U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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(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.
/ / 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 0-29204
HOMECOM COMMUNICATIONS, INC.
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(Exact name of small business issuer as specified in its charter)
DELAWARE 58-2153309
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3495 Piedmont Road
Building 12, Suite 110
Atlanta, Georgia 30305
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(Address of principal executive offices)
(404) 237-4646
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(Issuer's Telephone Number)
Indicate by check whether the registrant (1) has filed all reports required
to be filed by Section 13 of 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
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Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes No X .
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APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of September 23, 2003, there
were 14,999,156 shares of the registrant's Common Stock, par value $0.0001 per
share.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
HOMECOM COMMUNICATIONS, INC.
Consolidated Balance Sheets as of June 30, 2003 and December 31, 2002
June 30, 2003 December 31, 2002
(unaudited)
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 101,606 $ 160,342
Accounts receivable, net 257,311 243,159
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Total current assets 358,917 403,501
Prepaid expenses 26,802 20,358
Furniture, fixtures and equipment held for sale 105,624 83,695
Licensed Technology rights, net 969,786
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Total assets $ 1,461,129 $ 507,554
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LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 2,204,961 $ 2,109,069
Note payable 100,000
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Total liabilities 2,304,961 2,109,069
Redeemable Preferred stock, Series B, $.01 par value, 125
shares authorized, 125 shares issued at June 30, 2003 and December 31, 2002
and 17.8 shares outstanding at June 30, 2003 and December 31, 2002,
convertible, participating; $432,283 liquidation value as of June 30, 2003 251,750 251,750
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STOCKHOLDERS' DEFICIT:
Common stock, $.0001 par value, 15,000,000 shares
authorized, 14,999,156 shares issued and outstanding at
June 30, 2003 and December 31, 2002 1,500 1,500
Preferred stock, Series C, $.01 par value, 175 shares
issued and authorized, 90.5 shares outstanding at June 30, 2003 and
December 31, 2002, convertible, participating; $2,235,834 liquidation value
at June 30, 2003 1 1
Preferred stock, Series D, $.01 par value, 75 shares issued
and authorized, 1.3 shares outstanding at June 30, 2003
and December 31, 2002, convertible, participating;
$31,639 liquidation value at June 30, 2003 1 1
Preferred stock, Series E, $.01 par value, 106.4 shares
issued and authorized, 106.4 shares outstanding at June 30, 2003 and
December 31, 2002, convertible, participating; $2,673,377 liquidation value
at June 30, 2003 1 1
Preferred stock, Series F, $.01 par value, 13,500 shares
authorized, 0 shares issued and outstanding at June 30, 2003
Preferred stock, Series G, $.01 par value, 1,069 issued,
authorized, and outstanding at June 30, 2003,
convertible, participating; $1,069,000 liquidation value
at June 30, 2003 11
Treasury stock, 123,695 shares at June 30, 2003 and
December 31, 2002 (8,659) (8,659)
Additional paid-in capital 24,616,594 23,949,577
Accumulated deficit (25,705,031) (25,795,686)
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Total stockholder's deficit (1,095,582) (1,853,265)
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Total liabilities and stockholder's deficit $ 1,461,129 $ 507,554
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The accompanying notes are an integral part of these financial statements.
2
HOMECOM COMMUNICATIONS, INC.
Consolidated Statements of Operations for the six months ended June 30, 2003 and 2002
Three Months Ended Six Months Ended
June 30, June 30,
(unaudited) (unaudited)
------------------------------- -------------------------------
2003 2002 2003 2002
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Revenues $ 411,218 $ 373,487 $ 817,740 $ 744,751
Cost of Revenues 287,080 236,837 537,855 472,854
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GROSS PROFIT 124,138 136,650 279,885 271,897
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OPERATING EXPENSES:
Sales and marketing
Product development
General and administrative 175,054 187,192 261,269 292,193
Depreciation and amortization 16,437 16,437
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Total operating expenses 191,491 187,192 277,706 292,193
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OPERATING INCOME (LOSS) (67,353) (50,542) 2,179 (20,296)
OTHER EXPENSES (INCOME)
Interest expense 1,233 1,233
Other income, net (19,518) (22,349) (89,709) (23,814)
------------ ------------ ------------ ------------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE (49,068) (28,193) 90,655 3,518
INCOME TAXES
INCOME TAX PROVISION (BENEFIT) 0 0 0 0
------------ ------------ ------------ ------------
NET INCOME (LOSS) (49,068) (28,193) 90,655 3,518
DEEMED PREFERRED STOCK DIVIDEND (159,597) (176,682) (336,361) (353,366)
------------ ------------ ------------ ------------
LOSS APPLICABLE TO COMMON SHAREHOLDERS $ (208,665) $ (204,875) $ (245,706) $ (349,848)
============ ============ ============ ============
LOSS PER SHARE - BASIC AND DILUTED
CONTINUING OPERATIONS $ (0.01) $ (0.01) $ (0.02) $ (0.02)
============ ============ ============ ============
WEIGHTED NUMBER OF SHARES OUTSTANDING 14,999,156 14,999,156 14,999,156 14,999,156
The accompanying notes are an integral part of these financial statements.
3
HOMECOM COMMUNICATIONS, INC.
Consolidated Statements of Cash Flows for the three months ended March 31, 2003 and 2002
Six Months Ended
June 30,
(unaudited)
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2003 2002
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 90,655 $ 3,518
Adjustments to reconcile net income to cash used in
operating activities:
Provision for bad debts 14,665 29,216
Deferred rent expense (3,289)
Change in operating assets and liabilities:
Accounts receivable (28,817) (102,656)
Prepaid expenses (6,444) (49,961)
Accounts payable and accrued expenses (206,866) (37,805)
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Net cash used in operating activities (136,807) (160,977)
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CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of furniture, fixtures, and equipment (21,929) (22,853)
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Net cash used in investing activities (21,929) (22,853)
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CASH FLOW FROM FINANCING ACTIVITIES:
Issuance of Note Payable 100,000
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Net cash provided by financing activities 100,000
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NET DECREASE IN CASH AND CASH EQUIVALENTS (58,736) (183,830)
CASH AND CASH EQUIVALENTS at beginning of period 160,342 413,346
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CASH AND CASH EQUIVALENTS at end of period $ 101,606 $ 229,516
========= =========
SUPPLEMENTAL DATA:
Non-Cash activities:
Preferred stock issued for acquisition of technology licenses 986,223
Accrued penalty on preferred stock 319,194 319,194
The accompanying notes are an integral part of these financial statements.
