UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[x] Quarterly Report Pursuant to Section 13 or 15(d)
Securities Exchange Act of 1934
for Quarterly Period Ended September 30, 2002
-OR-
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities And Exchange Act of 1934
for the transaction period from ___________ to _________
Commission File Number 333-70663
CONNECTIVCORP
(formerly known as Spinrocket.com, Inc.)
(Exact name of registrant as specified in its charter)
Delaware 06-1529524
--------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
750 Lexington Avenue, 24th Floor, New York, New York 10022
--------------------------------------------------------------------------------
(Address of principal executive offices, Zip Code)
(212) 750-5858
--------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Check whether the issuer (1) 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 [ ]
The number of outstanding shares of the registrant's common stock, par value
$.001 as of November 19, 2002 is 10,786,966.
CONNECTIVCORP AND SUBSIDIARIES
FORM 10-QSB
NINE ANDTHREE MONTHS ENDED SEPTEMBER 30, 2002
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION PAGE
-----
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheet 3
Consolidated Statements of Operations for the nine months
ended September 30, 2002 and 2001 4
Consolidated Statements of Operations for the three months
ended September 30, 2002 and 2001 5
Consolidated Statements of Cash Flows 6
Notes To Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
Item 3. Controls and Procedures 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities and Use of Proceeds 13
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
2
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
CONNECTIVCORP
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
September 30,
2002
--------------
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 4,731
Prepaid expenses 1,889
--------------
Total Assets $ 6,620
==============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 280,476
--------------
Total Current Liabilities 280,476
--------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred Stock, $.001 par value
10,000,000 shares authorized, Series D, none issued -
Common Stock, $.001 per value
40,000,000 shares authorized, 10,786,966 issued and outstanding 10,787
Additional paid in capital 19,593,116
Stock subscription receivable (50,000)
Accumulated deficit (19,827,759)
--------------
Total Stockholders' Equity (273,856)
--------------
Total Liabilities and Stockholders' Equity $ 6,620
==============
The accompanying notes are an integral part of these consolidated statements.
3
CONNECTIVCORP
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(UNAUDITED)
2001
------------ -------------
Revenues $ 3,500 $ -
General and administrative expenses (759,929) (2,453,225)
------------ -------------
Operating loss (756,429) (2,453,225)
------------ -------------
Interest income 635 40,031
============ =============
Net loss $ (755,794) $(2,413,194)
Net loss per common share- basic and diluted $ (0.09) $ (1.12)
============ =============
Weighted average shares outstanding:
basic and diluted 8,366,710 2,157,832
============ =============
The accompanying notes are an integral part of these consolidated statements.
4
CONNECTIVCORP
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(UNAUDITED)
2002 2001
------------ -------------
Revenues $ - $ -
General and administrative expenses (185,850) (701,588)
------------ -------------
Operating loss (185,850) (701,588)
Interest income 103 7,240
------------ -------------
Net loss $ (185,747) $ (694,348)
============ =============
Net loss per common share- basic and diluted $ (0.02) $ (0.32)
============ =============
Weighted average shares outstanding:
basic and diluted 10,618,487 2,166,966
============ =============
The accompanying notes are an integral part of these consolidated statements.
5
CONNECTIVCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(UNAUDITED)
2001
------------ -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(755,794) $(2,413,194)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization - 752,025
Stock-based compensation 153,872 153,613
Shares issued for legal services 96,250
Changes in assets and liabilities:
Prepaid expenses (1,889) 22,273
Accounts payable and accrued expenses 221,181 (148,001)
------------ -------------
Net cash used in operating activities (382,630) (1,537,034)
------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 297,500 -
------------ -------------
Net cash provided by financing activities 297,500 -
------------ -------------
NET CHANGE IN CASH AND CASH EQUIVALENTS (85,130) (1,537,034)
CASH AND CASH EQUIVALENTS, beginning of period 89,861 1,818,631
------------ -------------
CASH AND CASH EQUIVALENTS, end of period $ 4,731 $ 281,597
============ =============
NON-CASH INVESTING AND FINANCING ACTIVITIES
Stock issued in satisfaction of accounts payable $ 42,292 $ 96,250
============ =============
The accompanying notes are an integral part of these consolidated statements.
