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 December 31, 2002, 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 001-16381
CERISTAR, INC.
(Name of small business issuer in its charter)
DELAWARE 87-0642448
(State or other jurisdiction (IRS Employer
of incorporation or organization) identification number)
50 West Broadway, Suite 1100, Salt Lake City, Utah 84119
(Address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code: (801) 350-2017
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001 per share
(Title of Class)
Indicate by checkmark 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 ( )
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of the Form 10-KSB or any amendment to
this Form 10-KSB. ( )
Registrant's revenues for the fiscal year ended December 31, 2002, were $521,000
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of March 31, 2003, was approximately $3,571,000 based on the
closing price on that date on the OTC Bulletin Board.
As of March 31, 2003, Registrant had outstanding 6,002,276 shares of Common
Stock.
PART I
Item 1. Description of Business
CeriStar, Inc. is a Delaware corporation ("CeriStar"), incorporated in December
of 1999 for the development of a new generation of telecommunication services
using fiber optic cable. Its principal product is the delivery of voice, video
and data services over a fiber network. These services include local and long
distance telephone, video conferencing, cable television with video on demand,
computer email and a host of other related services. Its markets are wide and
varied, including residential, commercial, governmental and educational
institutions. CeriStar's products were in the development stage throughout 2001
with marketing commencing in 2002.
In order to attract the capital needs to commence its marketing strategies, on
September 10, 2002 CeriStar entered into a forward triangular merger with Planet
Resources, Inc. ("Planet"), a Delaware corporation, in which the issued and
outstanding common and preferred stock of CeriStar were exchanged for the common
stock of Planet. CeriStar's series A and B preferred stock was exchanged for
..757 common shares of Planet and CeriStar's common stock was exchanged for .322
common shares of Planet. Planet had no operations for the prior two years. The
merger transaction was accounted for as a reverse merger. On October 15, 2002,
Planet Resources Inc. was renamed CeriStar, Inc.
CeriStar's foundation product is its CeriNet IP (Internet Protocol) Utility
Network. IP technology and standards have enabled the voice and computer
industry to adopt one, unified architecture that delivers information across a
common fiber or copper line. CeriNet is an IP open standard architecture that
integrates software and electronic hardware from IP compliant vendors to handle
packets of voice, video and data from origination to termination of that packet.
Components of the IP Utility Network are:
* Layer 2-3 packet switches
* Layer 3+ packet routers * Voice, video and data gateways * UNIX, Sun, and
Linux based servers * Class 5E equivalent soft switch * Video head end systems
(Wholesale to Retail) * OSS/BSS management software * Universal Power Supply
(UPS) backup units
CeriNet connects to Local Area Network (LAN) through its standard ports
consisting of:
* RJ-11 standard two-wire modular connectors * Quad Cable connectors of
four-wire (two twisted-pairs) insulated conductors for CAT-5 wiring * Fiber
Optic Terminals connecting copper wire to optical fiber cable * Fiber to Fiber
SC APC and SC UPC connection * Fiber to RF conversion for edge devices * RJ-45
eight-pin modular connector in the 10/100BaseT standard for unshielded twisted
pair (UTP) connections to smart wiring hubs * Coax RG6 Quad Cable connectors for
analog video feeds
The CeriNet product connects Local Area Network (LAN) customers including state
government, education, municipalities and greenfield developments to a wider
Metro Area Network (MAN) and international Wide Area Network (WAN).
CeriStar's CS-1000, CS-2000, CS-3000 and CS-4000 modules represent CeriStar's
version of bundled services and equipment that connects to CeriNet as customer
premise equipment (CPM) module. Other third party modules representing similar
bundles of services can easily be connected to CeriNet and provide similar
performance to CeriStar's CS series of products.
The consumer interface modules, either CeriStar supplied or third party
supplied, are connected to the CPM modules and allow IP and analog signals to be
sent to CeriNet for routing within the LAN, MAN and WAN at guaranteed
performance levels.
CeriStar has identified and developed a business plan to penetrate a large,
identifiable market, capitalizing on the convergence of voice, video and data
communications. CeriStar's utility network technology platform, CeriNet,
enhances communications and networking capabilities within any enterprise.
CeriStar targets its marketing and is offering customized solutions to the
following major market segments:
* State/Local Governments - "Economic Development Networks" * Education Systems
- "Knowledge Networks" * Commercial Building and Enterprises - "Smart Buildings
and Smart Environments" * Greenfields and Legacy Communities - "Smart Homes and
Businesses"
CeriStar is poised to capitalize on the imminent IP converged network upgrade
cycle by providing each of these market segments with paths to converged IP
network communications. CeriStar is currently testing this model in Utah and
plans to deploy it in the surrounding Western states after the testing has been
completed.
Over the next five years, CeriStar's business model will take into account the
premise that the majority of businesses will be running converged managed
networks. Most educational and governmental institutions will have partial
converged solutions in use. Greenfield residential will be populated with
converged solutions in the new developments. Legacy retrofit residential will
still be in its early stages of evolution.
Competitors exist at all levels in the LAN environment to provide bundled
converged services. Competitors exist in the WAN environment to deliver
connectivity. CeriStar is still unique in deploying a brand of IP Network that
is plug and play compatible with LAN and WAN solutions.
CeriStar deploys an IEEE and 7-layer standard network and equipment. It consists
of core, aggregation and edge equipment. All equipment can be interchanged
because of this open standard adherence. All equipment can be bought from
multiple vendors with no barriers to entry.
CeriStar is in the early stages of marketing its products and thus its cash
needs are more dependent on capital funding than on any major customer.
CeriStar filed four provisionary patent applications in 2001, which were
consolidated into one broad patent in 2002. These patents relate to the
architecture of an IP Utility Network that enables smart homes, smart commercial
buildings, and smart residential communities.
CeriStar enters into revenue sharing arrangements with commercial building
owners and residential developers. These contracts vary depending upon project
size, equipment ownership and local market conditions. The shared revenues are
based on the difference between CeriStar's wholesale and retail prices.
CeriStar is a Common Local Exchange Carrier (CLEC) licensed with the Utah Public
Utility Commission. With this license, CeriStar is able to provide telephony
services in competition with the Local Exchange Carrier, which is Qwest. As a
CLEC, CeriStar is able to compete with not only Qwest but also other CLEC's in
providing a myriad of services and converge them with non- regulated services
into a single converged network.