4
HOMECOM COMMUNICATIONS, INC.
Notes to Consolidated Financial Statements
(Unaudited)
1. BASIS OF PRESENTATION
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to Article 10 of Regulation S-X of the
Securities and Exchange Commission. The accompanying unaudited financial
statements reflect, in the opinion of management, all adjustments necessary to
achieve a fair statement of the financial position and results of operations of
HomeCom Communications, Inc. (the "Company," "we" or "us") for the interim
periods presented. All such adjustments are of a normal and recurring nature.
These financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 2002, as filed with the Commission on April
15, 2003.
2. GOING CONCERN MATTERS AND RECENT EVENTS
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern, which contemplate the
realization of assets and liquidations of liabilities in the normal course of
business. The Company has incurred significant losses since its incorporation
resulting in an accumulated deficit as of June 30, 2003 of approximately $25.7
million. The Company continues to experience negative cash flows from operations
and is dependent on one client that accounts for 97% of revenue. These factors
raise doubt about the Company's ability to continue as a going concern.
On March 27, 2003, we entered into an Asset Purchase Agreement (the
"Agreement") with Tulix Systems, Inc. ("Tulix"), a company in which Gia
Bokuchava, Nino Doijashvili and Timothy R. Robinson, who are officers and
directors of the Company, are officers, directors and founding shareholders.
Under the Agreement, Tulix will purchase the assets used in the operation
of our hosting and web site maintenance business, including intellectual
property, equipment, contracts, certain accounts receivable in an aggregate
amount of approximately $70,000, and cash of $50,000 (the "Asset Sale"). As
consideration for these assets, Tulix will: issue to us shares of Tulix common
stock that will represent 15% of the outstanding shares of Tulix; issue to us a
secured promissory note (the "Note") for a principal amount of $70,000 (subject
to adjustment as described below) that will bear interest at an annual rate of
7%, will be secured by certain assets of Tulix that are transferred to Tulix as
part of the Asset Sale, and will become due one year after the closing of the
Asset Sale (the principal amount of the note may be increased at closing
pursuant to the terms of the Agreement); and, assume certain obligations of
ours, including certain accounts payable related to ongoing operations.
The note to be issued by Tulix to the Company will be for a principal
amount of $70,000, subject to adjustment as described below. If the sum of the
cash and accounts receivable of the Company (as determined in accordance with
GAAP in a manner consistent with the Company's past practices) on the day that
we complete the Asset Sale is less than $325,053 (subject to certain
adjustments), the principal amount of the Note will be increased by an amount
equal to the difference between $325,053 (as adjusted) and the sum of the
Company's cash and accounts receivable on the closing date. To the extent that
the sum of cash and accounts receivable on the day that we complete the Asset
Sale is more than $325,053 (as adjusted), the excess will be divided evenly
between the Company and Tulix. The Note will bear interest at a rate of 7% per
year and will mature on the one year anniversary of the Closing of the Asset
Sale. Interest will be due and payable at maturity. The Note will be secured by
certain assets transferred to Tulix in the Asset Sale.
In connection with the Asset Sale, the Agreement provides that we will
enter into a Shareholders' Agreement with Tulix, Mr. Robinson, Mr. Bokuchava and
Ms. Doijashvili. The Shareholders' Agreement would give the Company certain
rights as a holder of Tulix stock for a period of five years. These rights
include rights of co-sale, rights of first refusal, anti-dilution rights and
rights to inspect the books and records of Tulix. The co-sale rights will give
us (and the other Tulix shareholders) the right to participate in any sales,
5
subject to certain exclusions, of Tulix stock by other Tulix shareholders. The
rights of first refusal granted to us in the Shareholders' Agreement will
require that Tulix give us (and the other Tulix shareholders) the right to
purchase any securities, subject to certain exclusions, that it intends to offer
to third parties before it offers those securities to third parties. The
anti-dilution rights contained in the Shareholders' Agreement will require Tulix
to grant us additional shares of common stock any time, subject to certain
exclusions, it issues shares of common stock to other persons so that our
aggregate ownership interest in Tulix is generally not diluted. Finally, the
Shareholders' Agreement will give us the right to inspect the books and records
of Tulix, subject to the specific terms of the Shareholders' Agreement.
The parties intend to complete the Asset Sale if (i) it is approved by the
Company's stockholders as required under Delaware law and (ii) the other
conditions to closing set forth in the Agreement are satisfied or waived. These
conditions include, among others, the requirement that all third parties who
have a contractual right to approve the assignment of their contracts to Tulix
must consent to such assignment and a condition in favor of Tulix that the
largest customer of the business to which the assets relate not have notified
the Company or Tulix that it intends to terminate its relationship with HomeCom
or Tulix, that it does not intend to transfer its business to Tulix upon
completion of the Asset Sale, or that it intends to materially change the amount
of business that it does with HomeCom or Tulix. As such, we can offer no
assurance that the Asset Sale will be completed. Neither we nor Tulix is under
any obligation to pay any type of termination fee if we do not complete the
Asset Sale, and there are no other deal protection measures. The Agreement also
contains a release from Tulix pertaining to certain matters and mutual releases
with Mr. Robinson, Mr. Bokuchava and Ms. Doijashvili regarding certain
employment matters.
On May 22, 2003, the Company completed a transaction with Eurotech, Ltd.
("Eurotech"). The Company had entered into a License and Exchange Agreement with
Eurotech and, with respect to Articles V and VI thereof, Polymate, Ltd. and
Greenfield Capital Partners LLC, on March 27, 2003 (as amended as of June 27,
2003, the "Exchange Agreement"). In connection with the completion of the
transaction, the Company entered into a License Agreement, dated May 22, 2003
with Eurotech (as amended as of June 27, 2003, the "License Agreement").