6
CONNECTIVCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2002
Note 1 - Basis of Presentation
As used in these financial statements, the term the "Company" refers to
ConnectivCorp and its consolidated subsidiaries.
The accompanying unaudited consolidated financial statements of the Company
have been prepared pursuant to the rules of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with U.S. generally accepted
accounting principles have been condensed or omitted pursuant to such rules
and regulations. These consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's Form 10-KSB. In the opinion of management, the
accompanying consolidated financial statements reflect all adjustments,
which are of a normal recurring nature, necessary for a fair presentation
of the results for the periods presented.
The results of operations presented for the nine months and three months
ended September 30, 2002, are not necessarily indicative of the results to
be expected for the year ending December 31, 2002.
Note 2 - Net Loss Per Common Share
Basic net loss per common share ("Basic EPS") is computed by dividing net
loss by the weighted average number of common shares outstanding. Diluted
net income per common share ("Diluted EPS") is computed by dividing net
income by the weighted average number of common shares and dilutive common
share equivalents then outstanding.
Basic and Diluted EPS are the same for the nine months and three months
ended September 30, 2002 and 2001, as Diluted EPS does not include the
impact of stock options and warrants then outstanding, as the effect of
their inclusion would be antidilutive.
The following table summarizes the equivalent number of common shares
assuming the related options and warrants that were outstanding as of
September 30, 2002 and 2001 had been converted. These were not included in
the calculation of diluted loss per share, as such shares are antidilutive:
2001
------- -------
Stock options - -
Warrants 146,608 146,608
------- -------
Common Stock Equivalents 146,608 146,608
======= =======
Options to purchase 10,333 and 485,935 shares of common stock, and warrants
to purchase 5,000 and 387,911 shares of common stock for the nine months
ended September 30, 2002 and 2001, respectively, were not included in the
above table because the exercise price of those options and warrants were
greater than the average market price of the common shares. The options and
warrants were still outstanding at the end of the period.
7
CONNECTIVCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2002
Note 3 - Common Stock
During the nine months ended September 30, 2002, the Company raised
$297,500 through the issuance of 2,975,000 shares of the Company's Common
Stock at $0.10 per share.
The Company issued 466,250 shares of Common Stock to suppliers, employees
and consultants in exchange for any outstanding options and warrants and a
release from any future claims against the Company. As a result of the
issuance, the Company recognized $7,971 of non-cash expenses.
On March 18, 2002, 1,205,000 shares of the Company's Common Stock was
issued to officers and directors and recognized $22,475 of compensation
expense.
The Company issued 2,960,000 shares of Common Stock to consultants as
compensation for services rendered in connection with the letter of intent
to acquire Aqua Development Corp. and recognized consulting expense of
$58,922. Atlantis Equities, Inc. ("Atlantis") received 2 million shares of
the 2,960,000 shares of Common Stock issued to consultants. Robert Ellin,
Chairman of the Company, is a principal of Atlantis. West End Capital
Partners, LLC ("WECP") received 760,000 shares of the 2,960,000 shares of
Common Stock issued to consultants. Jeffery Kuhr, a director of the
Company, is a principal in WECP.
The Company issued 500,000 shares of Common Stock to satisfy $42,292 of
accounts payable outstanding at December 31, 2002.
On March 12, 2002, the Company effected a one-for-ten reverse split of its
common stock. All references in the accompanying consolidated financial
statements and notes thereto relating to common stock and additional
paid-in capital, stock options and warrants, per share and share data have
been retroactively adjusted to reflect the one-for-ten reverse stock split.
