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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2003
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 0-15596
SITI-SITES.COM, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-1940923
(State of incorporation) (I.R.S. Employer
Identification No.)
47 Beech Road, Englewood, New Jersey 07631
(Address of principal executive offices) (Zip Code)
111 Lake Avenue, Suite #7, Tuckahoe, New York 10707
(Address of Chief Financial Officer) (Zip Code)
(212) 925-1181
(Registrant's telephone number, including area code)
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 |_|
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES |X| NO |_|
As of August 11, 2003, the registrant had outstanding 23,418,178 shares of its
Common Stock, par value $.001 per share.
The following documents are incorporated herein by reference:
(1) Annual Report to security holders on Form 10-K for the year ended
March 31, 2003 (the "Form 10-K for 2003");
(2) Annual Report to security holders on Form 10-K for the year ended
March 31, 2002 (the "Form 10-K for 2002");
(3) Annual Report to security holders on Form 10-K for the year ended
March 31, 2001 (the "Form 10-K for 2001");
(4) Annual Report to security holders on Form 10-K for the year ended
March 31, 2000 (the "Form 10-K for 2000");
(5) Quarterly Report to security holders on Form 10-Q for the quarter
ended June 30, 2002 ("June 30, 2002 10-Q")
SITI-SITES.COM, INC.
FORM 10-Q
JUNE 30, 2003
PART I. FINANCIAL INFORMATION Page No.
--------
Item 1. Financial Information
Statement of Net Assets in Liquidation at June 30, 2003 (Unaudited)
and March 31, 2003..................................................... 1
Statement of Changes in Net Assets (Liabilities) in Liquidation
(Unaudited) for the Three Months Ended June 30, 2003 and
June 30, 2002.......................................................... 2
Notes to Condensed Financial Statements (Unaudited).................... 3
Item 2. Management's Discussion and Analysis of Financial Condition
and Status of Liquidation.............................................. 6
Item 3. Quantitative and Qualitative Disclosures About Market Risk..... 8
Item 4. Controls and Procedures........................................ 8
PART II. OTHER INFORMATION............................................ 8
Item 1. Legal Proceedings ............................................. 8
Item 5. Other Information ............................................. 8
Item 6. Exhibits and Reports on Form 8-K............................... 9
PART I. FINANCIAL INFORMATION
SITI-Sites.com, Inc.
Statement of Net Assets in Liquidation
(Amounts in thousands)
June 30, 2003
(Unaudited) March 31, 2003
- --------------------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 28 $ 36
Receivables and other assets -- 5
------ ------
Total current assets 28 41
------ ------
Total assets $ 28 $ 41
------ ------
Liabilities
Current Liabilities
Accounts payable and accrued liabilities $ 11 $ 13
------ ------
Total current liabilities 11 13
------ ------
Total liabilities 11 13
------ ------
Commitments and contingencies -- --
------ ------
Net Assets in Liquidation $ 17 $ 28
====== ======
See accompanying notes to consolidated financial statements.
1
SITI-Sites.com, Inc.
Statement of Changes in Net Assets (Liabilities) in Liquidation
June 30, June 30,
2003 2002
(Unaudited) (Unaudited)
----------- -----------
Three months ended
(Amounts in thousands)
Net assets in liquidation beginning of period $ 28 $ 11
Additions to net assets in liquidation:
Contribution of management's services and rent 38 46
Reductions to net assets in liquidation:
Operating expenses and accrual of estimated costs (49) (62)
------ ------
Net assets (liabilities) in liquidation at end of period $ 17 $ (5)
====== ======
See accompanying notes to consolidated financial statements
2
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) MANAGEMENT'S PLAN FOR LIQUIDATION
Siti-Sites.com, Inc., a Delaware corporation (referred to as "SITI" or the
"Company") previously operated as an Internet media company with three websites
for the marketing of news and services. The Company's websites related entirely
to the music industry. SITI incurred losses continuously since its inception in
1999. Following conclusion of the second fiscal quarter ended September 30,
2001, management who were its primary investors (investing approximately $4.1
million 1998-2002), intended to continue operations by investing approximately
$600,000 in further equity capital in the Company. But on November 13, 2001 they
determined that such limited funding would not accomplish a meaningful result
for the investors or the Company and terminated discussions of such financing
plan. The Company commenced procedures to prepare to liquidate its assets
effective January 1, 2002.