Pursuant to the Exchange Agreement and the License Agreement, Eurotech has
licensed to the Company its rights to the EKOR, HNIPU, Electro Magnetic
Radiography/Acoustic Core (EMR/AC), Rad-X, Firesil, LEM and Rapidly
Biodegradable Hydrophobic Material (RBHM) technologies, which are more fully
described herein. In exchange for the licenses of these technologies, the
Company (i) issued to Eurotech 11,250 shares of Series F Convertible Preferred
Stock and 1,069 shares of Series G Convertible Preferred Stock, both of which
were new series of the Company's preferred stock, and (ii) will pay Eurotech a
royalty of seven percent (7%) on net sales generated by the licensed
technologies and a royalty of four percent (4%) on net sales generated by
products and services that are improvements on the licensed technologies. The
License Agreement provides that the licenses granted to the Company thereunder
will become terminable at the option of Eurotech (i) if the Company has not
effected a commercial sale of any licensed technology or improved licensed
technology by April 1, 2006, and (ii) in certain other circumstances. Effective
as of June 27, 2003, the holders of the outstanding shares of Series F Preferred
Stock cancelled their outstanding shares of Series F Preferred Stock in exchange
for the right to receive shares of Series H Convertible Preferred Stock.
EMR/AC is a technology intended for the imaging of subterranean nuclear and
hazardous wastes in ground and marine settings, and for oil exploration. HNIPU
is a technology intended to improve upon conventional monolithic polyurethanes
through a non-toxic process. EKOR is a family of non-toxic advanced composite
polymer materials used in the containment of nuclear and hazardous materials.
Rad-X is a water-based compound intended to affix radioactive or hazardous
contaminants to a variety of surfaces. Firesil is an organo-mineral
fire-protective coating for wood and other materials. Liquid Ebonite Mixtures
(LEM) are rubber-coating protective lining products. Rapidly Biodegradable
Hydrophobic Material (RBHM) is a biodegradable composite material.
In connection with the closing of the transaction with Eurotech, the
holders of the Company's Series C, Series D, and Series E Preferred Stock and
certain holders of the Company's Series B Preferred Stock (i) have agreed to
extend the mandatory conversion dates of their respective shares of Preferred
Stock until March 31, 2004 and (ii) have agreed to refrain from converting their
shares of Preferred Stock into shares of common stock until the Company has
amended its Certificate of Incorporation to authorize at least 150,000,000
shares of common stock. In addition, the holder of the outstanding shares of the
Company's Series C, Series D and Series E Preferred Stock has agreed to accept
payment for approximately $1.8 million of penalties that may be owed to it in
shares of common stock instead of cash.
6
The Exchange Agreement provides that, during the period prior to closing of
the Asset Sale, the financial needs of the hosting and web site maintenance
business will be funded by the operations of that business, while the finances
relating to the new licensed technologies will be kept separate. On May 22,
2003, we executed a note in favor of one of our preferred shareholders that
provides that we may borrow up to $150,000 for use solely in connection with the
technologies that we have licensed from Eurotech. Advances under this agreement,
which advances are secured by a security agreement, bear interest at a rate of
10% per annum and mature on December 31, 2003. We have borrowed $100,000 under
this agreement as of June 30, 2003.
Once issued, shares of Series H Convertible Preferred Stock will be
convertible into shares of common stock at a conversion rate of 10,000 shares of
common stock per share of Series H Preferred Stock, subject to adjustment as set
forth in the Certificate of Designations governing the Series H Preferred Stock.
As such, the 13,500 shares of Series H Preferred Stock to be issued to Eurotech,
Polymate and Greenfield will be convertible into 135,000,000 shares of common
stock. The Series H Certificate of Designations, however, will provide that no
holder of Series H Shares may convert Series H Shares into shares of common
stock if such conversion would result in that holder beneficially owning more
than 9.9% of the outstanding shares of common stock (excluding, for purposes of
the calculation, any unconverted Series H Shares). In addition, the Certificate
of Designations will provide that the shares of Series H Preferred Stock will
only become convertible at such time as the Company has a sufficient number of
authorized but unissued shares of common stock available to support the
conversion of the outstanding shares of all series of preferred stock.
Currently, the Company has only 15,000,000 shares of authorized common stock, of
which 14,999,156 shares have been issued and are outstanding. As such, our Board
of Directors has approved, and has directed us to submit to our stockholders, a
proposal to amend our Certificate of Incorporation to, among other things,
increase the number of shares of common stock that we are authorized to issue to
300,000,000 shares. Shares of Series H Preferred Stock will not have the right
to vote.
Pursuant to the License Agreement, the Company issued 1,069 shares of
Series G Convertible Preferred Stock to Eurotech. Each share of Series G
Convertible Preferred Stock is convertible into a number of shares of common
stock determined by dividing $1,000 by a number equal to 82.5% of the average
closing price of the common stock over the preceding five business days. The
Series G Certificate of Designations, however, provides that no holder of Series
G Shares may convert Series G Shares into shares of common stock if such
conversion would result in that holder owning more than 9.9% of the outstanding
shares of common stock (excluding, for purposes of the calculation, any
unconverted Series G Shares). Shares of Series G Preferred Stock do not have
the right to vote.
The Company has agreed to enter into a commercially reasonable registration
rights agreement with Eurotech, Polymate and Greenfield pursuant to which the
Company would grant both demand and piggyback registration rights to those
entities.
In anticipation of the transaction, Lawrence Shatsoff and David Danovitch
resigned from the Company's Board of Directors, and Don V. Hahnfeldt, formerly a
director, the President and Chief Executive Officer of Eurotech, and Randolph A.
Graves, Jr., a director and the Chief Financial Officer and Vice President of
Eurotech, were elected to fill these vacancies on the Company's Board of
Directors. The Board of Directors also appointed Mr. Hahnfeldt and Dr. Graves to
serve as officers of the new division that we created in connection with the
license of the above-referenced technologies from Eurotech. Mr. Hahnfeldt has
subsequently resigned his positions as an officer and director of HomeCom.
If we complete the Tulix transaction, we expect Mr. Robinson, Mr. Bokuchava
and Ms. Doijashvili to resign from the Board of Directors.
3. SEGMENT INFORMATION
During 2002, HomeCom operated as a single business unit. Beginning May 22,
2003, with the closing of the License Agreement with Eurotech, the Company was
reorganized into two separate business units. These units are organized based
upon the products and services which they deliver. HomeCom's reportable segments
are (i) Internet Services which consists of custom web development, hourly
maintenance services, and hosting; and (ii) Licensed Technologies, which
consists of business activities associated with the technologies licensed from
Eurotech.
7
The table below presents information about the reported business unit
income for HomeCom Communications, Inc. for the three and six months ended June
30, 2003 and 2002.