Note 4 - Contribution Agreement
On October 4, 2002, the Company executed a contribution agreement to
acquire Aqua Development Corp., a California corporation ("Aqua"). The
Company intends to acquire Aqua in exchange for 87.2% of the issued and
outstanding common stock in the Company, as defined. The acquisition is
contingent upon numerous factors, including the raising of additional
financing by the parties. Immediately upon the acquisition, the Company
will authorize its name to be changed to "d/b/a Aqua Development Corp."
At the closing of the Purchase Agreement, the Company shall provide a $1.5
million bridge loan to Aqua in the form of convertible debt to be evidenced
by a note bearing interest at 12% per annum, payable quarterly in arrears
for the first four months and 15% per annum thereafter. The loan will have
a maturity date on the second anniversary of issuance. The holders of the
bridge loan will receive six million warrants for the purchase of common
stock at an exercise price of $0.10 per share. As soon as practicable after
closing, the Company will make its best efforts to complete a private
placement memorandum to raise $5 million. In the event the private
placement transaction is not consummated by the maturity of the bridge
loan, each holder of the bridge loan may convert into common stock at a
conversion price that is the lesser of a price per share based on a $20
million valuation or a per share rice base on the valuation of any public
or private offering in which the net proceeds to the Company are not less
the $5 million completed while the bridge loan is outstanding. The parties
anticipate the closing shall occur during the fourth quarter of 2002.
8
CONNECTIVCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED AND UNREVIEWED)
SEPTEMBER 30, 2002
Note 5 - Commitments
Sublease
--------
On January 1, 2002, the Company entered into a sublease for office space
located at 750 Lexington Avenue, New York, New York. The lease term is for
the period from January 1, 2002 through December 31, 2002, with a monthly
rent of $2,500. The office space is being leased from an entity in which
the father of Robert Ellin, Chairman of the Company, is a partner.
Employment Agreements
----------------------
The Company entered into an employment contract, on March 18, 2002 with
Elliot Goldman for an initial term of one year. Mr. Goldman serves as
President, Chief Executive Officer and as a Director of the Company at an
annual salary of $150,000. However, the compensation shall accrue and no
more than $200 per week shall be paid to Mr. Goldman until such time as the
Company has received at least $1 million in proceeds from new debt and/or
equity investment subsequent the date of the agreement.
The Company entered into an employment contract, on March 18, 2002 with
Robert Ellin for an initial term of one year. Mr. Ellin serves as Chairman
of the Company at an annual salary of $150,000. However, the compensation
shall accrue and no more than $200 per week shall be paid to Mr. Ellin
until such time as the Company has received at least $1 million in proceeds
from new debt and/or equity investment subsequent the date of the
agreement.
Consulting Agreement
---------------------
The Company retained the services of Atlantis Equities, Inc. ("Atlantis"),
a private merchant banking and advisory firm that primarily assists
emerging growth companies, to act as its financial advisor pursuant to an
Engagement letter dated March 21, 2002 for a term of one year from March
18, 2002 and ending on March 18, 2003. Robert Ellin, the current Chairman
of the Company, is a principal in Atlantis. In consideration for the
services to be provided by Atlantis, upon the consummation of the
transactions contemplated by the letter of intent, dated as of March 21,
2002, by and between the Company and Aqua Development Corporation, the
Company will issue shares of its common stock so that Atlantis will own
that number of shares which constitutes up to 4.0% of the common stock then
outstanding. In addition, Atlantis is to receive cash compensation of
$250,000.
9
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Company's Financial Statements and the notes thereto appearing
elsewhere in this report. This report contains statements that constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. The Company cautions that forward-looking
statements are not guarantees of future performance and involve risks and
uncertainties, and that actual results may differ materially from the
statements that constitute forward-looking statements as a result of
various factors.
