-----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, AAEymNQ+7Qz/rkiGhNSc/YS7szBvAM8/dwAASjj33+YzhtplrKuvi26v6atQpzGm c76/bGmIND2edPMmPYflZg== 0001144204-06-000830.txt : 20060106 0001144204-06-000830.hdr.sgml : 20060106 20060106172112 ACCESSION NUMBER: 0001144204-06-000830 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20050630 FILED AS OF DATE: 20060106 DATE AS OF CHANGE: 20060106 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIGITAL DESCRIPTOR SYSTEMS INC CENTRAL INDEX KEY: 0000927454 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 232770048 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-26604 FILM NUMBER: 06517314 BUSINESS ADDRESS: STREET 1: 2010F CABOT BLVD WEST CITY: LANGHORNE STATE: PA ZIP: 19047 BUSINESS PHONE: 2157520963 MAIL ADDRESS: STREET 1: 2010 F CABOT BLVD WEST CITY: LANGHORNE STATE: PA ZIP: 19047 10QSB/A 1 v032001_10qsba.txt FORM 10-QSB/A U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 |X| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2005 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 0-21384 Digital Descriptor Systems, Inc. (Exact name of registrant as specified in its charter) Delaware 23-2770048 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification number) 2150 Highway 35, Sea Girt, New Jersey 08750 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's Telephone number, including area code: (732) 359-0260 Indicate by check mark whether the Registrant (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 period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| State the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date. Outstanding at Class of Common Stock August 11, 2005 --------------------- --------------- $.001 par value 623,158,193 Shares Transitional Small Business Disclosure Format Yes |_| No |X| -1- PART I. FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS Digital Descriptor Systems, Inc. and Subsidiary Condensed Consolidated Balance Sheet June 30, 2005 (Unaudited)
As Restated Assets Current Assets Cash and cash equivalents $ 519,058 Restricted cash 50,000 Accounts receivable, less allowance of $34,550 261,206 Inventory 238,808 Prepaid expenses 15,579 Deferred financing costs 809,533 ------------ Total Current Assets 1,894,184 Property and equipment, net of accumulated depreciation of $19,875 451,127 Intangible assets, net of accumulated amortization of $5,055 197,121 Deposits 1,730 Goodwill 4,054,998 ------------ Total Assets $ 6,599,160 ============ Liabilities and Shareholders' Impairment Current Liabilities Accounts payable $ 197,229 Accrued expenses 308,598 Accrued interest 1,076,877 Deferred income 158,644 Convertible debentures current 2,115,610 ------------ Total Current Liabilities 3,856,958 Note payable 3,500,000 Convertible debentures 2,122,996 ------------ Total Liabilities 9,479,954 ------------ Shareholders' deficit Preferred stock, $.001 par value 1,000,000 shares authorized, -0- issued and outstanding -0- Common stock, par value $.001; authorized 9,999,000,000 shares; 472,448,899 issued and outstanding 400,812 Additional paid-in capital 19,334,248 Accumulated deficit (22,615,854) ------------ Total Shareholders' Impairment (2,880,794) ------------ Total Liabilities and Shareholders' Impairment 6,599,160 ============
See notes to the condensed consolidated financial statements. -2- Digital Descriptor Systems, Inc. and Subsidiary Condensed Consolidated Statements of Operations (Unaudited)
Three Months Three Months Six Months Six Months Ended Ended Ended Ended June 30, 2005 June 30, 2004 June 30, 2005 June 30, 2004 -------------- -------------- -------------- -------------- Net Sales $ 875,513 $ 74,090 $ 1,024,388 $ 177,192 Cost of Revenues 447,460 19 492,161 4,967 -------------- -------------- -------------- -------------- Gross Profit 428,053 74,071 532,227 172,225 Operating Expenses: General and administrative expenses 555,080 132,608 775,453 247,401 Sales and marketing 60,585 18,663 79,070 37,470 Research and development 26,512 2,855 51,606 12,173 -------------- -------------- -------------- -------------- Total Operating Expenses 642,177 154,126 906,129 297,044 -------------- -------------- -------------- -------------- Operating Loss (214,124) (80,055) (373,902) (124,819) Other Expense: Depreciation and amortization -0- -0- (24,930) -0- Interest expense and financing costs (437,433) (210,090) (894,963) (421,535) Miscellaneous -0- -0- -0- 3,873 -------------- -------------- -------------- -------------- Other Expense (437,433) (210,090) (919,893) (417,662) -------------- -------------- -------------- -------------- Loss before provision for income taxes (651,557) (290,145) (1,293,795) (542,481) Provision for income taxes -0- -0- 780 -0- -------------- -------------- -------------- -------------- Net Loss $ (651,557) $ (290,145) $ (1,294,575) $ (542,481) ============== ============== ============== ============== Net Loss per common share, basic and diluted $ (-0-) $ (-0-) $ (-0-) $ (-0-) ============== ============== ============== ============== Weighted average shares of common stock Outstanding, basic and diluted 371,637,947 145,958,423 311,343,819 144,969,412 ============== ============== ============== ==============