Liquidation. The Company's only substantial liability, consisting of the
remaining nine months on its lease for office premises at 594 Broadway in New
York City, was amicably settled, and terminated as of December 31, 2001.
Concurrently office furniture and unnecessary computers were sold, and all
employees were terminated in November, 2001. A team of two software consultants
were paid in December, 2001 and January, 2002, to complete the Company's Artist
Promotion System. Attempts were to be made to license portions thereof, working
with a marketing consultant. However, complications in completing the software
resulted in management terminating these consulting relationships, with a view
to restarting them, if possible, when specific marketing or sale opportunities
present themselves. The Company shut down all of its websites effective February
1, 2002.
Certain former employees and directors purchased excess furniture and
equipment from the Company for a total of approximately $19,000. The balance of
the furniture was sold to an unrelated third party for approximately $5,000.
Financing. The Company required a small financing to complete its employee
terminations, asset liquidation and provide for ongoing corporate expenses.
Major investors in the Company provided $110,000 in equity funds, purchasing
4,400,000 shares of common stock at $.025 per share, in a private offering as of
December 7, 2001 in varying amounts parallel to their respective option
holdings. Each purchasing investor was further required to surrender all of his
outstanding options to purchase common stock of the Company, acquired in making
each previous investment. These consisted of options for a total of 4,400,000
shares, previously exercisable at prices ranging from $.15 to $2.50 per share,
and expiring between 2003 and 2006. All of such options are now cancelled and
terminated, reducing all outstanding stock options by over 90%. This surrender
and cancellation was intended to make future merger, sale or other business
possibilities for the Company easier to achieve. The Company has options,
previously held by employees in 1998 (before current major investors purchased
control), which still remain outstanding, for the purchase of 415,577 shares,
exercisable at prices ranging from $.35 to $2.15 per share, expiring between
2004 and 2006. There were 20,118,178 shares of common stock outstanding as of
June 30, 2002 as a result of the financing described above.
The Company's stock was trading at $.03 per share with nominal volume,
during the seven-day offer/closing period in December, 2001. The shares sold to
major investors were not registered under the Securities Act of 1933, were
purchased for investment and are not readily marketable, which factors generally
result in discounts in purchase value. There was also substantial business risk
to the purchasers because the Company has no continuing operations and was being
liquidated.
The Company has been seeking merger or sale possibilities with operating
businesses who perceive value in a merger with the Company as a publicly traded
corporate shell with approximately 5,400 shareholders.
Other Financing. The Company Chairman/CEO Lawrence M. Powers and another
investor, in order to finance ongoing corporate expenses, purchased an
additional 1,800,000 shares of common stock of the Company (1,200,000 and
3
600,000 shares, respectively) as of July 26, 2002, at $.025 per share. (This was
the same price paid by six shareholder investors in December, 2001, to finance
ongoing corporate expenses at that time.) The Company's stock was trading at
$.05 per share during the week ending July 26, 2002 with nominal volume. The
shares recently sold to these two existing investors were not registered under
the Securities Act of 1933, were purchased for investment requiring "legended"
certificates and are not readily marketable because of such legending and the
nominal trading volume in SITI stock, which factors generally result in
substantial discounts in purchase value. There are also several other business
risks to the purchasers, because the Company has no ongoing operations, is in
liquidation, and is seeking merger or sale possibilities with operating
businesses, to make use of the Company's publicly traded status with
approximately 5,400 shareholders. But current depressed stock market conditions
for "going public" increase the difficulties in arranging any such transactions.
The Company Chairman/CEO Lawrence M. Powers, in order to finance ongoing
corporate expenses, purchased an additional 1,500,000 shares of common stock of
the Company as of October 23, 2002, at $.02 per share. The Company's stock was
trading at $.02 per share for most of the three weeks preceding October 23, 2002
with nominal volume. The shares recently sold to Mr. Powers were not registered
under the Securities Act of 1933, were purchased for investment requiring
"legended" certificates and are not readily marketable because of such legending
and the nominal trading volume in SITI stock, which factors generally result in
substantial discounts in purchase value. The several other business risks to the
purchaser described above are continuing. As a result of this stock purchase
transaction completed October 28, 2002, the Company's outstanding common stock
increased as of such date from 21,918,178 shares to 23,418,178 shares.