As a CLEC, CeriStar is subject to all Public Utility Commission and Federal
Communications Commission rules and regulations for telephony services.
Regulation changes that may occur will only affect our voice services, while
data and video services remain unchanged. Since CeriStar is already a
certificated CLEC in Utah any regulation changes will have a minimal affect to
the business model.
Over the past two years CeriStar spent an estimated 96 man-months on research
and development activities at an estimate cost of $550,000. The majority of this
cost has been borne by investors.
CeriStar currently has 10 full time employees.
Item 2. Description of Property
CeriStar's property consists primarily of computer, and computer related
equipment that is located at CeriStar's headquarters in Salt Lake City and in or
near various customer locations. Currently, this equipment is maintained and
serviced by head office personnel.
CeriStar currently leases a facility located at 50 West Broadway, Suite 1100,
Salt Lake City, Utah on a month-to-month basis. The facility consists of
approximately 3,000 square feet of leased office space at a monthly rate of
$3,524.
Item 3. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Security Holders
None
PART II
Item 5. Market for Common Equity and Related Shareholder Matters
CeriStar's common stock currently trades on the OTC Bulletin Board under the
ticker symbol of CTRI.OB. Following CeriStar's merger with Planet Resources in
September 2002, CeriStar was initially traded under the ticker symbol PLNT.OB,
which was later changed to CTRI.OB. Prior to the merger, Planet Resources was
traded on the OTC Bulletin Board under the ticker symbol of PLNT.OB. As of March
25, 2003, the closing sales price of the common stock was $.95 per share. The
following are high and low sales prices for the common stock by quarter since
the merger as reported by the OTC Bulletin Board:
Common Stock Price Range
Period (Calendar Year) High Low
2002
First Quarter N/A N/A
Second Quarter N/A N/A
Third Quarter $3.10 $1.30
Fourth Quarter $2.25 $1.05
2003
First Quarter $1.55 $ .55
CeriStar has never paid any cash dividends on its common or preferred stock and
does not anticipate paying any cash dividends on its common or preferred stock
in the foreseeable future. At the time of the merger with Planet, CeriStar's
common and preferred shares were exchanged for Planet's common stock. CeriStar
currently intends to retain future earnings, if any, to fund the development and
growth of its proposed business and operation. Any payment of cash dividends in
the future on the common stock will be dependent upon CeriStar's financial
condition, results of operations, current and anticipated cash requirements,
plans for expansion, restrictions, if any, under any debt obligations, as well
as other factors that CeriStar's Board of Directors deems relevant.
As of March 31, 2003, CeriStar has 1,615 shareholders.
CeriStar's common stock is also registered on the Berlin Stock Exchange.
Item 6. Management's Discussion and Analysis of Financial Condition and Results
for Operations
This report contains forward looking statements that involve risks and
uncertainties. Words, such as "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates" and "views" are intended to identify forward
looking statements. Such statements are based upon current expectations and
projections about our business and assumptions made by the management and are no
guarantee of future performance. Therefore, actual events and results may differ
materially from those expressed or forecasted in the forward looking statements
due to risk factors identified in the Management's Discussion and Analysis of
Financial Condition and Results of Operations.
On September 10, 2002, CeriStar merged with a wholly owned subsidiary of Planet
Resources Inc., a non-operating company, together referred to as Planet, in
which all the issued and outstanding stock of CeriStar, including Convertible
Preferred Series A shares and the Convertible Preferred Series B shares, were
exchanged for shares of common stock of Planet. Series A and B preferred shares
of CeriStar were exchanged at a rate of approximately .757 shares of common
stock of Planet, and common shares of CeriStar were exchanged into approximately
..322 common shares of Planet. Just prior to the merger, Planet authorized a 1
for 5.23 reverse stock split. The merger was accounted for as a reverse merger
with CeriStar being the accounting acquirer. On October 15, 2002, Planet was
renamed CeriStar, Inc. Since Planet had no operations for the two years prior to
the merger, only CeriStar's financial condition and results of operations will
be discussed.
Plan of Operation
During 2001 CeriStar was engaged in developing and testing various Internet
Protocol (IP) products. These products emerged in marketable form in 2002.
CeriStar has proven its' technology and can now deliver technically advance
products to a wide range of residential, commercial, educational and
governmental customers. Since these products are significantly advanced from
current products in the market place, it is estimated that it will take another
year before they become generally accepted allowing for substantial market
penetration. The current marketing plan will require the acquisition of new debt
and equity capital to fund operations and geographic expansion into neighboring
states. it is anticipated that a majority of this funding will have to be raised
in the equity markets. Debt financing for equipment may become more readily
available as product revenues and market acceptance increases In the short term,
CeriStar will remain dependent on new capital with no assurances that this new
capital will be raised.
Previously, CeriStar had expended significant amounts of capital for equipment,
which has the capacity to handle a substantially larger customer volume. Now new
customers can be added without significant costs.
Results of Operations
A detailed comparison of the differences between operations of 2002 compared to
2001 is difficult due to the fact that in 2001 CeriStar was principally a
development company, developing and testing new ideas and turning those ideas
into new products. Fiscal 2002 continued some of the development effort but a
majority of the year was spent marketing those new ideas and products. When
combined with merger related expenses and investment services expense,
comparisons between the two years becomes even more difficult.
Revenues increased to $521,000 in 2002, compared to $260,000 in 2001. The
increase was due to sales of IP services, primarily to commercial customers.
Services revenue increased from $35,000 in 2001 to $269,000 in 2002, a $234,000
increase, accounting for 90% of the revenue increase. Equipment sales increased
from $212,000 in 2001 to $214,000 in 2002, or a $2,000 increase.
Cost of sales increased from $245,000 in 2001 to $465,000 in 2002. This increase
was due to increased service and labor costs associated with the services
revenue. Labor costs increased by $30,000, increasing from $90,000 in 2001 to
$120,000 in 2002. Service costs increased from $59,000 in 2001 to $253,000 in
2002. The high service costs in 2002 resulted in a margin of $16,000 for
services, or a 6% margin for 2002. This margin is expected to increase
significantly in the future as new customers are added as CeriStar's excess
bandwidth purchases and equipment is able to service a substantially larger
customer base.