The Company was incorporated in Delaware on May 8, 1998 under the name "SMD
Group, Inc." In January 1999, the Company changed its name to "CDbeat.com,
Inc." On April 19, 2000, the Company's name was changed to "Spinrocket.com,
Inc." On September 11, 2000, the Company changed its name from
Spinrocket.com, Inc. to "ConnectivCorp" because this new name better
described the Company's then strategic direction. The Company's business
model was to facilitate the online connection between targeted, profiled
consumers and marketers desiring to reach those consumers. As its initial
focus, the Company formed a new wholly-owned subsidiary, ConnectivHealth,
in order to facilitate its connectivity model in the healthcare field.
UNCERTAINTY
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company has a limited
operating history, and since its inception in 1998 has incurred substantial
losses. The Company's accumulated deficit as of September 30, 2002 is
approximately $19.8 million. To date, the Company has not generated any
significant revenue from its proposed business model, which contemplated
selling pharmaceutical and other healthcare companies access to the
Company's aggregated users. The Company incurred a net loss of
approximately $756,000 and $2.4 million for the nine months ended September
30, 2002 and 2001, respectively, while cash and cash equivalents at
September 30, 2002 totaled approximately $5,000. These matters raise
substantial doubt about the Company's ability to continue as a going
concern. The Company's continued existence is dependent upon several
factors including the Company's ability to raise additional equity or
execute its business strategy.
The Company has made a decision to restructure its operations. Management
has issued restricted common stock to satisfy existing trade payables and
the Company is seeking appropriate merger or acquisition partners in the
medical information or other unrelated fields. Management has agreed to
provide or arrange for short term financing of $250,000 in connection with
this effort and has effected a one for ten reverse stock split of the
Company's common stock as of March 12, 2002.
The Company's ability to operate as a going concern is dependent on its
ability to execute its restructuring and/or raise additional equity. There
can be no level of assurance that the Company will be able to achieve or
sustain any level of profitability in the future. Future operating results
will depend upon a number of factors, including the ability to raise
additional capital, the execution of the Management's restructuring plans
and prevailing economic conditions. While the Company has reduced its
operating expenses, no assurance can be given that the Company can sustain
these operating levels. Moreover, the Company has not yet generated any
meaningful revenues, and no assurance can be given that it will do so in
the future. There can be no assurance that the Company will generate
sufficient revenues to ever achieve profitability or otherwise sustain its
profitability in the future. While the Company is exploring appropriate
merger or acquisition partners in the medical information or other
unrelated fields, there can be no assurance that a transaction will be
consummated.
CONTRIBUTION AGREEMENT
On October 4, 2002, the Company executed a contribution agreement to
acquire Aqua Development Corp., a California corporation ("Aqua"). The
Company intends
10
to acquire Aqua in exchange for 87.2% of the issued and outstanding common
stock in the Company, as defined. The acquisition is contingent upon
numerous factors, including the raising of additional financing by the
parties. Immediately upon the acquisition, the Company will authorize its
name to be changed to "d/b/a Aqua Development Corp."
At the closing of the Purchase Agreement, the Company shall provide a $1.5
million bridge loan to Aqua in the form of convertible debt to be evidenced
by a note bearing interest at 12% per annum, payable quarterly in arrears
for the first four months and 15% per annum thereafter. The loan will have
a maturity date on the second anniversary of issuance. The holders of the
bridge loan will receive six million warrants for the purchase of common
stock at an exercise price of $0.10 per share. As soon as practicable after
closing, the company will make its best efforts to complete a private
placement memorandum to raise $5 million. In the event the private
placement transaction is not consummated by the maturity of the bridge
loan, each holder of the bridge loan may convert into common stock at a
conversion price that is the lesser of a price per share based on a $20
million valuation or a per share rice base on the valuation of any public
or private offering in which the net proceeds to the Company are not less
the $5 million completed while the bridge loan is outstanding. The parties
anticipate the closing shall occur during the fourth quarter of 2002.
The following discussion and analysis compares the results of the Company's
continuing operations for the Nine and Three Months ended September 30,
2002 and September 30, 2001.