Three Months Ended June 30, Six Months Ended June 30,
----------------------------- ------------------------------
2003 2002 2003 2002
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Revenues:
Internet Services $ 403,417 $ 373,487 $ 809,939 $ 744,751
Licensed Technologies 7,801 7,801
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Totals $ 411,218 $ 373,487 $ 817,740 $ 744,751
Business Unit Net Income (Loss):
Internet Services $ 179,494 $ 136,650 $ 335,241 $ 271,897
Licensed Technologies (55,356) (55,356)
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Totals $ 124,138 $ 136,650 $ 279,885 $ 271,897
Adjustments to reconcile business
unit net income with
consolidated net income (loss)
General and Administrative Expenses 191,491 187,192 277,706 292,193
Interest expense 1,233 1,233
Other income, net (19,518) (22,349) (89,709) (23,814)
--------- --------- --------- ---------
Consolidated net income (loss) $ (49,068) $ (28,193) $ 90,655 $ 3,518
========= ========= ========= =========
4. BASIC AND DILUTED LOSS PER SHARE
Loss per common share is computed by dividing net loss available to common
stockholders by the weighted average number of shares of common stock
outstanding for the period of time then ended. The effect of the Company's stock
options and convertible securities is excluded from the computations for the
three and six months ended June 30, 2003 and 2002, as it is antidilutive.
5. STOCK OPTIONS
The Company has adopted the disclosure requirement of Statement of
Financial Accounting Standards No. 148 (SFAS 148), "Accounting for Stock-Based
Compensation-Transition and Disclosure" effective December 15, 2002. SFAS 148
amends Statement of Financial Accounting Standards No. 123 (SFAS 123),
"Accounting for Stock Based Compensation," to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based compensation and also amends the disclosure requirements of SFAS
123 to require prominent disclosure in both annual and interim financial
statements about the methods of accounting for stock-based employee compensation
and the effect of the method used on report results. As permitted by SFDAS 148
and SFAS 123, the Company continues to apply the accounting provisions of APB
25, and related interpretations, with regard to the measurement of compensation
cost for options granted under the Company's Stock Option Plan. No compensation
expense has been recorded as all options granted had an exercise price equal to
the market value of the underlying stock on the grant date. The pro-forma effect
on our results of operations, had expense been recognized using the fair value
method described in SFAS 123, using the Black-Scholes option pricing model, is
shown below.
For the three months
ended June 30,
-------------------------
2003 2002
--------- -------
Loss applicable to common shareholders:
As reported (208,665) (204,875)
Pro forma (298,794) (247,302)
Basic and diluted loss per share:
As reported (0.01) (0.01)
Pro forma (0.02) (0.02)
6. TAXES
There was no provision for cash payment of income taxes for the six months
ended June 30, 2003 and 2002, respectively, as the Company anticipates a net
taxable loss for the year ended December 31, 2003.
8
7. STOCKHOLDERS' DEFICIT
As a requirement of the private placements of the Company's Series B, C, D
and E Convertible Preferred Stock, the Company was obligated to file and have
declared effective, within a specified time period, a registration statement
with respect to a minimum number of shares of common stock issuable upon
conversion of the Series B, C, D and E Preferred Stock. As of June 30, 2003,
such registration statement has not been declared effective and penalties are
owed. In accordance with the terms of the agreement between the parties,
penalties accrue at a percentage of the purchase price of the unregistered
securities per 30 day period. As of June 30, 2003, $1,846,365 has been accrued
into accounts payable and accrued expenses for such penalties. In connection
with the closing of the License and Exchange Agreement, the holders of the
Company's Series C, Series D, and Series E Preferred Stock and certain holders
of the Company's Series B Preferred Stock have agreed to extend the mandatory
conversion dates of their respective shares of Preferred Stock until March 31,
2004 and have agreed to refrain from converting their shares of preferred stock
into shares of common stock until the Company has amended its Certificate of
Incorporation to authorize at least 150,000,000 shares of common stock. In
addition, the holder of the outstanding shares of the Company's Series C, Series
D and Series E Preferred Stock has agreed to accept payment for penalties that
may be owed to it in shares of common stock instead of cash.
8. ISSUANCE OF SERIES F AND G PREFERRED STOCK
On May 22, 2003, the Company issued 13,500 shares of the Company's Series F
Convertible Preferred Stock, par value $.01 per share. Each Series F Share was
convertible into 10,000 shares of common stock and has a stated value of $1,000
per share (See Note 2). The holders of the outstanding shares of Series F
Preferred Stock have cancelled and surrendered their Series F Shares in exchange
for the right to receive shares of Series H Preferred Stock, which shares will
become issuable upon filing with the Secretary of State of Delaware of the
Certificate of Rights, Designations and Preferences of Series H Convertible
Preferred Stock. Like the Series F Shares, each Series H Share will have a
stated value of $1,000 per share and will be convertible into 10,000 shares of
common stock; provided, however, that no holder of Series H Shares may convert
Series H Shares into shares of common stock if the aggregate shares of common
stock beneficially owned by such holder and its affiliates would exceed 9.9% of
the outstanding shares of common stock if following such conversion (excluding,
for purposes of the calculation, the unconverted Series H Shares).
On May 22, 2003, the Company issued 1,069 shares of the Company's Series G
Convertible Preferred Stock, par value $.01 per share. The Series G shares have
a stated value of $1,000 per share. Each Series G Preferred Share is
convertible, from and after 120 days following the date of issuance, at the
option of the holder, into such number of shares of Common Stock as is
determined by dividing $1,000 per share by a number equal to 82.5% of the
average of the closing bid prices for the five trading days preceding the date
of conversion. No holder of Series G Shares may convert Series G Shares into
shares of common stock if the aggregate shares of Common Stock beneficially
owned by such holder and its affiliates would exceed 9.9% of the outstanding
shares of Common Stock following such conversion (excluding, for purposes of the
calculation, the unconverted Series G Shares). The Series G Preferred Stock has
no mandatory conversion date. In determining the accounting for the beneficial
conversion feature, the Company allocated $986,223 to the preferred stock based
on its relative fair value at the Issuance Date. The Company then allocated
$236,190 of the Series G value to additional paid in capital for the beneficial
conversion feature. The beneficial conversion feature will be recognized as a
deemed dividend to the preferred shareholders over the minimum period in which
the preferred shareholders can realize that return, which will be in the third
quarter of 2003.
The rights acquired from Eurotech in the License Agreement have been
recorded at $986,223 and are being amortized over periods ranging from three to
seven years. This amount represents Eurotech's net carrying value and we believe
approximates fair value.