See notes to the condensed consolidated financial statements. -3- Digital Descriptor Sysytems, Inc. and Subsidiary Condensed Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended June 30, -------------------------------- 2005 2004 -------------- -------------- Cash Flows from operating activities Net loss $ (1,294,575) $ (542,481) Adjustments to reconcile net income (loss) to Net cash used in operating activities Depreciation and amortization 24,930 0 Stock issued for services 30,000 0 Amortization of deferred financing costs and debt discounts related to the beneficial conversion feature of debentures 482,567 283,325 Bad debt expense -0- (12,291) Changes in operating assets and liabilities Accounts receivable (192,674) 90,567 Inventory 95,944 -0- Prepaid expenses (15,579) 4,720 Accounts payable 59,647 18,187 Accrued expenses (1,176) (28,312) Accrued interest 396,810 138,211 Deferred income (30,809) (71,988) -------------- -------------- Net cash used in operating activities (444,915) (120,062) -------------- -------------- Cash flows from investing activities Purchase fixed assets (50,492) 0 Increase in restricted cash -0- 48 Purchase assets from CGM Security Solutions (1,500,000) -- -------------- -------------- Net cash used by financing activities (1,550,492) 48 -------------- -------------- Cash flows from financing activities Payment of financing costs (502,041) (3,500) Proceeds from the issuance of convertible debentures 0 226,935 Due to officer and director (13,830) (3,190) -------------- -------------- Net cash (used) provided by financing activities (515,871) 220,245 -------------- -------------- (Decrease) increase in cash and cash equivalents $ (2,511,278) $ 100,231 Cash and cash equivalents - beginning 3,080,336 51,264 -------------- -------------- Cash and cash equivalents - ending $ 569,058 $ 151,495 ============== ==============
See notes to the condensed consolidated financial statements. -4- Digital Descriptor Systems, Inc. and Subsidiary Notes to the Condensed Consolidated Financial Statements (Unaudited) Note 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Item 310 of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six month period ending June 30, 2005 are not necessarily indicative of the results that may be expected for the year ended December 31, 2005. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-KSB for the year ended December 31, 2004. Principles of Consolidation. The consolidated financial statements include the accounts of CGM Applied Security Technologies, Inc. ("CGM Sub") a wholly owned subsidiary from March 1, 2005 to June 30, 2005. All intercompany balances and transactions have been eliminated in consolidation. Note 2. Supplemental Cash Flows Disclosures There were no cash payments for interest during the second quarter of 2005 or 2004. Cash payments for income taxes were $0 and $780 in the second quarter of 2005 and 2004 respectively. During the second quarter of 2005, $7,300 of the convertible debentures issued in September 2001, were converted into 53,000,000 shares of common stock. During the second quarter of 2005, 49,982,540 shares of common stock were issued for liquidated damages ($10,760) relating to the notes issued December 2001. Note 3. Related Party Transactions The Company owes the former chief executive officer, who is presently a director, and Senior Vice President & CFO, $3,000 at June 30, 2005, for back payroll and sundry expenses with no repayment terms.. Note 4. Goodwill and Acquisition of CGM On March 1, 2005, CGM Sub acquired substantially all of the assets of CGM for $1,500,000 in cash and a $3,500,000 promissory note at 2.86% interest, subject to adjustment. CGM is a manufacturer and distributor of barrier security seals, security tapes and related packaging security systems for palletized cargo, physical security systems for tractors, trailers and containers. The results of operations for CGM is included for March1 through June 30 in the consolidated statement of operations. The following pro forma results for the six months ended June 30, 2005 are presented as if the acquisition was made on January 1, 2005, for the six months ended: CGM DDSI AND SUBSIDIARY ----------- ------------------- Net Sales $ 1,507,764 $ 1,642,309 Net Income (Loss) 88,962 (1,129,689) Net Loss per Share -0- -0- The transaction was accounted for as an acquisition under the purchase method of accounting in accordance with Statement of Accounting Standards No. 141, Business combinations. Under the purchase method of accounting, the total purchase price is allocated to the net tangible and intangible assets acquired by the company in connection with the transaction, based on their fair values as of the completion of the transaction. The excess cost over the net tangible and identifiable intangible assets in the amount of $4,054,998 is allocated to goodwill. The preliminary purchase allocation is subject to finalization of the fair market value of the intangible assets. -5- Note 5. Restatements We have restated the balance sheet as of June 30, 2005 as a result of changes made to the presentation of the debt discounts associated with our convertible debentures. The debt discounts were previously recorded as an