Total administrative expense in 2002 was $2,768,000 compared to $1,420,000 in
2001, an increase of $1,348,000. Approximately $1,012,000 of this increase was
for expenses paid to consultants in the form of common stock for services
relating to the merger with Planet Resources. An additional $353,000 was paid,
primarily in the form of common stock, to consultants that are advising CeriStar
on product positioning, customer identification and international product
expansion, as CeriStar converts from a development company to an operating
company, marketing its IP application products and services. Payroll expense
decreased from $1,116,000 in 2001 to $912,000 in 2002 as salary and staff
reductions were implemented in late 2001 and early 2002. Depreciation expense
increased from $12,000 in 2001 to $64,000 in 2002 due to new equipment
acquisitions for the network. Professional fees also increased from $65,000 in
2001 to $152,000 in 2002, an $87,000 increase as accounting, legal, sales and
staffing professionals were hired to assist in a variety of areas.
During 2002 CeriStar borrowed $75,000 on a convertible long-term note that may
be converted to CeriStar's common stock. This note also has warrants to purchase
22,710 shares of common stock at $3.30 per share. Approximately $20,400 of the
interest expenses relates to this note.
Liquidity and Capital Resources
As of December 31, 2002, CeriStar's current liabilities were $672,000, while
current assets were only $93,000 equating to a $579,000 working capital deficit.
In order for CeriStar to continue operating, additional capital is essential.
CeriStar's operating revenues are not capable of supporting current operations.
Thus, in the short term, CeriStar is dependent on the capital markets for
funding. To meet these continuing funding needs, CeriStar is actively seeking
debt and equity fundingby accessing both the public and private capital markets.
With almost 200 residential customers in Provo, Utah and contracts signed for
over 400 additional residential customers in the surrounding area that will be
starting service throughout 2003 and early 2004, combined with projected sales
to new developments, CeriStar expects to be able to fund operations from service
revenues by the end of 2003. As previously mentioned, CeriStar remains dependent
on new capital but there can be no assurance that any new capital will be
raised. A majority of the merger expenses and a significant portion of
consulting and professional services expenses were paid with common stock, thus
conserving cash for operations. Approximately $1,322,000 in stock was issued
during 2002 to pay for these services as well as a portion of payroll expense,
primarily incentives to retain key employees.
Item 7. Financial Statements
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of CeriStar Inc. and Subsidiary
We have audited the accompanying consolidated balance sheet of Ceristar, Inc. as
of December 31, 2002 and 2001, and the related statements of operations,
stockholders' deficit and cash flows for the years then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of CeriStar, Inc. as of
December 31, 2002 and 2001 and the results of its operations and its cash flows
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3, the Company
has a deficit in working capital, negative cash flows from operations, and
recurring net losses. These issues raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 3. The accompanying financial statements do not include
any adjustment that might result from the outcome of this uncertainty.
TANNER + CO.
Salt Lake City, Utah
February 7, 2003
CERISTAR, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31
Assets 2002 2001
------
---------------- ---------------
Current assets:
$ $
Cash 28,210 2,518
Accounts receivable, net of allowance for
doubtful accounts of $16,117 and $0, respectively 52,945 2,206
Prepaid expenses 3,954 3,954
Deposits 8,338 -
---------------- ---------------
Total current assets 93,447 8,678
Property and equipment, net 339,395 49,322
---------------- ---------------
$ $
432,842 58,000
---------------- ---------------
Liabilities and Stockholders' Deficit
Current liabilities:
$ $
Accounts payable 385,615 34,084
Accrued payroll liabilities 101,888 61,399
Unearned revenue 94,300 21,704
Deferred purchase obligation 86,996 -
Convertible long-term debt 2,708 -
---------------- ---------------
Total current liabilities 671,507 117,187
Stockholders' deficit:
Preferred stock, $.001 par value; 10,000,000 shares
authorized, no shares issued and outstanding - -
Common stock, $.001 par value, voting, 40,000,000
shares authorized, 5,852,197, and 4,180,078
issued and outstanding, respectively. 5,852 4,180
Additional paid-in capital 8,546,387 5,284,625
Deferred compensation (615,011) (821,033)
Subscriptions receivable (996,289) (80,630)
Accumulated deficit (7,179,604) (4,446,329)
---------------- ---------------
Total stockholders' deficit: (238,665) (59,187)
---------------- ---------------
$ $
432,842 58,000
---------------- ---------------
CERISTAR, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
DECEMBER 31
2002 2001
------------------ ------------------
Sales $ 520,952 $ 259,639
Cost of sales (465,202) (244,908)
Selling, general, and administrative expense (2,767,581) (1,420,320)
------------------ ------------------
Loss from operations (2,711,831) (1,405,589)
Other income 1,753 4,795
Interest expense (23,197) -
------------------ ------------------
Loss before benefit for income taxes (2,733,275) (1,400,794)
Benefit for income taxes - -
------------------ ------------------
Net loss $ (2,733,275) $ (1,400,794)
------------------ ------------------
$ $
Loss per common share basic and diluted (0.58) (0.35)
------------------ ------------------
Weighted average shares - basic and diluted 4,724,000 3,982,000
------------------ ------------------
CERISTAR, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
YEARS ENDED DECEMBER 31, 2002 AND 2001
Additional Deferred Subscrip- Accumulated
Preferred Stock Common Stock Paid-in Compen- tions Deficit
Shares Amount Shares Amount Capital sation Receivable
------- ----------- ----------- ---------- ------------- ------------- ----------
Balance, January 1, 2001 1,273,924 1,274 7,101,961 7,102 3,565,840 (49,500) (17,414)(3,045,535)
Recapitalization of Ceristar from reverse
merger with Planet Resources, Inc. (1,273,924) (1,274) (3,457,843) (3,458) 41,399 - (36,667) -
Issuance of common stock for:
Cash - - 322 - 1,000 - - -
Services - - 72,585 73 225,347 - - -
Subscription receivable and compensation - - 315,238 315 996,685 (788,033) (26,799) -
Stock subscription received - - - - - - 250 -
Issuance of common stock for cash
(net of offering costs) - - 147,815 148 454,354 - - -
Amortization of deferred compensation - - - - - 16,500 - -
Net loss - - - - - - - (1,400,794)
----------- ----------- ----------- ---------- ------------- ------------- ------
Balance, December 31, 2001 - - 4,180,078 4,180 5,284,625 (821,033) (80,630) (4,446,329)
Issuance of common stock for:
Cash - - 328,654 329 482,584 -
Services - - 1,072,968 1,073 2,207,017 - (911,932) -
Subscription receivables and compensation - - 175,322 175 352,328 (320,000) (6,211) -
Debt - - 147,768 148 308,708 - - -
Non-vested common stock reacquired
through employee terminations (52,593) (53) (163,875) 161,444 2,484 -
Amortization of deferred compensation - - - - - 364,578 - -
Preferential conversion feature and issue of
warrants with long-term debt - - - - 75,000 - - -
Net loss - - - - - - - (2,733,275)
----------- ----------- ----------- ---------- ------------- ------------- ------
$ $ $ $ $
Balance, December 31, 2002 - - 5,852,197 5,852 8,546,387 (615,011) (996,289) (7,179,604)
----------- ----------- ----------- ---------- ------------- -------------
CERISTAR, INC.
