-----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, D5SIHFNqj/PNR0TIeBznwbq2zPZuJ5J4U96dpdJ3nPDrOknXLnzGnse6aW7WnW0g YgyMtHIB7ltZzQFyOel40w== 0001019687-07-003474.txt : 20071015 0001019687-07-003474.hdr.sgml : 20071015 20071015171300 ACCESSION NUMBER: 0001019687-07-003474 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20070630 FILED AS OF DATE: 20071015 DATE AS OF CHANGE: 20071015 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: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-20259 FILM NUMBER: 071172482 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 10KSB 1 seamless_10ksb-06302007.txt FORM 10-KSB SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-KSB [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2007 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _________________ Commission file number: 000-202559 SEAMLESS WI-FI, INC. --------------------------------------------------------- (Name of Small Business Issuer as specific in its Charter) NEVADA 33-0845463 ------ ---------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 800 N. RAINBOW BLVD., STE. 200, LAS VEGAS, NV 89109 - --------------------------------------------- ----- (Address of Principal Executive Offices) (Zip Code) Issuer's telephone number, including area code: (775) 588-2387 -------------- Securities registered pursuant to Section 12(b) of the Act: NONE ---- Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.001 par value ----------------------------- (Title of Class) Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained herein, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. Yes X No __ For the year ended June 30, 2007, our revenue was $42,717. As of October 4, 2007, the number of shares of common stock outstanding was 6,841,422,154. The aggregate market value of our common stock held by non-affiliates of the registrant as of October 4, 2007 was approximately $2,023,110 (based upon 6,743,701,705 shares at $.0003 per share). DOCUMENTS INCORPORATED BY REFERENCE The following documents are incorporated herein by reference: (i) Quarterly Report on Form 10-QSB for the quarterly period ended March 31, 1999, filed on May 19, 1999; (ii) Quarterly Report on Form 10-QSB for the quarterly period ended September 30, 1999, filed on December 1, 1999; (iii) Quarterly Report on Form 10-QSB for the quarterly period ended March 31, 2000, filed on May 22, 2000; (iv) Current Report on Form 8-K, filed on October 4, 2004; (v) Current Report on Form 8-K, filed on October 7, 2004; (vi) Annual Report on Form 10-KSB for the fiscal year June 30, 2004, filed on November 12, 2004; (vii) Current Report on Form 8-K, filed on January 19, 2005 and (viii) Quarterly Report on Form 10-QSB for the quarterly period ended December 31, 2006, filed on February 20, 2007.
TABLE OF CONTENTS PAGE ---- ITEM 1 DESCRIPTION OF BUSINESS..................................................................................1 ITEM 2 DESCRIPTION OF PROPERTY..................................................................................9 ITEM 3 LEGAL PROCEEDINGS........................................................................................10 ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS......................................................10 ITEM 5 MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTTERS................................................10 ITEM 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS....................11 ITEM 7 FINANCIAL STATEMENTS.....................................................................................17 ITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.....................17 ITEM 8A CONTROLS AND PROCEDURES..................................................................................17 ITEM 8B OTHER INFORMATION........................................................................................17 ITEM 9 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.............................................................................................17 ITEM 10 EXECUTIVE COMPENSATION....................................................................................19 ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS............21 ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.................................11 ITEM 13 EXHIBITS..................................................................................................22 ITEM 14 PRINCIPAL ACCOUNTANT FEES AND SERVICES...................................................................22 SIGNATURES .......................................................................................................24
PART I ITEM 1. DESCRIPTION OF BUSINESS. DEVELOPMENT OF BUSINESS Seamless Wi-Fi, Inc. has three operating subsidiaries: (1) Seamless Skyy-Fi, Inc. which, beginning in June 2004, provides wireless Internet access (commonly known as "Wi-Fi"); (2) Seamless Peer 2 Peer, Inc. which, beginning in January 2005, develops and provides a patent pending software program called Phenom(R) that encrypts Internet communications and provides flexible telecom data and voice transport solutions, including its Freek2Freek social network; and (3) Seamless Internet, Inc., established in November 2005, which offers high security hosting services for customers of Seamless Peer 2 Peer, Inc. and Seamless Skyy-Fi, Inc. and which is also manufacturing and marketing an ultra mobile personal computer named the S-XGen. BUSINESS SEAMLESS SKYY-FI, INC. Seamless Skyy-Fi, Inc. provides wireless Internet access at business locations. This service is referred to as "wireless fidelity" or "Wi-Fi" and the locations where this service is available are known as "Wi-Fi hot spots." Seamless Skyy-Fi is also the developer of the patent pending software program that provides Wi-Fi users with Seamless-Secure Internet Browsing (S-SIB(TM)) that encrypts the user's Wi-Fi signal. Seamless Skyy-Fi released its proprietary S-SIB(TM) technology on August 15, 2007. COMPETITION The market for Internet services is highly competitive. There are no substantial barriers for entry into the Wi-Fi market, based upon the advances of Internet technology. Management expects competition to continue to grow and intensify. This is especially true in the acquisition and installation of Wi-Fi hot spots. We believe creating Wi-Fi hot spots is one of the fastest growing segments of the Internet and both the private and public sector are becoming involved in the market. Our competition includes, but is not limited to, the following companies: o Advanced Internet Access, LLC o FatPort o Netnearu Corp. o Wayport, Inc o Wi-Fi Guys, LLC o Netopia, Inc. o Icoa, Inc. 1 Several companies, such as Starbucks and T-Mobile, have jointly entered into the competition with their own Wi-Fi locations. Other companies, such as ICOA, are attempting to acquire existing independent Wi-Fi companies. Other attempts are being made to develop roaming agreements between the Wi-Fi locations and companies to allow more access to existing Wi-Fi customers. Cellular telephone companies are trying to organize a network of Wi-Fi locations under their umbrellas. Other cellular telephone companies, such as Sprint, are also offering mobile Internet access through connection to their cellular networks. The hospitality industry is going to a free Wi-Fi model and fast food chains are offering service for a fee for Wi-Fi access at their locations. Another factor that impacts the Wi-Fi sector is that there are venues, such as cities and colleges, that are offering free Wi-Fi. Management feels that free Wi-Fi will not work because there are fixed costs for bandwidth that have to be paid by someone. Other costs which are also not free nor can they be waived, are costs of the broadcast radios, routers and antennas. Free Internet has been tried in the past, for example Net Zero had to move away from that model due to the fact that revenue from advertisers did not offset the hard cost of accessing the Internet. Competitors that have access to financial markets and cutting edge technological resources will remain viable for growth and expansion. These and other types of competitors for Internet access are expected to continue making substantial expenditures to promote, expand and improve their on-line properties. With the continued growth of the technology sector and the increased competition for the Wi-Fi Internet access business, there has been a corresponding increase in the number of business failures, which has negatively impacted availability of funds for these developing businesses. These occurrences have also impacted the availability of funds for us. We have obtained funding for acquisition and deployment of its Wi-Fi hot spot locations. Several of the principal competitive factors which would determine success in our targeted markets are: o location; o high speed bandwidth availability; o customer base; o fee arrangement, i.e., location owner pays vs. end user pays; o potential number of simultaneous users; and o implementation costs. To acquire locations, we plan on using a small in-house sales staff and several independent salespersons. This allows us to adjust sales activities as required. The in-house sales staff also allows us to maintain continuity with the sales training and presentations of the independent sales personnel. MARKETING PLAN We plan to concentrate our marketing campaign within a given region first to businesses within the chosen area that meet the criteria determined by our management. The types of businesses 2 that meet the criteria include coffee shops, carwashes, and hotels. Once a Wi-Fi hot spot location is established, we plan to advertise in order to inform the consumer of the availability of Wi-Fi service at that location. Once it establishes name recognition within the marketed region, we plan to refocus our marketing campaign to another region and/or business type. Our marketing campaign will use on-line services, web site placement and advertising networks, as well as traditional off-line media such as radio and direct mail print to convey to the business owner/operator and the consumer the services we offer. We also plan to use direct telemarketing and facsimile services to inform the business owner/operator and consumer of our services. Accordingly, we will incur increased costs associated with advertising our services to business operators and consumers. SEAMLESS PEER 2 PEER, INC. Seamless Peer 2 Peer, Inc. hired a development team to create its proprietary, patent pending Phenom(R) Encryption Software. Phenom(R) software allows secure communications over Wi-Fi, local area network ("LAN"), and wide area networks ("WAN") with its Virtual Internet Extranet Network technology. Phenom(R) software provides secure peer mail, chat, file transfer, and remote PC access in a two-megabyte download. Phenom(R) software's application protocol interface ("API") also supports voice over Internet protocol ("VoIP"), video voice conferencing, and white boarding. We anticipate that Phenom(R) will be available in 2008. Seamless Peer 2 Peer, Inc. also hired a development team to create its first encrypted secure peer to peer social network, Freek2Freek (WWW.FREEK2FREEK.COM). Freek2Freek will be a secure social web network developed by using the Phenom secure backbone for Freek2Freek. Freek2Freek is being built to be safe and secure for users, which will have a significant advantage over non-secure social networks that potentially risk users' identities and personal information. Seamless Peer 2 Peer expects to launch Freek2Freek in 2008. Upon launch, Freek2Freek will offer high levels of security and user verification because its patented backbone is based upon Seamless Peer 2 Peer's Phenom Secure Private Network layer technology, which allows transmission of data to peers over conventional IP networks in such a way that information can be shared among peers even if one or more are behind proxies, firewalls, or network address translations (also known as "NATs" Network Masquerading, Native Address Translation and IP Masquerading). Freek2Freek will be an online community where everyone who interacts will be authenticated and all communications will be encrypted. Seamless Peer 2 Peer is concentrating on establishing a client base for its software products. The Peer 2 Peer potential client base includes the following entities and end users: o Government agencies: Providing government agencies secure direct permission based access to other government agencies in a server-less "dark-net" environment. Government agencies can share information in a highly secure, highly encrypted "FIPS 142" compliant secure networking and collaborative dark-net, allowing direct 3 communication and information sharing in a Peer-2-Peersetting. Communications between field operatives and home-based peers can be accommodated from personal computer to hand held device. o Corporations: Providing corporations with an enhanced government standard encrypted communication and collaboration resource tool. Acting as a VPN client with communication (Voice over Internet protocol, video conferencing, chat and peer mail), as well as a suite of collaborative tools (white boarding, application sharing, and cooperative web surfing, and file sharing), companies can enhance work flow and productivity of their remote and mobile workforce in a secured and controlled work environment. o Technology and network consultants: Providing their customer base with cost effective, secure and feature rich networking solutions. The Phenom client and server provide end-to-end communication and collaboration tools for consultants looking for cost effective solutions for their customer base. o ISP, WISP, Wi-Fi providers: Can license, white label and resell the technology by offering secure network keys to their small business client base as well as create individual networks for their enterprise business clientele. Additionally, ISP, WISP and Wi-Fi providers can add a secure web surfing feature to their end user customer base as a value added service. Additionally, by providing Voice over IP and video conferencing the ISP's will see additional value added services that they can offer their customer base to enhance their bottom lines. o File sharing companies: Can license the technology and white label it as their own to provide the most seamless and easily integrated file sharing mechanism available in the Peer-2-Peer space today. COMPETITION The market for Internet based software services is highly competitive. There are substantial barriers for entry into the software internet service market. Our competition for Seamless Peer 2 Peer's products includes, but is not limited to, the following companies. o Grouper Networks, Inc. o Citrix Systems, Inc. o Peerme, Inc. o 3AM Labs, Inc. o Amteus Ltd. o Eclectic Endeavours, Inc. o Seclarity, Inc. o Securit-e-doc, Inc. 4 MARKETING PLAN Seamless Peer 2 Peer's marketing plan incorporates four basic distribution channels: 1. Direct sales that target vertical market networks for example: healthcare providers, government agencies, defense contractors, military, non-profits, etc. The direct sales staff will focus on the domestic market. 2. OEM distribution sales to private networks as well as general users. Furthermore, they will be able to bundle the SeamlessP2P client software for handheld devices, PDA's, desktop computers and laptops. 3. Affiliates, resellers and partners sales by offering the Seamless product through Internet Service Providers (e.g., cable, DSL, etc.), networking and IT solution providers, Internet business portals and wireless internet service providers. 4. Internet/online users are able to download the program for their daily Internet usage. PROPRIETARY SOFTWARE Seamless Peer 2 Peer is the developer of the proprietary (patent pending) Phenom(R) Encryption Software. Phenom(R) Software allows secure communications over Wi-Fi, local area network (LAN), and wide area networks (WAN) with its Virtual Internet Extranet Network technology. Phenom(R) software provides secure peer mail, chat, file transfer, and remote PC access in a two-megabyte download. Phenom(R) software's application protocol interface (API) also supports voice over internet protocol (VoIP), video voice conferencing, and white boarding. SOCIAL NETWORKING The Phenom(R) software client is an integral part of Seamless Peer-2-Peer's social networking environment. Freek-2-Freek will be a secure place for teens and the 18 to 34 demographic to share and communicate freely with their friends and family. By providing permission based communications and closed friend networks, users can be sure that their online social interactions are secure. Users will have the freedom to control their web page and presence as well as whom they do and do not want to interact with. Additional communications and interactions will be enhanced utilizing the Phenom(R) client to incorporate voice and video to its more traditional communication applications of chat and e-mail. Additional functions and features will allow users to share content with their peers utilizing the file sharing mechanism, as well as creating new and original content for their personal web pages using the application sharing tool, as well as the white boarding function. Enhanced content, enhanced communication and enhanced security are the differentiating factors between Freek-2-Freek and its current online competitors. Freek-2-Freek intends to provide free to the user advertising revenue driven content on the network to be shared freely between friends and peers and secured with the Seamless Wi-Fi Digital Rights Management solution better known as DRM. Using our DRM solution on the Freek-2-Freek network, we will be able to monitor the flow of DRM encrypted content throughout the network thus tracking file downloads and advertisement plays per file. DRM encrypted files can be any downloadable file to a PC or hand held device, these files include music files, video files, or document files, files size is not an issue as full length feature films can be encrypted as well. The DRM encrypted files will not be available for permanent download but tethered to the content server and deleted after a certain amount of plays. Number of plays will be determined by advertising dollars and costs incurred to distribute content. Permanent downloads will be available when an end user decides to purchase the movie, song or album that he or she wishes to own. Fees are paid to Seamless from the subscriber and/or the network operator: 1. Subscribers will either pay a monthly fee if they are a Seamless member and/or a per use fee if they are occasional users. 2. Operators of a Wide Area Network (WAN) and/or a Local Area Network (LAN) who want Seamless service then pay per month or per year based upon the number of users that are part of the network. SEAMLESS INTERNET, INC. Seamless Internet, Inc. offers hosting services for Seamless Peer 2 Peer and Skyy-Fi clients and is not available for general public hosting services. Seamless Internet, Inc. has contracted the manufacturing of the S-XGen (Seamless neXt Generation) Pocket Personal Computer. The S-XGen has been fitted with a 20GB hard drive, 256Kb RAM and its dimensions are 6.5" X 3.8" X 1.125". It includes a TFT Transflective Touch Screen viewable in sunlight, 802.11b/g and Bluetooth connectivity, SD MMC and Compact Flash sockets, 2-USB 2.0 ports, and a near full sized QWERTY folding keyboard, stereo speakers and inputs/outputs, docking socket and tri-band cell phone communications. Seamless Internet was originally created to provide in-house server solutions for parent company Seamless Wi-Fi. The expansion of services was driven by Seamless Wi-Fi's product and services growth. Seamless Internet's Services were first expanded with Seamless Wi-Fi's acquisition of the Peer 2 Peer Software and the creation of our Peer 2 Peer subsidiary. Many of the clients acquiring the Phenom(R) software program did not have the capability of properly securing their new sever, to either insure the integrity of the software or be able to provide the technical support required to support the software program. Thus Seamless Internet was expanded and the acquisition of FMS NetCheck in February 2006 allowed us to offer Web-monitoring for our clients as part of our hosting services. These services were created to facilitate the eventual implementation of Phenom(R) secure communications services for clients who do not have Oracle-compatible equipment and do not wish to purchase their own Oracle server. Creating our own high-security hosting facility provides the most robust infrastructure possible to potential clients seeking secure network services. We have clients that are interested in our products that do not have the information security systems and hardware in place for fail-safe implementations. Offering secure hosting services allows us to meet this potential client demand while also giving us the ability to support our products in the most efficient manner. 5 In March 2006, we acquired the patent, development and marketing rights for the ED.1 (Entertainment Device) minicomputer and communication device from Vercel Corporation. The ED.1 is an ergonomically-designed portable entertainment device and full-fledged computer boasting a form factor of 5" x 4" x 2" and weighing less than 12 ounces. When closed, it offers an MP3 player, a gaming device when opened, and a full-fledged internet communications device and computer when the integrated keyboard is unfolded. The keyboard offers almost full-size keyboard functionality and ergonomics. Our new unit, while maintaining its small size, has been specifically designed with a fully deployable folding and removable keyboard for data manipulation and navigation allowing the user easy access. It has a 4 inch high definition screen that provides a clear and crisp screen display. The unit is extremely versatile and the present plan for the first version has, among it many capabilities, the ability to be used as a completely loaded Wireless working computer. It is "Blue Tooth" enabled and can be used as an entertainment and gaming unit. The unit will also contain the Seamless patent-pending encryption software incorporated into its system to protect sensitive information. The new unit's size places it in between the "Palm and the Lap Top" size category - in the Ultra Mobile Personal Computer (UMPC) class of minicomputers and as such, it can be transported easily because it readily fits into a pocket or a purse, or be easily carried by hand. It does not require a carrying case, and despite its small size, it is designed so that its batteries can last up to eight hours. Seamless Internet named its mobile minicomputer the S-XGen (for Seamless Next Generation) Mobile Computing and Communications Device. In addition, we have been undertaking an aggressive redesign and are preparing for volume manufacturing of the device. We have also expanded the features and functionality of the S-XGen, including increasing standard internal memory from 128 Kb to 256 Kb, integrating an onboard camera and also more gaming buttons to facilitate gaming interactivity. COMPETITION Management feels that even though there are over 1,000 different devices that fall within the mini-mobile, communication, location (GPS), and computer, none have an almost full size keyboard and comparable feature set. However, indirect competitors include Nokia, Sony, T-Mobile, and Verizon, among others. MARKETING STRATEGY We are first offering the S-XGen as a small, easy to carry, wireless "Working Computer" with a wide range of capabilities, targeting the business community, travelers, and users in need of a small easy to carry and readily accessible computer (for example, our product will offer great benefits for mobile sales force, first responders, etc.). The S-XGen will also be offered with the capability of being used for entertainment and gaming 6 purposes with the Transflective LCD with integrated touch screen providing the user with high resolution picture viewing capability. This will address and target the gaming and entertainment user market. Pre-market test units are being Beta tested and reviewed now. We expect that we will be manufacturing units by the end of 2007 SOURCES AND AVAILABILITY OF RAW MATERIAL AND PRINCIPAL SUPPLIERS Raw material used for molded parts and circuit boards are readily available with limited lead time. Parts such as CPUs and hard drives are also standard productions parts and are readily available. However some of our parts do require an eight week lead time. These parts are also available through many suppliers. DEPENDENCE ON MAJOR CUSTOMERS We are not dependent on any one customer for a substantial portion of our sales of any product or service. INTELLECTUAL PROPERTY We own the following registered trademarks: o Phenom o Seamless P2P o Seamless Peer2Peer o ! o PP We have applied for trademark registration for the following marks: o Freek2Freek o Phenom Mobile o S-SIB o Seamless SIB o Get SINB o Get Phenom o SINB o SXGEN We have patents pending for the: o Phenom(R) Encryption Software o S-SIB (TM) o Various accessories for the S-XGen (TM) 7 GOVERNMENT APPROVAL Regulation of the following areas could impact our operations: REGULATION OF THE INTERNET To date, there has been some regulation of content providers on the Internet and this regulation may increase due to the increasing popularity and use of the Internet by broad segments of the population. It is possible that new laws and regulations may be passed and/or adopted with respect to the Internet pertaining to access, content of Web sites, privacy, pricing, encryption standards, consumer protection, electronic commerce, taxation, and copyright infringement and other intellectual property issues. No one is able to predict the effect, if any, what future regulatory changes or developments may have on the demand for Internet services, access and/or other Internet-related activities. Changes in the regulatory environment relating to the Internet access industry may include the enactment of laws and/or regulations that directly or indirectly affect the costs of telecommunications and Internet access. These changes could increase competition from national and/or regional telephone companies and other Internet access providers. These changes could adversely affect our business, operating results and financial condition. REGULATION OF INTERNET ACCESS We provide Internet service by using Internet access provided by telecommunications carriers. Terms, conditions and prices for telecommunications services are subject to economic regulation by state and federal agencies. Internet access providers are not currently subject to direct economic regulation by the FCC or any state regulatory body, other than the type and scope of regulation that is applicable to businesses generally. In April 1998, the FCC reaffirmed that Internet access providers should be classified as unregulated "information service providers" rather than regulated "telecommunications providers" under the terms of the Federal Telecommunications Act of 1996. Currently, we are not subject to federal regulations applicable to telephone companies and similar carriers because the Internet access services offered are provided by third-party telecommunications providers. To date, no state has attempted to exercise economic regulation over Internet service providers. REGULATION OF WIRELESS ACCESS Wi-Fi Internet access products primarily operate in unregulated frequencies. Due to the growth of Wi-Fi and the corresponding increased use within this bandwidth, there may be regulation in the near future. The regulation could impact broadcast range and use within given locations; however, at present the broadcast frequency remains unregulated. REGULATION OF PEER 2 PEER COMMUNICATION The courts and the legislature have recently become active in the peer 2 peer communications space, which can negatively impact us due to our acquisition of peer 2 peer software technology. 8 If the legislatures and court determine that this type of communications violates existing laws and/or new laws may be proposed that could limit and/or prohibit this type of communication then this could have a negative impact on our ability to generate revenue from this type of communications. REGULATION OF COMMUNICATION DEVICES Communications industry regulation changes rapidly, and such changes could adversely impact us. The following discussion describes some of the major communications-related regulations that affect us, but numerous other substantive areas of regulation not discussed here also may influence our business. Communications services are regulated to varying degrees at the federal level by the Federal Communications Commission ("FCC") and at the state level by public utilities commissions ("PUCs"). Seamless's suite of wireless broadband products and services is subject to federal regulation in a number of areas, including the licensing and use of spectrum, and the technical parameters, certification, marketing, operation and disposition of wireless devices. Applicable consumer protection regulations also are enforced at the federal and state levels. his does not describe all present and proposed federal, state and local legislation and regulations affecting the communications industry. Some legislation and regulations are the subject of ongoing judicial proceedings, legislative hearings and administrative proceedings that could change the manner in which our industry is regulated and the manner in which we operate. We cannot predict the outcome of any of these matters or their potential impact on our business and as such cannot predict potential risks in our development efforts in these areas. RESEARCH AND DEVELOPMENT COSTS We spent $1,274,000 on research and development during the fiscal year ended June 30, 2007 as compared to $516,000 spent on research and development during the year ended June 30, 2006. Since the end of the fiscal year June 30, 2007 to date, we have spent an additional $447,000 on research and development. EMPLOYEES As of the date hereof, we have seven full-time employees and ten independent contractors. We hire independent contractors for sales personnel, technical support and installation expertise. We have no collective bargaining agreements with our employees. We believe that our employee relationships are satisfactory. ITEM 2. DESCRIPTION OF PROPERTY The following locations are the principal places of business of the Company, some of the Companies share facilities:
800 N. Rainbow Blvd., Ste 208 3155 E. Patrick Lane Ste 1 2050 Russett Way, Ste 338, Las Vegas, Nevada 89107 Las Vegas, Nevada 89120 Carson City, Nevada 89703
9 We rent some of the locations on a month-to-month basis and it leases, through its subsidiary, other locations. The monthly office rental and lease agreements (which expire on August 31, 2010) are listed below. Rental and lease expense under these agreements for the years ended June 30, 2007 and 2006 were $47,222 and $35,136, respectively. Commitments under the current monthly rentals and operating leases are as follows: Fiscal year ending June 30: Rental Leases Monthly $800 2008 $ 53,687 2009 50,340 2010 50,340 ITEM 3. LEGAL PROCEEDINGS On March 30, 2006, the Superior Court of the State of California, County of Orange, entered a judgment against us and other defendants, jointly and severally, in the total amount of $452,714.79 in the matter of Globalist Internet Technologies, Inc. vs. Iron Horse Holdings, Inc., et al. To the best knowledge of our management, there are no legal proceedings pending or threatened against us. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. PART II ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. MARKET FOR COMMON EQUITY Our common stock is currently quoted on the Over-The-Counter Bulletin Board under the Symbol "SLWF." Set forth below is the trading history of our common stock without retail mark-up, mark-down or commissions: HIGH LOW 2005 Third Quarter.......................... 0.63 0.30 Fourth Quarter......................... 0.40 0.0039 2006 First Quarter.......................... 0.14 0.011 Second Quarter......................... 0.155 0.0251 Third Quarter.......................... 0.048 0.0245 10 Fourth Quarter......................... 0.026 0.0039 2007 First Quarter.......................... 0.00319 0.00162 Second Quarter......................... 0.0015 0.000625 On October 3, 2007, the closing sale price was $0.0003. The above quotations are inter-dealer quotations from market makers of our common stock. At certain times the actual closing or opening quotations may not represent actual trades that took place. HOLDERS As of October 4, 2007, there were approximately 163 shareholders holding certificated securities and approximately 70,000 shareholders currently listed in the Depository Trust Company as holding shares in brokerage accounts. DIVIDENDS We have paid no cash dividends on our common stock since inception and do not anticipate or contemplate paying cash dividends in the foreseeable future. RECENT SALES OF UNREGISTERED SECURITIES NONE. ITEM 6. 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. THE FOLLOWING INFORMATION CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS OF OUR MANAGEMENT. 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. 11 OVERVIEW During the fiscal year ended June 30, 2007, Seamless Wi-Fi, Inc, through its subsidiaries Seamless Skyy-Fi, Inc, Seamless Peer 2 Peer, Inc, and Seamless Internet, Inc. Inc. was/and is in the process of developing products and services to offer to the business community and consumers. Seamless Skyy-Fi, Inc. has developed the Seamless Secure Internet Browsing (S-SIB(TM)) software program for use by the consumer to access the Internet in a secure Wi-Fi signal. S-SIB(TM) encrypts Wi-Fi transmissions signal based upon RSA's government certified 256 bit AES encryption. Seamless Skyy-Fi, Inc. released its proprietary S-SIB(TM) technology on August 15, 2007. Seamless Skyy-Fi, Inc. also maintains 30 Wi-Fi locations at hotels and other locations. Seamless Skyy-Fi, Inc. also provides 24/7 tech support for its Wi-Fi locations and for the S-SIB(TM) software program. Seamless Peer 2 Peer, Inc. is developing its proprietary, patent pending Phenom(R) Encryption Software. Phenom(R) encrypts Peer 2 Peer communications based upon RSA's government certified 256 bit AES encryption coupled with RSA's Public Key Infrastructure flexible telecom data and voice transport solutions. Phenom(R) software allows secure communications over Wi-Fi, local area network ("LAN"), and wide area networks ("WAN") with its Virtual Internet Extranet Network technology. Phenom(R) software provides secure peer mail, chat, file transfer, and remote PC access in a two-megabyte download. Phenom(R) software's application protocol interface ("API") also supports voice over Internet protocol ("VoIP"), video voice conferencing, and white boarding. We expect Phenom(R) will be available in 2008. Seamless Internet, Inc. provides an in-house server solution for the parent company, Seamless Wi-Fi. Inc. The expansion of services in fiscal 2006 and 2007 includes supporting Seamless Peer 2 Peer, Inc. and Seamless Skyy-Fi, Inc. secure software programs and its own software of FMS NetCheck. FMS allows Seamless Internet, Inc. clients Website monitoring as part of our hosting services. In March 2006, Seamless Internet, Inc. acquired the patent rights to a pocket personal computer, and began a development program to make the pocket PC into a mobile communication and computer device. Seamless Internet, Inc. named the device the S-XGen and plans to begin manufacturing the S-XGen Mini-Mobile Personal Computing and Communications device by the end of 2007 . RESULTS OF OPERATIONS The following table sets forth, for the years indicated, our selected financial information:
June 30, 2007 June 30, 2006 --------------- --------------- Revenues $ 42,717 $ 38,793 Cost of revenues 165,580 115,070 --------------- ---------------
12
Gross loss (122,863) (76,277) Cost and expenses: Selling, general and administration 715,732 624,273 Software development cost -0- 1,795,369 Technology development cost -0- 38,552 Financing fees 265,000 345,000 Consulting 598,932 1,446,351 Legal 86,988 291,445 Office payroll 456,031 -0- Write down of investments -0- 1,345,384 Bad debt expenses 105,437 229,265 Depreciation and amortization 31,749 12,344 --------------- --------------- Total 2,259,869 6,127,983 Net loss from operations (2,382,732) (6,204,260) Adjustment of tax assessment -0- 460,957 Gain on liquidation of debt 4,904,508 -0- Interest income 143,130 111,093 Interest expense (291,535) (1,388,335) Other income 836,298 652,630 Income (loss) before income taxes 3,209,669 (6,367,915) Net income (loss) $ 3,209,669 $ (6,367,915) Net income (loss) per common share $ 0.002 $ (0.048) Weighted average basic and diluted common shares outstanding 2,087,742,032 133,750,923
FISCAL YEAR ENDED JUNE 30, 2007 COMPARED TO FISCAL YEAR ENDED JUNE 30, 2006 (AUDITED) Our revenues for the fiscal year ended June 30, 2007 of $42,717 is an increase of 9% in revenue when compared with $38,793 in revenues for the fiscal year ended June 30, 2006. We had net income of $3,209,669 for the fiscal year ended June 30, 2007 as compared to a net loss of ($6,367,915) for the year ended June 30, 2006. This increase in income is primarily due to income credit of $4,904,508 as payment in full for loans and interest as per our loan satisfaction agreement with Ayuda Funding, LLC. COMPARISON BY SEGMENT In accordance with SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information," management has determined that there are three reportable segments, 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. 13 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. The accounting policies of the segments are the same as those described in the summary of significant accounting policies (Note 1). Information on reportable segments is as follows: Fiscal Year Ended Fiscal Year Ended June 30, 2007 June 30, 2006 ------------- ------------- Seamless Skyy-Fi Sales $ 41,229 $ 38,793 Operating Expenses $ 287,908 $ 115,070 Seamless Peer 2 Peer Sales $ 0 $ 0 Operating Expenses $ 87,542 $ 2,128,765 Seamless Internet Sales $ 1,409 $ 0 Operating Expenses $ 552,846 $ 146,042 Cost And Expenses $ 885,658 $ 2,351,084 Other Net Income $ 4,386,862 $ 1,224,680 Other Expenses $ 291,535 $ 5,241,511 Net Income (Loss) $ 3,209,669 $(6,367,915) SEAMLESS SKYY-FI: The resultant loss for this segment for the fiscal year ended June 2007 was ($246,679). This loss was due to expenses of expanding its tech support and improving operations. The income increased to $41,229 as compared to $38,793 for the prior fiscal year ended 2006. Operating expenses also increased to $287,908 as compared to $115,070 for the prior fiscal year. The increased expenses are because several locations were changed and 24/7 tech support incorporated. SEAMLESS PEER 2 PEER SOFTWARE: The resultant loss for this segment for the fiscal year ended June 2007 was ($87,542). This loss was due to reduced expenditures in the development of the PHENOM (R) Since the software program is not available to market, no revenue has been generated by the product for fiscal years ended 2007 and 2006, respectively. Operating expenses for 2007 also decreased to $87,542 as compared to $2,128,765 for the prior fiscal year. The decreased expenses are because PHENOM(R) has been in beta testing for most of this fiscal year with expectation of deployment in 2008. SEAMLESS INTERNET PRODUCTS AND SERVICES: The resultant loss for this segment for the fiscal year ended June 2007 was ($551,437). This loss was due to expenses developing the S-XGen(TM) and improving the server array at our co-location. Income increased to $1,409 as compared to no income for the prior fiscal year ended 2006. Operating expenses also increased to $552,846 as compared to $146,042 for the prior fiscal year. The increased expenses are primarily due to the development of the S-XGen The S-XGen is a Mini-Mobile Personal Computing and Communications device which we expect will be available by the end of 2007 . OTHER: For the fiscal year ended June 30, 2007, this segment received income credit $4,904,508 as payment in full for loans and interest totaling $4,904,508 as per our loan satisfaction agreement with Ayuda Funding, LLC. The agreement provided that we would transfer 1,000,000 shares of 1st Global Financial Corporation common stock and 500,000 shares of DLR 14 Funding, Inc. common stock owned by us to Ayuda Funding LLC. The losses of ($6,367,915) for the June 30, 2006 fiscal year were due to the start-up operations and development cost of our product lines and services and increased operations costs. LIQUIDITY AND CAPITAL RESOURCES Net cash used by operations activities of $2,046,002 for the year ended June 30, 2007 decreased by $1,067,121 compared to the net cash used in operational activities of $3,113,123 for the year ended June 30, 2006. The decreases in net cash were primarily from the reduction in expenditures required to develop our Peer 2 Peer software, maintain our Internet operations, develop its mini computer and support our operations. CRITICAL ACCOUNTING POLICIES The Securities and Exchange Commission issued Financial Reporting Release No. 60, "Cautionary Advice Regarding Disclosure About Critical Accounting Policies," or FRR 60, suggesting that companies provide additional disclosure and commentary on their most critical accounting policies. The most critical accounting policies are the ones that are most important to the portrayal of a company's financial condition and operating results, and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Our management believes that of the significant accounting policies used in the preparation of the consolidated financial statements (see Note B to the Financial Statements), the following are critical accounting policies, which may involve a higher degree of judgment, complexity and estimates. The methods, estimates and judgments we use in applying these most critical accounting policies have a significant impact on the results reported in our financial statements. OFF BALANCE SHEET ARRANGEMENTS We have not entered into any off balance sheet arrangements that have, or are reasonably likely to have a current or future effect on our 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. USE OF ESTIMATES The preparation of the consolidated financial statements are in conformity with United States generally accepted accounting principles require us 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 We issue 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 15 of our 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. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS NO. 123(R), "Share-Based Payment," which revises SFAS No. 123. SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized as compensation expenses upon based their fair value. Effective January 1, 2003, we adopted the fair value recognition provision of SFAS No. 123. We plan to adopt SFAS No. 123(R) effective July 1, 2005, using the modified prospective method and do not expect any impact on our results of operations or financial position. In December, the FASB issued SFAS No 153, Exchange of Nonmonetary Assets, an amendment of APB No. 29, Accounting for Nonmonetary Transactions exchanges of similar productive assets and replaces it withy a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. We are required to adopt FAS 153, on a prospective basis, for nonmonetary exchanges beginning June 15, 2005 the adoption of FAS 153 did not have any impact on our financial condition, results of operations and cash flows. In December 2003, the Securities and Exchange Commission released Staff Accounting Bulletin No. 104, "Revenue Recognition" ("SAB 104"). SAB 104 clarifies existing guidance regarding revenue recognition. Our adoption of SAB 104 did not have an impact on our consolidated results of operations, financial position or cash flows. INFLATION The moderate rate of inflation over the past few years has had an insignificant impact on our sales and results of operations during the period. CAPITAL EXPENDITURES There were no capital expenditures during the 2007 fiscal year. NET OPERATING LOSS CARRY FORWARDS No provision for income taxes has been recorded in the accompanying financial statements as a result of our net operating losses. We have unused tax loss carry forwards of approximately $18,687,528 to offset future taxable income. Such carry forwards expire in the years beginning 2021. The net income of $3,209,669 for fiscal year ended June 30, 2007 is offset by the tax loss carry forwards of the previous fiscal year of June 30, 2006 which was $21,897,197. We have reduced the deferred tax asset resulting from our tax loss carry forwards by a valuation allowance of an 16 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, 2006 to June 30, 2007 was a decrease of approximately $3,000,000. ITEM 7. FINANCIAL STATEMENTS. The financial statements required to be filed pursuant to this Item 7 begin on page F-1 of this report. ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. ITEM 8A CONTROLS AND PROCEDURES Our Chief Executive Officer and Chief Financial Officer (the "Certifying Officers") are responsible for establishing and maintaining our disclosure controls and procedures. 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 our disclosure controls and procedures as of the end of the period covered by this report and believe that our disclosure controls and procedures are effective based on the required evaluation. During the period covered by this report, there were no changes in internal controls that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 8B OTHER INFORMATION On October 11, 2007, the Board of Directors elected Albert Reda to serve as corporate Secretary, effective immediately, until the next annual meeting of the Board of Directors and until his successor is elected and qualified. PART III ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS Our directors and executive officers are as follows: NAME AGE POSITION Albert R. Reda 62 Director, Chief Executive Officer, Chief Financial Officer, Secretary Matt Sebal 37 Director 17 John Domerego 63 Director ALBERT R. REDA, CHIEF EXECUTIVE OFFICER, CHIEF FINANCIAL OFFICER, SECRETARY AND DIRECTOR. Mr. Reda joined us in November 1998. From 1996 through 1998, he was employed with CRT Corporation as Vice President in charge of production for manufacturing frozen food products. For the period of 1994 to 1995, Mr. Reda was self-employed in the financial lending area, buying and selling loans between individuals and institutions. Mr. Reda received his Bachelor of Science Degree from California State University, Long Beach, with a major in engineering. Mr. Reda is also a director of DLR Funding, Inc, Carbon Jungle, Inc. and of 1st Global Debit Cash Card, Inc. MATT SEBAL, DIRECTOR. Mr. Sebal became one of our directors in October 2005. Since January 2002, he has been serving as President and Director of 51st State Systems, Inc. which provides technology and consulting services in Vancouver, BC Canada. From May 2002 and continuing through the present, Mr. Sebal has served as President and as a Director of DCM Enterprises, Inc., a management and investment holding company. From October, 2001 through the present, he has served as Secretary and as a Director of Hosting Site Networks, Inc., a provider of Internet services including web hosting, web consulting, and electronic mail services. From June 2000 to January 2003, Mr. Sebal held one or more of the following the positions with Return Assured Incorporated: Secretary, President, Chairman and CEO, and DirectoR. Return Assured Incorporated was involved with enabling e-retail transactions. From November 2000 to October 2003, Mr. Sebal served as a Director of Mindfuleye, Inc., which developed software for licensing to the investment community. Mr. Sebal holds a baccalaureate degree in Political Science from the University of Western Ontario, Canada. JOHN DOMEREGO, DIRECTOR. Mr. Domerego has been a Director of Seamless Wi-Fi, Inc. since October 2005 and President of Seamless Internet Inc. since February 2005. Mr. Domerego was previously involved in the development, designing, engineering and erection of co-generation and power generating facilities both as an employee of Raytheon Engineering and self-employed as an associate of Malcolm Jones Associates, an engineering company where he managed multi-million dollar projects from conception to completion. Mr. Domerego also has 20 years experience in the pulp and paper industry where he was employed and performed as chief engineer and eventually as general manager. He was responsible for all facets of the industry involving the successful operation of paper mills and facilities. Mr. Domerego has a Bachelor of Science degree in Mechanical Engineering. Directors serve until the next annual meeting or until their successors are qualified and elected. Officers serve at the discretion of the Board of Directors. COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and certain officers, as well as persons who own more than 10% of a registered class of our equity securities, ("Reporting Persons") to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission. The following Reporting Persons have not complied on a timely basis with all filing requirements applicable to them: 18 o Mildred Carroll, Secretary, failed to file a Form 4 disclosing her change in ownership from 520,000 shares of common stock to 420,006 shares of common stock during our last fiscal year; o Matt Sebal, Director, failed to file a Form 4 disclosing his change in ownership from 2,700,000 shares of common stock to 5,100,000 shares of common stock during our last fiscal year; and o John Demerego, Director, was delinquent in filing a Form 4 disclosing his change in ownership from 2,700,000 shares of common stock to 5,100,000 shares of common stock during our last fiscal year. ITEM 10. EXECUTIVE COMPENSATION. SUMMARY COMPENSATION TABLE Set forth below is a summary of compensation for our principal executive officer and our two most highly compensated officers other than our principal executive officer (collectively, the "named executive officers") for our last two fiscal years. There have been no annuity, pension or retirement benefits ever paid to our officers, directors or employees. With the exception of reimbursement of expenses incurred by our named executive officers during the scope of their employment and unless expressly stated otherwise in a footnote below, none of the named executive officers received other compensation, perquisites and/or personal benefits in excess of $10,000.
========================================================================================================================== Name and Non-Equity Principal Salary ($) Bonus Stock Option Incentive All Other Total Position Year ($) Awards ($) Awards Plan Compen- ($) ($) Compensation sation ($) (s) - -------------------------------------------------------------------------------------------------------------------------- Albert R. Reda, CEO, 2007 $240,000 $0 $0 $0 $0 $0 $240,000 CFO, Secretary (Principal Executive Officer) - -------------------------------------------------------------------------------------------------------------------------- 2006 $240,000 $0 $0 $0 $0 $0 $240,000 - -------------------------------------------------------------------------------------------------------------------------- Mildred Carroll, 2007(1) $54,000 $0 $0 $0 $0 $0 $54,000 Secretary - -------------------------------------------------------------------------------------------------------------------------- 2006 $72,000 $0 $0 $0 $0 $0 $72,000 - --------------------------------------------------------------------------------------------------------------------------
GRANTS OF PLAN-BASED AWARDS We did not grant any plan-based awards during this fiscal year ended June 30, 2007. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END The following table sets forth information for the named executive officers regarding the number of shares and underlying shares both exercisable and unexercisable stock options, as well as the exercise prices and expiration dates thereof, as of June 30, 2007. - ---------------------- (1) Resigned on April 11, 2007. 19
Option Awards Stock Awards - ---------------- -------------------------------------------------------------------------------- ---------------------------------- Name Number of Number of Equity Option Option Number of Market Equity Equity securities securities Incentive Exercise Expiration Shares of Value of Incentive Incentive Underlying Underlying Plan Awards: Price Date Units of Shares Plan Plan Unexercised Unexercised Number of ($) Stock or Units Awards: Awards Options Options Securities that have of Stock Number of Market (#) (#) Underlying not vested that Unearned or Exercisable Unexercisable Unexercised (#) have not Shares, Payout Unearned vested Units or Value of Options ($) other Unearned (#) rights Shares, that Units of have other not rights vested that # have not vested $ - ---------------- -------------- -------------- --------------- --------- ------------ ----------- ---------- ------------ ---------- Albert R. -0- -0- -0- $-0- -0- -0- -0- -0- -0- Reda, CEO, CEO, Secretary (Principal Executive Officer) - ---------------- -------------- -------------- --------------- --------- ------------ ----------- ---------- ------------ ---------- Mildred -0- -0- -0- $-0- -0- -0- -0- -0- -0- Carroll, Secretary - ---------------- -------------- -------------- --------------- --------- ------------ ----------- ---------- ------------ ----------
EMPLOYMENT AGREEMENTS On June 8, 2007, we entered into an Employment Agreement with Albert Reda as our Chief Executive Officer. The Employment Agreement has a term of five years with automatic one year renewals unless either party gives notice to the other at least 30 days prior to the end of any term. The Employment Agreement provides for an annual salary of $300,000, makes provision for salary increases subject to profitability of the Company, and bonuses in the discretion of the Board of Directors. The Employment Agreement provides for severance of the entire remaining compensation payable for the remainder of any term of the Agreement in the event of termination without cause. COMPENSATION OF DIRECTORS Our Directors do not receive any cash compensation, but are entitled to reimbursement of their reasonable expenses incurred in attending directors' meetings. We do not have any audit, nominating, compensation or other committee of our Board of Directors. 20 ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. The following table sets forth certain information regarding our shares of outstanding common stock beneficially owned as of the date hereof by (i) each of our directors and executive officers, (ii) all directors and executive officers as a group, and (iii) each other person who is known by us to own beneficially more than 5% of our common stock based upon 6,841,422,154 issued shares of common stock.
================================================================================================================ Name and Address of Beneficial Owners(2) Amount and Nature of Percent Beneficial Ownership Ownership(3) - ---------------------------------------------------------------------------------------------------------------- Albert R. Reda, CEO, CFO, Secretary, Director 1,026,455,000(4) 13.1% - ---------------------------------------------------------------------------------------------------------------- Matt Sebal, Director 5,100,000 * - ---------------------------------------------------------------------------------------------------------------- John Domerego, Director 5,100,000 * - ---------------------------------------------------------------------------------------------------------------- All executive officers and directors as a group (four persons) 1,036,655,000 13.2% ================================================================================================================ *Less than 1%.