intangible asset and are now reducing the convertible debenture, current and long term liabilities. The impact of this adjustment on the financial statements originally reported is surmmarized below : The change had no effect on our statement of operations nor our statement of cash flows. June 30, 2005 - -------------------------------------------------------------------------------- As reported As retated Debt discount and deferred financing costs, net 2,186,504 809,533 Total Assets 7,976,131 6,599,160 Total liabilites 10,856,925 9,479,954 -6- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following is management's discussion and analysis of certain significant factors that will have affected our financial condition and results of operations. Certain statements under this section may constitute "forward-looking statements". The following discussion should be read in conjunction with our financial statements and notes thereto included in this report. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Critical Accounting Policies No material changes have occurred in the disclosure with respect to our critical accounting policies set forth in our Annual Report form 10-KSB for the fiscal year ended December 31, 2004. Results of Operations Three Months Ended June 30, 2005 Compared to the Three Months Ended June 30, 2004 Revenues for the three months ended June 30, 2005, of $875,513 increased $801,423 or 1,182% from the three months ended June30, 2004. The Company generates its revenues through software licenses, hardware, post customer support arrangements security tape and other security related items and other services. The increase in the Company's revenue is directly attributed to the acquisition of CGM, on March 1, 2005. DDSI is still experiencing a decrease in software maintenance contract dollar amount, a loss in client base, and the lack of new product offerings to their clients. Cost of goods sold increased by $447,441 due to the higher cost of sales in CGM Sub. General and Administrative expenses for the three month period ending June 30, 2005, was $555,080 versus $132,608 for the same period prior year for an increase of $422,472. This increase was mainly attributable to the acquisition of CGM which added costs in all areas, and an increase in accounting and legal costs related to the acquisition. Selling and Marketing expenses increased $41,922 for the three months period ended June 30, 2005 to $60,585 from $18,663 for the same period in 2004, which represents a 225% increase. This increase was mainly attributable to costs associated with CGM Sub where the Company is ramping up its advertising, trade shows attendance and the addition of sales reps. Research and development for the three months ended June 30, 2005, was $26,513 compared to $2,855 for the same period prior year for a increase of $23,658. The increase was due to the expansion in development expenses as the Company looks for ways to expand its revenue base by upgrading it products . The net loss for the Company increased 225% for the three months ended June, 2005, to $651,557 from $290,145 for the three months ending June 30, 2004. This was principally due to the increase in expenses in the cost of sales, general & administrative and interest expense on the Company's debt. Six Months Ended June 30, 2005 Compared to the Six Months Ended June 30, 2004 Revenues for the six months ended June 30, 2005, of $1,024,388 increased $847,196 or 478% from the six months ended June30, 2004. The Company generates its revenues through software licenses, hardware, post customer support arrangements security tape and other security related items and other services. The increase in the Company's revenue is directly attributed to the acquisition of CGM, on March 1, 2005. DDSI is still experiencing a decrease in software maintenance contract dollar amount, a loss in client base, and the lack of new product offerings to their clients. Cost of goods sold increased by $487,194 due to the higher cost of sales in CGM Sub. General and Administrative expenses for the six month period ending June 30, 2005, was 775,453 versus $247,40131 for the same period prior year for an increase of $528,052. This increase was mainly attributable to the acquisition of CGM which added costs in all areas, and an increase in accounting and legal costs related to the acquisition. Selling and Marketing expenses increased $41,600 for the six months period ended June 30, 2005 to $79,070 from $37,470 for the same period in 2004, which represents a 111% increase. This increase was mainly attributable to costs associated with CGM Sub where the Company is ramping up its advertising and trade shows attendance and the addition of sales reps. Research and development for the six months ended June 30, 2005, was $51,606 compared to $12,173 for the same period prior year for a increase of $39,433. The increase was due to the expansion in development expenses as the Company looks for ways to expand its revenue base by upgrading it products. The net loss for the Company increased 139% for the six months ended June, 2005, to $1,294,575 from $542,481 for the six months ending June 30, 2004. This was principally due to the increase in expenses