Consolidated Statement of Cash Flow
YEAR ENDED DECEMBER 31
2002 2001
------------------ ------------------
Cash flows from operating activities:
Net loss $ (2,733,275) $ (1,400,794)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 63,682 12,072
Stock issued for services 1,322,450 407,588
Amortization of deferred compensation 364,578 16,500
Amortization of discount on long-term debt 10,000 -
Bad debt expense 16,117 -
Decrease (increase) in:
Accounts receivable (66,856) (2,206)
Prepaid expense - (430)
Deposits (8,338) -
Increase (decrease) in:
Accounts payable 186,990 34,084
Accrued liabilities 40,489 40,347
Deferred revenue 56,396 21,704
------------------ ------------------
Net cash used in operating activities (747,767) (871,135)
------------------ ------------------
Cash flows used in investing activities-
purchase of property and equipment (86,018) (12,507)
------------------ ------------------
Cash flows from financing activities:
Proceeds from issuance of common stock 482,913 455,752
Proceeds from convertible long-term debt 75,000 -
Proceeds from related party note 140,300 -
Proceeds from notes payable 228,394 -
Payments on notes payable (59,838) -
Payments on convertible long-term debt (7,292) -
------------------ ------------------
Net cash provided by financing activities 859,477 455,752
------------------ ------------------
Net increase (decrease) in cash
and cash equivalents 25,692 (427,890)
Cash and cash equivalents at beginning of year 2,518 430,408
------------------ ------------------
$ $
Cash and cash equivalents at end of year 28,210 2,518
------------------ ------------------
Notes to Consolidated Financial Statement December 31, 2002, and 2001
1.Organization and CeriStar, Inc. (formerly Planet Resources, Inc.)
Description of (the Company) operates in the communications
Business industry as a hi-tech developer of IP technology
applied to data convergence. The Company is
located in Salt Lake City, Utah, and wasformed in
December 1999.
On September 10, 2002 the Company entered into an
Agreement and Plan of Merger with Planet Resources,
Inc and its wholly owned subsidiary together
referred to as (Planet) in which all the issued and
outstanding stock of the Company, including
Convertible Preferred Series A shares (Series A) and
Convertible Preferred Series B shares (Series B),
were exchanged for the issued and outstanding stock
of Planet. Series A and B shares were exchanged at a
rate of approximately .757 for every common share of
Planet and common shares of the Company were
converted into approximately .322 shares of Planet
common share. Just prior to the merger Planet
authorized a 1 to 5.23 reverse stock split. The
merger was accounted for as a reverse merger with
the Company being the accounting acquirer and thus
the historical operations presented in the condensed
financial statements of operations, cash flows and
stockholder's deficit, are those of the Company.
2. Summary of Concentration of Credit Risk
Significant Financial instruments which potentially
Accounting Policies subject the Company to concentration of credit risk
consist primarily of trade receivables. In the
normal course of business, the Company provides
on-going credit
evaluations of its customers and maintains
allowances for possible losses which, when realized,
have been within the range of management's
expectations.
The Company maintains its cash in bank deposit
accounts which, at times, may exceed federally
insured limits. The Company has not experienced any
losses in such accounts and does not believe it is
exposed to any significant credit risk on cash and
cash equivalents.
Cash and Cash Equivalents
Cash includes all cash and investments with original
maturities to the Company of three months or less.
Property and Equipment Property and equipment are
recorded at cost less accumulated depreciation.
Depreciation and amortization on capital leases and
property and equipment are determined using the
straight-line method over the estimated useful lives
of the assets or terms of the leases. Depreciation
and amortization periods are as follows:
Computer equipment and software 3 - 5 years
Furniture and fixtures 5 years
Revenue Recognition
Revenue is recognized when a valid contract or
purchase order has been executed or received,
services have been performed or product has been
delivered, the selling price is fixed or
determinable, and collectibility is reasonably
assured. Payments received prior to performance are
recorded as unearned revenue.
Income Taxes
Deferred taxes are computed using the asset and
liability method. Under the asset and liability
method, deferred tax assets and liabilities are
recognized for future tax consequences attributable
to differences between the financial statement
carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in
which those temporary differences are expected to be
recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is
recognized in income in the period that includes the
enactment date. Deferred tax assets are not
recognized unless it is more likely than not that
the asset will be realized in future years.
Earnings Per Common and Common Equivalent Share The
computation of basic earnings per common share is
computed using the weighted average number of common
shares outstanding during the year.
Earnings Per Common and Common Equivalent Share
Continued The computation of diluted earnings per
common share is based on the weighted average number
of shares outstanding during the year plus common
stock equivalents which would arise from the
exercise of warrants outstanding using the treasury
stock method and the average market price per share
during the year. Warrants to purchase 324,466 and
83,724 common stock equivalents are not included in
the diluted earnings per share calculation for 2002
and 2001, respectively, since their effect is
anti-dilutive.
Impairment of Long-Lived Assets The Company reviews
its long-lived assets for impairment whenever events
or changes in circumstances indicate that the
carrying amount of the assets may not be recoverable
through undiscounted future cash flows. If it is
determined that an impairment loss has occurred
based on expected cash flows, such loss is
recognized in the statement of operations.
Use of Estimates
The preparation of financial statements in
conformity with accounting principles generally
accepted in the United States of America requires
management to make estimates and assumptions that
affect the reported amounts of assets and
liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements
and the reported amounts of revenues and expenses
during the reporting periods. Actual results could
differ from those estimates.