- ---------- (1) C/o our address, 800 N. Rainbow Blvd., Suite 200, Las Vegas, NV 89109, unless otherwise noted (2) Except as otherwise indicated, we believe that the beneficial owners of Common Stock listed above, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable, or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage of the person holding such options or warrants, but are not deemed outstanding for purposes of computing the percentage of any other person. (3) Includes 56,250 shares of preferred stock held by the Reda Family Trust convertible into 562,500,000 shares of common stock; 2,965,000 shares of common stock held by ARR, LLC; and 45,924 shares of preferred stock held by ARR, LLC convertible into 459,240,000 shares of common stock. 21 ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. None. ITEM 13. EXHIBITS 3.1 Articles of Incorporation, dated December 4, 1998(1) 3.2 Certificate of Amendment of Certificate of Incorporation, dated February 17, 1999(2) 3.3 Certificate of Amendment of Articles of Incorporation, dated June 30, 1999(1) 3.4 Certificate of Amendment of Articles of Incorporation, dated December 22, 1999(3) 3.5 Certificate of Amendment of Articles of Incorporation, dated February 9, 2000(3) 3.6 Certificate of Designation, Number, Powers, Preferences and Other Rights and Qualifications, Limitations, Restrictions and Other Characteristics of Series "C" Preferred Stock, dated September 30, 2004(4) 3.7 Bylaws, dated June 1, 1999(5) 10.1 Form of Location Provider Agreement(5) 10.2 Asset Purchase Agreement between Seamless P2P, LLC and Seamless Peer 2 Peer, Inc., dated January 18, 2005(6) 10.3 Promissory Note and Security Agreement from 1st Global Financial Corporation, dated July 14, 2006(7) 10.4 Revolving Line of Credit Agreement with DLR Funding, Inc., dated January 15, 2007(7) 10.5 Secured Promissory Note Payable in Agreed Installments and Secured Term Note, dated October 1, 2006(7) 10.6 Loan Agreement with Ayuda Funding Corp., dated October 26, 2006 10.7 OEM Mobility License Agreement with Microsoft Licensing, GP, dated May 22, 2007 10.8 Microsoft Services OEM Foundation Service Agreement - Non-Standard, dated June 9, 2007 10.9 Loan Satisfaction Agreement with Ayuda Funding Corp. dated June 7, 2007 10.10 Employment Agreement with Albert Reda, dated June 8, 2007 14 Code of Business Conduct and Ethics (8) 21 Subsidiaries - ---------- (1) Incorporated by reference from our Quarterly Report on Form 10-QSB for the quarterly period ended September 30, 1999, filed on December 1, 1999. (2) Incorporated by reference from our Quarterly Report on Form 10-QSB for the quarterly period ended March 31, 1999, filed on May 19, 1999. (3) Incorporated by reference from our Quarterly Report on Form 10-QSB for the quarterly period ended March 31, 2000, filed on May 22, 2000. (4) Incorporated by reference from our Current Report on Form 8-K, filed on October 4, 2004. (5) Incorporated by reference from our Current Report on Form 8-K, filed on October 7, 2004. (6) Incorporated by reference from our Current Report on Form 8-K, filed on January 19, 2005. (7) Incorporated by reference from our Quarterly Report on Form 10-QSB for the quarterly period ended December 31, 2006, filed on February 20, 2007. (8) Incorporated by reference from our Annual Report on Form 10-KSB for the fiscal year June 30, 2004, filed on November 12, 2004. 22 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 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES. KEMPISTY & COMPANY, CPA'S ("KEMPISTY") Kempisty was our independent auditor and examined our financial statements for the fiscal years ending June 30, 2007 and June 30, 2006. Kempisty performed the services listed below and was paid the fees listed below for the fiscal years ended June 30, 2007 and June 30, 2006. AUDIT FEES Kempisty was paid aggregate fees of approximately $60,000 for the fiscal year ended June 30, 2007 and approximately $40,000 for the fiscal year ended June 30, 2006 for professional services rendered for the audit of our annual financial statements and for the reviews of the financial statements included in our quarterly reports on Form 10-QSB during these fiscal years. AUDIT RELATED FEES Kempisty was not paid additional fees for either of the fiscal years ended June 30, 2007 or June 30, 2006 for assurance and related services reasonably related to the performance of the audit or review of our financial statements. TAX FEES Kempisty was not paid additional fees for either of the fiscal year ended June 30, 2007 and June 30, 2006 for professional services rendered for tax compliance, tax advice and tax planning during these fiscal years. ALL OTHER FEES Kempisty was not paid any other fees for professional services during the fiscal years ended June 30, 2007 and June 30, 2006. AUDIT COMMITTEE We do not have an audit committee. 23 SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, duly authorized. SEAMLESS WI-FI, INC. DATED: October 12, 2007 By: /s/ Albert R. Reda ----------------------- Albert R. Reda Director, Chief Executive Officer, Chief Financial Officer, and Secretary (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) 24 Financial Index to be inserted F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors Seamless Wi-Fi, Inc. We have audited the accompanying consolidated balance sheet of Seamless Wi-Fi, Inc. and Subsidiaries as of June 30, 2007 and the related statements of operations, changes in stockholders' equity (deficit) and cash flows for each of the years in the two year period ended June 30, 2007. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). atementtpndards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Seamless Wi-Fi, Inc. and Subsidiaries at June 30, 2007 and the results of its' operations and its cash flows for each of the years in the two year period ended June 30, 2007 in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that Seamless Wi-Fi, Inc. and Subsidiaries will continue as a going concern. As more fully described in Note 4, the Company has incurred operating losses since inception and requires additional capital to continue operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans regarding these matters are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Kempisty & Company CPAs, P.C. Kempisty & Company Certified Public Accountants PC New York, New York October 12, 2007 F-2
SEAMLESS WI-FI, INC. F/K/A ALPHA WIRELESS BROADBAND, INC. CONSOLIDATED BALANCE SHEET June 30, 2007 ------------ ASSETS Current assets Cash $ 15,181 Accounts receivable 124,077 Accrued interest receivable 236,132 ------------ Total current assets 375,390 Property and equipment (net of accumulated depreciation $44,093) 51,158 Technology 1,968,991 Employee advance 22,319 Notes receivable - related parties (net of allowance $334,703) 2,493,153 Restricted cash 75,000 Security deposit 6,600 ------------ TOTAL ASSETS $ 4,992,611 ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 239,226 Payroll taxes 96,706 Judgments payable 361,054 Other current liabilities 828,000 Investment payable 50,000 ------------ Total current liabilities 1,574,986 Stockholders' equity Convertible Preferred A stock, par value $0.001, 10,000,000 shares authorized, 498,914 shares issued and outstanding 498 Convertible Preferred B stock, par value $0.001, 10,000,000 shares authorized, 0 shares issued and outstanding -- Convertible 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, 4,847,202,154 shares issued and outstanding 4,847,201 Additional paid-in capital 17,057,454 Accumulated deficit (18,687,528) ------------ Total stockholders' equity 3,517,625 Less: Treasury stock at cost 100,000 ------------ Adjusted stockholders' equity 3,417,625 ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,992,611 ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. F-3
SEAMLESS WI-FI, INC. f/k/a ALPHA WIRELESS BROADBAND, INC. CONSOLIDATED STATEMENTS OF OPERATIONS June 30, 2007 2006 --------------- --------------- Revenues $ 42,717 $ 38,793 Cost of revenues 165,580 115,070 --------------- --------------- Gross Loss (122,863) (76,277) --------------- --------------- Expenses: Selling, general and admin. 715,732 624,273 Software development costs -- 1,795,369 Technology development costs -- 38,552 Consulting 598,932 1,446,351 Finance 265,000 345,000 Legal 86,988 291,445 Officer payroll 456,031 -- Write down of investments -- 1,345,384 Bad Debt 105,437 229,265 Depreciation and amortization 31,749 12,344 --------------- --------------- Total Expenses 2,259,869 6,127,983 --------------- --------------- Net loss from operations (2,382,732) (6,204,260) Other income/(expense) Adjustment of tax assessment -- 460,957 Gain on liquidation of debt 4,904,508 -- Interest income 143,130 111,093 Interest expense (291,535) (1,388,335) Other 836,298 652,630 --------------- --------------- Income/(Loss) before income taxes 3,209,669 (6,367,915) --------------- --------------- Income taxes (benefit) (note 7) -- -- --------------- --------------- Net Income/(Loss) 3,209,669 (6,367,915) =============== =============== Basic and Diluted income/(loss) per common shares $ 0.00 $ (0.05) =============== =============== Weighted average basic and diluted common shares 2,087,742,032 133,750,923 =============== =============== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
F-4
SEAMLESS WI-FI, INC f/k/a ALPHA WIRELESS BROADBAND, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY (DEFICIT) FOR THE YEAR ENDED JUNE 30, 2006 Convertible Preferred Stock Common Stock ----------------------------------------- -------------------------- Additional Shares Shares ($0.001 Par Value) Paid in a Par $.001 C Par $1.00 Amount Shares Amount Capital ------------ ------------- ------ ------ ------ ------- Balance June 30, 2005 976,819 700,000 $ 700,977 24,468,944 $ 24,469 $ 11,709,065 Common stock issued for Services 2,022,500 2,023 646,752 Preferred C stock issued for (300,000) (300,000) 5,655,190 5,655 294,346 SEAMLESS Preferred C returned to Treasury (100,000) (100,000) 100,000 Common stock issued for conversion of preferred A stock (31,278) (32) 312,780,520 312,780 4,767,946 Adjustments to equity Loss for fiscal year ended June 30, 2006 -------------------------------------------------------------------------------------- BALANCE JUNE 30, 2006 945,541 300,000 $ 300,945 344,927,154 $ 344,926 $ 17,518,109 =======================================================================================
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Accumulated Treasury Deficit Stock Total ------- ----- ----- Balance June 30, 2005 $ (15,817,276) $ - $ (3,382,765) Common stock issued for Services 648,775 - Preferred C stock issued for 0 SEAMLESS - - Preferred C returned to Treasury 100,000 (100,000) Common stock issued for - conversion of preferred A stock 5,080,694 Adjustments to equity 287,994 287,994 - Loss for fiscal year ended (6,367,915) (6,367,915) June 30, 2006 --------------------------------------------------- BALANCE JUNE 30, 2006 $ (21,897,197) $ 100,000 $ (3,833,217) ===================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. F-5
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY (DEFICIT) (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2007 Convertible Preferred Stock Common Stock --------------------------------------- --------------------------------- Additional Shares Shares ($0.001 Par Value) Paid in a Par $.001 C Par $1.00 Amount Shares Amount Capital ------------ ----------- ------ ------ ------ ------- Balance June 30, 2006 945,541 300,000 $ 300,945 344,927,154 $ 344,926 $ 17,518,109 Common stock issued for Services 36,005,000 36,005 124,045 Common stock issued for conversion of Preferred A stock to settle operating expenses (500) (1) 5,000,000 5,000 19,000 Common stock issued for conversion of preferred A stock (446,127) (446) 4,461,270,000 4,461,270 (2,067,832) Adjustment to additional paid in capital 1,464,132 Income for the fiscal year ended June 30, 2007 ------------------------------------------------------------------------------------------- BALANCE JUNE 30, 2007 498,914 300,000 $ 300,498 4,847,202,154 $ 4,847,201 $ 17,057,454 ===========================================================================================
[table continued]
Accumulated Treasury Deficit Stock Total ------- ----- ----- Balance June 30, 2006 $ (21,897,197)$ 100,000 $ (3,833,217) Common stock issued for Services 160,050 Common stock issued for conversion of Preferred A stock to settle operating expenses 24,000 Common stock issued for conversion of preferred A stock 2,392,992 Adjustment to additional paid in capital 1,464,132 Income for the fiscal year ended June 30, 2007 3,209,669 3,209,669 ---------------------------------------------------- BALANCE JUNE 30, 2007 $ (18,687,528)$ 100,000 3,417,625 ====================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. F-6
SEAMLESS WI-FI, INC. f/k/a ALPHA WIRELESS BROADBAND, INC CONSOLIDATED STATEMENTS OF CASH FLOWS June 30, 2007 2006 ----------- ----------- Cash flows used in operating activities Net loss from continuing operations $ 3,209,669 $(6,367,915) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation and amortization 31,749 12,344 Issuance of common stock for services 184,050 648,775 Issuance of common stock for payment of financing costs -- 984,000 Write-down of capitalized software costs -- 1,500,570 Write-down of investments -- 1,075,000 Cancellation of indebtedness (836,223) (649,080) Gain on liquidation of long term debt (4,904,508) -- Interest expense 214,829 -- Financing cost 265,000 345,000 Bad debt expense 105,438 229,265 Changes in operating assets and liabilities Investments -- 135,192 Accounts receivable (124,077) -- Accrued interest receivable (125,039) (111,093) Other receivable -- 135,192 Accounts payable (865) 141,464 Other current liabilities 81,204 (683,254) Payroll taxes payable (95,564) (468,394) Judgements payable -- (40,189) Payable to officer (51,665) -- ----------- ----------- Net cash used by operating activities (2,046,002) (3,113,123) Cash flows used in investing activities: Equipment -- (95,251) Technology (1,552,991) (91,000) Investments -- (85,000) Advances to related party (1,478,503) (132,099) ----------- ----------- Net cash used in investing activities (3,031,494) (403,350) Cash flows from financing activities Increase in current liabilities -- 44,014 Increase in long term debt 5,017,803 3,765,767 Repayment of notes payable (19,468) (79,500) Repayment of advances from officer -- (35,922) Repayment of related party advances -- (83,814) ----------- ----------- Net cash provided by financing activities 4,998,335 3,610,545 Increase (decrease) in cash (79,161) 94,072 Cash at beginning of period 94,342 270 ----------- ----------- Cash at end of period $ 15,181 $ 94,342 =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. F-7
SEAMLESS WI-FI, INC. f/k/a ALPHA WIRELESS BROADBAND, INC SUPPLEMENTAL DISCLOSURES OF CASH FLOWS JUNE 30, 2007 2006 ---- ---- 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 conversion of preferred A stock and settle operating expenses $2,416,992 $4,588,768 Common stock and preferred stock issued for acquisition of assets $ -- $ 200,000
SEE NOTES TO FINANCIAL STATEMENTS. F-8 SEAMLESS WI-FI, INC. F/K/A ALPHA WIRELESS BROADBAND, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1: ORGANIZATION AND OPERATIONS Prior to December 31, 1997, Seamless Wi-Fi, Inc (the "Company") formerly known as Alpha Wireless Broadband, Inc. 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 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 its 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 changed the name of its subsidiary from Skyy-Fi, Inc. to Seamless Skyy-Fi, Inc. 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. F-9 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 stated 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 to product specifications. 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 two to five 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 year ended June 30, 2007, there were no software development expenses. 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. F-10 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." There were no options granted during the years ended June 30, 2007 and 2006, respectively. NEW ACCOUNTING PRONOUNCEMENTS In February 2007, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 159, "Fair Value Option for Financial Assets and Financial Liabilities." SFAS 159 permits all entities to choose to measure eligible items at fair value at specified election dates. The Company is currently assessing the impact of adopting SFAS 159 on its consolidated financial statements. 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 F-11 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; at June 30, 2007 working capital deficiency is $292,120. The Company is actively pursuing additional 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 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 year ended June 30, 2007, the Company entered into a loan satisfaction agreement with Ayuda Funding, LLC. The agreement provided the Company would transfer 1,000,000 shares of 1st Global Financial Corporation common stock and 500,000 shares of DLR Funding, Inc. common stock, valued at $1 per share to Ayuda Funding, LLC as payment in full of loans and interest totaling $4,904,508. In addition, Ayuda Funding, LLC converted 76,027 shares of Series A Preferred Stock into 760,270,000 shares of common stock due to a default on one of the notes, valued at $2,392,992, and as a payment of the loan plus interest. NOTE 4: OTHER CURRENT LIABILITIES Other current liabilities consist of the following: Credit cards payable $ 316,228 (1) Payable to Integrated Communication 235,585 Various liabilities assumed from Alpha Tooling acquisition 276,187 -------- $828,000 ======== (1) Payments in varying amounts are due monthly with interest at 18% per annum. (2) Results from contract cancellation. NOTE 5: RELATED PARTY TRANSACTIONS F-12 The Company has made the following loans and advances to related parties as of June 30, 2007:
Allowance for Loan/Advance for uncollectible Balance Balance loans/advances Net ---------- ---------- ----------- Accepted Sales (A) $ 338,033 $ 338,033 Carbon Jungle, Inc. (B) 236,543 $ 236,543 -- DK Corp. (C) 98,160 98,160 -- DLR Funding (D) 667,159 667,159 1st Global Financial Service (E,F) 1,487,961 1,487,961 ---------- ---------- ----------- Total: $2,827,856 $ 334,703 $ 2,493,153 ========== ========== ===========
The above interest at annual rates ranges from 6% to 12%. The net balance at June 30, 2007 is $2,493,153 matures in the fiscal years ended June 30 as follows: 2008 $ 400,877 2009 506,599 2010 1,585,677 ---------- $2,493,153 =========== (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. (C) DK Corp is a business held by David Karst. (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. (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. (F) The President of the Company is an officer of this Company. The Company has recorded interest income on the above for the year ended June 30, 2007 in the amount of $ 236,132. During the year ended June 30, 2006, the Company owned 19% of the common stock of 1st Global Financial Services, Inc. (1st Global). Accepted Sales is a wholly owned subsidiary of 1st Global. Albert Reda, the Company's CEO, is a director of 1st Global. 1st Global is in the debit/credit carding processing business and is in the process of becoming a credit card processor. 1st Global may collaborate with the Company to market Seamless Skyy-Fi services to its merchants. The Company has made advances to 1st Global until they can obtain permanent financing from other sources. As of June 30, 2007, the Company owned 4.9 % of the common stock of 1st Global Services, Inc. This decrease of ownership was due to the Company having entered into a loan satisfaction agreement with Ayuda Funding, LLC. The agreement provided for the Company transferring to Ayuda Funding, LLC 1,000,000 shares of its 1st Global common stock and 500,000 shares of its DLR Funding, Inc. common stock as payment in full of loans and interest totaling $4,904,508. (See Note 3: Long Term Debt.) F-13 Creditor Trust The Company established a creditor trust pursuant to the terms and conditions of a trust agreement whereby shares of the Company's common stock were to be held in trust 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. 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 Albert Reda who is an officer and director of the Company. 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. 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 Company's authorized common stock and preferred stock 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 securities issued for which the consideration so fixed paid or delivered shall be fully paid stock and the holder of such securities 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 securities 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 then holders of the outstanding shares of the common stock. 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 FISCAL YEAR ENDED JUNE 30, 2007, THE FOLLOWING SECURITIES WERE ISSUED: F-14 Ayuda Funding, LLC converted 175,000 shares of Series A Preferred Stock into 1,750,000,000 shares of common stock. Ayuda Funding, LLC converted 76,027 shares of Series A Preferred Stock into 760,270,000 shares of common stock to pay back Ayuda in the amount of $2,392,992. 36,005,000 shares of common stock were issued for services and expensed for officer's compensation at $160,050. 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. 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. DURING THE FISCAL YEAR ENDED JUNE 30, 2006, THE FOLLOWING SECURITIES WERE ISSUED: 2,022,500 shares of common stock were issued for operational services valued at $648,775. Ayuda Funding LLC converted 24,703 shares of Series A preferred stock into 247,030,520 shares of common stock, of which $773,145 was used to pay judgments, and pay back Ayuda Funding LLC in the amount of $617,575. Adobe Oil acquired 400,000 shares of Series C preferred stock from Seamless P2P valued at $400,000, which 300,000 shares were converted into 5,656,537 shares of common stock and 100,000 shares were returned to Treasury. See Note 6: Related Party Transaction. Windsor Professional Plaza LLC converted 6,575 shares of Series A preferred stock into 65,750,000 shares of common stock of which 10,000,000 shares of common stock were issued for consulting services and expensed at $473,000. 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 $20,000,000 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 $7,000,000 for both years ended June 30, 2007 and 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 June 30, 2007. NOTE 8: COMMITMENTS AND CONTINGENCIES LEASE The Company has entered into lease agreements for office space and an automobile which expire on August 31, 2010 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 years ended June 30, 2007 F-15 and 2006 was $47,222 and $35,136, respectively. Remaining commitments under the operating leases are as follows: Fiscal year ending June 30: 2008 $ 53,687 2009 50,340 2010 50,340 LEGAL PROCEEDINGS The Company is a party to the following legal proceedings: GLOBALIST V. INTERNET BUSINESS'S INTERNATIONAL, INC. ET AL On March 30, 2006, the Superior Court of the State of California, County of Orange, entered a judgment against the Company and other defendants, jointly and severally, in the total amount of $452,714.79 in the matter of Globalist Internet Technologies, Inc. vs. Iron Horse Holdings, Inc., et al. EMPLOYMENT CONTRACT The Company has an employment contract with their Chief Executive Officer, Albert Reda that calls for a base salary of $240,000 for the year ended June 30, 2007 and thereafter, a base annual salary of $300,000 increasing to $360,000 once the Company is profitable, from July 2007 until its expiration date in June 2012. In addition, the contract includes a bonus that will be determined by the Company's Board of Directors. Severance for the remainder of any term is also required in the event of termination without cause. 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. F-16 Information on reportable segments is as follows: Fiscal year ended June 30, 2007 2006 ----------- ----------- Wi-Fi ISP net sales $ 42,717 $ 38,793 Cost of Wi-Fi sales (165,580) (115,070) Cost and expenses (2,551,404) (7,516,318) Other net income 5,883,936 1,224,680 ----------- ----------- Net loss $ 3,209,669 $(6,367,915) =========== =========== NOTE 10: SUBSEQUENT EVENTS On August 7, 2007, the Company's board of directors approved a distribution to its shareholders of 400,000 shares of 1st Global Financial Corporation common stock owned by the Company which had zero carry value on the Company's books. On September 14, 2007, one share of 1st Global Financial Corporation common stock was distributed for each 20,000 shares of Company common stock held by Company shareholders as of the record date, September 7, 2007. Company common stock shareholders owning less than 20,000 shares of Company common stock were not entitled to receive any distribution as it was not economically feasible for the Company to make cash in lieu payments or issue fractional shares. During the quarter ending September 30, 2007, $75,000 of cash was used to pay professional fees per agreed settlement, see Note 8: Commitment & Contingencies-Legal Proceedings, with the approval of the Company's Board of Directors. F-17 EX-10.6 2 seamless_ex1006.txt EXHIBIT 10.6 Exhibit 10.6 LOAN AGREEMENT AGREEMENT made this 26TH DAY OF OCTOBER, 2006 ("Agreement") between SEAMLESS WI-FI, INC., C/O ALBERT REDA, residing at 15421 SO. CARMENTIA RD., SUITE A, SANTA FE SPRINGS, CA 90670 ("Borrower") and AYUDA FUNDING CORP., a Nevada corporation, maintaining an address at 2050 Russett Way, Suite 397, Carson City, NV 89703 ("Lender"). Unless otherwise indicated herein, all dollar amounts referred to in this Agreement, including the symbol $, refer to United States currency. WHEREAS: The Borrower has requested that the Lender provide a loan in the amount of ONE MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS ($1,250,000). WHEREAS: The Lender is willing to furnish such loan only upon the terms and conditions contained herein including, without limitation, the execution, delivery and where appropriate, the filing and/or recording of certain collateral security instruments. NOW THEREFORE: In consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is agreed as follows: DEFINITIONS: As used in this Agreement, the following terms shall have the following meanings: "COLLATERAL" shall mean 100,000 PREFERRED SHARES of Seamless Wi-Fi, Inc., a Nevada corporation. "DEFAULT" shall mean any event specified in Section 8.1 hereof. "EVENT OF DEFAULT" shall mean any event specified in Section 8.1 hereof. "FAIR MARKET VALUE" shall mean with respect to each of the shares included in the Collateral and for any day: if the principal market for the Collateral is a national securities exchange, the average of the highest and lowest sales prices per share of the Collateral on such day as reported by such exchange or on a composite tape reflecting transactions on such exchange, or, if the principal market for the Collateral is not a national securities exchange and the Collateral is quoted on The Nasdaq Stock Market (`Nasdaq"), and, if the actual sales price information is available with respect to the Collateral, the average of the highest and the lowest sales price per share of the Collateral on such day on Nasdaq, or if such information is not available, the average of the highest bid and lowest asked prices per share of the Collateral on such day on Nasdaq, or if the principal market for the Collateral is not a national securities exchange and the Collateral is not quoted on Nasdaq, the average of the highest bid and lowest asked prices per share of the Collateral on such day as reported on the OTC Bulletin Board Services or by the National Quotation Bureau, Inc. or a comparable service. "INDEX PRICE" shall mean the closing bid price as quote on the exchange/medium on which the Collateral is normally traded on the date specified herein. "LIEN" shall mean, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect to such asset. "LOAN" shall mean the amount of monies borrowed by Borrower from Lender under Section 2.1 hereof. "LOAN AGREEMENT" shall mean this Loan Agreement including all Exhibit and Schedules hereto as amended or supplemented from time to time. "LOAN DOCUMENTS" shall mean collectively, this Loan Agreement, the Closing Summary, the Note and the Pledge Agreement, and all other agreements, documents, instruments or certificates delivered in connection with the Loan Agreement. "MATURITY" is the date on which this Loan is due and payable. "MATURITY DATE" is the maturity date for this Loan Agreement and Note, which is the earlier of (a) the date payment is accelerated pursuant to an Event of Default and (b) OCTOBER 26, 2009. "NOTE" shall mean the full recourse promissory note described in Section 2.1 hereof and attached hereto as Exhibit 2.1(b) or any full recourse promissory note issued in exchange therefore. "OBLIGATION(S)" shall mean all indebtedness and other liabilities and obligations of the Borrower to the Lender of every kind, nature and description, present or future, direct or indirect, secured or unsecured, joint or several, absolute or contingent, matured or not, in any currency, due or to become due, now existing or hereafter arising, regardless of how they arise of by what agreement or instrument or whether evidenced by any agreement or instrument and whether as principal or surety, including, without limitation, (i) the payment in full when due of the Loan and all interest thereon, the payment of all amounts payable by the Borrower to the Lender under the terms of the Loan Agreement, the Note or any other Loan Document and the payment and performance in full when due of all other liabilities and obligations of the Borrower to the Lender under the Loan Agreement, the Note and the other Loan Documents and all notes and other evidences or indebtedness issued in exchange or substitution for the Note and (ii) the observance and performance by the Borrower of the obligations to be observed and performed