in the cost of sales, general & administrative, and interest expense on the Company's debt. -7- Plan of Operations Acquisition of CGM On March 1, 2005, DDSI and CGM Sub acquired substantially all of the assets of CGM, for (i) $1,500,000 in cash and (ii) a 2.86% promissory note (the "Note") in the principal amount of $3,500,000, subject to adjustment (the "Acquisition"). The assets of CGM were acquired pursuant to an Asset Purchase Agreement among DDSI, CGM Sub and CGM dated as of February 25, 2005. The principal amount of the Note is subject to adjustment based upon the average of (i) the gross revenues of CGM Sub for the fiscal year ending December 31, 2007 and (ii) an independent valuation of CGM Sub based upon the consolidated audited financial statements of the Company and CGM Sub for the fiscal years ending December 31, 2006 and 2007. In addition, the Company has granted CGM a secondary security interest in substantially all of its assets and intellectual property. In connection with the Acquisition, the Company entered into a letter agreement with certain of its investors (the "Investors") which extended the maturity date of debt instruments issued on November 30, 2004 until March 1, 2008, and amended the conversion price of the debt that is held by the Investors to the lower of (i) $0.0005 or (ii) 60% of the average of the three lowest intraday trading prices for the Company's common stock during the 20 trading days before, but not including, the conversion date. In addition, the exercise price of the warrants held by the Investors was amended to $.001 per share. The short-term objective of DDSI is the following: The Company plans to spend the majority of it time and efforts on increasing the revenue and marketplace of its wholly owned subsidiary, CGM Applied Security Technologies, as it feels that there is a much greater potential for growth of the product line of CGM. In order to accomplish this the Company has hired additional sales people and is increasing its marketing budget in order to expand the awareness of CGM's product line. In addition the Company has begun a complete revamping of the company's infrastructure in order to make it better able to respond to the need of its customers and to give management the reporting it needs on a timely basis. To continue to expand the sale and acceptance of its core solutions by offering new and synergistic biometric (a measurable, physical characteristic or personal behavioral trait used to recognize the identity, or verify the claimed identity, of an individual) (i.e. FMS) security products to its installed base in the criminal justice market. DDSI's objective is to expand with these, and additional products, into much larger commercial and federal markets. Additionally, DDSI plans to execute an acquisition strategy based upon the availability of financing. We also plan to add additional product lines as a Value Added Reseller. Technologies related to DDSI's core business can bring additional cash flow with relatively small internal development capital outlay. DDSI's long-term objective is as follows: To enhance its sales of the product line acquired with the acquisition of CGM both domestically and internationally, though the addition of sales representative and distributors To seek additional products to sell into its basic business market - Criminal Justice - so that DDSI can generate sales adequate enough to allow for profits. New products include biometric devices such as FMS (Fingerprint Matching System) and our integrated digital image and fingerprint package, Identify on Demand. DDSI believes that it will not reach profitability until the year 2006. Over the next twelve months, management is of the opinion that sufficient working capital will be obtained from operations and external financing to meet DDSI's liabilities and commitments as they become payable. DDSI has in the past successfully relied on private placements of common stock securities, bank debt, loans from private investors and the exercise of common stock warrants in order to sustain operations. If DDSI is unable to obtain additional funding in the future, it may be forced to curtail or terminate operations. DDSI is doing the following in its effort to reach profitability: o Cutting costs in areas that add the least value to DDSI. o Deriving funds through investigating business alliances with other companies who may wish to license the FMS SDK (software developer's kit). o Increasing revenues through the introduction of Compu-Capture(R), specifically towards kindergarten through twelfth grades, for the creation of ID cards. o Increasing revenues through the introduction of a scaled down version of our Compu-Capture(R) product. -8- o Increasing revenues through the addition of innovative technologies as a Value Added Seller. o Acquiring and effectively adding management support to profitable companies complementary to its broadened target markets. Liquidity and Capital Resources We had net losses of $1,294,575 and $542,481 during the six months ended June 30, 2005 and 2004, respectively. As of June 30, 2005, we had a cash balance in the amount of $569,058 and current liabilities of $3,856,958 which includes $3,000 due to officers