Stock-Based Compensation The Company has adopted the
disclosure only provisions of Statement of Financial
Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation." Accordingly, no
compensation expense is recognized when stock
options or warrants are granted to employees. No
options or warrants were issued to employees for the
years ended December 31, 2002 and 2001. Warrants
issued in 2002 and 2001 were in connection with
purchases of stock, conversion of debt and issuance
of debt.
The fair value of each warrant on the date of grant
using the Black-Scholes option price the following
assumptions at December 31:
2002 2001
-------------------------
Expected dividend yield $ - $ -
Expected stock price volatility 50.41% NA
Risk-free interest rate 4.25% 4.75%
Expected life of options 5 years 5 years
The weighted average fair value of each warrant
granted during 2002 and 2001 was $1.63 and $.52,
respectively.
Reclassifications
Certain accounts in the 2001 financial statement
have been reclassified to conform with the current
year presentation.
3. Going Concern The Company has a working capital deficit, a stockholders'
deficit, and recurring net losses. These factors create
substantial doubt about the
Company's ability to continue as a going concern.
The financial statements do not include any
adjustment that might be necessary if the Company is
unable to continue as a going concern.
The ability of the Company to continue as a going
concern is dependent on the Company generating cash
from the sale of its common stock or obtaining debt
financing and attaining future profitable
operations. Management's plans include selling its
equity securities and obtaining debt financing to
fund its capital requirements and ongoing
operations, however, there can be no assurance the
Company will be successful in these efforts.
4. Property and Equipment Property and equipment consists at December 31:
2002 2001
------------------------------------
Computer equipment and software $ 410,598 $ 57,707
Furniture and fixtures 10,587 9,723
------------------------------------
421,185 67,403
Less accumulated depreciation
and amortization (81,790) (18,108)
------------------------------------
$ 339,395 $ 49,322
====================================
5. Deferred Purchase
Obligation During the year ended December 31, 2002, the
Company entered into an agreement to
finance the purchase of equipment through a residential
developer. The obligation has no stated interest
rate and will be repaid solely from net revenues
generated from the use of the equipment. The
obligation is secured by the equipment, and the
maturity of the obligation is contingent on net
future revenues generated from the equipment. The
balance of the obligation at December 31, 2002 is
$86,996.
6. Convertible Long-Term Convertible long-term debt consists of a note payable
to a Debt financial institution with an original amount due of $75,000. The
note is payable in
monthly installments of $1,744, including interest
at 14%, secured by equipment, and matures on May 30,
2007.
The note includes a beneficial conversion feature
wherein the holder of the note, at the holders
option, may covert the note to shares of the
Company's common stock at $1.65 per share. The
Company also issued to the note holder a warrant to
purchase 22,710 shares of the Company's stock at an
exercise price of $3.30 per share. Based on the
value of the warrants, calculated using the Black
Scholes option pricing model at the date of grant,
together with the intrinsic value of the beneficial
conversion feature, the note was discounted for the
full face value and the discount is being amortized
over the life of the loan.
As of December 31, 2002 the principle balance
remaining on the note was $67,708 which is reduced
by the unamortized discount of $65,000 equaling a
net book value of the debt of $2,708 which is
recorded on the balance sheet.
Future maturities of long-term debt are as follows:
Year Ending December 31: Amount
------------------------ -------------
2003 $ 12,217
2004 14,041
2005 16,138
2006 18,548
2007 6,764
-------------
67,708
Less Discount (65,000)
-------------
$ 2,708
=============
7. Income Taxes The benefit for income taxes is
different than amounts which would be provided by
applying the statutory income tax rate to loss
before benefit for income taxes for the following
reasons:
Years Ended
December 31,
----------------------------------
2002 2001
----------------------------------
----------------------------------
Income tax benefit at
statutory rate $ 1,020,000 $ 518,000
Stock valuation for services (472,000) (149,000)
Change in valuation allowance (546,000) (367,000)
Other (2,000) (2,000)
----------------------------------
----------------------------------
$ - $ -
----------------------------------
2002 2001
----------------------------------
----------------------------------
Net operating loss carry-forwards $ 1,370,000$ 783,000
Amortization of license technology 298,000 321,000
Depreciation (48,000) (6,000)
Deferred revenue 26,000 8,000
Allowance for doubtful accounts 6,000 -
Valuation allowance (1,652,000) (1,106,000)
----------------------------------
----------------------------------
$ -$ -
----------------------------------
At December 31, 2002, the Company has net operating
loss carry-forwards available to offset future
taxable income of approximately $3,674,000 of which
will begin to expire in 2019. The utilization of the
net operating loss carry-forwards is dependent upon
the tax laws in effect at the time the net operating
loss carry-forwards can be utilized. A valuation
allowance has been recorded against the deferred tax
asset due to the uncertainty surrounding its
realization caused by the Company's recurring
losses.
8. Common Stock Warrants The Company has issued warrants
in conjunction with the sale of its securities and
convertible debt. Warrants that were issued generally
do not have a life that exceeds five years.
Information regarding warrants to purchase common
stock is summarized below:
Exercise
Number of Price Per
Warrants Share
----------------------------------
----------------------------------
Outstanding at January 1, 2001
Granted 83,724$ 1.67
Expired - -
----------------------------------
----------------------------------
Outstanding at December 31, 2001 83,724 1.67
Granted 240,742 1.67 - 4.50
Expired - -
----------------------------------
----------------------------------
Outstanding at December 31, 2002 324,466$ 1.67 - 4.50
----------------------------------
The following table summarizes information about outstanding
warrants for common stock at December 31, 2002:
Outstanding Exercisable
-----------------------------------------------------------------
Weighted
Average
Remaining Weighted
Range of Number Contractual Average Average
Exercise Out- Life Exercise Number Exercise
Prices standing (Years) Price Exercisable Price
--------------------------------------------------------------------------------
$ 1.67 - 2.30 91,902 2.53 $ 2.10 91,902 $ 2.10
3.30 - 4.50 232,564 2.99 3.65 232,564 3.65
--------------------------------------------------------------------------------
$ 3.21 324,466 2.86 $ 3.21 324,466 $ 3.21
--------------------------------------------------------------------------------
9. Stock Subscription Subscriptions receivable consist of the obligation of
employees to Receivable purchase, at $.031 per share, approximately 2,716,295
and
2,596,286 of the Company's common shares at December 31,
2002 and 2001, respectively. The difference between the
fair value of the shares and the subscription receivable
is recognized as
compensation according to the vesting period set forth in
the stock purchase agreements which range from two to
three years.