As a result of the liquidation and reasons discussed below, the Company's
management has determined that it is an inactive entity (See "Form 10-K for
2003, Item 1. Business - Inactive Entity"). The Company meets all of the
criteria as set forth below except as noted:
(a) Gross receipts from all sources for the fiscal year ended March
31, 2003 are not in excess of $100,000;
(b) The registrant has not purchased or sold any of its own stock,
granted options therefore, or levied assessments upon outstanding stock; (1)
(c) Expenditures for all purposes for the fiscal year ended March
31, 2003 are not in excess of $100,000; (2)
(d) No material change in the business has occurred during the
fiscal year, including any bankruptcy, reorganization, readjustment or
succession or any material acquisition or disposition of plants, mines, mining
equipment, mine rights or leases; and
(e) No exchange upon which the shares are listed, or governmental
authority having jurisdiction, requires the furnishing to it or the publication
of audited financial statements.
(1) During the last fiscal year, the Company had no source of funding to
cover its expenses which were almost entirely audit and stock transfer expenses,
and Chairman/CEO Powers, who may be deemed to beneficially own approximately 48%
of the Company's outstanding stock, and another investor provided funding to the
Company. All of the shares issued are legended and neither investor, has any
intention of selling the stock publicly in the foreseeable future. (See "Form
10-K for 2003, Item 1. Business - Inactive Entity")
(2) Operating expenses of approximately $260,000 include approximately
$185,000 of contributed services and rent. The Company recorded such $185,000 as
a contribution of capital because there was no cash outlay for such expenses.
(b) CHANGE TO LIQUIDATION BASIS OF ACCOUNTING
During the quarter ended December 31, 2001, the Company decided to
liquidate its operations and adopted the liquidation basis of accounting
effective January 1, 2002. Under the liquidation basis of accounting, assets are
stated at their estimated net realizable values and liabilities are stated at
their estimated settlement amounts, which estimates will be periodically
reviewed and adjusted. Since the Company is in liquidation without continuing
operations, the need to
4
present quarterly Statements of Operations and Comprehensive Loss as well as a
Statement of Cash Flows, is eliminated. However, the prior year's financial
statements for the comparable quarter are presented, since the Company did not
adopt this method of accounting until January 1, 2002.
The valuation of assets at their net realizable value and liabilities at
their anticipated settlement amounts necessarily requires many estimates and
assumptions. In addition, there are substantial risks and uncertainties
associated with carrying out the liquidation of the Corporation's existing
operations. The valuations presented in the accompanying Statement of Net Assets
in Liquidation represent estimates, based on present facts and circumstances, of
the net realizable values of assets and costs associated with carrying out the
dissolution and liquidation plan based on the assumptions set forth below. The
actual values and costs are expected to differ from the amounts shown herein and
could be greater or lesser than the amounts recorded. Accordingly, it is not
possible to predict the aggregate amount that will ultimately be distributable
to shareholders and no assurance can be given that the amount to be received in
liquidation will equal or exceed the net assets in liquidation per share in the
accompanying Statement of Net assets in Liquidation or the price or prices at
which the Common Stock has generally traded or is expected to trade in the
future. The cautionary statements regarding estimates of net assets in
liquidation set forth in the Forward-Looking Statements portion of this report
are incorporated herein by reference.
(c) RECENT HISTORY
For a full discussion of the Company's recent history refer to Form 10-K
for 2003, Form 10-K for 2002 and Form 10-K for 2001, incorporated herein by
reference.
(d) USE OF ESTIMATES
In preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and revenues and expenses during the reporting
period. Actual results could differ from those estimates.
(e) CASH AND CASH EQUIVALENTS
Cash and cash equivalents include the Company's cash balances and
short-term investments that mature in 90 days or less from the original date of
maturity. Cash and cash equivalents are carried at cost plus accrued interest,
which approximates market.