and directors. The total amount of notes payable and debentures is $7,738,606. We may not have sufficient cash or other assets to meet our current liabilities. In order to meet these obligations, we may need to raise cash from the sale of securities or from borrowings. The Company's revenues have been insufficient to cover the cost of revenues and operating expenses. Therefore, the Company has been dependent on private placements of its Common Stock and issuance of convertible notes in order to sustain operations. In addition, there can be no assurances that the proceeds from private placements or other capital will continue to be available, or that revenues will increase to meet the Company's cash needs, or that a sufficient amount of the Company's Common Stock or other securities can or will be sold or that any Common Stock purchase options/warrants will be exercised to fund the operating needs of the Company. The Company has contractual obligations of $9,321,310 as of June 30, 2005. These contractual obligations, along with the dates on which such payments are due are described below:
Contractual Obligations Total One Year or Less More Than One Year - ------------------------------------- ----------- ---------------- ------------------ Due to Related Parties $ 3,000 $ 3,000 $ 0 Accounts Payable and Accrued Expenses 502,827 502,827 0 Accrued interest on loans 1,076,877 1,076,877 0 Note payable 3,500,000 0 3,500,000 Convertible Debentures 4,238,606 2,115,610 2,122,996 Total Contractual Obligations $ 9,321,310 $ 3,698,314 $ 5,622,996
The Company is currently in default on several of the convertible debentures That are included in current liabilities. Below is a discussion of our sources and uses of funds for the six months ended June 30, 2005 and 2004. Net Cash from Operating Activities Net cash used in operating activities for the six months ended June 30, 2005 and 2004 was $444,915 and $120,062, respectively. The increase in cash used from operating activities in the six months ended June 30, 2005 versus 2004 of $324,853 was principally due to the increase in net operating costs associated with CGM. Net Cash from Investing Activities Net cash used in investing activities for the six months ended June 30, 2005 was $1,550,492 which reflects the cash paid for the acquisition of CGM's assets. Net Cash from Financing Activities Net cash used in financing activities was $515,871 for the six months ended June 30, 2005. $220,245 was provided by financing activities for the six months ended June 30, 2004. Off Balance Sheet Arrangements We do not have any off balance sheet arrangements as of June 30, 2005 or as of the date of this report. -9- Item 3. Control and Procedures (a) Evaluation of Disclosure Controls and Procedures As of June 30, 2005, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective in timely alerting them to material information required to be included in our periodic reports that are filed with the Securities and Exchange Commission in that we were required to make certain revisions to our financial statements. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, reglardless of how remote. In addition, we reviewed our internal controls, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of their last valuation. (b) Changes in Internal Controls There were no significant changes in the Company's internal controls or in other factors that could significantly affect those controls during the quarter covered by this Report or from the end of the reporting period to the date of this Form 10-QSB. -10- PART II. OTHER INFORMATION Item 1. Legal Proceedings None. Item 2. Changes in Securities and Use of Proceeds None. Item 3. Defaults Upon Senior Securities: The Company is in default of $1,733,478 of outstanding debentures. Although the debenture holders have not pursued their rights under such debentures, there can be no assurances that such rights will not be exercised. Item 4. Submission of Matters to a Vote of Security Holders None. Item 5. Other Information None. Item 6. Exhibits 4.1 Security Agreement dated February 25, 2005 by and between CGM Applied Security Technologies, Inc. and CGM Security Solutions, Inc. (incorporated herein by reference to the Current Report on Form 8-K, dated March 3, 2005) 4.2 Intellectual Property Security Agreement dated February 25, 2005 by and between CGM Applied Security Technologies, Inc and CGM Security Solutions, Inc. (incorporated herein by reference to the Current Report on Form 8-K, dated March 3, 2005) 4.3 Letter Agreement, by and among the Company, AJW Partners, LLC, New Millennium Capital Partners II, LLC, AJW Offshore, Ltd. and AJW Qualified Partners, LLC, dated January 31, 2005 (incorporated herein by reference to the Current Report on Form 8-K, dated March 3, 2005) 4.4 2.86% Secured Convertible promissory Note in the name of CGM Security Solutions, Inc. dated February 25, 2005 (incorporated herein by reference to the Current Report on Form 8-K, dated March 3, 2005) 10.1 Asset Purchase Agreement dated February 25, 2005 by and among the Company, CGM Applied Security Technologies, Inc. and CGM Applied Security Solutions. (incorporated herein by reference to the Current Report on Form 8-K, dated