by it hereunder or under any related agreement, instrument or document. "PERSON" shall mean any individual, corporation, company, voluntary association, partnership, joint venture, trust, unincorporated organization or government (or any agency, instrumentally or political subdivision thereof). "PLEDGE AGREEMENT" shall mean the pledge agreement attached hereto as Exhibit 5.1. "PRIME RATE" shall mean the posted prime rate of JP Morgan Chase New York, New York on any given day. USE OF DEFINED TERMS. All terms defined in this Loan Agreement shall have such defined meanings when used without definition in the Note, Pledge Agreement, certificates or other documents made or delivered pursuant this Loan. LENDER'S DISCRETION. The terms "satisfactory to," "determined by," "acceptable to," "shall elect," "shall request," or similar terms used in this Loan Agreement or any attachment or exhibit made part of this Agreement, shall mean satisfactory to, at the election of, determined by, acceptable to, or requested by the Lender in its sole discretion, unless otherwise specifically provided for or excepted. STATEMENTS OF KNOWLEDGE. Any statements, representations or warranties which are based upon the knowledge of the Borrower shall be deemed to have been made after due inquiry with respect to the matter in question but without Borrower being required to seek an opinion of counsel with respect hereto. AMOUNT OF LOAN LOAN. In accordance with the terms and conditions of this Loan Agreement, the Lender agrees to advance to Borrower funds the sum of which shall be determined herein and attached to and made part of this Agreement as Exhibit 2.1(a) (Closing Summary), which sum shall be delivered within three (3) business days after confirmation of receipt and final acceptance of Collateral. This Loan Agreement shall be evidenced by a full recourse Note attached hereto as Exhibit 2.1(b) which shall have a term commencing on the date hereof and terminating on the Maturity Date. The Maturity Date may be extended by mutual agreement of the Lender and Borrower on the same terms and conditions as set forth herein or on such other terms and conditions as the Lender and Borrower may mutually agree, provided, however that the term of this Agreement may not exceed four (4) years. Lender agrees that upon the payment of a fee equal to one percent (1%) of the principal amount of the Loan, the Maturity Date may be extended for an additional period of one year. This Loan is a full recourse obligation of the Borrower. FEES AND INTEREST. The Lender will assess a funding fee in the amount of $175,000.00 and will deduct this fee from the principal upon delivery of the Loan proceeds. The Borrower shall pay to the Lender interest on the unpaid principal amount of the Loan, for the period commencing on the date hereof until such Loan is paid in full at a rate per annum equal to 6.5%. Interest on the Loan shall be computed on the basis of a 360-day year and shall be due and payable quarterly, commencing on JANUARY 26, 2007 for the preceding three (3) months, or longer period for the initial interest payment computed from the date of the Note through OCTOBER 26, 2009. PRINCIPAL PAYMENT. Principal payment of the Note shall be due and payable OCTOBER 26, 2009. The principal payment due shall increase by and become equal to the sum total of Borrower's obligations to Lender then outstanding on OCTOBER 26, 2009. APPLICATION OF RECURRING PAYMENTS. Funds received from or on behalf of the Borrower pursuant to the terms and provisions of the Loan Agreement and Note shall be applied in the following manner: The payment of fees, penalties and expenses pursuant to any provision of the Loan Documents, then The payment of accrued and/or unpaid interest on the Note, then When specifically allowed by the Loan Agreement, applied against the principal balance. PREPAYMENT. No prepayment of principal is permitted the first TWENTY FOUR (24) months of the note, then Thereafter, Borrower may prepay a portion or all of the principal on any anniversary date of the Loan Agreement subject to the following criteria: Borrower shall Provide Lender 30 days written notice of intent to prepay, and Shall advise Lender by notice of the amount specifically intended to prepay and the date on which the Borrower intends to make said payment, and Pay a fee equal to ten percent (10%) of the outstanding principal balance. Funds accepted for repayment of principal shall be applied to Borrower's obligation in accordance with the protocol established in Section 2.4(a), (b), and (c). CLOSING. Closing shall occur as of OCTOBER 26, 2006. Net loan proceeds will be wired to the Borrower's designated account below using the schedule outlined in the closing summary: DELIVERY OF COLLATERAL. Under the instructions of the Lender, the Borrower will deliver 100,000 PREFERRED shares of SEAMLESS WI-FI, INC., a Nevada corporation (OTCBB:SLWF.OB) via electronic format to the Lender's designated account below: Name: [_____] DTC: [_____] Account Name: [_____] Account Number: [_____] COLLATERAL LENDER'S RIGHTS TO COLLATERAL. At any time after the date first above written and after Borrower's delivery to Lender of the Collateral, Lender shall be entitled from time to time, in its sole discretion to take any of the following actions with respect to the Collateral. Hold all or a portion of the Collateral as security for the obligations hereunder and under the Note, and pursuant to the terms of the Pledge Agreement attached hereto as Exhibit 5.1; or Sell, transfer title to, encumber or otherwise dispose of all or a portion of the Collateral, free and clear of any lien or encumbrances pursuant to and in reliance on Borrower's representations set forth in Section 4 hereof as if the Collateral were the Collateral were Lender's own property; or Pledge, loan, gift or otherwise dispose of all or a portion of the Collateral free and clear of any lien or encumbrances; or Commingle the Collateral with other assets or securities of Lender. RETURN OF COLLATERAL UPON REPAYMENT OF LOAN. Upon payment of the Loan amount due, Lender shall return the appropriate number of shares based on the following formula: original market value of Collateral, as of the closing date of the Loan, divided by the closing market price per share of the Collateral stock on the date the Loan is repaid or the original number of shares given as Collateral, whichever results in the lowest number of shares. RETURN TO BORROWER ON APPRECIATION OF COLLATERAL. Upon payment of the Loan a maturity, Borrower shall be entitled to receive, at the Lender's option, a cash or Collateral credit against Borrower's liability to Lender in an amount equal to 0% percent of any appreciation in the value of the Collateral over the Fair Market Value on the trading day before closing, with the remainder for the account of the Lender. ASSIGNMENT OF PROCEEDS OF COLLATERAL. As to any of the Collateral retained by Lender in its possession, and while any Obligations to Lender remain outstanding and unpaid, Borrower shall assign any and all proceeds and products of such Collateral and assign all dividends and distributions on such Collateral in favor of Lender, which shall be deemed additional fee compensation to Lender for the making of the loan to Borrower and shall be the sole property of Lender. Such proceeds shall not be considered part of the Collateral nor additional security held by Lender.] LOSS OF OWNERSHIP RIGHTS IN SHARES. To the extent Lender exercises its option to and does sell or otherwise dispose of a portion or all of the Collateral, pursuant to Section 3.1, Borrower acknowledges that Borrower shall no longer retain any ownership rights in the same, including but not limited to no longer retaining any share voting rights and the right to receive any proceeds or dividends on such shares, until such time as Borrower fully repays the Obligations and the Collateral is accordingly returned to Borrower. ACKNOWLEDGMENT OF BORROWER. The Borrower acknowledges and agrees to the rights granted to the Lender to, among other things, sell, transfer title to, or dispose of the Collateral whether or not an Event of Default has occurred and is continuing. REPRESENTATIONS AND WARRANTIES OF BORROWER Borrower represents and warrants to Lender that: NO LIENS OR RESTRICTIONS. The Borrower is the direct legal and beneficial owner of record of the Collateral as of the date of this Loan Agreement. The Collateral is free and clear of any Lien. Collateral is free of any restriction, including restrictive legends. The Collateral is freely tradable and transferable. CONSENTS. This Loan Agreement and the Loan Documents executed by Borrower constitute valid and binding obligations of Borrower, enforceable in accordance with their respective terms. The Borrower represents and warrants that no consent of any other party and no consent, license, approval, or authorization of any governmental authority is required in connection with the execution, delivery and performance of this Loan Agreement and the Loan Documents herewith. NO CONFLICTS. The execution and delivery of this Loan Agreement and other Loan Documents executed by Borrower do not conflict with or result in the breach of any agreement, mortgage or other instrument under which Borrower or any of the Collateral is subject. The execution and delivery of this Loan Agreement and other Loan Documents executed by Borrower does not cause a violation or conflict of any law, rule, or regulation of any governmental agency with jurisdictional authority applicable to him or the Collateral. LITIGATION. There is no action or proceeding pending, contemplated or threatened against Borrower before or by any court, arbitrator, grand jury or administrative agency, any governmental authority, bureau, agency, or instrumentality which might result in a material adverse change in the financial condition of Borrower. NO DEFAULTS. Borrower is not in default in the payment or performance of any of Borrower obligations or in the performance of any contract, agreement or other instrument to which Borrower is a party or by which any of Borrower's assets or properties may be bound. ISSUANCE DATE OF SHARES CONSTITUTING COLLATERAL. The shares of common stock of SEAMLESS WI-FI, INC. representing the Collateral were issued to the Borrower at least two (2) years prior to the date of this Agreement. CONDITIONS TO LENDER'S OBLIGATIONS The obligation of the Lender to make the Loan is subject to the Lender's satisfaction of the following conditions precedent: PLEDGE. The Borrower shall have delivered to the Lender: The Note, in the form of Exhibit 2.1(b) attached hereto, duly executed by the Borrower and The Pledge Agreement, in the form of Exhibit 5.1 attached hereto, duly executed by the Borrower, and The shares of common stock in form and substance satisfactory to the Lender, in DTC format representing the Collateral, accompanied by stock powers duly executed by the Borrower in blank and "signature guaranteed" by any member firm of a registered national securities exchange or a commercial bank in form and substance satisfactory to transfer title to the Collateral, and An irrevocable proxy in the form and substance satisfactory to the Lender, duly executed by the Borrower, and An undertaking in the form and substance satisfactory to the Lender, duly executed by the Borrower. LEGAL MATTERS. All matters and all documentation and other instruments in connection with the Loan shall be satisfactory in form and substance to Lender and its counsel, and counsel to Lender shall have received copies of all documents, which it may reasonably request in connection with the Loan. REGULATIONS. The making of the Loan by Lender to Borrower and the other transactions contemplated hereby, including but not limited to the execution, delivery and performance of the Pledge Agreement and Lender's right to sell, transfer, encumber or otherwise dispose of all or a portion of the Collateral pursuant to Section 3.1 hereof shall be in compliance exclusively with applicable New York and United States of America laws and government regulations imposed upon Lender and the Borrower. LIEN SEARCHES. Appropriate UCC, tax and judgment and other lien, property and title searches of public records with respect to Borrower shall have been obtained by Lender and shall be satisfactory in all respects to Lender and its counsel. Borrower shall pay the cost of obtaining such searches in a sum not exceeding $1,000. NO JUDGMENT AND LITIGATION. Lender shall have received satisfactory evidence that: There exists no judgment, order, injunction or other restraint issued or filed which prohibits the making of the Loan or the consummation of the other transactions contemplated hereby, and No action, suit, litigation or similar proceeding at law or in equity by or before any court, governmental authority, or agency exists or is threatened with respect to the transactions contemplated hereby. AFFIRMATIVE COVENANTS Borrower hereby covenants that as long as any obligation to Lender remains outstanding and unpaid, Borrower shall, unless otherwise consented to in writing by Lender: NOTICES. Promptly give notice to the Lender of: The occurrence of any Default or Event of Default under this Loan agreement or any other Loan Document, or Any default whether or not any requirement for the giving of notice or the lapse of time or both has been satisfied under any instrument or agreement of Borrower which could have a materially adverse effect on the Collateral. NOTICE OF LITIGATION AND OTHER MATTERS. Borrower shall immediately give notice to the Lender of any of the following events, describing the substance and status of the matter involved: The institution of any investigation or proceeding by any governmental authority or agency; or Any action, suit, proceeding which names as a party or may affect the Borrower involving individually amounts greater than $1,000,000 and in the aggregate greater than $1,000,000. NEGATIVE COVENANTS Borrower covenants that so long as any of the Obligations remains outstanding and unpaid, the Borrower shall not without Lender's express prior written consent, create, assume or suffer to exist any Lien of any kind upon any of the Collateral, except for liens and security interests in favor of the Lender. EVENT OF DEFAULT AND REMEDIES EVENTS OF DEFAULT. An "Event of Default" shall exist if any one or more of the following shall occur: Failure by Borrower to pay the principal of the Note within three (3) business days of the date when due, whether on the date fixed for payment or by acceleration or otherwise, or the failure by Borrower to pay any interest on the Note within three (3) business days of the date such interest becomes due; or If any representation or warranty made by Borrower in this Loan Agreement or in any certificate or statement furnished at the time of Closing or pursuant to this Loan Agreement or any other Loan Document shall prove to have been untrue or misleading in any material respect at the time made; or Default by Borrower in the performance or observance of any covenant or agreement contained in this Loan Agreement or default in any other Loan Document which is not cured within any applicable grace period provided for therein, if any; or A final judgment for the payment of money in excess of $1,000,000 shall be rendered against Borrower, and such judgment shall remain undischarged for a period of sixty (60) days from the date of entry thereof unless within such sixty (60) day period such judgment shall be stayed, and appeal taken there from and the execution thereon stayed during such appeal; or If the Borrower shall default in respect of any evidence of indebtedness or under any agreement under which any notes or other evidence of indebtedness of Borrower are issued, if the effect thereof is to cause, or permit the holder or holders thereof to cause, such obligation or obligations in an amount in excess of $1,000,000 in the aggregate to become due prior to its or their stated maturity or to permit to acceleration thereof; or If an Event of Default under the Pledge Agreement of even date herewith shall occur and any grace period provided for therein shall have expired; or If Borrower shall make a general assignment for the benefit of creditors or consent to the appointment of a receiver, liquidator, custodian, or similar official of all or substantially all of Borrower's properties, or any such official is placed in control of such properties, or Borrower admits in writing Borrower's inability to pay Borrower's debts as they mature, or the Borrower shall commence any action or proceeding or take advantage of or file under any federal or state insolvency statute, including, without limitation, the United States Bankruptcy Code, seeking to have an order for relief entered with respect to Borrower or seeking adjudication as a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, liquidation, dissolution, or other relief with respect to Borrower or Borrower's debts; or There shall be commenced against Borrower any action or proceeding of the nature referred to in subsection (g) of this Section 8.1, or seeking issuance of a warrant of attachment, execution, distraint, or similar process against all or any substantial part of the property of Borrower, which results in the entry of an order for relief which remains undismissed, undischarged or unbonded for a period of sixty (60) days; or The Pledge Agreement shall cease at any time after its execution and delivery and for any reason to create a valid and perfected first priority security interest in the Collateral and to any other property subject thereto or the validity or priority of such security interest shall be contested by Borrower or by any other Person; or any of the other Loan Documents shall at any time after their execution and delivery for any reason cease to be in full force and effect or shall be declared null or void, or the validity or enforceability thereof shall be contested by Borrower or by any other Person; or The Fair Market Value of the Collateral shall at any time be less than eighty percent (80%) of the amount of the Obligations. RIGHTS UPON AN EVENT OF DEFAULT. Upon the occurrence of an Event of Default, the principal amount of the Note, together with any accrued and unpaid interest thereon, shall be immediately due and payable without notice or demand, presentment, or protest, all of which are hereby expressly waived. At any time after the date of this Agreement, Lender shall thereupon have the rights, benefits, and remedies afforded to it under any of the Loan Documents with respect to the Collateral and may take, use, sell or otherwise encumber or dispose of the Collateral as if it were the Lender's own property. Borrower agrees that Lender may or may not proceed, as Lender determines in its sole discretion, with any or all other rights, benefits, and remedies that it may be entitled against the Borrower. Anything herein to the contrary notwithstanding, except as provided for below, the Borrower agrees, for itself, its representatives, successors, endorsees and assigns, that: the Borrower and each of its representatives, successors, assigns or affiliates shall be personally liable for the Obligations; and the Lender and each such representative, successor, endorsee or assignee, in its sole discretion, may look to the property encumbered by the Pledge Agreement and/or the other instruments of security that secure the Note for payment of the Obligations, or may make any claim or institute any action or proceeding against the Borrower or any representatives, successors, assigns or affiliates of the Borrower for any deficiency remaining after collection upon the Collateral or any loss suffered by Lender, or its representatives, successors, endorsees or assigns. Borrower shall also be liable for any claims, losses or damages suffered by the Lender as a result of: Damages arising from any fraud, misrepresentations or the breach of any covenant or agreement by the Borrower; Damage to the pledged Collateral resulting from gross negligence or intentional acts of the Borrower; and/or Failure to pay taxes or other property-related liens by the Borrower; and/or Damages arising from the failure to comply with any and all laws by the Borrower. RE-DELIVERY OF COLLATERAL AND/OR PAYMENT BY BORROWER FULL REPAYMENT OF THE OBLIGATIONS. In the event of Borrower's timely full repayment of the Obligations, and provided that Borrower is or was not otherwise in default under this Loan Agreement which default has not been or was not timely cured (in which event, Lender shall be entitled to exercise its rights as otherwise set forth in this Loan Agreement in addition to Lender being entitled to retain as its sole property and/or to sell the Collateral, to the extent Lender has not already exercised its rights under Section 3.1, free and clear of any encumbrances or any claims by Borrower), Lender shall return the Collateral to Borrower, provided however that should the value of the Collateral then be greater than the value of the Collateral at Closing, at the option of Borrower, either Lender shall be entitled to retain as its sole property that portion of the Collateral that is equal in value to one hundred percent (100%) of any appreciation in the value of the Collateral over the value at Closing, or Borrower shall pay Lender in cash or Collateral an amount equal in value to one hundred percent (100%) of any appreciation in the value of the Collateral over the value at Closing. FAILURE TO FULLY REPAY OBLIGATIONS OR OTHER DEFAULT BY BORROWER. In the event of Borrower fails to fully and timely repay the Obligations, and provided that Borrower is or was not otherwise in default under this Loan Agreement which default has not been or was not timely cured, Lender shall be entitled to retain as its sole property and/or to sell the Collateral, to the extent Lender has not already exercised its rights under Section 3, free and clear of any encumbrances or any claims by Borrower. Provided, however, that in the event that Borrower is or was otherwise in default under this Loan Agreement which default has not been or was not timely cured, Lender shall be entitled to exercise its rights as otherwise set forth in this Loan Agreement in addition to Lender being entitled to retain as its sole property and/or to sell the Collateral, to the extent Lender has not already exercised its rights under Section 3, free and clear of any encumbrances or any claims by Borrower. DELIVERY LOCATION. Any return or delivery of the Collateral, or a portion thereof, to Borrower shall be at the address specified herein for the giving of notices or to such other person and address as Borrower specifies in writing to Lender. Any payment by Borrower to Lender shall be at the address specified herein for the giving of notices or to such other person and address as Lender specifies in writing to Borrower. MISCELLANEOUS REDELIVERY OF COLLATERAL. Lender agrees that, within ten (10) business days of Borrower's full payment of the Obligations, to return the Collateral to Borrower at the address specified herein for the giving of notices or to such other person and address as Borrower specifies in writing to Lender. NOTICES. All notices, requests or other communications to either party by the other shall be in writing and shall be deemed duly given on the earlier of the date the same is delivered in person or when deposited in the United States mail, certified or registered, postage prepaid, return receipt requested, to the names and addresses listed on the front page of this Agreement. Either party may designate by notice in writing to the other a new address to which notices, requests and other communications hereunder shall be given. CONTROLLING LAW. The Loan Agreement, the Note and all instruments or agreements delivered hereunder shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to the choice of law provisions. PROVISIONS SEVERABLE. If any of the provisions of this Loan Agreement shall be or become illegal or unenforceable in whole or in part, for any reason, the remaining provisions shall nevertheless be deemed valid, binding and subsisting. FURTHER ASSURANCES. Borrower hereby agrees to execute and deliver such further instruments and documents as may be reasonably requested by Lender in order to carry out fully the intent and accomplish the purposes of this Loan Agreement and the transactions referred to herein. Borrower agrees to take any action which Lender may reasonably request in order to obtain and enjoy the full rights and benefits granted to Lender by this Loan Agreement, and each other agreement, instrument and document delivered to Lender in connection herewith, including specifically, at Borrower's own cost and expense, the use of its best efforts to assist in obtaining consent of any government agency or self-regulatory organization for an action or transaction contemplated by this Loan Agreement which is then required by law. SURVIVAL OF AGREEMENTS. Except as herein provided, all agreements, representations and warranties made herein and in any certificate delivered pursuant hereto, shall survive the execution and delivery of this Loan Agreement and the Note, and shall continue in full force and effect until the indebtedness of Borrower under the Notes and all other Obligations have been paid in full. ENTIRE AGREEMENT. This Loan Agreement and other Loan Documents contain the entire agreement between the parties hereto and may be amended, changed or terminated only by an instrument in writing signed by the parties hereto. WAIVERS. No failure to exercise and no delay in exercising, on the part of Lender, any right, power or privilege under this Loan Agreement, or under the Note, or any agreement or instrument delivered to Lender hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise Pledge Agreement or the Note or any agreement or instrument delivered hereunder shall be effective unless executed by Lender and any such waiver shall not constitute a waiver in the future of any of the provisions of any of the foregoing documents, except as may be specifically provided in any such waiver. No notice to Borrower from Lender shall entitle Borrower to any other or further notices in any circumstance unless expressly provided for in such notice or this Loan Agreement. No course of dealing between Borrower and Lender shall operate as a waiver of any of the rights of Lender under this Loan Agreement. GENDER AND NUMBER. Words used herein, regardless of the number of gender specifically used, shall be deemed and construed to include any other number, singular or plural and any other gender, masculine, feminine or neuter, as the context requires. HEADINGS. The headings used in this agreement are solely for the convenience of reference, and are not part of this agreement, and are not to be considered in construing or interpreting this agreement. COUNTERPARTS. This Loan Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. SUCCESSORS AND ASSIGNS. This Loan Agreement shall be binding upon the inure to the benefit of Borrower and Lender and their respective successors and assigns except that the rights and obligations of Borrower hereunder may not be assigned or transferred in any respect. The provisions of this Loan Agreement are intended to be for the benefit of any holder, from time to time, of the Note and shall be enforceable by any such holder, whether or not an expressed assignment to such holder of rights under this Loan Agreement has been made by Lender or its successors or assigns. CONFIDENTIALITY. This Loan Agreement and other Loan Documents are to be kept confidential and are not to be reproduced in any manner whatsoever for Persons other than the parties hereto. Each Party agrees not to circumvent the legitimate interests of the other party and to maintain this transaction in strict confidentiality. Each party agrees to maintain the confidentiality of any trade secrets, techniques, and contracts and contacts of the other party. Each party agrees not to engage in unauthorized communications (i.e. telephone calls, written inquiries, etc.) with the other party's banks, insurers. CONSENT TO JURISDICTION; VENUE; JURY TRIAL WAIVER. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to choice of law provisions. Borrower hereby consents to the exclusive jurisdiction of the courts sitting in New York, New York, United States of America, as well as to the jurisdiction of all courts from which an appeal may be taken from the aforesaid courts, for the purpose of any suit, action or other proceeding by any party to this Agreement, arising out of or related in any way to this Agreement. Borrower hereby irrevocably and unconditionally waives any defense of an inconvenient forum to the maintenance of any action or proceeding in any such court, any objection to venue with respect to any such action or proceeding and any right of jurisdiction on account of the place of residence or domicile of any party hereto. The Undersigned hereby irrevocably and unconditionally waives the right to a jury trial in connection with any claim arising out of or related to this Agreement. In addition, Borrower consents to the service of process by United States certified or registered mail return receipt requested, or Federal Express or similar courier delivery addressed to Borrower at the address provided herein. Borrower also, to the extent permitted by law, waives trial by jury in any action brought on or with respect to this Loan Agreement and agrees that in the event this Loan Agreement shall be successfully enforced by suit or otherwise, Borrower will reimburse the Lender or holder or holders of Obligations, upon demand, for all reasonable expenses incurred in connection therewith, including, without limitation, reasonable attorneys' fees and expenses. IN WITNESS WHEREOF, the parties hereto cause this Loan Agreement to be duly executed and delivered as of the day and year first above written. BORROWER: LENDER: SEAMLESS WI-FI, INC., C/O ALBERT REDA AYUDA FUNDING CORP. By: /s/ Albert Reda By: /s/ Manuel M. Bello ----------------------------------------- -------------------- IT IS SPECIFICALLY AGREED AND UNDERSTOOD THAT THE TRANSMITTAL OF THIS LOAN AGREEMENT DOES NOT CONSTITUTE AN OFFER BY THE PROPOSED LENDER AND THAT THE PROPOSED LOAN AGREEMENT SHALL NOT BE BINDING UPON THE PROPOSED LENDER UNLESS ACTUALLY SIGNED BY THE LENDER. MOREOVER, IT IS SPECIFICALLY AGREED THAT THE ENCLOSED DOES NOT REPRESENT A NOTE OR MEMORANDUM OF AGREEMENT UNTIL EXECUTED AND PERFORMED. THE LENDER SHALL BE UNDER NO OBLIGATION TO PROCEED WITH THE CONSUMMATION OF THIS TRANSACTION. ACKNOWLEDGEMENT STATE OF } - ------------------------------------------------------ } } COUNTY OF } - ------------------------------------------------------ On October 25, 2006, before me personally came Seamless Wi-Fi, Inc., c/o Albert Reda, who resides at 15421 So. Carmentia Rd., Suite A, Santa Fe Springs, CA 90670, to me known, and known to me to be the individual described in, and who executed the foregoing Agreement, and duly acknowledged to me that she executed the same. ________________ Notary Public EXHIBIT 2.1(B) FULL RECOURSE PROMISSORY NOTE This 26TH DAY OF OCTOBER, 2006 FOR VALUE RECEIVED, the undersigned, SEAMLESS WI-FI, INC., C/O ALBERT REDA (the "Borrower"), hereby promises to pay AYUDA FUNDING CORP. (the "Lender") in accordance with the terms and conditions of the Loan Agreement attached hereto dated OCTOBER 26, 2006 (the "Loan Agreement"), the principal amount of the Loan and interest on the unpaid principal amount of the Loan from the date thereof at the rates per annum and for the periods set forth in and established by the Loan Agreement. Capitalized terms that are not defined herein have the respective meanings ascribed to them in the Loan Agreement. All indebtedness outstanding under this Note beyond the Maturity Date, whether by acceleration or otherwise, shall be subject to incur interest, computed in the same manner as interest on this Note prior to Maturity and all such interest shall be payable as provided in the Loan Agreement. The Borrower has pledged to the Lender 100,000 PREFERRED SHARES of SEAMLESS WI-FI, INC., a NEVADA corporation (the Collateral) pursuant to a Pledge Agreement dated OCTOBER 26, 2006 executed by Borrower in favor of the Lender. The security interest shall assign any and all proceeds and products of the Collateral and assign all dividends and distributions on the Collateral in favor of the Lender, up to the amount of the Obligations. Anything herein to the contrary notwithstanding, the obligation of the Borrower to make payments of interest shall be subject to a limitation that interest payments shall not be required of the Borrower to the extent that the Lender's charging thereof would violate the law or laws applicable to the Lender which limit rates of interest. If the interest on the indebtedness evidenced hereby would otherwise exceed the highest lawful rate, only such highest lawful rate will be assessed the Borrower. Any amount of interest charged the Borrower by the Lender in excess of such highest lawful rate will be assessed the Borrower. Any amount of interest charged the Borrower by the Lender in excess of such highest lawful rate shall be deemed paid and accepted as a reduction of the principal balance of the Loan. Payment of both principal and interest on this Note shall be made at the office of the Lender or such other place as the Lender shall designate to the Borrower in writing, in lawful money of the United States of America in immediately available funds when due and payable as set forth in the Loan Agreement. This Note is hereby made part of the Loan Agreement as referenced and is secured in the manner provided therein and is subject to the terms and conditions thereof and is entitled to the benefits thereof. Upon the occurrence of any Event of Default, the principal amount and all carried interest on this Note shall be immediately due and payable in the manner and with the effect provided for in the Loan Agreement. This Note is a full recourse Note, and anything herein to the contrary notwithstanding (except as provided below), the Borrower agrees, for itself, its representatives, successors, endorsees and assigns, that: the Borrower and each of its representatives, successors, assigns or affiliates shall be personally liable for the Obligations under this Note; and The Lender and each such representative, successor, endorsee or assignee, in its sole discretion, may look to the property encumbered by the Pledge Agreement and/or the other instruments of security that secure the Note for payment of the Obligations, or may make any claim or institute any action or proceeding against the Borrower or any representatives, successors, assigns or affiliates of the Borrower for any deficiency remaining after collection upon the Collateral or any loss suffered by Lender, or its representatives, successors, endorsees or assigns. Borrower shall also be liable for any claims, losses or damages suffered by the Lender as a result of: Damages arising from any fraud, misrepresentations or the breach of any covenant or agreement by the Borrower; Damage to the pledged Collateral resulting from gross negligence or intentional acts of the Borrower; and/or Failure to pay taxes or other property-related liens by the Borrower; and/or Damages arising from the failure to comply with any and all laws by the Borrower; and/or Damages arising from the Collateral not being at any time, free-trading and unrestricted shares of common stock, which may be publicly sold or conveyed by Lender without restrictions on transfer. The Borrower agrees to pay all costs and expenses of collection, including, without limitation, the reasonable attorneys' fees, costs and disbursements of the holder hereof, in the event that any action, suit or proceeding is brought by the holder hereof to collect on this Note. This Note shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to the choice of law provisions. IN WITNESS WHEREOF, the Borrower has executed this Note as of the day and year first above written. BORROWER: LENDER: SEAMLESS WI-FI, INC., C/O ALBERT REDA AYUDA FUNDING CORP. By: /s/ Albert Reda By: /s/ Manuel M. Bello ----------------------------------------- -------------------- ACKNOWLEDGEMENT STATE OF } - ------------------------------------------------------ } } COUNTY OF } - ------------------------------------------------------ On October 25, 2006, before me personally came Seamless Wi-Fi, Inc., c/o/Albert Reda, who resides at 15421 So. Carmentia Rd., Suite A, Santa Fe Springs, CA 90670, to me known, and known to me to be the individual described in, and who executed the foregoing Agreement, and duly acknowledged to me that she executed the same. _________________ Notary Public EXHIBIT 5.1 PLEDGE AGREEMENT AGREEMENT made this 26TH DAY OF OCTOBER, 2006 ("Agreement") between SEAMLESS WI-FI, INC., C/O ALBERT REDA, ("Pledgor" and AYUDA FUNDING CORP., a Nevada corporation, maintaining an address at 2050 Russett Way, Suite 397, Carson City, NV 89703 ("Lender"). WHEREAS: The Pledgor and the Lender are entering into a Loan Agreement (as it may be amended, supplemented, restated or otherwise modified from time to time) as of the date hereof (the "Loan Agreement") providing for the making of a Loan to the Pledgor in the amount, and subject to the terms and conditions, specified in the Loan Agreement. The Pledgor is the direct legal and beneficial owner of not less than 100,000 PREFERRED SHARES of SEAMLESS WI-FI, INC., a NEVADA corporation, which, Pledgor warrants may be transferred by Pledgor without any restrictions on further retransfer. The execution and delivery of this Agreement and the pledge by the Pledgor to the Lender of Pledgor's rights in the Collateral, as hereinafter defined, constitute conditions precedent to the obligation of the Lender to make a Loan to the Pledgor pursuant to the terms of the Loan Agreement. NOW THEREFORE: In consideration of the premises, and in order to induce the Lender to execute and deliver the Loan Agreement and to make and maintain a Loan thereunder, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Pledgor hereby agrees as follows: DEFINITIONS: Capitalized terms that are not defined herein have the respective meanings ascribed to them in the Loan Agreement, and, in addition, the following terms shall have the following meanings: "AMOUNT REALIZED " has the meaning specified in Section 10. "LOAN AGREEMENT" has the meaning specified in the Whereas clause above. "LOAN" has the meaning specified in Recital A. "OBLIGATIONS" means all indebtedness and other liabilities and obligations of the Pledgor to the Lender of every kind, nature and description, present or future, direct or indirect, secured or unsecured, joint or several, absolute or contingent, matured or not, in any currency, due or to become due, now existing or hereafter arising, regardless of how they arise of by what agreement or instrument or whether evidenced by any agreement or instrument and whether as principal or surety, including, without limitation, (i) the payment in full when due of the Loan and all interest thereon, the payment of all amounts payable by the Pledgor to the Lender under the terms of the Loan Agreement, the Note or any other Loan Document and the payment and performance in full when due of all other liabilities and obligations of the Pledgor to the Lender under the Loan Agreement, the Note and the other Loan Documents and all notes and other evidences or indebtedness issued in exchange or substitution for the Note and (ii) the observance and performance by the Pledgor of the obligations to be observed and performed by it hereunder or under any related agreement, instrument or document. "PLEDGE" has the meaning specified in Section 2. "PLEDGED COLLATERAL" has the meaning specified in Section 2. "PLEDGE SHARES" has the meaning specified in Section 2(a) "UNIFORM COMMERCIAL CODE" means the Uniform Commercial Code as adopted and in effect from time to time in the State of New York. GENDER AND NUMBER: Words used herein, regardless of the number of gender specifically used, shall be deemed and construed to include any other number, singular or plural and any other gender, masculine, feminine or neuter, as the context requires. HEADINGS: The headings used in this Agreement are solely for the convenience of reference, and are not part of this agreement, and are not to be considered in construing or interpreting this Agreement. REFERENCES: Unless otherwise specified, the words "hereof," "herein," "hereunder" and other similar words refer to this Pledge Agreement as a whole and not just to the Section, subsection or clause in which they are used, and the words "this Agreement" refer to this Pledge Agreement, as amended, modified or supplemented from time to time. STATEMENTS AS TO KNOWLEDGE: Any statements, representations or warranties which are based upon the knowledge of the Pledgor shall be deemed to have been made after due inquiry with respect to the matter in question. PLEDGE: The Pledgor hereby pledges, hypothecates and assigns to the Lender, and hereby grants to the Lender a security interest in and all right, title an interest in and to (the "Pledge"), the following described property, whether now owned by the Pledgor or hereafter acquired and whether now existing or hereafter created (hereinafter the "Pledged Collateral"): All of the shares of capital stock of SEAMLESS WI-FI, INC. ("Issuer") described in Schedule 1 together with the certificates evidencing such shares (collectively, the "Pledged Shares"); All cash, instruments, securities or other property representing a dividend or other distribution on any of the Pledged Shares, or representing a distribution or return of capital upon or in respect of the Pledged Shares, or resulting from a stock split, revision, reclassification or other like change of the Pledged Shares or otherwise received in exchange therefor, and any warrants, rights or options issued to the holders of, or otherwise in respect of, the Pledged Shares; All proceeds of any of the property of the Pledgor described in subsections (a) and (b) of this Section 2 and, to the extent related to any property described in said clauses or such proceeds, all books, correspondence, records, and other documents. PLEDGE ABSOLUTE: The Pledgor hereby agrees that this Agreement shall be binding upon the Pledgor and that the Pledge hereunder shall be irrevocable and unconditional, irrespective of the validity, legality or enforceability of the Loan Agreement, the Note, any other Loan Document or any of the Obligations, the absence of any action to enforce the same, the waiver or consent by the Lender with respect to any provision thereof, the recovery of any judgment against the Pledgor, or any action to enforce the same or any other similar circumstances. The Pledgor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of merger or bankruptcy of the Pledgor, any notice to require a proceeding first against the Pledgor or any other Person, protest or notice with respect to the Note or any other promissory notes or evidences of indebtedness secured hereby or in the indebtedness evidenced thereby and all demands whatsoever, and covenants that this Agreement will remain in full force and effect so long as any Obligations remain unpaid. REPRESENTATIONS AND WARRANTIES: The Pledgor hereby represents and warrants, to his knowledge, as follows: The Pledgor is not in violation of any applicable United States federal or state, or any applicable law or regulation or in default with respect to any order, writ, injunction or decree of any court, or in default under any order, license, regulation or demand of any governmental agency, which violation or default could affect the validity or enforceability of this Agreement or any related document or prevent the Pledgor from performing any of his obligations hereunder or under any related documents. The execution, delivery and performance of this Agreement by the Pledgor, the Pledge of the Pledged Collateral pursuant hereto and incurrence and performance of the obligations provided for herein will not (i) violate any law or regulation applicable to the Pledgor or any of Pledgor's assets, (ii) violate or constitute (with due notice or lapse of time or both) a default under any provision of indenture, agreement, license or other instrument to which the Pledgor is a party or by which Pledgor or any of Pledgor's properties may be bound or affected, (iii) violate any order of any court, tribunal or governmental agency binding upon the Pledgor or any of Pledgor's properties or (iv) result in the creation or imposition of any lien or encumbrance of any nature whatsoever upon any assets or revenues of the Pledgor (except liens in favor of the Lender hereunder). No authorizations, approvals and consents of, and no filings and registrations with any governmental or regulatory authority or agency or any other Person are necessary for the execution, delivery or performance by the Pledgor of this Agreement or for the validity or enforceability hereof. This Agreement constitutes the legal, valid and binding obligation of the Pledgor, enforceable against the Pledgor in accordance with its terms. The Pledgor is the sole record and beneficial owner of the Pledged Shares and has held the Pledged Shares for at least two (2) years. The Pledged Shares are not subject to any liens, security interests, charges or encumbrances of any kind or nature, other than the liens created hereunder. The Pledgor has legal title to the Pledged Shares and the Pledgor has good and lawful authority to Pledge all of the Pledged Shares in the manner hereby done or contemplated. The Pledged Shares are not subject to any contractual or other restriction upon the transfer thereof, and no right, warrant or option to acquire any of the Pledged Shares exists in favor of any other Person. The Pledged Shares are freely tradable and transferable securities and do not bear any restrictive legend. The Pledgor has taken all necessary action to create and perfect a security interest in the Pledged Shares in favor of the Lender, and the Lender has acquired a first and prior perfected security interest therein. When any item of Pledged Collateral other than the Pledged Shares is pledged hereunder, (i) the Pledgor will be the owner of such item of Pledged Collateral free and clear of any liens, security interests, charges or encumbrances of any kind or nature (other than those created hereunder) and (ii) the Pledgor will have legal title to such item of Pledged Collateral and the Pledgor will have good and lawful authority to Pledge and deliver such item of Pledged Collateral in the manner hereby contemplated. Any information, schedules, exhibits and reports furnished by the Pledgor to the Lender in connection with the negotiation and preparation of this Agreement does not contain any omissions or misstatements of fact which would make the statements contained therein misleading or incomplete in any material respect. COVENANTS. The Pledgor hereby agrees that, unless the Lender shall otherwise agree in writing, until the payment in full of the Obligations: The Pledgor (i) shall defend his title to the Pledged Collateral against all claims and demands whatsoever that are adverse to the Lender, (ii) shall not create, incur, assume or suffer to exist any liens, security interests, charges or encumbrances of any kind or nature (other than those created hereunder) in any Pledged Collateral and (iii) shall not sell, assign, transfer, exchange or otherwise dispose of, or grant any option or other right with respect to any Pledged Shares. The Pledgor shall, upon demand of the Lender, do the following: furnish further assurances of title, execute any written agreement or do any other act(s) necessary to effectuate the purposes and provisions of this Pledge Agreement, execute any instrument, document or statement required by law or otherwise in order to perfect, continue or preserve the security interests of the Lender in the Pledged Collateral and pay all filing or other costs incurred in connection herewith. Upon the Lender's request and from time to time thereafter, the Pledgor will make, execute, acknowledge and deliver, file and record in the proper filing and recording places, all such instruments including, without limitation, appropriate financing statements and duly executed medallion signature guaranteed blank stock powers and other instruments of powers and other instruments of transfer or assignment satisfactory in form and substance to the Lender, and take all such action as the Lender may reasonably deem necessary or advisable to carry out the intent and purpose of this Pledge Agreement and to establish and maintain in favor of the Lender a valid, enforceable and perfected security interest in the Pledged Collateral and the other rights contemplated hereby that are superior and prior to the rights and security interests of all other persons or entities. Without limiting the generality of the foregoing sentence, (1) the Pledgor will, form time to time upon the Lender's request, cause all relevant books and records, if any, to be marked with such legends or segregated in such manner as the Lender may specify, and take or cause to be taken such other action and adopt such procedures as the Lender may specify, to give notice of, and to perfect, the security interests created hereby in the Pledged Collateral. The Pledgor shall procure, pay for, affix to any and all documents and cancel any documentary tax stamps required by, and in accordance with, applicable law and will indemnify the Lender, and holder the Lender harmless against, any liability (including interest and penalties) in respect of such documentary stamp taxes. APPOINTMENT OF AGENTS: REGISTRATION IN NOMINEE NAME. The Lender shall have the right to appoint one or more agents for the purpose of retaining physical possession of the certificates representing or evidencing the Pledged Collateral, which may be held (in the discretion of the Lender) in the name of the Pledgor, endorsed or assigned in blank or in favor of the Lender, or in the name of the Lender or any nominee or nominees of the Lender or any agent appointed by the Lender. In addition to all other rights possessed by the Lender, the Lender may, from time to time, at the Lender's sole discretion and without notice to the Pledgor, take any or all of the following actions: (a) transfer all or any part of the Pledged Collateral into the name of the Lender or its nominee, with or without disclosing that such Pledged Collateral is subject to the lien and security interest created hereby; (b) take control of any proceeds of any of the Pledged Collateral; and (c) exchange certificates or instruments representing or evidencing Pledged Collateral for certificates or instruments of smaller or larger denominations for any purpose consistent with its rights under this Pledge Agreement; provided that all powers of the Lender under this Section 6 shall be subject to the rights of the Pledgor under Section 9 hereof to the extent that the exercise of such powers represents a sale of an item of Pledged Collateral. Pledgor further acknowledges and agrees that as long as any portion of the principal balance of the Loan remains due and outstanding. Lender may take any and all action with respect to the Pledged Collateral as Lender, in its sole and absolute discretion, may deem to be advisable, including, without limitation, utilizing the Pledged Collateral as collateral for hedging transactions, transferring the Pledged Collateral within or among one or more Depository Accounts, creating and trading derivative instruments that are backed, in whole or in part, by the Pledged Collateral, and altering or revising the owner of record of the beneficial interest or any other interest in the Pledged Collateral. Lender is under no obligation to sequester the Pledged Collateral apart from any other assets of the Lender, and Lender may combine the Pledged Collateral, in whole or in part, with any other assets. VOTING RIGHTS; DIVIDENDS, ETC. So long as no Event of Default has occurred and is continuing, the Pledgor shall be entitled to exercise any and all voting rights and powers relating or pertaining to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement. Any and all stock dividends, liquidating dividends, distribution of property, redemption or other distributions made on or in respect of the Pledged Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock of the issuer of the Pledged Collateral or received in exchange for Pledged Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which the Pledgor may be a party or otherwise, and any and all cash and other property received in payment of the principal of or in redemption of or in exchange for any Pledged Collateral (either at maturity, upon call for redemption or otherwise), shall become part of the Pledged Collateral and, if received by the Pledgor, shall be held in trust for the benefit of the Lender and shall forthwith be delivered to the Lender or its designated agent (accompanied by proper instruments of assignment and/or stock powers executed by the Pledgor in accordance with the Lender's instructions) to be held subject to the terms of this Pledge Agreement. Upon the occurrence of an Event of Default and so long as such Event of Default shall continue, at the option of the Lender (subject to applicable law), all rights of the Pledgor to exercise the voting rights and powers which the Pledgor is entitled to exercise pursuant to Subsection 7.1 shall cease, and all such rights shall thereupon become vested in the Lender, and the Lender shall have the sole and exclusive right and authority to exercise such voting and/or consensual rights and powers. Any and all cash and other property paid over to or received by the Lender pursuant to the provisions of this Subsection 7.3 shall be retained by the Lender as part of the Pledged Collateral, and shall be applied in accordance with the provisions hereof. Concurrently with his execution of this Agreement, the Pledgor shall execute and deliver to the Lender an irrevocable proxy to vote the Pledged Shares, substantially in the form of Exhibit A. After the occurrence and during the continuance of an Event of Default, the Pledgor shall deliver to the Lender such further evidence of such irrevocable proxy or such further irrevocable proxies to vote any shares of stock constituting part of the Pledged Collateral as the Lender may request. The Lender at any time may extend or renew for one or more periods (whether or not longer than the original period) the Obligations, and grant releases, compromises or indulgences with respect to the Obligations or any extension or renewal thereof or any security therefor or to any obligor hereunder or thereunder without impairing the Lender's rights, or releasing the Pledgor from its obligations hereunder. RIGHTS AND REMEDIES. The Lender may, without being required to give any notice to the Pledgor, apply the cash (if any) then held by its pursuant to Section 6 or 7 to the ratable payment in full of the Obligations and all other indebtedness referred to in Section 10 in the order and manner specified in Section 10. The Lender may sell the Pledged Collateral, or any part thereof, in accordance with Section 9 and shall apply the proceeds of such sale to the ratable payment in full of the Obligation and all other indebtedness referred to in Section 10 in the order and manner specified in Section 10. The Pledgor agrees that, without notice to or further assent by the Pledgor, the liability of the Pledgor or any other Person for or upon any of the Obligations may, from time to time, in whole or in part, be renewed, extended, modified, accelerated, compromised or released by the Lender, as the Lender may deem advisable, and that the Pledged Collateral or other collateral or liens securing any of the Obligations may, from time to time, in whole or in part (subject, in the case of the Pledged Collateral, to the provisions of this Agreement), be exchanged, sold or surrendered by the Lender, as the Lender may deem advisable, all without impairing, abridging, affecting or diminishing this Agreement or the rights of the Lender hereunder or with respect to the Pledged Collateral. Except as otherwise provided herein, the Pledgor agrees the Pledged Collateral or other collateral or liens, securing any of the Obligations may, from time to time, in whole or in part, be exchanged, sold or surrendered by the Lender, as the Lender may deem advisable, all without impairing, abridging, affecting or diminishing this Agreement or the rights of the Lender hereunder or with respect to the Pledged Collateral. RE-DELIVERY OF COLLATERAL AND/OR PAYMENT BY PLEDGOR In the event of Pledgor's timely full repayment of the Obligations, and provided that Pledgor is or was not otherwise in default under the Loan Agreement which default has not been or was not timely cured (in which event, Lender shall be entitled to exercise its rights as otherwise set forth in this Loan Agreement in addition to Lender being entitled to retain as its sole property and/or to sell the Collateral, to the extent Lender has not already exercised its rights under Section 3.1, free and clear of any encumbrances or any claims by Pledgor), Lender shall return the Collateral to Pledgor, provided however that should the value of the Collateral then be greater than the value of the Collateral at Closing, at the option of Pledgor, either Lender shall be entitled to retain as its sole property that portion of the Collateral that is equal in value to one hundred percent (100%) of any appreciation in the value of the Collateral over the value at Closing, or Pledgor shall pay Lender in cash or Collateral an amount equal in value to one hundred percent (100%) of any appreciation in the value of the Collateral over the value at Closing. In the event of Pledgor fails to fully and timely repay the Obligations, and provided that Pledgor is or was not otherwise in default under this Loan Agreement which default has not been or was not timely cured, Lender shall be entitled to retain as its sole property and/or to sell the Collateral, to the extent Lender has not already exercised its rights under Section 3, free and clear of any encumbrances or any claims by Pledgor. Provided, however, that in the event that Pledgor is or was otherwise in default under this Loan Agreement which default has not been or was not timely cured, Lender shall be entitled to exercise its rights as otherwise set forth in this Loan Agreement in addition to Lender being entitled to retain as its sole property and/or to sell the Collateral, to the extent Lender has not already exercised its rights under Section 3, free and clear of any encumbrances or any claims by Pledgor. Any return or delivery of the Collateral, or a portion thereof, to Pledgor shall be at the address specified herein for the giving of notices or to such other person and address as Pledgor specifies in writing to Lender. Any payment by Pledgor to Lender shall be at the address specified herein for the giving of notices or to such other person and address as Lender specifies in writing to Pledgor. SALE OF PLEDGED COLLATERAL. As an alternative to exercising the power of sale herein conferred upon it, the Lender may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Pledged Collateral, or any portion thereof, pursuant to a judgment or decree of a court or courts of competent jurisdiction. In connection with any disposition of the Pledged Collateral in accordance herewith, any such sale or other disposition of any Pledged Collateral in reliance on such advice shall be deemed to be commercially reasonable under the Uniform Commercial Code and otherwise proper. The Lender shall be under no obligation to sell or otherwise dispose of any Pledged Collateral, or to cause any Pledged Collateral to be sold or otherwise disposed of, by reason of any diminution in the fair market value thereof, and the failure of the Lender to do so shall under no circumstances be deemed a failure to exercise reasonable care in the custody or preservation of the Pledged Collateral. In addition to the rights and remedies granted to the Lender in this Pledge Agreement and in any other instrument or agreement securing, evidencing or relating to any of the Obligations, the Lender shall have all the rights and remedies of a secured party under the Uniform Commercial Code. The Lender shall have the right in its sole discretion to determine which rights, security, lien, guaranties or remedies it shall retain, pursue, release, subordinate, modify or enforce, without in any way modifying or affecting