2. LITIGATION
As of the date of this report the Company knows of no pending or
threatened legal actions against the Company that would have a material impact
on the operations or financial condition of the Company. In December, 2002 the
Company was sued for $3,750 in Civil Court, New York City by MetTel, a former
supplier of Internet access service. The suit was brought one year after the
Company terminated the service in November, 2001, returned the "router"
connecting the system and paid all outstanding bills into December, 2001.
Although the outcome of any legal proceedings cannot be predicted with
certainty, based on current knowledge of the applicable law and facts taking
into consideration the opinion of the Company's general counsel that the
allegations lack merit and substance, and that the Company should prevail in
this litigation, management believes that this lawsuit should not have a
material adverse effect on the net assets in liquidation. As of June 30, 2003,
the claimant has not pursued its claim by docketing it in Court or replying to
the Company's counterclaim.
Defaults by EZCD.com as to its investment representations, and its content
and technology sharing agreement with the Company could result in litigation or
other legal complications, and attendant costs and efforts by the Company's
management to resolve such matters. EZCD.com filed for bankruptcy liquidation in
August, 2000 and the Company is making creditor claims in such proceeding which
have been partially accepted by the trustee therein, and will result in a
nominal distribution. There is little likelihood of any material recovery.
5
From time to time in previous years, the Company had been a party to other
legal actions and proceedings incidental to its business. As of the date of this
report, however, the Company knows of no other pending or threatened legal
actions that could have a material impact on the net assets in liquidation.
3. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities were comprised of the following:
June 30, March 31,
2003 2003
----------------------
(Amounts in thousands)
Accrued professional fees $ 11 $ 11
Accounts payable and accrued
Expenses -- 2
------ ------
$ 11 $ 13
====== ======
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND STATUS
OF LIQUIDATION
THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS FORWARD LOOKING STATEMENTS
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995,
INCLUDING, BUT NOT LIMITED TO STATEMENTS RELATED TO BUSINESS OBJECTIVES AND
STRATEGY OF THE COMPANY. SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON CURRENT
EXPECTATIONS, ESTIMATES AND PROJECTIONS ABOUT THE COMPANY'S INDUSTRY,
MANAGEMENT'S BELIEFS AND CERTAIN ASSUMPTIONS MADE BY THE COMPANY'S MANAGEMENT.
WORDS SUCH AS "ANTICIPATES," "EXPECTS," "INTENDS," "PLANS," "BELIEVES," "SEEKS,"
"ESTIMATES," VARIATIONS OF SUCH WORDS AND SIMILAR EXPRESSIONS ARE INTENDED TO
IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. THESE STATEMENTS ARE NOT GUARANTEES OF
FUTURE PERFORMANCE AND ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND
ASSUMPTIONS THAT ARE DIFFICULT TO PREDICT; THEREFORE, ACTUAL RESULTS MAY DIFFER
MATERIALLY FROM THOSE EXPRESSED, FORECASTED, OR CONTEMPLATED BY ANY SUCH
FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE ACTUAL EVENTS OR RESULTS TO
DIFFER MATERIALLY INCLUDE, AMONG OTHERS, THOSE RISK FACTORS SET FORTH IN THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED MARCH 31, 2003. GIVEN
THESE UNCERTAINTIES, INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON ANY
SUCH FORWARD-LOOKING STATEMENTS. UNLESS REQUIRED BY LAW, THE COMPANY UNDERTAKES
NO OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A
RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE. HOWEVER, READERS SHOULD
CAREFULLY REVIEW THE RISK FACTORS SET FORTH IN OTHER REPORTS OR DOCUMENTS THE
COMPANY FILES FROM TIME TO TIME WITH THE SECURITIES AND EXCHANGE COMMISSION,
PARTICULARLY THE ANNUAL REPORTS ON FORM 10-K, OTHER QUARTERLY REPORTS ON FORM
10-Q AND ANY CURRENT REPORTS ON FORM 8-K.