9. RECENT ACCOUNTING PRONOUNCEMENTS
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity." SFAS
No. 150 establishes standards for classification and measurement in the
statement of financial position of certain financial instruments with
characteristics of both liabilities and equity. It requires classification of a
financial instrument that is within its scope as a liability (or an asset in
some circumstances). SFAS No. 150 is effective for financial instruments entered
into or modified after May 31, 2003 and, otherwise is effective at the beginning
of the first interim period beginning after June 15, 2003. For financial
instruments created before the issuance date of this statement, transition shall
be achieved by reporting the cumulative effect of a change in accounting
principle by initially measuring the financial instrument at fair value. We are
9
currently evaluating the impact that the adoption of SFAS No. 150 will have on
our financial position and results of operations, however at June 30, 2003, the
Company has approximately $6,442,000 in liquidation value related to its Series
B, C, D, E and G Preferred Stock that may be classified as a liability.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
GENERAL
Except for historical information contained herein, some matters discussed
in this report constitute forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward looking statements include,
but may not be limited to, those statements regarding the Company's
expectations, beliefs, intentions, or strategies regarding the future. All
forward-looking statements included in this document are based on information
available to the Company on the date hereof, and the Company assumes no
obligation to update any such forward-looking statements. Specifically, the
Company's statements with respect to, among other things, the completion of the
sale of assets to Tulix, the viability of and plans for the technologies that we
license from Eurotech, and our ability or inability to continue as a going
concern are forward-looking statements. The Company notes that a variety of risk
factors could cause the Company's actual results and experience to differ
materially from the anticipated results or other expectations expressed in the
Company's forward-looking statements including, among other things, our ability
or inability to complete the transaction with Tulix, our ability to obtain
additional financing, the commercial viability of the licensed technologies that
we have acquired from Eurotech, our ability to retain the licenses to these
technologies, and other factors discussed in this report and set forth in our
Annual Report on Form 10-K and in our other securities filings.
Historically, we developed and marketed specialized software applications,
products and services that enabled financial institutions and their customers to
use the Internet and intranets/extranets to obtain and communicate important
business information, conduct commercial transactions and improve business
productivity. We provided Internet/intranet solutions in three areas: (i) the
design, development and integration of customized software applications,
including World Wide Web site development and related network outsourcing; (ii)
the development, sale and integration of our existing software applications into
the client's operations; and, (iii) security consulting and integration
services. In October, 1999, we sold our security consulting and integration
services operations and entered into a joint marketing program with the
acquiror. During 2001, we sold our remaining software applications businesses.
Currently, we derive revenue primarily from professional web development
services and hosting fees. On March 23, 2001, we announced our intentions to
wind down our operations. On March 27, 2003 we entered into an agreement to sell
substantially all of the assets used in our web development, hosting and website
maintenance business to Tulix.
On May 22, 2003 we closed the transactions contemplated by the License and
Exchange Agreement to license certain technologies from Eurotech. If the Tulix
transaction is consummated, our primary assets will include cash and accounts
receivable that we do not transfer to Tulix, the assets that we licensed from
Eurotech, the Tulix Note and the shares of Tulix stock that Tulix will issue to
us in the transaction.
Our revenues and operating results have varied substantially from period to
period, and should not be relied upon as an indication of future results.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2003 COMPARED TO THREE MONTHS ENDED JUNE 30,
2002
NET SALES. Net sales increased 10.1% from $373,487 in the second quarter of
2002 to $411,218 in the second quarter of 2003. This increase of $37,731 is
primarily attributable to increased sales to Roadrunner and sales by the
Licensed Technologies Division. Revenues consisted of $403,417 in sales of
hosting and hourly development services and $7,801 in sales of EKOR, which are
recognized at the time that products are shipped or services are provided.
10
COST OF SALES. Cost of sales includes: cost of materials; salaries for
programmers, technical staff and customer support; as well as a pro-rata
allocation of telecommunications, facilities and data center costs. Cost of
sales increased from $236,837, or 63.4% of revenues, in the second quarter of
2002 to $287,080, or 69.8% of revenues, in the second quarter of 2003. The
increase in the cost of sales is primarily due to expenses incurred with the
start up of the Licensed Technologies Division.
GROSS PROFIT. Gross profit decreased by $12,512 from $136,650 in the second
quarter of 2002 to $124,138 in the second quarter of 2003. Gross profit margins
decreased from 36.6% during the second quarter of 2002 to 30.2% during the
second quarter of 2003. This decline in gross profit is primarily related to the
increase of cost of sales in support of the Licensed Technologies Division
outpacing the increased revenue from Roadrunner for the quarter.
SALES AND MARKETING. The Company ceased all sales and marketing efforts
related to our Internet Services Division in 2001. There were no such
expenditures in the second quarter of 2002 or 2003. As of the end of the second
quarter of 2003, there have been no expenditures for sales and marketing related
to the Licensed Technologies Division.
PRODUCT DEVELOPMENT. The Company ceased all product development efforts
related to our Internet Services Division in 2001. There were no such
expenditures in the second quarter of 2002 or 2003. As of the end of the second
quarter of 2003, there have been no expenditures for product development related
to the Licensed Technologies Division.
GENERAL AND ADMINISTRATIVE. General and administrative expenses include
salaries for administrative personnel, insurance and other administrative
expenses, as well as a pro-rata allocation of telecommunications, and facilities
and data center costs. General and administrative expenses decreased from
$187,192 in the second quarter of 2002 to $175,054 in the second quarter of
2003. As a percentage of net sales, these expenses decreased from 50.1% in the
second quarter of 2002 to 42.6% in the second quarter of 2003. This decrease is
primarily due to successful negotiations to reduce the cost of the Company's
internet connections and a one time $42,133 charge taken in 2002.
DEPRECIATION AND AMORTIZATION. With the write down of the carrying value of
all fixed assets in the fourth quarter of 2000, the Company has suspended
depreciation of its remaining assets in anticipation of a sale. Amortization
expense of $16,437, which represents one month of amortization of the intangible
Licensed Technologies, was recognized in the second quarter of 2003.
OTHER INCOME. Other income in the second quarter of 2003 consisted of
$1,130 in interest earned on money market accounts, $1,233 in interest expense
on the notes related to the Licensed Technologies Division and $18,388 in the
reversal of accruals related to defaults on the lease for our Atlanta offices
during the third quarter of 2001 and other accruals which were resolved at a
lower cost than estimated.