any of the other of them or any of the Lender's rights hereunder. APPLICATION OF PROCEEDS OF COLLATERAL SALE. The Lender shall apply all cash held by it pursuant to Section 6 or 7 with respect to the Pledged Collateral and the proceeds of the sale of any Pledged Collateral (such cash and proceeds being referred to collectively as the "Amount Realized") as follows: the payment to or reimbursement of Lender for any fees and expenses for which it is entitled to be paid or reimbursed pursuant to any of the provisions of the Loan Documents; then the payment of any accrued and unpaid interest of the Note; and then for such use of the Lender as it may elect. Anything herein to the contrary notwithstanding (but except as provided below), the Pledgor agrees, for itself, its representatives, successors, endorsees and assigns, that: (i) the Pledgor and any of its representatives, successors, assigns or affiliates shall be personally liable for the Obligations; and (ii) in the event of a default hereunder, the Lender (and any such representative, successor, endorsee or assignee), in its sole discretion, may look to the property encumbered by this Agreement and/or the other instruments of security that secure the Obligations for payment of the Obligations, and may make any claims or institute any action or proceeding against the Pledgor (or any representatives, successors, assigns or affiliates of the Pledgor) for any deficiency remaining after collection upon the Pledged Collateral. The Pledgor is and will remain personally liable for any deficiency remaining after collection of the Pledged Collateral to the extent of any loss suffered by Lender, or its representatives, successors, endorsees or assigns, if such loss is caused by Pledgor based in whole or in part upon: Damages arising from any fraud, misrepresentations or the breach of any covenant or agreement by the Pledgor; and/or, Damage to be pledged Collateral resulting from gross negligence or intentional acts of the Pledgor; and/or Failure to pay taxes or other property-related liens by the Pledgor; and/or Damages arising from the failure to comply with any and all laws by the Pledgor; and/or Damages arising from the Collateral not being at any time, free-trading and unrestricted shares of common stock, which may be publicly sold or conveyed by Lender without restrictions on transfer. COMPLIANCE WITH SECURITIES LAWS. The Pledgor shall execute and deliver to the Lender concurrently with the Pledgor's execution of this Agreement an undertaking substantially in the form of Exhibit B. The Pledgor further agrees to do or cause to be done all such other acts and things as may be necessary to make any sale or the disposition of any portion or all of the Pledged Shares by the Lender hereunder valid and binding and in compliance with any and all applicable laws, regulations, orders, writs, injunctions, decrees or awards of any and all courts, arbitrators or governmental instrumentalities, domestic or foreign, having jurisdiction over any such sale or sales or dispositions, all at the Pledgor's sole expense. The Pledgor further agrees that a breach of any of the covenants contained in this Section 12 will cause irreparable injury to the Lender, that the Lender has no adequate remedy at law in respect of such breach and agrees that each and every covenant contained in this Section 12 shall be specifically enforceable against the Pledgor, and the Pledgor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants, except for a defense that all of the Obligations have been paid in full or that the Lender has released the Pledged Shares. INDEMNIFICATION. The Pledgor hereby agrees to indemnify the Lender and each of its employees, officers, directors, attorneys and agents (each, an "indemnity") for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against such indemnities in any way relating to or arising out of this Agreement or any other documents contemplated by or referred to herein or the transactions contemplated hereby or the enforcement of any of the terms hereof; PROVIDED, HOWEVER, that the Pledgor shall not be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct of the Lender or failure by the Lender to exercise reasonable care in the custody and preservation of the Pledged Collateral as provided in Section 16. LENDER APPOINTED ATTORNEY-IN-FACT. The Pledgor hereby appoints the Lender as the Pledgor's attorney-in-fact, with full power of substitution, for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Lender may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, the Lender shall have the right and power to sign the name of the Pledgor to any financing statements, continuation statements or other documents under the Uniform Commercial Code relating to the Pledged Collateral and, to the extent permitted under Section 7, shall have the right and power to receive, endorse and collect all checks and other orders for the payment of money made payable to the Pledgor representing any dividend, interest payment or other distribution payable or distributable in respect of the Pledged Collateral or any part thereof and to give full discharge therefore. NO SUBROGATION. Notwithstanding any payment or payments made by the Pledgor hereunder, the receipt of any amounts by the Lender with respect to the Pledged Collateral or any setoff or application of funds of the Pledgor by the Lender, the Pledgor shall not be entitled to subrogate to any rights of the Lender. LIMITATIONS ON LENDERS DUTY IN RESPECT OF COLLATERAL. Beyond the safe custody thereof, the Lender shall not have any duty as to any Pledged Collateral in its possession or control or in the possession or control of any agent or nominee of the Lender or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto. NO WAIVER: CUMULATIVE REMEDIES. No course of dealing between the Pledgor and the Lender, no failure on the part of the Lender to exercise, and no delay in exercising, any rights, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy by the Lender preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and not exclusive of any other remedies provided by law, including without limitation the rights and remedies of a secured party under the Uniform Commercial Code. TERMINATION. This Agreement shall terminate when all of the Obligations have been paid in full, at which time the Lender shall reassign and redeliver to the Pledgor, without recourse or warranty and at the sole expense of the Pledgor, against receipt, the Pledged Collateral, together with appropriate instruments of reassignment and release; provided, however, that this Agreement shall be reinstated if any payment in respect of the Obligations is rescinded, invalidated, declared to be fraudulent or preferential or otherwise required to be restored or returned by the Lender for any reason, including without limitation by reason of the insolvency or bankruptcy of the Pledgor or any other Person. ADDRESSES FOR NOTICE. All notices, requests, demands, instruments, directions and other communications provided for hereunder shall be in writing and shall be mailed (by registered or certified mail, postage prepaid) or delivered to the applicable party at the address specified for such party on the first page of this Agreement or, as to any party, to such other address as such party shall specify by a notice in writing to the other party hereto. Each notice, request, demand, instruction, direction or other communication provided for hereunder shall be deemed delivered (i) if by mail, five business days after being deposited in the mail, addressed to the applicable party at its address set forth above, (ii) if by hand or by overnight courier, when delivered to the applicable party at such address. SEVERABILITY. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render such provision unenforceable in any other jurisdiction. FURTHER ASSURANCES. The Pledgor agrees to do such further reasonable acts and things, and to execute and deliver such additional conveyances, assignments, agreements and instruments, as the Lender may at any time request in connection with the administration or enforcement of this Pledge Agreement (including, without limitation, to aid the Lender in the sale of all or any part of the Pledged Collateral) or related to the Pledged Collateral or any part thereof or in order better to assure and confirm unto the Lender rights, powers and remedies hereunder. The Pledgor hereby consents and agrees that any registrar or transfer agent for any of the Pledged Collateral shall be entitled to accept the provisions hereof as conclusive evidence of the right of the Lender to effect any transfer pursuant to Section 6, notwithstanding any other notice or direction to the contrary heretofore or hereafter given by the Pledgor or any other person to the Pledgor or to any such registrar to transfer agent. BINDING AGREEMENT; ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Pledgor shall not assign this Agreement or any interest herein or in the Pledged Collateral or any part thereof, or otherwise pledge, encumber or grant any option with respect to the Pledged Collateral or any part thereof, without the prior written consent of the Lender. The Lender may assign this Agreement and its rights and remedies hereunder in whole or in part to any assignee of the Obligation or any portion thereof. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE INTERNAL LAWS OF THE STATE OF NEW YORK , WITHOUT GIVING EFFECT TO CHOICE OF LAW PRINCIPLES. CONSENT TO JURISDICTION; VENUE. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA. PLEDGOR HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE COURTS SITTING IN NEW YORK COUNTY, NEW YORK UNITED STATES OF AMERICA, AS WELL AS TO THE JURISDICTION OF ALL COURTS FROM WHICH AN APPEAL MAY BE TAKEN FROM THE AFORESAID COURTS, FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING BY ANY PARTY TO THIS AGREEMENT, ARISING OUT OF OR RELATED IN ANY WAY TO THIS AGREEMENT. PLEDGOR FURTHER AGREES NOT TO INITIATE ANY ACTION OR PROCEEDING PURSUANT THIS AGREEMENT OUTSIDE OF THE AGREED VENUE. PLEDGOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY ACTION OR PROCEEDING AN ANY SUCH COURT, ANY OBJECTION TO VENUE WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING AND ANY RIGHT OF JURISDICTION ON ACCOUNT OF THE PLACE OF RESIDENCE OR DOMICILE OF ANY PARTY THERETO. IN ADDITION, PLEDGOR CONSENTS TO THE SERVICE OF PROCESS BY UNITED STATES CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, OR FEDERAL EXPRESS OR SIMILAR COURIER DELIVERY ADDRESSED TO PLEDGOR AT THE ADDRESS PROVIDED HEREIN. PLEDGOR AGREES THAT IN THE EVENT THIS LOAN AGREEMENT SHALL BE SUCCESSFULLY ENFORCED BY SUIT OR OTHERWISE, PLEDGOR WILL REIMBURSE THE LENDER OR HOLDER OR HOLDERS OF THE OBLIGATIONS, UPON DEMAND, FOR ALL REASONABLE EXPENSES INCURRED IN CONNECTION THEREWITH, INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES AND EXPENSES. SHOULD ANY ACTION BROUGHT PURSUANT THIS AGREEMENT IN THE STIPULATED VENUE BY THE PLEDGOR BE SUCCESSFULLY ADJUDICATED IN FAVOR OF THE PLEDGOR, LENDER WILL REIMBURSE PLEDGOR, UPON DEMAND, FOR ALL REASONABLE EXPENSES INCURRED IN CONNECTION THEREWITH, INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES AND EXPENSES. WAIVER OF JURY TRIAL. THE PARTIES HERETO HEREBY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT, ANY INSTRUMENT OR DOCUMENT REFERRED TO HEREIN OR RELATED HERETO, OR ANY ITEM OF PLEDGED COLLATERAL, AND AGREE THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY. AMENDMENTS. No provision of this Agreement may be amended, waived or modified, and (unless otherwise provided herein) no item of Pledged Collateral may be released, except in a writing signed by the Pledgor and the Lender. EXPENSES. The Pledgor hereby agrees to reimburse the Lender for the enforcement of the Lender's rights under this Agreement, the sale of the Pledged Collateral or any part thereof and the collection of payments due under or in respect of the Pledged Collateral and all amounts due under this Agreement. WAIVER OF NOTICE OF ACCEPTANCE. The Pledgor hereby waives notice of the making of any Loan or the issuance of the Note and notice from the Lender of its acceptance of and reliance upon this Agreement. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, all of which when taken together shall constitute but one and the same agreement. IN WITNESS WHEREOF, the Pledgor has duly executed this Pledge Agreement as of the date first above written. /s/ Albert Reda ------------------------------------- SEAMLESS WI-FI, INC., C/O ALBERT REDA ACKNOWLEDGEMENT STATE OF } - ------------------------------------------------------ } } COUNTY OF } - ------------------------------------------------------ On October 25, 2006, before me personally came Seamless Wi-Fi, Inc., c/o/Albert Reda, who resides at 15421 So. Carmentia Rd., Suite A, Santa Fe Springs, CA 90670, to me known, and known to me to be the individual described in, and who executed the foregoing Agreement, and duly acknowledged to me that she executed the same. __________________ Notary Public SCHEDULE I TO PLEDGE AGREEMENT OF _________________ BY SCHEDULE OF PLEDGED SHARES
- ---------------------------------------------------------------------------------------------------------------------- NAME OF ISSUER NUMBER OF SHARES CLASS OF SHARES CERTIFICATE NUMBER SYMBOL Seamless Wi-Fi, Inc. 100,000 preferred SLWF - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
EXHIBIT A TO PLEDGE AGREEMENT FORM OF IRREVOCABLE PROXY KNOW ALL MEN BY THESE PRESENTS: that the undersigned does hereby make, constitute and appoint AYUDA FUNDING (the "Lender") and each of the Lender's officers and employees, his true and lawful attorneys, for him and in his name, place and stead, to act as its proxy in respect of all of the pledged shares of capital stock of SEAMLESS WI-FI, INC. (OTC BB: SLWF.OB), a corporation hereinafter referred to as the "Corporation"), which he now or hereafter may own or holder, including, without limitation, the right, on his behalf, to demand the call by any proper officer of the Corporation pursuant to the provisions of the certificate of incorporation or by-laws of the Corporation and as permitted by law of a meeting of the Corporation's shareholders and at any meeting of shareholders, annual, general or special, to vote for the transaction of any and all business that may come before such meeting, or at any adjournment thereof, including, without limitation, the right to vote for the sale of all or any part of the assets of the Corporation and/or the liquidation and dissolution of the Corporation, giving and granting to this said attorneys full power and authority to do and perform each and every act and thing, whether necessary or desirable to be done in and about the premises, as fully as he might or could do if personally present, with full power of substitution, appointment and revocation, hereby ratifying and confirming all that his said attorneys shall do or cause to be done by virtue hereof. This Irrevocable Proxy is given to the Lender and to its officers and employees in consideration of its execution and delivery of the Loan Agreement dated as of the date hereof between the undersigned and the Lender (as it may be amended, supplemented, restated or otherwise modified from time to time, the "Loan Agreement"), and the transactions contemplated thereby, and in order to carry out the covenant of the undersigned contained in a certain Pledge Agreement of even date herewith by the undersigned in favor of the Lender (as it may be amended, supplemented, restated or otherwise modified from time to time, the "Pledge Agreement"), and this Proxy shall be irrevocable and coupled with an interest, and shall be effective and binding upon the undersigned and his heirs, executors, administrators, legatees, representatives, successors and assigns until the payment in full of all of the Obligations (as such term is defined in the Pledge Agreement) and may be exercised after the occurrence and during the continuance of an Event of Default (as such term is defined in the Loan Agreement). IN WITNESS WHEREOF, the undersigned has duly executed this Irrevocable Proxy as of OCTOBER 26, 2006. /s/ Albert Reda ------------------------------------- SEAMLESS WI-FI, INC., C/O ALBERT REDA ACKNOWLEDGEMENT STATE OF } - ------------------------------------------------------ } } COUNTY OF } - ------------------------------------------------------ On October 25, 2006, before me personally came Seamless Wi-Fi, Inc., c/o/Albert Reda, who resides at 15421 So. Carmentia Rd., Suite A, Santa Fe Springs, CA 90670, to me known, and known to me to be the individual described in, and who executed the foregoing Agreement, and duly acknowledged to me that she executed the same. _________________ Notary Public EXHIBIT B TO PLEDGE AGREEMENT FORM OF UNDERTAKING The undersigned agrees that if an Event of Default shall occur under the Loan Agreement, as such term is defined in the Pledge Agreement dated as of OCTOBER 26, 2006 (as it may be amended, supplemented, restated or otherwise modified from time to time, the "Pledge Agreement"), by the undersigned in favor of AYUDA FUNDING (the "Lender"), the undersigned shall, at the request of the Lender and at the sole expense of the undersigned, furnish to the Lender such statements, prospectuses, opinions of counsel and other documents as the Lender shall require to enable compliance with applicable state and federal securities or blue sky laws in connection with the public sale or other disposition of the Pledged Shares and to facilitate such public sale or disposition. The undersigned agrees that a breach of any of his obligations set forth in this undertaking will cause irreparable injury to the Lender, that the Lender has no adequate remedy at law in respect of such breach and agrees that each and every covenant contained herein shall be specifically enforceable against the undersigned, and the undersigned hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants. The undertaking of the undersigned herein shall remain in full force and effect notwithstanding any amendment or modification of the Pledge Agreement. /s/ Albert Reda ------------------------------------- SEAMLESS WI-FI, INC., C/O ALBERT REDA ACKNOWLEDGEMENT STATE OF } - ------------------------------------------------------ } } COUNTY OF } - ------------------------------------------------------ On October 25, 2006, before me personally came Seamless Wi-Fi, Inc., c/o/Albert Reda, who resides at 15421 So. Carmentia Rd., Suite A, Santa Fe Springs, CA 90670, to me known, and known to me to be the individual described in, and who executed the foregoing Agreement, and duly acknowledged to me that she executed the same. _________________ Notary Public EX-10.7 3 seamless_ex1007.txt EXHIBIT 10.7 Exhibit 10.7 - -------------------------------------------------------------------------------- Company Name: SEAMLESS WI-FI INC. MS License Agreement Number: 514843022 License Effective Date: May 1, 2007 Expiration Date: May 31, 2009 Embedded Systems Website URL: https://microsoft.embeddedoem.com - -------------------------------------------------------------------------------- MICROSOFT OEM MOBILITY LICENSE AGREEMENT (Version 3.0) MICROSOFT LICENSING, GP ("MS"), and the undersigned company ("COMPANY") agree to be bound by the terms of this MICROSOFT OEM MOBILITY LICENSE AGREEMENT ("License Agreement") effective as of the date above ("License Effective Date"). This License Agreement Consists of the Following: this Signature Page Addresses Schedule General Terms and Conditions Minimum Commitment Schedule Product and Royalty Schedule - Microsoft Windows Mobile Version 5.0 Software - -------------------------------------------------------------------------------- MICROSOFT LICENSING, GP SEAMLESS WI:FI INC. A General Partnership Organized Under A company organized Under the the Laws Of: State of Nevada,U.S.A. laws of: NEVADA, USA By: /s/ Sai Ofias BY: /s/ Albert Reda ---------------------------- ---------------------------- (signature) (signature) Name: SAI OFIAS Name: ALBERT REDA -------------------------- -------------------------- (printed) SR PROGRAM (printed) MANAGER Title: Title: -------------------------- ------------------------- (printed) (printed) Date: May 23, 2007 Date: May 8, 2007 - -------------------------------------------------------------------------------- CONFIDENTIAL SHIPPING AND BILLING ADDRESS SCHEDULE COMPANY "Ship To" Address COMPANY Billing Address Albert Reda Albert Reda President President SEAMLESS WI-FI INC. SEAMLESS WI-FI INC. 800 North Rainbow Blvd. 800 North Rainbow Blvd. Las Vegas, NV 89107 Las Vegas, NY 89107 UNITED STATES UNITED STATES Telephone: 775-588-2387 Telephone: 775-588-2387 Fax: 775-588-2387 Fax: 775-588-2387 E-mail: arreda@slwf.net E-mail: arreda@slwf.net COMPANY'S TECHNICAL SUPPORT PHONE NUMBER FOR CUSTOMERS AND END USERS: 775-588-2387 2 CONFIDENTIAL GENERAL TERMS AND CONDITIONS 1. Business Terms. (a) This License Agreement incorporates all of the terms of the Microsoft OEM Business Terms Document for Embedded Systems ("BTDE") dated May 1, 2007, Number 5148430021. This License Agreement also incorporates any changes made to the BTDE by MS and COMPANY. The terms of this License Agreement control over any conflicting terms in the BTDE. (b) Additional Definitions. "COMPANY Companion CD" means a CD distributed with the Device that contains the following: o Contents from the MS Companion CD. The Documentation describes what contents can be distributed. o COMPANY's logo. o If desired, software owned or licensed by COMPANY other than MS or MSCORP software ("COMPANY Software"). "Critical Supplemental Code" means either (i) the Licensed Product could allow the propagation of an internet worm without End User action; or (ii) the Licensed Product could result in the compromise of the confidentiality, integrity, or availability of End Users data or of the integrity or availability of processing resources. The term Supplemental Code includes Critical Supplemental Code. "Variance" means each instance in which the Licensed Product does not substantially comply with the End User Documentation. "Device" means OEM Parties' computing system or device with an Image that (i) is designed for and distributed with Licensed Product, (ii) meets the design requirements; and (iii) and passes the MSCORP Compatibility Test. As used in the BTDE, Embedded System includes Device, except Sections 2(a) and 2(b) of the BTDE do not apply. A Device does not require a Runtime Key. "End User Documentation" means end user information about the Licensed Product as described in the Documentation. "Memory Medium" means a non-volatile, solid-state memory medium. "Mobile Operator" means a wireless telecommunication service provider. "MS Companion CD" means a CD acquired by COMPANY from an AR. The CD contains the following: o MS software that the end user installs on a personal computer. This software enables data exchange between the personal computer and the Device. o End User Documentation in electronic format. o Other MS software. "MSCORP Compatibility Test" means MSCORP'S compliance tests for each Devide. "New Devices" means Devices that have not been previously distributed by COMPANY. It also means Device models that have been previouswly distributed by COMPANY, but must re-pass the MSCORP Compatibility Test as described in the Documentation. 2. LICENSE GRANT AND LIMITATIONS. (a) LICENSE GRANT. Subject to all terms and conditions of this License Agreement, MS grants to COMPANY the following non-exclusive right to: (i) Use the Deliverables to: o Create an OEM abstraction layer for the Licensed Product on the Device, o Test the Device, o Create device drivers for the Device, and o Design COMPANY Binaries. (ii) Reproduce the MS Binaries as part of an Image. (iii) Install one copy of the Image on each Device. COMPANY may only use the following parties to reproduce and install Images: o COMPANY's employees (only on COMPANY premises), o Contractors, and o COMPANY's Installers. (iv) Create the COMPANY Companion CD. COMPANY must use an AR to reproduce the COMPANY Companion CD. (v) Distribute one copy of the MS Binaries as part of the Image on each Device. (vi) Distribute one copy of the APM and COMPANY Companion CD with each Device. (vii) Sublicense rights to use the Licensed Product to each End User by means of License Terms. (A) The License Terms for each Licensed Product are posted on ECE. COMPANY may use different terms or additional terms, as long as they are no less protective of MS than the License Terms. (B) COMPANY must substitute its name for "[OEM]" in the License Terms. COMPANY may substitute the term "[OEM]'s software suppliers" for the term "MS" in the License Terms. (C) COMPANY or Channel must notify each End User before or at the time of purchase that the Device contains software that is subject to the License Terms. (D) the End User must agree to the License Terms before using the Device, and (E) COMPANY must distribute the license terms in a manner that forms a contract binding the End User under applicable law. (b) Additional License Limitations. The BIDE has license limitations for these Licensed Products. For the Licensed Products in this License Agreement, COMPANY must comply with these license limitations except that Section 4 of the BTDE does not apply to the Licensed Products in this License Agreement. COMPANY must also comply with the following additionallicense limitations. (i) The Image cannot function, download or install on anything other than the Device for which it was designed. COMPANY shall configure the Image to ensure that it executes only the Device for which it was designed. 3 CONFIDENTIAL (iv) SUPPLEMENTAL CODE. (A) MS may provide Supplemental Code. COMPANY must include the Supplemental Code on all New Devices. COMPANY must include the Supplemental Code on New Devices no later than 120 days after it is made available to COMPANY. (B) MS may notify COMPANY that the Supplemental Code is required on all Devices. If COMPANY receives such notice then the following apply. NEW DEVICES. COMPANY shall include the required Supplemental Code in the Images for New .Devices prior to distribution. OTHER DEVICES. COMPANY shall make available an Update Image with the required Supplemental Code to applicable Mobile Operators and/or End Users. COMPANY must make the Update Image available as soon as possible, but not later than sixty (60) days after the required Supplemental Code is made available to COMPANY. (C) MS may provide Critical Supplemental Code directly to end users on behalf of the COMPANY. (v) The Deliverables may include files, modules, and/or materials for other products not licensed by COMPANY. COMPANY's license rights do not include these files, modules, and/or materials of the Deliverables. The Documentation has information to assist COMPANY to license and report the correct Licensed Products. (vi) DESIGN REQUIREMENTS AND MSCORP COMPATIBILITY TEST. (A) The Documentation has design requirements for the Device. Each Device must meet the design requirements. (B) The Documentation also includes information about the MSCORP Compatibility Test. Each New Device must pass the MSCORP Compatibility Test prior to distributing through the Channel or to End Users. For each Device that must be tested, COMPANY must provide to MS or the testing lab at least five (5) units of the Device. COMPANY must provide these Devices without any cost to MS or the testing lab. (C) MS or a testing lab conducts the MSCORP Compatibility Test. COMPANY will receive notice of the results of the MSCORP Compatibility Test. A Device that passes the MSCORP Compatibility Test may be distributed unless it needs to be retested as provided in the Documentation. A Device that does not pass cannot be distributed. COMPANY may ask that the Device be retested once COMPANY has addressed the reasons for the prior failure. (vii) MS has an official launch date for each Licensed Product. MS will notify COMPANY of the official launch date. Prior to the official launch date, COMPANY can only distribute Devices to the Channel to prepare-for the official- launch date. COMPANY or its Channel may not distribute Devices for any other reason prior to the official launch date. Licensed Product must also be available for download on MOO before COMPANY may distribute any Devices with that Licensed Product. (viii) COMPANY must notify the End User of the system requirements for the Device and the personal computer. Notice must be prominently displayed on the Device packaging and in the End User Documentation. (c) SAMPLE CODE. Subject to all terms and conditions of the License Agreement, MS grants to COMPANY a non-exclusive, limited, license to modify and create derivative works of the Sample Code delivered in source code form. Sample Code may be distributed as part of an Image, Update, or Recovery Image. 3. Limited Warranty. (a) MS warrants that each Licensed Product (excluding Sample Code) does not have a Variance. (b) COMPANY must notify MS of a Variance within 30 days after MS' delivery of Deliverables to COMPANY. If MS corrects the Variance, COMPANY must notify MS of a continuing Variance within 30 days after MS' delivery of a correction. (c) MS' warranty can be satisfied in the following ways. (i) COMPANY does not provide timely notice of a Variance. (ii) COMPANY distributes a Device that contains the Licensed Product. Within 60 days of notice, MS corrects the Variance and delivers it to COMPANY. (d) If MS does. not satisfy its warranty, COMPANY's sole remedy is to terminate this License Agreement for the affected Licensed Product within 30 days of the failure to satisfy the warranty. (E) COMPANY AGREES TO THE FOLLOWING. o This warranty is limited. o MS does not make any other warranties. o Implied warranties are expressly disclaimed including merchantability, fitness for a particular purpose and non-infringement. (F) THE SAMPLE CODE IS LICENSED "AS-IS" OEM PARTIES (OR COMPANY AND COMPANY SUBSIDIARIES, AS APPLICABLE) BEAR THE RISK OF USING IT. MS GIVES NO EXPRESS WARRANTIES, GUARANTEES OR CONDITIONS. COMPANY also agrees that COMPANY's remedies are limited by the BTDE and as described above. 4. INTELLECTUAL PROPERTY INFRINGEMENT. MS's duty to defend Claims under Section 8 of the BTDE does not include any Claim arising from the use or distribution of Sample Code 5. TERM. The term of this License Agreement begins on the License Effective Date and expires on the Expiration Date. 4 CONFIDENTIAL