ACCOUNTING POLICIES
The following accounting policies are important to an understanding of the
operating results and financial condition of the Company and should be
considered as an integral part of the financial review. For additional
accounting policies, see note 1 to the consolidated financial statements,
"Significant Accounting Policies."
Estimates and Assumptions
---------------------------
In preparing the financial information, the Company used some estimates and
assumptions that may affect reported amounts and disclosures. Estimates are
used when accounting for depreciation, amortization, impairment of assets
and asset valuation allowances. We are also subject to risks and
uncertainties that may cause actual results to differ from estimated
results, such as legislation, regulation and the ability to obtain
financing. Certain of these risks and uncertainties are discussed elsewhere
in Management's Discussion and Analysis.
NINE MONTHS ENDED SEPTEMBER 30, 2002
-----------------------------------------
The Company generated $3,500 in revenues from operations during the nine
months ended September 30, 2002. The Company did not generate revenues from
operations during the nine months ended September 30, 2001.
For the nine months ended September 30, 2002 and 2001, the Company reported
the following:
Net loss $ (755,794) $ (2,413,194)
============= =============
Net loss per common share- basic and diluted $ (0.09) $ (1.12)
============= =============
For the nine months ended September 30, 2002, the Company reported a net
loss of $755,794. General and administrative expenses include expenses of
approximately $77,000 for professional fees; $226,000 for salary and
related expenses, $176,000 for consultants, $77,000 of insurance, $22,500
for rent and $64,000 for compensation costs recognized in connection with
stock options.
11
For the nine months ended September 30, 2001, the Company reported a loss
from continuing operations of $2,413,194. General and administrative
expenses include expenses of approximately $257,000 for professional fees;
$323,000 for salary and related expenses, $449,000 for consultants,
$749,000 for amortization of acquired software, magazines and goodwill,
$169,000 for the maintenance and content for the web site and $154,000 for
compensation costs recognized in connection with stock options.
THREE MONTHS ENDED SEPTEMBER 30, 2002
------------------------------------------
The Company did not generate revenues from operations during the three
months ended September 30, 2002 and 2001.
For the three months ended September 30, 2002 and 2001, the Company
reported the following:
Net loss $ (185,747) $ (694,348)
============= =============
Net loss per common share- basic and diluted $ (0.02) $ (0.32)
============= =============
For the three months ended September 30, 2002, the Company reported a loss
from continuing operations of $185,747. General and administrative expenses
include expenses of which approximately, $76,000 for salary and related
expenses, $6,000 for legal and professional, $7,500 for rent and $67,000
for consultants.
The Company reported a loss from continuing operations of $694,348 for the
three months ended September 30, 2001. General and administrative expenses
include expenses of approximately $113,000 for professional fees; $83,000
for salary and related expenses, $64,000 for compensation costs recognized
in connection with stock options, $248,000 for amortization of acquired
software, magazines and goodwill.
Liquidity and Capital Resources
----------------------------------
In the nine months ended September 30, 2002, $382,630 of cash was used in
operating activities. Funds were used to pay the Company's operating
expenses. $297,500 of cash was generated through the issuance of 2,975,000
shares of common stock.
ITEM 3 - CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures that are designed
to ensure that information required to be disclosed in the Company's
Exchange Act reports is recorded, processed, summarized and reported within
the time periods specified in the SEC's rules and forms, and that such
information is accumulated and communicated to the Company's management,
including its Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure based
closely on the definition of "disclosure controls and procedures" in Rule
13a-14(c). In designing and evaluating the disclosure controls and
procedures, management recognized that any controls and procedures, no
matter how well designed and operated, can provide only reasonable
assurance of achieving the desired control objectives, and management
necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures. Within 90
days prior to the date of this report, the Company carried out an
evaluation, under the supervision and with the participation of the
Company's management, including the Company's Chief Executive Officer and
the Company's Chief Financial Officer, of the effectiveness of the design
12
and operation of the Company's disclosure controls and procedures. Based on
the foregoing, the Company's Chief Executive Officer and Chief Financial
Officer concluded that the Company's disclosure controls and procedures
were effective. There have been no significant changes in the Company's
internal controls or in other factors that could significantly affect the
internal controls subsequent to the date the Company completed its
evaluation. Therefore, no corrective actions were taken.