Overview
SITI has been seeking merger or sale possibilities with operating
businesses who perceive value in a merger with the Company as a publicly traded
corporate shell. The Company was an Internet media company with three websites
for the marketing of news and services. The Company's websites related entirely
to the music industry. The Company intended to develop these websites further by
entering into strategic partnerships and affiliations. As part of this strategy,
in June, 1999 the Company acquired Tropia, which promoted and marketed the music
of selected independent artists on its website www.Tropia.com. The Company next
acquired three music-related websites, HungryBands.com (an e-commerce website
and business promoting and selling music by independent artists),
NewMediaMusic.com (an e-news/magazine business), and NewYorkExpo.com (a music
and Internet conference business), all in January, 2000. As of December 31,
2001, the Company discontinued the operations of its New Media Music and
HungryBands divisions because they were not viable businesses. As of March 31,
2001, the Company discontinued the operations of the New York Expo as a result
of increased losses associated with the production of the Expo. In addition,
during fiscal 2000, the Company made and wrote-off a $500,000 investment in a
music CD custom compilation and promotion company, Volatile Media, Inc., which
6
did business as EZCD.com, now in bankruptcy liquidation. Such investment was
written off at March 31, 2000 because of uncertainties in EZCD's financing plans
and ability to continue operations.
SITI's history under former management and control persons goes back to
1984 when it was incorporated in Delaware. As a result of a change of control of
the Company in December, 1998, the Company's senior management and Board of
Directors were replaced. The current senior management and Board of Directors
changed the strategic direction of the Company from being a developer of
patented communication technologies to that of an Internet media company. All
prior business operations of the Company were discontinued. The Company changed
its corporate name to SITI-Sites.com, Inc. from Spectrum Information
Technologies, Inc. after its Annual Meeting of Stockholders on December 14,
1999, and its former stock symbol "SITI" is now "SITN.EOB".
In view of the Company's determination to seek other business
opportunities to create shareholder value, the following information should not
be relied upon as an indication of future performance. All of the Company's
operations prior to January 1, 2002 are discontinued operations and the Company
adopted the liquidation basis of accounting, effective January 1, 2002. (See
Status of Liquidation).
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary objective is to conserve its cash while it is
seeking merger or sale possibilities. As of June 30, 2003 the Company had net
assets of $17,000.
As of June 30, 2003, the Company's total assets were $28,000, represented
entirely by cash. During the three months ended June 30, 2003, the Company paid
approximately $49,000 in operating expenses consisting primarily of its stock
transfer agent fees and salary to one employee of approximately $6,000 and
$3,000, respectively, as well as management's contribution of their services of
approximately $31,000.
As of June 30, 2003, the Company's liabilities were $11,000 consisting
primarily of its obligations for professional fees associated with its fiscal
2003 year end agreed upon procedures. Management, primarily the Chairman/CEO,
continues to work without any cash compensation. Management further continues to
use personal offices to continue its plan. As a result, of this contribution,
the Company charged-off approximately $38,000 to compensation and rent.
LIQUIDATION BASIS OF ACCOUNTING
The condensed consolidated financial statements for the three months ended
June 30, 2002 were prepared on the liquidation basis of accounting. Under the
liquidation basis of accounting, assets are stated at their estimated net
realizable values and liabilities are stated at their estimated settlement
amounts, which estimates will be periodically reviewed and adjusted. Since the
Company is in liquidation without continuing operations, the need to present
quarterly Statements of Operations and Comprehensive Loss as well as a Statement
of Cash Flows is eliminated.
The valuation of assets at their net realizable value and liabilities at
their anticipated settlement amounts necessarily requires many estimates and
assumptions. In addition, there are substantial risks and uncertainties
associated with carrying out the liquidation of the Corporation's existing
operations. The valuations presented in the accompanying Statement of Net Assets
in Liquidation represent estimates, based on present facts and circumstances, of
the net realizable values of assets and costs associated with carrying out the
dissolution and liquidation plan based on the assumptions set forth below. The
actual values and costs are expected to differ from the amounts shown herein and
could be greater or lesser than the amounts recorded. Accordingly, it is not
possible to predict the aggregate amount that will ultimately be distributable
to shareholders and no assurance can be given that the amount to be received in
liquidation will equal or exceed the net assets in liquidation per share in the
accompanying Statement of Net assets in Liquidation or the price or prices at
which the Common Stock has generally traded or is expected to trade in the
future. The cautionary statements regarding estimates of net assets in
liquidation set forth in the Forward-Looking Statements portion of this report
are incorporated herein by reference.