SIX MONTHS ENDED JUNE 30, 2003 COMPARED TO SIX MONTHS ENDED JUNE 30, 2002
NET SALES. Net sales increased 9.8% from $744,751 in the first six months
of 2002 to $817,740 in the first six months of 2003. This increase of $72,989 is
primarily attributable to increased sales to Roadrunner and in sales by the
Licensed Technologies Division. Revenues consisted of $809,939 in hosting and
hourly development and $7,801 in sales of EKOR, which are recognized at the time
that products are shipped or services are provided.
COST OF SALES. Cost of sales includes; cost of materials; salaries for
programmers, technical staff and customer support; as well as a pro-rata
allocation of telecommunications, facilities and data center costs. Cost of
sales increased from $472,854, or 63.5% of revenues, in the first six months of
2002 to $537,855, or 65.8% of revenues, in the first six months of 2003. The
increase in the cost of sales is primarily due to expenses incurred with the
start up of the Licensed Technologies Division.
GROSS PROFIT. Gross profit increased by $7,988 from $271,897 in the first
six months of 2002 to $279,885 in the first six months of 2003. Gross profit
margins decreased from 36.5% during the first six months of 2002 to 34.2% during
the first six months of 2003. The improvement in gross profit is primarily
11
related to recognizing continued growth in Roadrunner. Gross profit would have
increased an additional $55,356 and gross profit margins would have increased to
41.4% without the additional costs associated with the Licensed Technologies
Division.
SALES AND MARKETING. The Company ceased all sales and marketing efforts
related to our Internet Services Division in 2001. There were no such
expenditures in the first six months of 2002 or 2003. As of the end of the first
six months of 2003, there have been no expenditures for sales and marketing
related to the Licensed Technologies Division.
PRODUCT DEVELOPMENT. The Company ceased all product development efforts
related to our Internet Services Division in 2001. There were no such
expenditures in the first six months of 2002 or 2003. As of the end of the first
six months of 2003, there have been no expenditures for product development
related to the Licensed Technologies Division.
GENERAL AND ADMINISTRATIVE. General and administrative expenses include
salaries for administrative personnel, insurance and other administrative
expenses, as well as a pro-rata allocation of telecommunications, and facilities
and data center costs. General and administrative expenses decreased from
$292,193 in the first six months of 2002 to $261,269 in the first six months of
2003. As a percentage of net sales, these expenses decreased from 39.2% in the
first quarter of 2002 to 32.0% in the first quarter of 2003. This decrease is
primarily due to the reversal of accruals for operating expenses incurred during
the fall of 2001 related to the closing of our Chicago, New York and Houston
offices which were ultimately resolved at a lower cost than estimated or were no
longer needed for their originally intended purpose. This decrease is also due
to successful negotiations to reduce the cost of the Company's internet
connections and a one time $42,133 charge taken in 2002.
DEPRECIATION AND AMORTIZATION. With the write down of the carrying value of
all fixed assets in the fourth quarter of 2000, the Company has suspended
depreciation of its remaining assets in anticipation of a sale. Amortization
expense of $16,437, which represents one month of amortization of the intangible
Licensed Technologies, was recognized in the second quarter of 2003.
OTHER INCOME. Other income in the first six months of 2003 consisted of
$2,481 in interest earned on money market accounts, $1,233 in interest expense
on the notes related to the Licensed Technologies Division, $18,388 in the
reversal of accruals related to defaults on the lease for our Atlanta offices
during the third quarter of 2001, and $68,840 in the reversal of accruals
related to defaults on leases of capital equipment during the third quarter of
2001 which were resolved at a lower cost than estimated.
RECENT ACCOUNTING PRONOUNCEMENTS
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with characteristics of Both Liabilities and Equity." SFAS
No. 150 establishes standards for classification and measurement in the
statement of financial position of certain financial instruments with
characteristics of both liabilities and equity. It requires classification of a
financial instrument that is within its scope as a liability (or an asset in
some circumstances). SFAS No. 150 is effective for financial instruments entered
into or modified after May 31, 2003 and, otherwise is effective at the beginning
of the first interim period beginning after June 15, 2003. For financial
instruments created before the issuance date of this statement, transition shall
be achieved by reporting the cumulative effect of a change in accounting
principle by initially measuring the financial instrument at fair value. We are
currently evaluating the impact that the adoption of SFAS No. 150 will have on
our financial position and results of operations, however at June 30, 2003, the
Company has approximately $6,442,133 in liquidation value related to its Series
B, C, D, E and G Preferred Stock that may be classified as a liability.
LIQUIDITY AND CAPITAL RESOURCES
Our sources of capital are extremely limited. We have incurred operating
losses since inception and as of June 30, 2003, we had an accumulated deficit of
$25,705,031 and a working capital deficit of $1,846,044. On March 23, 2001, we
announced our intentions to wind down operations. We have entered into an
agreement to sell substantially all of the operating assets of our hosting and
website maintenance business to Tulix and we have entered into an agreement
whereby we license certain technologies from Eurotech. If we complete the Tulix
transaction, our primary assets will include cash and accounts receivable that
we do not transfer to Tulix, the assets that we license from Eurotech, the Tulix
Note and shares of Tulix stock.
On May 22, 2003, in connection with the closing of the licensing transaction
with Eurotech, we executed a note in favor of one of our preferred stockholders
that provides that we may borrow up to $150,000 for use solely in connection
with the technologies that we have licensed from Eurotech. Advances under this
agreement, which advances are secured by a security agreement, bear interest at
rate of 10% per annum and mature on December 31, 2003. We have borrowed $100,000
under this agreement to date.
We can provide no assurance that the financing sources described above, or
any other financing that we may obtain in the future (if we are able to obtain
financing from any other sources, and we can provide no assurances that we will
be able to obtain any such financing), will enable us to sustain our operations.
If we cannot resolve our liabilities, and no other alternatives are available,
we may be forced to seek protection from our creditors. The aforementioned
12
factors raise substantial doubt about the Company's ability to continue as a
going concern. The financial statements included herein have been prepared
assuming the Company is a going concern and do not include any adjustments that
might result should the Company be unable to continue as a going concern.