MINIMUM COMMITMENT SCHEDULE - ------------------------------------------------------------------------------------------------------------------------------------ First Period of This Agreement - --------------------------------------------- ------------------------------------------ ------------------------------------------- Date Payment Amount Cumulative Amount of Payments for Period (US$) (US$) - --------------------------------------------- ------------------------------------------ ------------------------------------------- Signing of License Agreement (payment due US$245,000.00 US$245,000.00 UPON SIGNING) - --------------------------------------------- ------------------------------------------ ------------------------------------------- May 31, 2007 US$18,848.00 US$263,848.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- June 30, 2007 US$18,846.00 US$282,694.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- July 31, 2007 US$18,846.00 US$301,540.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- August 31, 2007 US$18,846.00 US$320,386.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- September 30, 2007 US$18,846.00 US$339,232.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- October 31, 2007 US$18,846.00 US$358,078.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- November 30, 2007 US$18,846.00 US$376,924.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- December 31, 2007 US$18,846.00 US$395,770.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- January 31, 2008 US$18,846.00 US$414,616.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- February 29, 2008 US$18,846.00 US$433,462.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- March 31, 2008 US$18,846.00 US$452,308.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- April 30, 2008 US$18,846.00 US$471,154.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- May 31, 2008 US$18,846.00 US$490,000.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- Total First Period Minimum Commitment US$490,000.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------------ Second Period of This Agreement - --------------------------------------------- ------------------------------------------ ------------------------------------------- Date Payment Amount Cumulative Amount of Payments for Period (US$) (US$) - --------------------------------------------- ------------------------------------------ ------------------------------------------- June 30, 2008 US$40,834.00 US$40,834.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- July 31, 2008 US$40,834.00 US$81,668.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- August 31, 2008 US$40,834.00 US$122,502.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- September 30, 2008 US$40,834.00 US$163,336.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- October 31, 2008 US$40,834.00 US$204,170.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- November 30, 2008 US$40,834.00 US$245,004.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- December 31, 2008 US$40,834.00 US$285,838.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- January 31, 2009 US$40,834.00 US$326,672.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- February 28, 2009 US$40,834.00 US$367,506.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- March 31, 2009 US$40;834.00 US$408,340.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- April 30, 2009 US$40,834.00 US$449,174.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- May 31, 2009 US$40,826.00 US$490,000.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- Total Second Period Minimum Commitment US$490,000.00 - --------------------------------------------- ------------------------------------------ ------------------------------------------- 5 CONFIDENTIAL
PRODUCT AND ROYALTY SCHEDULE MICROSOFT(R) WINDOWS MOBILE(R) VERSION 5.0 SOFTWARE
PRODUCT TABLE - -------------------------------------------------------- ------------------- -------------------------- ------------- PRODUCT NAME AND VERSION* LICENSABLE PART APPLICABLE ADDITIONAL Royalty** Number PROVISIONS - -------------------------------------------------------- ------------------- -------------------------- ------------- Microsoft(R) Windows Mobile(R) Version 5.0 Software for R53-00712 (2138), (2139), (2140), US$49.00 Pocket PC, Phone Edition (CDMAJIxRTT) (Far East (2151), (2153), (2350), Languages) (2809), (2840) - -------------------------------------------------------- ------------------- -------------------------- ------------- Microsoft(R) Windows Mobile(R) Version 5.0 Software for R53-00704 (2138), (2140), (2151), US$49.00 Pocket PC, Phone Edition (CDMA/1xRTT) (Western (2153), (2350), (2809), Languages) (2840) - -------------------------------------------------------- ------------------- -------------------------- ------------- Microsoft(R) Windows Mobile(R) Version 5.0 Software for R53-00711 (2138), (2139), (2140), US$49.00 Pocket PC, Phone Edition (GSMIGPRS) (Far East (2151), (2153), (2350), Languages) (2809), (2840) - -------------------------------------------------------- ------------------- -------------------------- ------------- Microsoft(R) Windows Mobile(R) Version 5.0 Software for R53-00703 (2138), (2140), (2151), US$49.00 Pocket PC, Phone Edition (GSMIGPRS) (Western (2153), (2350), (2809), Languages) (2840) - -------------------------------------------------------- ------------------- -------------------------- -------------
* Language versions are licensed only on an if and as available basis. Far East Languages include Chinese Simplified, Chinese Traditional, Japanese, Korean, and English. WESTERN EUROPEAN LANGUAGES INCLUDE Brazilian, Czech, Danish, Dutch, English, Finnish, French, German, Greek, Italian, Norwegian, Polish, Portuguese, Russian, Spanish, and Swedish. Smartphone Western Languages also include Hungarian, Romanian, Slovak, and Turkish. **A Licensed Product is not licensed hereunder unless royalty rates are indicated in the Licensed Product table. ADDITIONAL PROVISIONS KEY The following provisions (each, an "Additional Provision" or "AP") apply to the Licensed Products as indicated above. The APs apply in addition to the terms of the License Agreement. Capitalized terms used below and not otherwise defined have the meaning set forth in the BTDE or the General Terms and Conditions of this License Agreement. The APs supersede any inconsistent terms in the General Terms and Conditions of the License Agreement. Those General Terms and Conditions supersede any inconsistent terms in the BTDE. (2138) COMPANY must either: (a) enter into a Microsoft Premier Support Agreement, or (b) demonstrate to MS that COMPANY has obtained or arranged an equivalent level of support independently. (2139) (a) (i) The Simplified Chinese language version of this Licensed Product must not be distributed in Taiwan; and (ii) The Traditional Chinese language version of this Licensed Product must not be distributed in People's Republic of China (with the exception of Hong Kong and Macao). (b) COMPANY must notify the Channel of these limits. COMPANY must defend, indemnify and hold harmless MS Parties from and against all damages, costs and attorneys' fees arising from claims or demands resulting from COMPANY's failure to notify its Channel of these limits. (2140) COMPANY'S Companion CD. (a) COMPANY is licensed to use the MS Companion CD to create COMPANY's Companion CD as provided in the Documentation. COMPANY may not modify, obscure or omit any files contained on the MS Companion CD, except as expressly allowed in the Documentation. (b) COMPANY may not transfer or copy any files contained on the MS Companion CD to any media other than COMPANY's Companion CD. (c) COMPANY's Companion CD must pass the MSCORP Compatibility Test as outlined in the Documentation. After COMPANY receives notice from MS that the test has been passed, then COMPANY may engage an AR to replicate the COMPANY's Companion CD. If COMPANY engages an AR to replicate COMPANY's Companion CD before COMPANY receives such MS approval, then MS Parties shall not be responsible for any costs or damages incurred by COMPANY. This includes costs or damages incurred if MS requires changes to COMPANY's Companion CD. (d) COMPANY shall distribute COMPANY's Companion CD: (i) only in the. form and packaging as received from the AR; and (ii) only in the Device packaging or as a replacement directly to the End User. 6 CONFIDENTIAL (e) COMPANY agrees that it owns all right, title and interest in, or has all necessary rights to authorize the AR to replicate, the COMPANY Software. COMPANY shall defend, indemnify and hold harmless MS Parties from and against any and all third party claims or demands, or any other liability or damages arising out of or related to the replication, licensing, distribution, or use of the COMPANY Software. (2151) The Deliverables include sample code located at: %_WTNCEROOT%1PUBLICICOMMONIOAKIDRIVERS1BLUETOOTHISAMPLE (collectively, "Bluetooth Sample Code"). COMPANY must pass the Bluetooth Tests before distributing the Bluetooth Sample Code with an Image on a Device. "Bluetooth Tests" means a standard series of tests, as amended from time to time, to determine compliance with the Bluetooth certification process described at httpalqualweb.bluetooth.org or such other location that may be designated from time to time. (2153) COMPANY shall advise the End User which language versions of Licensed Product have been installed on the Device. (2350) For this Licensed Product, COMPANY and MS agree as follows: (a) Devices may be subject to telecommunication laws and regulations. COMPANY must comply with these laws and regulations. (b) COMPANY must test the Device to ensure that the Device functions properly on the Mobile Operator's network. COMPANY's obligation continues so long as COMPANY offers the Device for use with the network. (c) MS will not pay for any network testing for any reason. (d) MS is not required to provide any Supplemental Code or any support to enable the Device to function (or to continue to function) on any network. (e) MS can enter into separate agreements with Mobile Operators or the Channel related to the Devices. Mobile Operators can only be licensed by COMPANY to distribute the Devices. COMPANY cannot license Mobile Operators to change the Image. (f) COMPANY must make available support services for Mobile Operators and End Users of the Device. (g) COMPANY will provide appropriate notices or warnings to End Users of Embedded Systems or others who may be affected by such use. (h) COMPANY must defend, indemnify and hold harmless MS Parties from and against all damages, costs and attorneys' fees arising from claims or demands resulting from COMPANY's failure to comply with any of the above items. (2809) COMPANY's license to distribute this Licensed Product shall expire when the License Agreement expires or terminates or, if earlier, on July 31, 2015. (2840) MS COMPANION CD contains Microsoft(R) Office Outlook(R) 2007 Trial, COMPANY may choose to: (a) Include the Outlook 2007 Trial on the COMPANY Companion CD; (b) Include a link to the Outlook 2007 Trial download website designated in the Deliverables; or (c) Not include Outlook 2007 Trial. DEVICES Each "Device" must be listed below in the Device Table. It also must meet the requirements of this License Agreement and all applicable Additional Provisions. At COMPANY's option, COMPANY may designate models by model line or series. For example, COMPANY could use "Jaguar model line", "Jaguar Pro series", "Jaguar Pro 750 model line", "Jaguar Pro 950 series", etc. Devices defined by model line or series include all present models which include the model line or series name. "Jaguar Pro model line" includes Jaguar Pro,.. Jaguar Pro 950, Jaguar Pro S, etc. "Jaguar series" includes Jaguar, Jaguar Pro, Jaguar Pro 950, jaguar S400, etc. "Jaguar Pro 950 series" includes Jaguar Pro 950, Jaguar Pro 955, etc. COMPANY may elect to include as Devices new models which comply with all of the terms and conditions of this License Agreement by notifying MS of any such new models when COMPANY submits its royalty report for the reporting period in which each such new model is first distributed with Licensed Product. Any new model in a licensed model line or series which is not included in a Notice to Add Devices (and is thus not licensed for the applicable Licensed Product) must have a unique model number or model name used for internal and external identification purposes which distinguishes it from any model which COMPANY has designated previously as a Device. PRODUCT NUMBER KEY: Please refer to the Licensable Part Number in the Product Table above. A Licensed Product is only licensed for distribution on a listed Device if the appropriate box below is marked with a "C". Otherwise, the Licensed Product may not be distributed on a Device. 7 CONFIDENTIAL
DEVICE TABLE - ---------------------------- ------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- Model Name/Model Number Processor R53- R53- R53- R53- 00703 00704 00711 00712 - ---------------------------- ------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- S-XGen Series INTEL 186 C C C C PROCESSORS OR COMPARABLE - ---------------------------- ------------------ ---------- ---------- ---------- ---------- ---------- ---------- ----------
COMPANY represents and warrants that the names and numbers indicated in the Model Name/Model Number column in the table above accurately state the designation used by COMPANY to refer to the listed models (on the Device and in COMPANY's books and records). 8 CONFIDENTIAL EX-10.8 4 seamless_ex1008.txt EXHIBIT 10.8 Exhibit 10.8 MICROSOFT SERVICES OEM FOUNDATION SERVICE AGREEMENT NON-STANDARD ________________ (FOR MICROSOFT INTERNAL PURPOSES ONLY) | | MICROSOFT SERVICES PARTNER | 001245011 | ADVANTAGE, STANDARD PLAN SERVICE |_______________| AGREEMENT NO. This Service Agreement ("Agreement"), is effective as of 06/06/07 by and between the undersigned partner ("You", "Your" and "Partner") and the undersigned Microsoft affiliate ("We," "Us," or "Our"). This Agreement is comprised of this cover page, the services description, and the additional terms and conditions that are attached and which are incorporated by this reference. Partner Invoice Information - --------------------------- Name of Partner Contact Name (This Person Receives Seamless Wi Fi, Inc. Invoices UNder this Agreement unless otherwise specified on your Purchase Order.) Albert R. Reda - ------------------------------------------------------------------------------ Street Address Contact E-mail Address 800 N. Rainbow Blvd. Suite 208 arreda@slwf.net - ------------------------------------------------------------------------------ City State/Province Phone LAS VEGAS NEVADA 775-588-2387 - ------------------------------------------------------------------------------ Country Postal Code Fax US 89107-1103 775-588-2499 - ------------------------------------------------------------------------------ Invoicing - --------- OEM Foundation is a prepaid service and all fees and any applicable taxes are due upon acceptance of this Agreement. We must be in receipt of a purchase order, check, or other acceptable form of payment before we will begin providing services. We will invoice you for additional services performed and expenses incurred. Our invoices are payable within 30 days of receipt by you and will be directed to Your representative for payment at the address shown above unless otherwise provided in a Purchase Order. TERM The Agreement will commence on June 8, 2007 and will expire on __________ (the "Expiration Date") or the date We conclude the Services, which ever is later. By signing below the parties acknowledge and agree to be bound to the terms of Agreement. Partner Microsoft Affiliate - ------- ------------------- Name of Partner Name Seamless Wi Fi, Inc. Microsoft Corporation Signature Signature Name of person signing (please print) Name of person signing Mark Kuenster Title of person signing (please print) Title of person signing Albert R. Reda (CEO) Senior Director Date Date June 6, 2007 June 21, 2007 TO PURCHASE OEM SUPPORT PLEASE FOLLOW THE BELOW STEPS: MICROSOFT FOUNDATIOLN SERVICES AGREEMENT: [ ] Complete customer contact information on page 1 [ ] Print 2 copies [ ] Please leave effective dates and contract number blank on page 1 of the Services Description [ ] Sign and date the Service Agreement onpage 2 (original ink signature on both copies) [ ] Return both originals, as one countersigned original will be sent to you for your files PAYMENT: [ ] Please submit purchase order with signed agreement. Terms for payment are Net 30 days. PLEASE CONTACT US IF YOU REQUIRE DIFFERENT PAYMENT OPTIONS. WHEN COMPLETE, ALL DOCUMENTATION SHOULD BE SENT VIA A TRACEABLE METHOD OF SHIPMENT TO: Kirsten Gudmundson Microsoft Corporation One Microsoft Way, 122/2455 Redmond, WA 98052 USA PLEASE ALLOW ONE WEEK FROM RECEIPT OF ALL DOCUMENTATION FOR ACTIVATION OF SUPPORT. QUESTIONS: Please contact Kirsten Gudmundson with any questions on any of the documents or this process at 425-421-8769 or kirsteng@microsoft.com SERVICES DESCRIPTION 1. AVAILABLE SERVICES. You may utilize any combination of the following Services. Unless We specify otherwise, the Services are charged on an hourly basis and will be deducted from the total number of hours You have purchased as set forth in Section 1.7. 1.1 SUPPORT ACCOUNT MANAGEMENT. Support Account Management from a pool of Microsoft Resources ("Service Resources") is intended to help coordinate the support and services relationship. Services Resources are Your advocates within Microsoft and facilitates a team that can provide Problem Resolution Support and Support Assistance. Services Resources also serve as the point of information delivery and provides Your feedback regarding the Services to the product groups, product support services, quality and testing labs, research and development and other Microsoft groups. Service Resources can also provide the following Services: a. SERVICES PLANNING. At the commencement of this Agreement, a planning session CAN be conducted with Your Service Contact. The purpose of this session is to discuss the Services available and gather input regarding Your support needs. b. STATUS MEETINGS AND REPORTING. A standard status report can be prepared on a regular basis, to summarize the Services delivered during the previous reporting period. c. ESCALATION MANAGEMENT. Support issues that require escalation to other resources within Microsoft can be closely managed by the Services Resource to expedite resolution. 1.2 PROBLEM RESOLUTION SUPPORT. Problem Resolution Support provides assistance for problems with specific symptoms encountered with Microsoft products, where there is a reasonable expectation that the problems are caused by Microsoft products. Problem Resolution Support is available 24 hours a day, seven days a week. Requests for support must be submitted electronically through the website by Your Service Contact. Problem Resolution Services can include any combination of the following: a. PROBLEM REQUEST (BREAK-FIX). An assisted break-fix support request is defined as a single support issue and the reasonable effort needed to resolve it. A single support issue is a problem that cannot be broken down into subordinate issues. If a problem consists of subordinate issues, each shall be considered a separate issue. Issues requiring an onsite visit will include charges for reasonable travel and living expenses. In certain situations, We may provide You with a modification to the commercially available Microsoft product software code to address specific critical problems ("Hotfixes") in response to an assisted break-fix support request. Hotfixes are designed to address Your specific problems and are not regression tested. Except as otherwise provided herein or in an Exhibit, Hotfixes may not be distributed to unaffiliated third parties without Our express written consent. You are responsible for setting the initial severity level to Severity B or Severity C. You can request a change in severity level at any time in consultation with Us. The incident severity will determine the response levels within Microsoft. Estimated response times and Your responsibilities are defined in the following table:
------------------------------------------------------------------------------------------------------------------- Severity (1) Your situation Our Expected Response Your Expected Response ------------------------------------------------------------------------------------------------------------------- I o Catastrophic business o Continuous effort on a o Notification of Senior Escalation impact: 24x7 basis Executives at Your site Only o You have complete loss o Our Resources at Your o Allocation of appropriate of a core (mission site as requested.(3) resources to sustain critical) Rapid Escalation continuous effort on a business process and within Microsoft 24x7 basis work cannot reasonably to Product o Rapid access and response continue teams from change control o Needs immediate o Notification of Senior authority attention Executives at Microsoft -------------------------------------------------------------------------------------------------------------------
2
------------------------------------------------------------------------------------------------------------------ A o Critical business impact: o Continuous effort o Allocation of appropriate Escalation o Your business on a 24x7 basis resources to sustain Only has significant loss o Our Resources at Your continuous effort on a or degradation of services site as requested. (3) 24x7 basis (2) o Needs attention o Notification of o Rapid access and response within 1 hour Senior Managers at from change control Microsoft. authority o Management notification ------------------------------------------------------------------------------------------------------------------ B o Moderate business o 1st response in o Allocation of appropriate Submission impact: 4 hours or resources to sustain via web o Your business has less Business Hours (1) moderate loss or o Effort during continuous effort degradation of services Business Hours (1) o Access and response from but work can reasonably only change control authority continue in an impaired within 8 Business Hours (1) manner. o Needs attention within 4 Business/ Hours ------------------------------------------------------------------------------------------------------------------ C o Minimum business o 1st response in 8 hours o Accurate contact Submission impact: or less information on case owner via web o Your business is o Effort during o Responsive within one day substantially Business Hours (1) only on a Business Hours (1) daily functioning with minor basis (2). or no impediments of services. o Needs attention within 8 Business/ Hours ------------------------------------------------------------------------------------------------------------------
(1) Business Hours is 8AM to 6PM United States Pacific Time (GMT -08:00), Monday thru Friday excluding US public holidays, (2) We may need to downgrade the severity level if You are not able to provide adequate resources or responses to enable us to continue with problem resolution efforts. (3) Additional fees apply. You may be required to perform problem determination and resolution activities as requested by Us. Problem determination and resolution activities may include detailed symptom reproduction scenarios, capturing error messages, collecting configuration information, changing product configurations, installing new versions of software or new components, or modifying processes. You are responsible for implementing the procedures necessary to safeguard the integrity and security of Your software and data from unauthorized access and to reconstruct lost or altered files resulting from catastrophic failures. b. LOGO ESCALATION. The Services Resource will act as Your liaison with the test teams. This service includes: o Escalation of Logo submissions o Providing feedback on submission failures to assist You in obtaining a "pass" certification o Providing assistance with participation in beta Hardware Compatibility Tests o Providing proactive information regarding product testing suites c. REMOTE DEBUGGING SETUP. We can setup and test remote debugging of devices located at your organization prior to utilizing remote debugging for problem resolution of a specific issue reported by You. In order to setup and pre-verify remote debugging, You must provide us with the appropriate access and necessary equipment. A minimum five hour set-up fee will be charged FOR this service. Your Service Resources can provide a list of the currently available remote debugging configurations. d. KNOWLEDGE BASE ("KB") SERVICES AND LOCALIZATION. You may request that We prepare KB articles that pertain to specific Microsoft product bugs that affect the functionality of Your products. We may provide this service on a case-by-case basis, subject to Our mutual agreement regarding the 3 business impact of the problem. You may request Localization of an existing KB article as an additional billable service. 1.3 SUPPORT ASSISTANCE. Support Assistance provides short-term advice and guidance for problems not covered with Problem Resolution Support as well as requests for consultative assistance for design, development and deployment issues. Support Assistance can help You prepare to install or embed Microsoft products on OEM systems, Independent Hardware Vendor, Mobility and Embedded devices. Requests for Support Assistance must be submitted electronically through the website by Your Service Contact. Requests for Support Assistance may be submitted 24 hours a day, seven days a week. Urgent requests must be marked as Severity B and Our first response will be within 24 hours. All other requests should be marked as Severity C and Our first response will be within 48 hours. Your expected response will be the same as set forth in the severity table in Section 1.2. The following are types of Support Assistance that can be utilized under this Agreement: a. GENERAL SUPPORT ASSISTANCE. Service Resources can review Your existing service planning, support readiness and pre-install processes and provide technical advice to assist with troubleshooting preparation. Service Resources can also provide technical assistance to help You more effectively utilize product toolkits. b. BETA AND EARLY ADOPTER NOMINATION. Service Resources can advocate for Your nomination into Microsoft Beta Product and Early Adopter Programs as appropriate. c. ADAPTATION SERVICES. Service Resources can assist You with planning and installing Microsoft products on Your manufactured systems and help coordinate installation activities between third- party equipment or software suppliers and Microsoft. d. DEVELOPMENT SUPPORT ASSISTANCE. Application Development Consulting helps You in Your creation and development of internal applications on the Microsoft platform that integrate Microsoft technologies. Development Support Assistance specializes in Microsoft development tools and technologies. 1.4 INFORMATION SERVICES. Information Services provide You with technical information about Microsoft products and support tools that help You to implement and operate Microsoft products in a more efficient and effective manner. Information Services includes any combination of the following (though the Newsletter is automatically included): a. WEBSITE. The website provides access to the following information resources at no additional charge: o Regularly updated product news flashes documenting key support and operational information about Microsoft products. o Critical problem alerts notifying You of potentially high-impact problems. o Web response tool for submitting and checking the status of support incidents. o Microsoft Knowledge Base of technical articles and troubleshooting tools and guides. b. SUPPORT WEBCASTS. Support webcasts are regularly scheduled webcast discussions led by Our program managers, developers and professionals covering key areas of Microsoft technology. These are provided at no additional charge. c. NEWSLETTER. You will receive a newsletter at most monthly which may include the following: o industry trend analysis o Recent significant wins o List of recently published KB articles o Technical tips and links to technical articles/whitepapers o Upcoming events and announcements section o Notification of Beta and Early Adopter Programs o List of service enhancements from OEM services o Tips on how to effectively use the Services 1.5 WORKSHOPS AND EVENTS. Workshops and Events are designed to introduce or enhance your understanding of Microsoft products. Workshops and Events can include the following: a. WORKSHOPS. We can conduct instructor-led, hands-on training sessions that emphasize Microsoft technologies. Workshops are priced depending upon the length, delivery location and material presented. Your Services Resource can provide You with a current list of available Workshops. 4 b. EVENTS. We can provide broad and deep technical development-focused presentations, that provide training and facilitate your implementations of Microsoft technologies. These events provide the opportunity to interact with Microsoft product groups, OEM Services technical, account and marketing contacts. Your Services Resource can provide You with notification of scheduled events. Attendance for Workshops and Events is only available as an add-on Additional Service. 1.6 ADDITIONAL SERVICES. You may request additions to this Agreement at any time. Additional Services that are available for purchase, and the specific terms and conditions applicable to those Services, may be set forth in this Agreement or an attached Additional Services Exhibit. Additional Services will be invoiced at the prevailing price at the time the services are rendered or upon acceptance of an Exhibit referencing this Agreement. The total amount of Services that You purchase under this Agreement may not exceed a maximum of 600 hours. 1.7 OEM FOUNDATION PLAN SERVICES AND FEES. The quantities listed in the table below represent the amount of Services that you have pre-purchased for use during the term of this Agreement and the fee payable.