Deferred compensation related to these subscriptions was
$615,011 and $821,033 at December 31, 2002 and 2001. The
measurement date
of compensation is the date the shares were granted.
In addition to the employee subscription receivable,
the company has also issued 443,131 shares of its
common stock related to consultant agreements for
which services will be rendered in 2003. The stock
issuances have been recorded as subscriptions
receivable with a value of $911,933.
10. Supplemental Cash During the years ended December 31, 2002, the Company:
Flow Information
o Financed the purchase of equipment with a
deferred purchase obligation of $103,196.
o Effected a payment of $16,200 on the
deferred purchase obligation and recorded
an increase of $16,200 in deferred revenue.
o Issued 1,248,290 of the Company's common
shares for services of $1,325,660, deferred
compensation of $320,000 and subscriptions
receivable of $914,933.
o Exchanged 147,768 shares of the Company's
common stock for $308,708 of notes payable.
o Issued 45,420 warrants with a beneficial
conversion feature attached to long-term
debt, which resulted in a discount against
the long-term debt of $75,000.
o Reacquired, through employee terminations,
52,593 shares of the Company's common stock
for a reduction in deferred compensation of
$161,444 and subscriptions receivable of
$800.
o Acquired equipment in exchange for accountspayable
of $164,541.
During the year ended December 31, 2001, the
Company:
o Issued 315,238 shares to employees in
exchange for services of $182,168, deferred
compensation of $788,033, and employee
stock subscriptions receivable of $26,799.
Cash paid for interest and income taxes are as
follows:
Years Ended
December 31,
----------------------------------
2002 2001
Interest $ 23,197 $ -
---------------------------------
Income Taxes $ - $ -
---------------------------------
11. Related Party
Transactions Related party transactions are as follows:
During the year ended December 31, 2002, an
officer of the Company and relatives of the Officer
exchanged $127,200 of notes payable for 59,585 shares
of the Company's common stock.
During the year ended December 31, 2001, an Officer
and relatives of an officer purchased 27,200 Series
B convertible preferred stock for $68,000.
12. Major Customers Sales to customers which exceeded 10% of total
sales are as follows for the
years ended December 31:
2002 2001
----------------------------------
Customer A $152,000 $ -
Customer B $ 91,000 $ 172,000
Customer C $ 60,000 $ -
13. Commitments and Contingencies Litigation
The Company may
become or is
subject to
investigations,
claims or
lawsuits ensuing
out of the
conduct of its
business. The
Company is
currently not
aware of any
such items which
it believes
could have a
material effect
on its financial
position.
14. Fair Value of The
Company's financial
instruments consist of
cash, receivables and
Financial Instruments
payables. The carrying
amount of cash,
receivables,
convertible long-term
debt and payables approximates fair value because of
the short-term nature of these items.
15. Recent Accounting In June 2001, the FASB issued Statement of Financial
Accounting Standards No. Pronouncements 143, "Accounting for Asset Retirement
Obligations". This Statement addresses
financial accounting and reporting for obligations
associated with the retirement of tangible
long-lived assets and the associated asset
retirement costs. This Statement is effective for
financial statements issued for fiscal years
beginning after June 15, 2002. This Statement
addresses financial accounting and reporting for the
disposal of long-lived assets. The Company is
currently assessing the impact of this statement.
In April 2002, the FASB issued Statement of
Financial Accounting Standards (SFAS) No. 145,
"Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical
Corrections." This statement requires the
classification of gains or losses from the
extinguishments of debt to meet the criteria of
Accounting Principles Board Opinion No. 30 before
they can be classified as extraordinary in the
income statement. As a result, companies that use
debt extinguishment as part of their risk management
cannot classify the gain or loss from that
extinguishment as extraordinary. The statement also
requires sale-leaseback accounting for certain lease
modifications that have economic effects similar to
sale-leaseback transactions. The Company does not
expect Adoption of SFAS No. 145 did have a material
impact on financial position or future operations.
In June 2002, the FASB issued SFAS No. 146,
"Accounting for Costs Associated with Exit or
Disposal Activities." This standard, which is
effective for exit or disposal activities initiated
after December 31, 2002, provides new guidance on
the recognition, measurement and reporting of costs
associated with these activities. The standard
requires companies to recognize costs associated
with exit or disposal activities when they are
incurred rather than at the date the company commits
to an exit or disposal plan. The adoption of SFAS
No. 146 by the Company is not expected to have a
material impact on the Company's financial position
or future operations.
In December 2002, the FASB issued SFAS No. 148
"Accounting for Stock-Based Compensation--Transition
and Disclosure--an amendment of FASB Statement No.
123," which is effective for all fiscal years ending
after December 15, 2002. SFAS No. 148 provides
alternative methods of transition for a voluntary
change to the fair value based method of accounting
for stock-based employee compensation under SFAS No.
123 from the intrinsic value based method of
accounting prescribed by Accounting Principles Board
Opinion No. 25. SFAS 128 also changes the disclosure
requirements of SFAS 123, requiring a more prominent
disclosure of the pro-forma effect of the fair value
based method of accounting for stock-based
compensation. The adoption of SFAS No. 148 by the
Company did not have a material impact on the
Company's financial position or future operations.
In January 2003, the Financial Accounting Standards
Board (FASB) issued Interpretation No. 46,
Consolidation of Variable Interest Ethics (FIN No.
46), which addresses consolidation by business
enterprises of variable interest entities. FIN No.
46 clarifies the application of Accounting Research
Bulletin No. 51, Consolidated Financial Statements,
to certain entities in which equity investors do not
have the characteristics of a controlling financial
interest or do not have sufficient equity at risk
for the entity to finance its activities without
additional subordinated financial support from other
parties. FIN No. 46 applies immediately to variable
interest entities created after January 31, 2003,
and to variable interest entities in which an
enterprise obtains an interest after that date. It
applies in the first fiscal year or interim period
beginning after June 15, 2003, to variable interest
entities in which an enterprise holds a variable
interest that it acquired before February 1, 2003.