We spent $21,929 during the first six months of 2003 for the purchase of
capital equipment. This amount was expended primarily for computer equipment,
communications equipment and software necessary for us to maintain the operating
integrity of our Network Operations Center for the continued provision of
services to our existing customers.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4. Controls and Procedures
Within 90 days prior to the filing date of this report, the Company's
management conducted an evaluation, under the supervision and with the
participation of the Company's Executive Vice President and Chief Financial
Officer, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures. Based on this evaluation, the Executive Vice
President and Chief Financial Officer concluded that the Company's disclosure
controls and procedures are effective. There have been no significant changes in
the Company's internal controls or in other factors that could significantly
affect those controls subsequent to the date of our last evaluation.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On or about February 8, 2002, we received a complaint filed by Properties
Georgia OBJLW One Corporation in the State Court of Fulton County, Georgia on
December 6, 2001, alleging that we defaulted on our lease in Building 14 at 3495
Piedmont Road, Atlanta, Georgia 30305. The complaint sought damages in the
amount of $141,752 plus interest of $23,827, plus attorneys' fees and court
costs. On December 18, 2002 we reached a settlement with Georgia OBJLW One
Corporation in the amount of $135,000, consisting of one payment of $30,000 paid
at that time, followed by seven monthly payments of $15,000 to be made from
February thru August, 2003. We are currently in compliance with this agreement.
We are not a party to any other material legal proceedings. From time to
time, we are involved in various routine legal proceedings incidental to the
conduct of our business.
Item 2. Changes in Securities and Use of Proceeds
In connection with the closing of the License and Exchange Agreement, the
holders of the Company's Series C, Series D, and Series E Preferred Stock and
certain holders of the Company's Series B Preferred Stock have agreed to extend
the mandatory conversion dates of their respective shares of Preferred Stock
until March 31, 2004 and have agreed to refrain from converting their shares of
Preferred Stock into shares of common stock until the Company has amended its
Certificate of Incorporation to authorize at least 150,000,000 shares of common
stock. In addition, the holder of the outstanding shares of the Company's Series
C, Series D and Series E Preferred Stock has agreed to accept payment for
approximately $1.8 million of penalties that may be owed to it in shares of
common stock instead of cash.
Also in connection with the closing of the License and Exchange Agreement,
on May 22, 2003 the Company issued an aggregate of 13,500 shares of Series F
Preferred Stock and 1,069 shares of Series G Preferred Stock, both of which are
new series of the Company's preferred stock, as partial consideration for the
licenses of the EKOR, HNIPU, EMR/AC, Rad-X, Firesil, LEM and RBHM technologies.
Of these amounts, 11,250 shares of Series F Preferred Stock were issued to
Eurotech, 1,500 shares of Series F Preferred Stock were issued to Polymate and
750 shares were issued to Greenfield. All 1,069 shares of Series G Preferred
Stock were issued to Eurotech. Shares of Series F Preferred Stock were, and
Series G Preferred Stock are, entitled to a liquidation preference of $1,000 per
13
share over the outstanding shares of common stock. The Company relied upon the
exemption from registration provided by Section 4(2) of the Securities Act of
1933, as amended (the "Securities Act") in issuing these securities, based on,
among other factors, the sophistication of the offerees, the small number of
offerees and the absence of any advertising or general solicitation. Effective
June 27, 2003, the holders of the outstanding shares of Series F Preferred Stock
cancelled their outstanding shares of Series F Preferred Stock in exchange for
the right to receive shares of Series H Preferred Stock. The terms of the Series
H Preferred Stock will be similar to the terms of the Series F Preferred Stock
except for, among other things, the limitations on conversions of the Series H
Shares, as described below, and the fact that Series H Shares will not be
entitled to vote, as described below. The Company intends to rely on the
exemptions from registration provided by Sections 4(2) and 3(a)(9) of the
Securities Act in issuing shares of Series H Preferred Stock.
Once issued, shares of Series H Convertible Preferred Stock will be
convertible into shares of common stock at a conversion rate of 10,000 shares of
common stock per share of Series H Preferred Stock, subject to adjustment as set
forth in the Certificate of Designations governing the Series H Preferred Stock.
As such, the 13,500 shares of Series H Preferred Stock to be issued to Eurotech,
Polymate and Greenfield will be convertible into 135,000,000 shares of common
stock. The Series H Certificate of Designations, however, will provide that no
holder of Series H Shares may convert Series H Shares into shares of common
stock if such conversion would result in that holder beneficially owning more
than 9.9% of the outstanding shares of common stock (excluding, for purposes of
the calculation, any unconverted Series H Shares). In addition, the Certificate
of Designations will provide that the shares of Series H Preferred Stock will
only become convertible at such time as the Company has a sufficient number of
authorized but unissued shares of common stock available to support the
conversion of the outstanding shares of all series of preferred stock.
Currently, the Company has only 15,000,000 shares of authorized common stock, of
which 14,999,156 shares have been issued and are outstanding. As such, our Board
of Directors has approved, and has directed us to submit to our stockholders, a
proposal to amend our Certificate of Incorporation to, among other things,
increase the number of shares of common stock that we are authorized to issue to
300,000,000 shares. Shares of Series H Preferred Stock will carry a liquidation
preference of $1,000 per share over the outstanding shares of common stock.
Shares of Series H Preferred Stock will not have the right to vote.
Each share of Series G Convertible Preferred Stock is convertible into a
number of shares of common stock determined by dividing $1,000 by a number equal
to 82.5% of the average closing price of the common stock over the preceding
five business days. As such, assuming, for illustration purposes only, a market
price of $.03 per share of common stock, the Series G Preferred Stock would
convert into 35,633,333 shares of common stock. However, the Series G
Certificate of Designations states that no conversion of shares of Series G
Preferred Stock into shares of Common Stock is permitted if such conversion
would result in the holder of such Series G Shares beneficially owning more than
9.9% of the outstanding shares of Common Stock following such conversion
(excluding, for purposes of the calculation, any unconverted Series G Shares).
Shares of Series G Preferred Stock do not have the right to vote.
The Company has agreed to enter into a commercially reasonable registration
rights agreement with Eurotech, Polymate and Greenfield pursuant to which the
Company would grant both demand and piggyback registration rights to those
entities.
On May 22, 2003, we executed a note in favor of one of our preferred
shareholders that provides that we may borrow up to $150,000 for use solely in
connection with the technologies that we have licensed from Eurotech. Advances
under this agreement, which advances are secured by a security agreement, bear
interest at a rate of 10% per annum and mature on December 31, 2003. We have
borrowed $100,000 under this agreement as of June 30, 2003. The Company relied
upon the exemption from registration provided by Section 4(2) of the Securities
Act of 1933 in issuing these securities, based on the sophistication of the
offerees, the small number of offerees and the absence of any advertising or
general solicitation, among other factors.