March 3, 2005) 10.2 Employment Agreement, dated February 25, 2005, by and among the Company, CGM Applied Security Technologies, Inc. and CGM Security Solutions, Inc. and Eric Hoffer (incorporated herein by reference to the Current Report on Form 8-K, dated March 3, 2005) 10.3 Employment Agreement dated February 25, 2005 by and among the Company and Anthony Shupin (incorporated herein by reference to the Current Report on Form 8-K, dated April 15, 2005) 10.4 Employment Agreement dated February 25, 2005 by and among the Company and Michael J. Pellegrino (incorporated herein by reference to the Current Report on Form 8-K, dated April 15, 2005) 31.1 Certification by Chief Executive Officer pursuant to Sarbanes-Oxley Section 302 31.2 Certification by Chief Financial Officer pursuant to Sarbanes-Oxley Section 302 32.1 Certification by Chief Executive Officer pursuant to 18 U.S.C., Section 1350 32.2 Certification by Chief Financial Officer pursuant to Sarbanes-Oxley Section 1350 -11- SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DIGITAL DESCRIPTOR SYSTEMS, INC. -------------------------------- (Registrant) Date: December 29, 2005 By: /s/ ANTHONY SHUPIN --------------------------------------- Anthony Shupin (President, Chief Executive Officer) (Chairman) Date: December 29, 2005 By: /s/ MICHAEL J. PELLEGRINO --------------------------------------- Michael J. Pellegrino Senior Vice President & CFO (Director) -12- EX-31.1 2 v032001_ex31-1.txt EXHIBIT 31.1 DIGITAL DESCRIPTOR SYSTEMS, INC. OFFICER'S CERTIFICATE PURSUANT TO SECTION 302 I, Anthony Shupin, the Chairman, President, and Chief Executive Officer, of Digital Descriptor Systems, Inc., certify that: 1) I have reviewed this Form 10-QSB/A of Digital Descriptor Systems, Inc. for the fiscal quarter ended June 30, 2005; 2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4) The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e for the small business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer is made known to us by other within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5) The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design of operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: December 29, 2005 /s/ Anthony Shupin - ------------------------------------- Anthony Shupin President and Chief Executive Officer EX-31.2 3 v032001_ex31-2.txt EXHIBIT 31.2 DIGITAL DESCRIPTOR SYSTEMS, INC. OFFICER'S CERTIFICATE PURSUANT TO SECTION 302 I, Michael Pellegrino, the Chief Financial Officer, of Digital Descriptor Systems, Inc., certify that: (1) I have reviewed this Form 10-QSB/A of Digital Descriptor Systems, Inc. for the fiscal quarter ended June 30, 2005; (2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; (3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; (4) The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e for the small business issuer and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer is made known to us by other within those entities, particularly during the period in which this report is being prepared; b. Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c. Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and (5) The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design of operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: December 29, 2005 /s/ Michael Pellegrino - ------------------------------------- Michael Pellegrino Chief Financial Officer EX-32.1 4 v032001_ex32-1.txt EXHIBIT 32.1 DIGITAL DESCRIPTOR SYSTEMS, INC. CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Digital Descriptor Systems, Inc. (the "Company") on Form 10-QSB/A for the period ended June 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Anthony Shupin, Chairman, President, and Chief Executive Officer, of the Company, certify, pursuant to 18 U.S.C.ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Quarterly Report on Form 10-QSB/A of the Company 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. A signed original of this written statement required by Section 906 has been provided to Digital Descriptor Systems, Inc. and will be retained by Digital Descriptor Systems, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. Date: December 29, 2005 /s/ Anthony Shupin - ------------------------------------- Anthony Shupin President and Chief Executive Officer EX-32.2 5 v032001_ex32-2.txt EXHIBIT 32.2 DIGITAL DESCRIPTOR SYSTEMS, INC. CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Digital Descriptor Systems, Inc. (the "Company") on Form 10-QSB/A for the period ended June 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael Pellegrino, Chief Financial Officer, of the Company, certify, pursuant to 18 U.S.C.ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Quarterly Report on Form 10-QSB/A of the Company 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. A signed original of this written statement required by Section 906 has been provided to Digital Descriptor Systems, Inc. and will be retained by Digital Descriptor Systems, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. Date: December 29, 2005 /s/ Michael Pellegrino - ------------------------------------- Michael Pellegrino Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----