The Company does not expect to identify any variable
interest entities that must be consolidated. In the
event a variable interest entity is identified, the
Company does not expect the requirements of FIN No.
46 to have a material impact on its financial
condition or results of operations.
In November 2002, the FASB issued Interpretation No.
45, Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others (FIN No. 45).
FIN No. 45 requires certain guarantees to be
recorded at fair value, which is different from
current practice to record a liability only when a
loss is probable and reasonably estimable, as those
terms are defined in FASB Statement No. 5,
Accounting for Contingencies. FIN No. 45 also
requires the Company to make significant new
disclosures about guarantees. The disclosure
requirements of FIN No. 45 are effective for the
Company in the first quarter of fiscal year 2003.
FIN No. 45's initial recognition and initial
measurement provisions are applicable on a
prospective basis to guarantees issued or modified
after December 31, 2002. The Company's previous
accounting for guarantees issued prior to the date
of the initial application of FIN No. 45 will not be
revised or restated to reflect the provisions of FIN
No 45. The Company does not expect the adoption of
FIN No. 45 to have a material impact on its
consolidated financial position, results of
operations or cash flows.
SFAS No. 140, Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of
Liabilities, was issued in September 2000. SFAS No.
140 is a replacement of SFAS No. 125, Accounting for
Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities. Most of the
provisions of SFAS No. 125 were carried forward to
SFAS No. 140 without reconsideration by the
Financial Accounting Standards Board (FASB), and
some were changed only in minor ways. In issuing
SFAS No. 140, the FASB included issues and decisions
that had been addressed and determined since the
original publication of SFAS No. 125. SFAS No. 140
is effective for transfers after March 31, 2001.
Management does not expect the adoption of SFAS No.
140 to have a significant impact on the financial
position or results of operations of the Company.
16. Subsequent Event On March 1, 2003, the Company
entered into an agreement with Wired LLC, in which
the Company is obligated to purchase equipment in
the amount of $343,840 in exchange for 45,000
warrants to purchase the Company's common shares at
$1.05 per share and issuance of 109,400 of the
Company's common shares. The equipment will be used
in a revenue sharing venture in which Wired LLC will
receive all net profits from communications services
as
provided in the agreement until it has recovered the
sales price of the equipment plus 12%. After Wired
LLC has recovered the sales price of the equipment
plus 12%, net profits will be divided evenly from
communications service revenue. The Company has an
obligation to service, and maintain the equipment,
and support the communications services for the
duration of the contract years.
Item 8. Change In and Disagreements with Accountants
None
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons
The following table sets forth the officers and directors of CeriStar as of
March 31, 2003
Name Age Position
David L Bailey 63 Chairman of the Board, President and Chief Executive Officer
Dane P. Goodfellow 57 Vice President of Marketing and Director
Mark S. Hewitt 51 Director
G. Earl Demorest 48 Vice President of Engineering and Finance
Paul D. Losee 54 Vice President of Corporate Development
Lark M. Allen 58 Director (resigned as of March 31, 2003)
David L Bailey has served as Chairman of the Board, President and Chief
Executive Officer of CeriStar since December 1999. From May 1997 to December
1999, Mr. Bailey served as Managing Partner of DL Group, a limited liability
corporation, which marketed computer software and telecommunications products.
From 1993 to 1997, he was Chairman and Chief Executive Officer of VZ Corp., a
software development company. Mr. Bailey has also been Chairman and Chief
Executive Officer of Clyde Digital Systems and Cericor, and was the lead founder
and Chief Executive Officer of Iomega, Inc.
Dane P. Goodfellow has served as Vice President of Marketing and a director of
CeriStar since December 1999. >From 1998 to 1999, Mr. Goodfellow served as Vice
President of Sales of ViewPoint, Inc. a software development company. From 1994
to 1997, he served as Vice President of Marketing and Sales of VZ Corp., a
software development company.
Mark S. Hewitt has served as a director of CeriStar since April 2000. Mr. Hewitt
is the Chief Technology Officer of Nextbend Inc. a consumer electronics company
based in Florida. Previously, he was Chief Technology Officer of Mediacentric
Group, a communications solutions provider. And prior to that position, he was
Senior Vice President of I-Link, a unified messaging and IP telephony company.
G. Earl Demorest has served as Vice President of Engineering and Finance since
December 1999. >From 1997 to 1999, Mr. Demorest served as Chief Financial
Officer and Network Administrator of DL Group, a limited liability corporation,
which marketed computer software and telecommunications products. From 1995 to
1997, he was Controller and Network Administrator of VZ Corp, a software
development company. Mr. Demorest is also the son-in-law of Mr. Bailey.
Paul D. Losee has served as Vice President of Development since March 2001. From
1999 to 2001, Mr. Losee was the Chief Operating Officer of Xboundary.com, Inc.,
an internet centric software developer. From 1998 to 1999, he was the Chief
Operating Officer of IQ Telecommunications, Inc. Mr. Losee was President and
founder of M+, Inc., a marketing consultancy firm.
Lark M. Allen served as a director of CeriStar since April of 2000, until his
resignation in March of 2003.
Item 10. Executive Compensation
Executive and Director compensation for the past three years is as follows:
Summary Compensation Table
Long-Term Compensation
Annual Compensation
Awards Payouts
Other Securities
Annual Restricted Underlying
Long-term All Other
Name and Compensa- Stock Options/ Incentive
Compensa-
Principal Position Period Salary($) Bonus($) tion($) Awards($) SARs(#) Payout($) tion ($)(4)
D.L. Bailey, 2002(1) $75,000 0 0 0 0 0 0
President, Chief 2001(2) $136,154 0 0 0 0 0 0
Executive Officer 2000(3) $150,000 0 0 0 0 0 0
and Director
D.P. Goodfellow, 2002(1) $71,923 0 0 0 0 0 0
Vice President 2001(2) $79,788 0 0 0 0 0 0
Marketing, Director 2000(3) $120,000 0 0 0 0 0 0
G.E. Demorest, 2002(1) $81,923 0 0 0 0 0 0
Vice President 2001(2) $103,615 0 0 0 0 0 $123,750
Engineering and 2000(3) $90,000 0 0 0 0 0 0
Finance
P.D. Losee, 2002(1) $95,539 0 0 0 0 0 0
Vice President 2001(2) $92,961 0 0 0 0 0 $569,250
Corporate 2000(3) N/A n/a n/a n/a n/a n/a n/a
Development
(1) For the fiscal year ended December 31, 2002.