------------------------------------------------------------------------ SERVICES FEE (US$) ------------------------------------------------------------------------ o OEM Foundation o 100 Hours of Services Management, Support Assistance and Problem Resolution o Additional 0 Hours for Support Assistance for Consulting, Reviews, Development, Testing (40 hours $15,000 minimum) o Additional 0 Hours for Attendance At Technical Workshops or Training Events (16 hours minimum) o Additional 0 Hours for Kb Localization (8 hours minimum) ------------------------------------------------------------------------
1.8 PARTNER'S DESIGNATED SERVICE CONTACT Service Contract ("sc") Name: _____________________________________ Address: _____________________________________ Phone: _____________________________________ Email: _____________________________________ Facsimile: Time zone (GMT+}: _____________________________________ 2. PREREQUISITES AND ASSUMPTIONS. Our delivery of Services under this Agreement is based upon the following Prerequisites and Assumptions: a. All Services will be provided remotely to Your locations. Where onsite visits are mutually agreed and not pre-paid, You will be billed for reasonable travel and living expenses. b. All Services will be provided in the English language. c. We will provide support for all versions of commercially released generally available Microsoft products unless specifically excluded on the website. Support for those Microsoft products that 5 have entered the Extended Phase of support, as defined on the website, will be charged on an hourly basis only. Non-security related Hoffix support is not available for Microsoft products that have entered the Extended Phase of support. d. All Services, including any additional Services purchased after the Effective Date shall be forfeited if not utilized during the term of this Agreement. e. Support Assistance is dependent upon the availability of resources. f. You must have access to the Internet. g. Additional Prerequisites and Assumption may be set forth in relevant Exhibits. 3. YOUR RESPONSIBILITIES. This section sets forth Your performance obligations under this Agreement. Our performance is predicated upon You fulfilling the following responsibilities in addition to those set forth in Section 1.2 and Section 1.3 and any applicable Exhibits. Failure to comply with the following responsibilities may result in delays of Service. a. You will designate a Services Contact ("SC") for services related activities. The SC will manage all of Your services activities, and internal processes for submitting requests to Us. The SC will be supplied with an individual account number for access to the website for support issue submission and information content. b. You agree to have an internal escalation process to facilitate communication between Your management and Us as appropriate. c. You agree to respond to customer satisfaction surveys We may provide to You from time-to-time regarding the Services. d. You agree to provide reasonable office space, telephone and high speed internet access, and access to Your internal systems and diagnostic tools to Our Services Resources that are required to be on-site. e. You are responsible for any travel and expenses incurred by Your employees or contractors. 6 TERMS AND CONDITIONS 4. OWNERSHIP AND LICENSE. Except as otherwise set forth in an Exhibit (or attachment to an Exhibit) to this Agreement, this section governs the ownership and use rights of any computer code or other materials that may be provided under this Agreement. a. Fixes. Except as otherwise provided herein, Your right to use fixes is governed by the license agreement for the affected product or, if the fix is not provided for a specific product, any other use terms We provide. All fixes provided are licensed to You. Your right to redistribute fixes is governed by the terms of Your currently valid OEM license agreement for the affected product. For the purposes of this Agreement, "fixes" means any product related bug fixes, workarounds, patches, beta fixes or beta builds other than sample code or materials: and "product(s)" means any computer code or materials comprising commercial, free, pre-release or beta products We make available to You for license which are published by Us or Our affiliates. We do not transfer ownership rights in any products and We reserve all rights not expressly granted. b. PRE-EXISTING WORK. All rights in any computer code or materials developed or otherwise obtained by or for Us or Our affiliates, or You or Your affiliates independently of this Agreement (Pre-existing Work") shall remain the sole property of the Party providing the Pre-existing Work. During the performance of the Services for this Agreement, each Party grants to the other Party (and Our Contracts as necessary) a temporary, non-exclusive license to use, reproduce and modify any of its Pre-existing Work provided to the other Partner solely for the performance of such Services. We grant You a non-exclusive, perpetual, fully paid-up license to use, reproduce and modify (if applicable) Our Pre-existing Work in the form delivered to You for Your internal business operations without any obligation of accounting or payment of royalties. Your licenses to Our Pre-existing Work is conditioned upon Your compliance with the terms of this Agreement and the perpetual license applies solely to Our Pre-existing Work that is left to You at the conclusion of Our performance of the Services. c. MATERIALS. All rights in any materials developed by Us (other than software cede) and provided to You in connection with the Services ("Materials") shall be owned by Us except to the extent such Materials constitute Your Pre-existing Work. We grant You a non-exclusive, perpetual, fully paid- up license to use, reproduce and modify the Materials solely for Your internal business operations and without any obligation of accounting or payment of royalties. You may sublicense the rights granted herein to Your Affiliates. All rights not expressly granted, are reserved. d. SAMPLE CODE. We grant You a nonexclusive, perpetual, royalty-free right to use and modify any software code provided by Us for the purposes of illustration ("Sample Code") and to reproduce and distribute the object code form of the Sample Code, provided that You agree: (i) to not use Our name, logo, or trademarks to market Your software product in which the Sample Code is embedded; (ii) to include a valid copyright notice on Your software product in which the Sample Code is embedded; and (iii) to indemnify, hold harmless, and defend Us and Our suppliers from and against any claims or lawsuits, including attorneys' fees, that arise or result from the use or distribution of the Sample Code. e. OPEN SOURCE LICENSE RESTRICTIONS. Because certain third party license terms require that computer code be generally (i) disclosed in source code form to third parties; (ii) licensed to third parties for the purpose of making derivative works; or (iii) redistributable to third parties at no charge (collectively, "open source license terms"), the license rights that each Party has granted to any computer code (or any intellectual property associated therewith) do not include any license, right, power or authority to incorporate, modify, combine and/or distribute that computer code with any other computer code in a manner which would subject the other's computer code to open source license terms. Furthermore, each Party warrants that it will not provide or give to the other Party computer code that is governed by open source license terms. f. RESERVATION OF RIGHTS. All rights not expressly granted in this Section 4 are reserved. g. RESTRICTIONS ON USE. You may not i) rent, lease, lend or host service deliverables or fixes, except as otherwise provided herein; ii) reverse engineer, de-compile or disassemble fixes or service deliverables, except to the extent expressly permitted by applicable law.Despite this limitation; or iii) transfer licenses to, or sublicense fixes or service deliverables to any government entity or quasi governmental entity, except as specifically authorized herein. 7 h. EXPORT. You agree to comply with all applicable international and national laws that apply to the products, fixes and service deliverables, including the U.S. Export Administration Regulations, as well as end-user, end-use and destination restrictions issued by U.S. and other governments. For additional information on exporting Microsoft products, see http://MICROSOFT.COM/EXPORTING. 5. CONFIDENTIALITY. The terms and conditions of this Agreement are confidential, and any and all information identified by either Party as "Confidential" and/or "Proprietary", or which, under all of the circumstances, ought reasonably to be treated as Confidential and/or Proprietary ("Confidential Information"), will not be disclosed to any third person without the express consent of the other Party except under the terms of this Agreement for five (5) years following the date of its disclosure. These confidentiality obligations shall not apply to any information which is, or becomes, available to the general public other than through a breach by the receiving Party, or is developed through the independent efforts of the receiving Party. Either Party shall be free to use for any purpose the residuals resulting from access to or work with such Confidential Information, provided that such Party shall maintain the confidentiality of the Confidential Information. The term "residuals" means information in non-tangible form, which may be retained by persons who have had access to the Confidential Information. However, nothing in this paragraph shall be deemed to grant to EITHER Party a license in the other Party's copyrights or patents. Either Party may provide suggestions, comments or other feedback to the other with respect to the other's confidential information. Feedback is voluntary and the Party receiving feedback is not required to hold it in confidence. The Party receiving feedback will not disclose the source of feedback without the providing Party's consent. Feedback may be used for any purpose without obligation of any kind. We may use any technical information we derive from providing services related to our products for problem resolution, troubleshooting, product functionality enhancements and fixes, for our knowledge base. We agree not to identify You or disclose any of Your confidential information in any item in the knowledge base. 6. WARRANTIES, DISCLAIMER. We warrant that all services will be performed in a good workman like manner. EXCEPT FOR THE FOREGOING EXPRESS WARRANTY, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, WE DISCLAIM AND EXCLUDE ALL REPRESENTATIONS, WARRANTIES, AND CONDITIONS WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING BUT NOT LIMITED TO REPRESENTATIONS, WARRANTIES, OR CONDITIONS OF TITLE, NON-INFRINGEMENT, SATISFACTORY CONDITION, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO ANY SERVICES, SERVICE DELIVERABLES, FIXES, PRODUCTS, OR ANY OTHER MATERIALS OR INFORMATION. 7. LIMITATION OF LIABILITY, EXCLUSIONS. To the maximum extent permitted by applicable law, Our total liability (and that of Our contractors) for direct damages is limited to the amount You have paid under this Agreement for the Services giving rise to the claims. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, NEITHER PARTY NOR THEIR CONTRACTORS WILL BE LIABLE FOR ANY INDIRECT, CONSEQUENTIAL (INCLUDING WITHOUT LIMITATION, DAMAGES FOR BUSINESS INTERRUPTION, OR LOSS OF BUSINESS INFORMATION), SPECIAL, OR INCIDENTAL DAMAGES OR DAMAGES FOR LOSS OF PROFITS OR REVENUES ARISING IN CONNECTION WITH THIS AGREEMENT, ANY STATEMENT OF SERVICES, SERVICES, SERVICE DELIVERABLES, FIXES, PRODUCTS, OR ANY OTHER MATERIALS OR INFORMATION, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR IF SUCH POSSIBILITY WAS REASONABLY FORESEEABLE. The foregoing limitations and exclusions of liability apply regardless of whether the liability is based on breach of contract, tort (including negligence), strict liability, breach of warranties, or any other legal theory. The limitations AND exclusions of liability for damages in this section 7 do not apply to a Party's violations of section 5 (Confidentiality) or a Party's violation of the other Party's intellectual property rights. 8. TERMINATION. Either Party may terminate this Agreement if the other Party is (i) in material breach or default of any obligation that is not cured within 30 calendar days notice of such breach or (ii) fails to pay any invoice that is more than 60 calendar days outstanding. You agree to pay all fees for Services performed and expenses incurred prior to termination. 9. MISCELLANEOUS. This Agreement constitutes the Parties' entire agreement concerning the subject matter hereof, and supersede any other prior and contemporaneous communications. All notices, authorizations, and requests GIVEN or made in connection with this Agreement must be sent by post, express courier, or facsimile to the addresses indicated on the cover page of this Agreement. Notices will be deemed delivered on the date shown on the postal return receipt or on the courier, or facsimile confirmation of delivery You may not assign this Agreement without Our written consent, which consent will not be unreasonably withheld. This Agreement will be governed by the laws of the State of Washington and any action brought under this Agreement shall be brought in federal or state court in the State of Washington. 8 Notwithstanding, this does not prevent either Party from seeking injunctive relief with respect to a violation of intellectual property rights or confidentiality obligations in any appropriate jurisdiction. The sections regarding restrictions on use, fees, confidentiality, ownership and license, no other warranties, limitations of liability, termination, and miscellaneous of this Agreement, will survive any termination or expiration of this Agreement. If a court holds any provision of this Agreement to be illegal, invalid or unenforceable, the remaining provisions will remain in full force and effect and the parties will amend the Agreement to give effect to the stricken clause to the maximum extent possible. No waiver of any breach of this Agreement or will be a waiver of any other breach, and no waiver will be effective unless made in wilting and signed by an authorized representative of the waiving Party. Apart from the payment of any amounts due, neither Party shall be liable for performance delays or for non-performance due to causes beyond its reasonable control. 9 EX-10.9 5 seamless_ex1009.txt EXHIBIT 10.9 Exhibit 10.9 LOAN SATISFACTION AGREEMENT THIS LOAN SATISFACTION AGREEMENT ("Agreement"), dated as of June 7, 2007, is by and between Seamless Wi-Fi, Inc., a Nevada corporation ("Seamless") and Ayuda Funding Corp., a Nevada corporation ("Ayuda") (individually, a "Party"; collectively, the "Parties"). WHEREAS, Seamless has borrowed $4,600,000 under three loan agreements with Ayuda (collectively, the "Loan"); WHEREAS, the current balance of the Loan is $4,904,508.03; WHEREAS, Seamless currently owns 1,000,000 shares of common stock of 1st Global Financial Corporation, a Nevada corporation, and 500,000 shares of common stock of DLR Funding, Inc., a Nevada corporation (collectively, the "Valuable Assets"); and WHEREAS, Seamless desires to transfer to Ayuda, and Ayuda desires to receive from Seamless, the Valuable Assets as payment for the full balance of the Loan. NOW THEREFORE, in consideration of the promises and respective mutual agreements herein contained, it is agreed by and between the Parties hereto as follows: 1. SETTLEMENT AND DISCHARGE OF LOAN. Upon execution of this Agreement (the "Closing"), subject to the terms and conditions herein set forth, Seamless shall transfer to Ayuda, and Ayuda shall accept from Seamless, the Valuable Assets as final settlement for the full balance of the Loan. Notwithstanding anything else in this Agreement, effective as of the Closing, the Loan shall be immediately deemed satisfied in full. IN WITNESS WHEREOF, the Parties hereto have executed this Agreement, as of the date first written hereinabove. SEAMLESS WI-FI, INC., AYUDA FUNDING CORP., a Nevada corporation a Nevada corporation /s/ Albert Reda /s/ Manuel M. Bello - ------------------------------------ ----------------------------------------- Albert Reda, Chief Executive Officer Manuel M. Bello, Chief Executive Officer EX-10.10 6 seamless_ex1010.txt EXHIBIT 10.10 Exhibit 10.10 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT ("Agreement") is made, entered into, and effective as of June 8, 2007 (the "Effective Date"), by and between Seamless Wi-Fi, Inc., a Nevada corporation ("Company"), and Albert Reda, an individual ("Employee") (individually, a "Party"; collectively, the "Parties"). RECITALS WHEREAS, Company desires to employ Employee, and Employee desires to be employed as the Chief Executive Officer of Company; and WHEREAS, Company desires to have an employment agreement with Employee as its Chief Executive Officer, subject to the terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the mutual covenants and conditions contained herein, the Parties hereto hereby agree as follows: AGREEMENT 1. TERM OF EMPLOYMENT. a. SPECIFIED PERIOD. Company hereby employs Employee and Employee accepts employment with Company for a period of five years beginning on June 8, 2007, and terminating on June 7, 2012. b. RENEWAL. This Agreement is subject to automatic renewal for successive one year terms, upon the same terms and conditions as set forth herein, unless either this Agreement is terminated pursuant to Section 8 hereof or a Party gives written notice to the other Party of its intent to terminate, at least 30 days prior to expiration of the then-current term. c. EMPLOYMENT TERM DEFINED. "Employment Term" refers to the entire period of employment of Employee by Company, whether for the period provided above, or whether terminated earlier as hereinafter provided or extended by automatic renewal as described above. 2. DUTIES AND OBLIGATIONS OF EMPLOYEE. Employee shall serve as Chief Executive Officer of the Company. Employee shall report to the Board of Directors or any other individual designated by the Board of Directors of the Company. Employee shall faithfully and diligently perform all professional duties and acts as may be requested and required of Employee by Company or its Directors. Employee shall devote such time and attention to the business of Company as shall be required to perform the required services and duties. Employee at all times during the Employment Term shall strictly adhere to and obey all policies, rules and regulations established from time to time governing the conduct of employees of Company. 3. EXCLUSIVITY, NON-DISCLOSURE. a. DEVOTION TO COMPANY BUSINESS. Employee agrees to perform Employee's services efficiently and to the best of Employee's ability. Employee agrees throughout the term of this Agreement to devote his time, energy and skill to the business of the Company and to the promotion of the best interests of the Company. b. TRADE SECRETS. Employee agrees that he shall not at any time, either during or subsequent to his Employment Term, unless expressly consented to in writing by Company, either directly or indirectly use or disclose to any person or entity any confidential information of any kind, nature or description concerning any matters affecting or relating to the business of Company, including, but not limited to, information concerning the customers of Company, Company's marketing methods, compensation paid to employees, independent contractors or suppliers and other terms of their employment or contractual relationships, financial and business records, know-how, or any other information concerning the business of Company, its manner of operations, or other data of any kind, nature or description. Employee agrees that the above information and items are important, material and confidential trade secrets and these affect the successful conduct of Company's business and its goodwill. c. INVENTIONS AND PATENTS. All processes, inventions, patents, computer software, copyrights, trademarks and other intangible rights (collectively referred to as "Intellectual Property") that may be conceived or developed by Employee during the Employment Term, either alone or with others, made or conceived by him shall remain the sole property of Company. 4. COMPENSATION. a. SALARY. Subject to the termination of this Agreement as provided herein, Company shall compensate Employee for his services hereunder at a monthly salary of $20,000 until June 30, 2007. Thereafter, Company shall compensate Employee for his services hereunder at a monthly salary of $25,000 for the remainder of the Employment Term. All salary payments hereof shall be payable in accordance with the Company's practices, less normal payroll deductions, and prorated for the actual Employment Term. b. SALARY INCREASES; ADDITIONAL COMPENSATION. In the event that the Company becomes profitable according to generally accepted accounting principles ("GAAP"), Employee's monthly salary shall be increased to $30,000 for the remainder of the Employment Term. Such salary increase shall become effective on the first day of the month following the month in which the Company becomes profitable according to GAAP. c. BONUS. Employee shall receive bonuses as may be determined by the Board of Directors of the Company in its sole discretion. 5. EMPLOYEE INCENTIVES. Employee shall be entitled to receive incentives under all incentive plans made available by Company or in the future to similarly situated employees, subject to the terms, conditions and overall administration of such plans, including but not limited to stock options, bonuses, profit sharing, and any other incentive plans that the Company has made available to similarly situated employees. 6. EMPLOYEE BENEFITS. a. VACATION. Employee shall be entitled, during each employment year, to four weeks vacation, per annum, non-cumulative. Employee may be absent from his employment for Vacation only at such times as may be convenient to Company and Employee. b. MEDICAL COVERAGE. Company agrees to include Employee in the coverage of its medical and dental insurance as provided to other employees of the Company. c. PLAN PARTICIPATION. Employee shall be entitled to participate in or to receive benefits under all of Company's employee benefit plans made available by Company or in the future to similarly situated employees, subject to the terms, conditions and overall administration of such plans, including but not limited to 401(k) plans, IRA plans, E.R.I.S.A Plans, any other retirement or benefit plans that the Company has made available to similarly situated employees. 7. BUSINESS EXPENSES. Employee will be required to incur travel, meals, entertainment and other business expenses on behalf of the Company in the performance of Employee's duties hereunder. Company will reimburse Employee for all such reasonable business expenses incurred by Employee in connection with Company's business upon presentation of receipts or other acceptable documentation of the expenditures. In compensating Employee for expenses, the ordinary and usual business guidelines and documentation requirements shall be adhered to by Company and Employee. 8. TERMINATION OF EMPLOYMENT. a. TERMINATION FOR CAUSE. Company may terminate this Agreement for cause at any time. For purposes of this Agreement, the term "cause" shall include, but not be limited to, in the Company's reasonable but sole discretion, the following: a material breach of or failure to perform any covenant or obligation in this Agreement, disloyalty, dishonesty, neglect of duties, unprofessional conduct, acts of moral turpitude, disappearance, felonious conduct, or fraud. Company may terminate this Agreement for cause by giving written notice of termination to Employee without prejudice to any other remedy to which Company may be entitled either at law, in equity, or under this Agreement. The notice of termination required by this section shall specify the ground for the termination and shall be supported by a statement of all relevant facts. b. TERMINATION UPON DEATH OR DISABILITY. i. DEATH. This Agreement shall be terminated immediately upon the death of Employee. ii. DISABILITY. Company reserves the right to terminate this Agreement if, due to illness or injury, either physical or mental, Employee is unable to perform Employee's customary duties as an employee of Company, unless reasonable accommodation can be made to allow Employee to continue working, for more than 30 days in the aggregate out of a period of 12 consecutive months. The disability shall be determined by a certification from a physician. Such a termination shall be effected by giving ten days' written notice of termination to Employee. Termination pursuant to this provision shall not prejudice Employee's rights to receive disability insurance payments or the continued compensation pursuant to this Agreement. iii. FOR CAUSE. Termination under this section for either death or disability shall be considered "for cause" for the purposes of this Agreement. c. EFFECT OF MERGER, TRANSFER OF ASSETS, OR DISSOLUTION. Without the prior written consent of Employee, this Agreement shall not be terminated by any voluntary or involuntary dissolution of Company resulting from a merger or consolidation in which Company is not the consolidated or surviving corporation, or a transfer of all or substantially all of the assets of Company. In the event of any such merger or consolidation or transfer of assets, Employee's rights, benefits, and obligations hereunder shall be assigned to the surviving or resulting corporation or the transferee of Company's assets, unless Employee agrees otherwise. d. PAYMENT ON TERMINATION. If Company terminates this Agreement "without cause," it shall pay "Severance Benefits" to the Employee. Severance Benefits shall mean, for purposes of this Agreement, a cash payment equal to the aggregate compensation payable to the Employee during the remaining term of this Agreement, including all salary, commissions, bonuses and other compensation. e. TERMINATION BY EMPLOYEE. i. WITHOUT CAUSE. Employee may terminate this Agreement without cause upon 30 days' prior written notice to Company. ii. WITH CAUSE. Employee may terminate this Agreement immediately with cause, in which event Employee shall receive the Payment on Termination in accordance with Section 8(d) herein. For the purposes of this Agreement, "cause" for termination by Employee shall be a breach of any material covenant or obligation hereunder; or the termination of this Agreement without the prior written consent of Employee due to the voluntary or involuntary dissolution of the Company, any merger or consolidation in which the Company is not the surviving or resulting corporation, or any transfer of all or subsequently all of the assets of Company. 9. GENERAL PROVISIONS. a. BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of the Parties hereto their respective devisees, legatees, heirs, legal representatives, successors, and permitted assigns. The preceding sentence shall not affect any restriction on assignment set forth elsewhere in this Agreement. b. NOTICES. Any notice, request, instruction, or other document required by the terms of this Agreement, or deemed by any of the Parties hereto to be desirable, to be given to any other party hereto shall be in writing and shall be given by personal delivery, overnight delivery, mailed by registered or certified mail, postage prepaid, with return receipt requested, or sent by facsimile transmission to the addresses of the Parties as follows: TO COMPANY: Seamless Wi-Fi, Inc., ----------- 800 N. Rainbow Blvd, Suite 208 Las Vegas, Nevada Attn: Albert Reda, Chief Executive Officer TO EMPLOYEE: Albert Reda ------------ 15421 Carmenita Road, Suite A Santa Fe Springs, CA 90670 Fax: ____________________ With a copy to: Oswald & Yap 16148 Sand Canyon Avenue Irvine, CA 92618 Fax: (949) 788-8980 Attn: Lynne Bolduc, Esq. The persons and addresses set forth above may be changed from time to time by a notice sent as aforesaid. If notice is given by personal delivery or overnight delivery in accordance with the provisions of this Section, such notice shall be conclusively deemed given at the time of such delivery provided a receipt is obtained from the recipient. If notice is given by mail in accordance with the provisions of this Section, such notice shall be conclusively deemed given upon receipt and delivery or refusal. If notice is given by facsimile transmission in accordance with the provisions of this Section, such notice shall be conclusively deemed given at the time of delivery if during business hours and if not during business hours, at the next business day after delivery, provided a confirmation is obtained by the sender. c. SUMS DUE DECEASED EMPLOYEE. If Employee dies prior to the expiration of the Employment Term, any sums that may be due him from Company under this Agreement as of the date of death shall be paid to Employee's executors, administrators, heirs, personal representatives, successors, and assigns. d. ASSIGNMENT. Subject to all other provisions of this Agreement, any attempt to assign or transfer this Agreement or any of the rights conferred hereby, by judicial process or otherwise, to any person, firm, Company, or corporation without the prior written consent of the other Party, shall be invalid, and may, at the option of such other Party, result in an incurable event of default resulting in termination of this Agreement and all rights hereby conferred. e. CHOICE OF LAW. This Agreement and the rights of the parties hereunder shall be governed by and construed in accordance with the laws of the State of California including all matters of construction, validity, performance, and enforcement and without giving effect to the principles of conflict of laws. f. JURISDICTION. The parties submit to the jurisdiction of the Courts of the County of Orange, State of California or a Federal Court empaneled in the State of California for the resolution of all legal disputes arising under the terms of this Agreement. g. INDEMNIFICATION. Company shall indemnify, defend and hold Employee harmless, to the fullest extent permitted by law, for all claims, demands, losses, costs, expenses, obligations, liabilities, damages, recoveries and deficiencies, including interest, penalties and reasonable attorney's fees that Employee shall incur or suffer that arise from, result from or relate to the discharge of Employee's duties under this Agreement. Company shall maintain adequate insurance for this purpose or shall advance Employee any expenses incurred in defending any such proceeding or claim to the maximum extent permitted by law. h. ENTIRE AGREEMENT. Except as provided herein, this Agreement, including exhibits, contains the entire agreement of the Parties, and supersedes all existing negotiations, representations, or agreements and all other oral, written, or other communications between them concerning the subject matter of this Agreement. There are no representations, agreements, arrangements, or understandings, oral or written, between and among the Parties hereto relating to the subject matter of this Agreement that are not fully expressed herein. i. SEVERABILITY. If any provision hereof is held to be illegal, invalid or unenforceable under present or future laws effective during the term hereof, such provision shall be fully severable. This Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance wherefrom. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically by the Company as a part hereof a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and legal, valid and enforceable. j. CAPTIONS. The captions in this Agreement are inserted only as a matter of convenience and for reference and shall not be deemed to define, limit, enlarge, or describe the scope of this Agreement or the relationship of the Parties, and shall not affect this Agreement or the construction of any provisions herein. k. MODIFICATION. No change, modification, addition, or amendment to this Agreement shall be valid unless in writing and signed by all Parties hereto. l. ATTORNEYS' FEES. In the event any Party hereto shall commence legal proceedings against the other to enforce the terms hereof, or to declare rights hereunder, as the result of a breach of any covenant or condition of this Agreement, the prevailing Party in any such proceeding shall be entitled to recover from the losing Party its costs of suit, including reasonable attorneys' fees, as may be fixed by the court. m. TAXES. Any income taxes required to be paid in connection with the payments due hereunder, shall be borne by the Party required to make such payment. Any withholding taxes in the nature of a tax on income shall be deducted from payments due, and the Party required to withhold such tax shall furnish to the Party receiving such payment all documentation necessary to prove the proper amount to withhold of such taxes and to prove payment to the tax authority of such required withholding. n. NOT FOR THE BENEFIT OF CREDITORS OR THIRD PARTIES. The provisions of this Agreement are intended only for the regulation of relations among the Parties. This Agreement is not intended for the benefit of creditors of the Parties or other third Parties and no rights are granted to creditors of the Parties or other third Parties under this Agreement. Under no circumstances shall any third party, who is a minor, be deemed to have accepted, adopted, or acted in reliance upon this Agreement. o. COUNTERPARTS. This Agreement may be executed in several counterparts and it shall not be necessary for each Party to execute each of such counterparts, but when all of the parties have executed and delivered one of such counterparts, the counterparts, when taken together, shall be deemed to constitute one and the same instrument, enforceable against each Party in accordance with its terms. p. FACSIMILE SIGNATURES. The parties hereto agree that this Agreement may be executed by facsimile signatures and such signatures shall be deemed originals. The parties further agree that within ten days following the execution of this Agreement, they shall exchange original signature pages. q. CONFLICT WAIVER. The Parties hereby agree and acknowledge that the law firm of Oswald & Yap ("the Firm"), which represents the Company, has drafted this Agreement. The Parties hereto further acknowledge that they have been informed of the inherent conflict of interest associated with the drafting of this Agreement by the Firm and waive any action they may have against the Firm regarding such conflict. The Parties have been given the opportunity to consult with counsel of their choice regarding their rights under this Agreement. (SIGNATURE PAGE IMMEDIATELY FOLLOWS) IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed as of the Effective Date. COMPANY: SEAMLESS WI-FI, INC., a Nevada corporation /s/ Albert Reda ------------------------------------------- BY: Albert Reda ITS: Chief Executive Officer EMPLOYEE: ALBERT REDA /s/ Albert Reda ------------------------------------------- Albert Reda CONFIRMED AUTHORIZED BY THE BOARD OF DIRECTORS: SEAMLESS WI-FI, INC., a Nevada corporation /s/ Ken Reda - ------------------------- BY: Ken Reda ITS: Secretary EX-21 7 seamless_ex21.txt EXHIBIT 21 Exhibit 21 SUBSIDIARIES Seamless Skyy-Fi, Inc., a Nevada corporation Seamless Peer 2 Peer, Inc., a Nevada corporation Seamless Internet, Inc., a Nevada corporation EX-31.1 8 seamless_ex3101.txt EXHIBIT 31.1 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 Annual Report of Seamless Wi-Fi, Inc. (the "Company") on Form 10-KSB for the period ending June 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Albert R. Reda, Chief Executive Officer of the Company, certify, pursuant to Rules 13a-14 and 15-d14 of the Securities Exchange Act of 1934 (the "Exchange Act"), as adopted pursuant to ss.302 of the Sarbanes-Oxley Act of 2002, that: 1. I have reviewed this Report; 2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; 3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company, as of, and for, the periods presented in this Report; 4. I and the other certifying officers of the Company 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 any 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 most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and 5. I and the other certifying officers have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and to 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 R. Reda - --------------------------- Albert R. Reda, Chief Executive Officer October 12, 2007 EX-31.2 9 seamless_3102.txt EXHIBIT 31.2 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 Annual Report of Seamless Wi-Fi, Inc. (the "Company") on Form 10-KSB for the period ending June 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Albert R. Reda, Chief Financial Officer of the Company, certify, pursuant to Rules 13a-14 and 15-d14 of the Securities Exchange Act of 1934 (the "Exchange Act"), as adopted pursuant to ss.302 of the Sarbanes-Oxley Act of 2002, that: 1. I have reviewed this Report; 2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; 3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company, as of, and for, the periods presented in this Report; 4. I and the other certifying officers of the Company 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 any 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 most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and 5. I and the other certifying officers have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and to 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 R. Reda - ------------------------ Albert R. Reda Chief Financial Officer October 12, 2007 EX-32 10 seamless_ex32.txt EXHIBIT 32 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 Annual Report of Seamless Wi-Fi, Inc. (the "Company") on Form 10-KSB for the period ending June 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Albert R. 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 results of operations of the Company. /s/ Albert R. Reda - ------------------------------- Albert R. Reda Chief Executive Officer and Chief Financial Officer October 12, 2007 -----END PRIVACY-ENHANCED MESSAGE-----