Item 3. Defaults Upon Senior Securities
As a requirement of the private placements of the Company's Series B, C, D
and E Convertible Preferred Stock, the Company was obligated to file and have
declared effective, within a specified time period, a registration statement
with respect to a minimum number of shares of common stock issuable upon
conversion of the Series B, C, D and E Preferred Stock. As of June 30, 2003,
such registration statement has not been declared effective and penalties are
14
owed to the Series B, C, D and E Preferred Stock holders. In accordance with the
terms of the agreement between the parties, penalties accrue at a percentage of
the purchase price of the unregistered securities per 30 day period. As of June
23, 2003, $1,846,365 has been accrued into accounts payable and accrued expenses
for such penalties. Additionally, the outstanding shares of our Series B, C, D,
and E Preferred Stock were scheduled to convert automatically into shares of
common stock in March 2002, July 2002, September 2002, and April 2003
respectively, pursuant to the Certificates of Designations governing our Series
B, C, D, and E Preferred Stock. However, because we did not have a sufficient
number of authorized shares of Common Stock available for issuance upon
conversion of these shares of Series B, C, D, and E Preferred Stock, we are not
in compliance with the requirements of our Certificate of Incorporation.
Furthermore, no shares of Series B, C, D, or E Preferred Stock have been
converted since the automatic conversion date, and we remain obligated to
convert the remaining shares of Series B, C, D, and E Preferred Stock into
shares of common stock. If the outstanding shares of Series B, C, D, and E
Preferred Stock had been converted into shares of common stock on June 30, 2003,
we would have been obligated to issue 107,462,648 shares of common stock upon
such conversions. In connection with the closing of the License and Exchange
Agreement, the holders of the Company's Series C, Series D, and Series E
Preferred Stock and certain holders of the Company's Series B Preferred Stock
have agreed to extend the mandatory conversion dates of their respective shares
of Preferred Stock until March 31, 2004 and have agreed to refrain from
converting their shares of Preferred Stock into shares of common stock until the
Company has amended its Certificate of Incorporation to authorize at least
150,000,000 shares of common stock. In addition, the holder of the outstanding
shares of the Company's Series C, Series D and Series E Preferred Stock has
agreed to accept payment for penalties that may be owed to it in shares of
common stock instead of cash.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable.
Item 5. Other Information
Not Applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 License Agreement, dated May 22, 2003, by and between
HomeCom Communications, Inc. and Eurotech, Ltd.
(Incorporated by reference to Exhibit 10.1 of the
Registrant's Current Report on Form 8-K, as filed with the
Commission on June 6, 2003.)
10.2 Secured Promissory Note, dated May 22 2003, by HomeCom
Communications, Inc. in favor of MacNab LLC. (Incorporated by
reference to Exhibit 10.2 of the Registrant's Current Report
on Form 8-K, as filed with the Commission on June 6, 2003.)
10.3 Security Agreement, dated May 22, 2003, by and between HomeCom
Communications, Inc. and MacNab LLC. (Incorporated by
reference to Exhibit 10.3 of the Registrant's Current Report
on Form 8-K, as filed with the Commission on June 6, 2003.)
10.4 Stock Exchange Agreement, effective as of June 27, 2003, by
and among HomeCom Communications, Inc., Eurotech, Ltd.,
Greenfield Capital Partners LLC and Polymate, Ltd..
10.5 Amendment No. 1 to License Agreement, effective as of June 27,
2003, by and among HomeCom Communications, Inc. and
Eurotech, Ltd.
10.6 Amendment No. 1 to License and Exchange Agreement, effective as
of June 27, 2003, by and among HomeCom Communications, Inc.,
Eurotech, Ltd., and, solely with respect to Article V and
Article XI of the License and Exchange Agreement,
Polymate, Ltd. and Greendfield Capital Partners LLC.
15
31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
32.1 Certification pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002. (This certification is not "filed" for purposes
of Section 18 of the Exchange Act [15 U.S.C. 78r] or otherwise
subject to the liability of that section. Such certification
will not be deemed to be incorporated by reference into any
filing under the Securities Act or the Exchange Act, except to
the extent that the Company specifically incorporates them by
reference.)
(b) Reports on Form 8-K
On June 6, 2003, we filed a Current Report on Form 8-K to report the
closing of the transactions contemplated by the License and Exchange agreement
with Eurotech, Polymate Ltd., and Greenfield Capital Partners LLC.
16
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.
HOMECOM COMMUNICATIONS, INC.
By: /s/ Timothy R. Robinson
------------------------
Name: Timothy R. Robinson
Title: Executive Vice President,
Chief Financial Officer
Date: September 24, 2003
17
EXHIBIT INDEX
10.1 License Agreement, dated May 22, 2003, by and between HomeCom
Communications, Inc. and Eurotech, Ltd. (Incorporated by reference to
Exhibit 10.1 of the Registrant's urrent Report on Form 8-K, as filed
with the Commission on June 6, 2003.)
10.2 Secured Promissory Note, dated May 22 2003, by HomeCom Communications,
Inc. in favor of MacNab LLC. (Incorporated by reference to Exhibit 10.2
of the Registrant's Current Report on Form 8-K, as filed with the
Commission on June 6, 2003.)
10.3 Security Agreement, dated May 22, 2003, by and between HomeCom
Communications, Inc. and MacNab LLC. (Incorporated by reference to
Exhibit 10.3 of the Registrant's Current Report on Form 8-K, as filed
with the Commission on June 6, 2003.)
10.4 Stock Exchange Agreement, effective as of June 27, 2003, by and among
HomeCom Communications, Inc., Eurotech, Ltd., Greenfield Capital
Partners LLC and Polymate, Ltd..
10.5 Amendment No. 1 to License Agreement, effective as of June 27, 2003, by
and among HomeCom Communications,Inc. and Eurotech, Ltd.
10.6 Amendment No. 1 to License and Exchange Agreement, effective as of
June 27, 2003, by and among HomeCom Communications, Inc.,
Eurotech, Ltd., and, solely with respect to Article V and Article XI
of the License and Exchange Agreement, Polymate, Ltd. and Greendfield
Capital Partners LLC.
31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(This certification is not "filed" for purposes of Section 18 of the
Exchange Act [15 U.S.C. 78r] or otherwise subject to the liability of
that section. Such certification will not be deemed to be incorporated by
reference into any filing under the Securities Act or the Exchange Act,
except to the extent that the Company specifically incorporates them by
reference.)
18