(2) For the fiscal year ended December 31, 2001
(3) For the fiscal year ended December 31, 2000.
(4) Prior to CeriStar's merger with Planet, shares of CeriStar common stock were
issued to Messrs. Demorest and Losee. These shares vest monthly over three
years. The shares were valued at $1.00 per share based on the conversion feature
and the price paid for preferred stock less any obligation to purchase vested
shares. These shares were accompanied with an obligation of such employee to
purchase such shares at $.01 per share. If employment is terminated before the
end of the vesting period, CeriStar can at its option repurchase the unvested
portion at $.01 per share.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the beneficial ownership of the outstanding
shares of CeriStar common stock for (i) each executive officer of CeriStar, (ii)
each director, (iii) each person known to be the beneficial owner of more than
5% of the outstanding shares of CeriStar and (iv) all directors and officers as
a group:
Percentage
Name and addresses(1) Number of Shares of Ownership
David L Bailey (2) 821,493 13.7%
Dane P. Goodfellow 454,865 7.6
George E. Demorest 311,653 5.2
A. W. Dugan 305,324 5.1
Paul D. Losee 137,150 2.3
Mark S. Hewitt * *
Lark M. Allen * *
Executive officers and directors
as a group (6 persons) 1,765,548 (a) 29.3%
* Less than 1%.
(1) The address for Mr. Bailey is 1971 Summerwood Dr, Farmington UT 84025.
The address for Mr. Goodfellow is 8789 South Sutton Way, Salt Lake City, UT
84121. The address for Mr. Demorest is 1529 E Hilda Dr, Fruit Heights, UT 84037.
The address for Mr. Dugan is 1415 Louisiana, Suite 3100, Houston, TX 83846. The
address for Mr. Losee is 2783 Hobbs Creek Dr, Layton, UT 84040. The address for
Mr. Hewitt is 5900 Corral Gate Lane, Sarasota, FL 34241. The address for Mr.
Allen is 1921 Hunting Ridge Rd, Raleigh, NC 27615.
(2) Includes warrants to purchase 15,594 shares of common stock issued to Mr.
Bailey.
Item 12. Certain Relationships and Related Transactions
During 2002, David L. Bailey, his wife, Connie Bailey, and his nephew,
A. Brent Bailey, collectively loaned a total of $127,200 to CeriStar, which was
later exchanged for 4,736 shares of CeriStar Series B convertible preferred
stock (which was subsequently converted to 3,585 shares of CeriStar common
stock) and 56,000 shares of CeriStar common stock. During 2001, Mr. Bailey, his
wife Connie Bailey, and his brother, Daniel W. Bailey, purchased a total of
27,200 shares of Series B convertible preferred stock for $68,000.
Item 14. Controls and Procedures
The Company's President and Chief Executive Officer and its Chief Financial
Officer (the "Certifying Officers"), are responsible for establishing and
maintaining disclosure controls and procedures for the Company. The Certifying
Officers have concluded (based on their evaluation of these controls and
procedures as of a date within 90 days of the filing of this report) that the
design and operation of the Company's disclosure controls and procedures (as
defined in Rule 13a-14c under the Securities Exchange Act of 1934) are
effective. No significant changes were made in the Company's internal controls
or in other factors that could significantly affect those controls subsequent to
the date of the evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
There were no significant changes made in our internal controls during the
period covered by this report, or to our knowledge, in other factors that could
significantly affect these controls subsequent to the date of their evaluation.
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.
CERISTAR, INC.
DATED April 15, 2003. By:/s/David L. Bailey
----------------------------------
David L. Bailey, Chairman of the Board,
President and Chief Executive Officer
Pursuant to the requirements of the Securities exchange act of 1934, this report
has been signed by the following persons in counterpart on behalf of the Company
on the dates indicated.
Signature Title Date
/s/David L. Bailey
__________________________ Chairman of the Board, President and April 15, 2003
David L. Bailey Chief Executive Officer
(Principal Executive Officer)
/s/Mark S. Hewitt
_________________________ Director April 15, 2003
Mark S. Hewitt
/s/Dane P. Goodfellow
_________________________ Vice President of Marketing April 15, 2003
Dane P. Goodfellow and Director
/s/G. Earl Demorest
_________________________ Vice President of Engineering and Finance April 15, 2003
G. Earl Demorest and Chief Financial Officer (Principal
Financial and Accounting Officer)
CERTIFICATIONS
I, David L. Bailey, certify that:
1. I have reviewed this Annual Report on Form 10-KSB of CeriStar, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
(a) Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
(c) Presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
CERISTAR, INC.
DATED April 15, 2003. By: /s/David L. Bailey
----------------------------------
David L. Bailey, Chairman of the Board,
President and Chief Executive Officer
CERTIFICATIONS
I, G. Earl Demorest, certify that:
1. I have reviewed this Annual Report on Form 10-KSB of CeriStar, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
(a) Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
(c) Presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
CERISTAR, INC.
DATED April 15, 2003. By: /s/G. Earl Demorest
----------------------------------
G. Earl Demorest
Vice President of Engineering and Finance
and Chief Financial Officer
EXHIBIT 99.1
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 CeriStar, (the "Company") on Form
10-KSB for the year ended December 31, 2002, David L. Bailey, hereby certifies,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes - Oxley Act of 2002, that to the best of his knowledge:
1. The annual report fully complies with the requirements of Section 13(a) of
the Securities Exchange Act of 1934; and
2. The information contained in the annual report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
CERISTAR, INC.
DATED April 15, 2003. By: /s/David L. Bailey
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David L. Bailey, Chairman of the Board,
President and Chief Executive Officer
EXHIBIT 99.2
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 CeriStar, (the "Company") on Form
10-KSB for the year ended December 31, 2002, G. Earl Demorest, hereby certifies,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes - Oxley Act of 2002, that to the best of his knowledge:
1. The annual report fully complies with the requirements of Section 13(a) of
the Securities Exchange Act of 1934; and
2. The information contained in the annual report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
CERISTAR, INC.
DATED April 15, 2003. By: /s/G. Earl Demorest
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G. Earl Demorest, Vice President of Engineering
and Finance and Chief Financial Officer