RISK FACTORS
See the Company's Annual Report on Form 10-K , "Item 1 - Risk Factors That
May Affect the Company's Business, Future Operating Results and Financial
Condition." and "Status of Liquidation" set forth herein.
7
STATUS OF LIQUIDATION
SITI continues to seek merger or sale possibilities with operating
businesses who perceive value in a merger with the Company as a publicly traded
corporate shell. There can be no assurance these of any merger or sale occurring
or such transaction will be viable for the Company. There are also several other
business risks to the purchasers, because the Company has no ongoing operations,
is in liquidation, and is seeking merger or sale possibilities with operating
businesses, to make use of the Company's publicly traded status with
approximately 5,400 shareholders. But current depressed stock market conditions
for "going public" increase the difficulties in arranging any such transactions.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's market risk disclosures set forth in its fiscal 2003 Annual
Report filed on Form 10-K have not changed significantly.
ITEM 4. CONTROLS AND PROCEDURES
(a) The Company's principal executive officer and its principal financial
officer, based on their evaluation of the Company's disclosure controls and
procedures (as defined in Exchange Act Rules 13a -14 (c)) as of a date within 90
days prior to the filing of this Quarterly Report on Form 10-Q, have concluded
that the Company's disclosure controls and procedures are adequate and effective
for the purposes set forth in the definition in Exchange Act rules.
(b) There were no significant changes in the Company's internal controls
or in other factors that could significantly affect the Company's internal
controls subsequent to the date of their evaluation.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As of the date of this report the Company knows of no pending or
threatened legal actions against the Company that would have a material impact
on the operations or financial condition of the Company. In December, 2002 the
Company was sued for $3,750 in Civil Court, New York City by MetTel, a former
supplier of Internet access service. The suit was brought one year after the
Company terminated the service in November, 2001, returned the "router"
connecting the system and paid all outstanding bills into December, 2001.
Although the outcome of any legal proceedings cannot be predicted with
certainty, based on current knowledge of the applicable law and facts taking
into consideration the opinion of the Company's general counsel that the
allegations lack merit and substance, and that the Company should prevail in
this litigation, management believes that this lawsuit should not have a
material adverse effect on the net assets in liquidation. As of June 30, 2003,
the claimant has not pursued its claim by docketing it in Court or replying to
the Company's counterclaim.
Defaults by EZCD.com as to its investment representations, and its content
and technology sharing agreement with the Company could result in litigation or
other legal complications, and attendant costs and efforts by the Company's
management to resolve such matters. EZCD.com filed for bankruptcy liquidation in
August, 2000 and the Company is making creditor claims in such proceeding which
have been partially accepted by the trustee therein, and will result in a
nominal distribution. There is little likelihood of any material recovery.
From time to time in previous years, the Company had been a party to other
legal actions and proceedings incidental to its business. As of the date of this
report, however, the Company knows of no other pending or threatened legal
actions that could have a material impact on the net assets in liquidation.
8
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
Exhibit 31 Certification Pursuant To Section 302 of The
Sarbanes-Oxley Act of 2002
Exhibit 32 Certification Pursuant to 18 U.S.C. Section 1350, As
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 202
B. Reports on Form 8-K
On July 15,2003, the Company filed Form 8-K announcing at "Item 4.
Change in the Registrant's Certifying Accountant", the Company's
termination of McGladrey & Pullen, LLP as its auditors as a result
of the Company's inactive status.
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
Dated: August 13, 2003
SITI-SITES.COM, INC.
By /s/ Lawrence M. Powers
---------------------------------------
Lawrence M. Powers
Chief Executive Officer and
Chairman of the Board of Directors
By /s/ Toni Ann Tantillo
---------------------------------------
Toni Ann Tantillo
Chief Financial Officer,
Vice President, Secretary and Treasurer
10