PART II -- OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
None
ITEM 2 - CHANGES IN SECURITIES
The issuance of the shares of Common Stock during the nine months ended
September 30, 2002 did not involve a public offering and was based on
Section 4(2) of the Securities Act of 19933, as amended.
During the nine months ended September 30, 2002, the Company raised
$297,500 through the issuance of 2,975,000 shares of the Company's Common
Stock at $0.10 per share to four existing shareholders and consultants.
The Company issued 466,250 shares of Common Stock to suppliers, employees
and consultants in exchange for any outstanding options and warrants and a
release from any future claims against the Company. As a result of the
issuance, the Company recognized $7,971 of non-cash expenses.
On March 18, 2002, 1,205,000 shares of the Company's Common Stock was
issued to officers and directors and recognized $22,475 of compensation
expense.
The Company issued 2,960,000 shares of Common Stock to consultants as
compensation for services rendered in connection with the letter of intent
to acquire Aqua Development Corp. and recognized consulting expense of
$58,922. Atlantis Equities, Inc. ("Atlantis") received 2 million shares of
the 2,960,000 shares of Common Stock issued to consultants. Robert Ellin,
Chairman of the Company, is a principal of Atlantis. West End Capital
Partners, LLC ("WECP") received 760,000 shares of the 2,960,000 shares of
Common Stock issued to consultants. Jeffery Kuhr, a director of the
Company, is a principal in WECP.
The Company issued 500,000 shares of Common Stock to satisfy $42,292 of
accounts payable outstanding at December 31, 2002.
On March 12, 2002, the Company effected a one-for-ten reverse split of its
common stock. All references in the accompanying consolidated financial
statements and notes thereto relating to common stock and additional
paid-in capital, stock options and warrants, per share and share data have
been retroactively adjusted to reflect the one-for-ten reverse stock split.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
13
ITEM 5 - OTHER INFORMATION
Sublease
--------
On January 1, 2002, the Company entered into a sublease for office space
located at 750 Lexington Avenue, New York, New York. The lease term is for
the period from January 1, 2002 through December 31, 2002, with a monthly
rent of $2,500. The office space is being leased from an entity in which
the father of Robert Ellin, chairman of the Company, is a partner.
Employment Agreements
----------------------
The Company entered into an employment contract, on March 18, 2002 with
Elliot Goldman for an initial term of one year. Mr. Goldman serves as
President, Chief Executive Officer and as a Director of the Company at an
annual salary of $150,000. However, the compensation shall accrue and no
more than $200 per week shall be paid to Mr. Goldman until such time as the
Company has received at least $1 million in proceeds from new debt and/or
equity investment subsequent the date of the agreement.
The Company entered into an employment contract, on March 18, 2002 with
Robert Ellin for an initial term of one year. Mr. Ellin serves as Chairman
of the Company at an annual salary of $150,000. However, the compensation
shall accrue and no more than $200 per week shall be paid to Mr. Ellin
until such time as the Company has received at least $1 million in proceeds
from new debt and/or equity investment subsequent the date of the
agreement.
Consulting Agreement
---------------------
The Company retained the services of Atlantis Equities, Inc. ("Atlantis"),
a private merchant banking and advisory firm that primarily assists
emerging growth companies, to act as its financial advisor pursuant to an
Engagement letter dated March 21, 2002 for a term of one year from March
18, 2002 and ending on March 18, 2003. Robert Ellin, the current Chairman
of the Company, is a principal in Atlantis. In consideration for the
services to be provided by Atlantis, upon the consummation of the
transactions contemplated by the letter of intent, dated as of march 21,
2002, by and between the Company and Aqua Development Corporation, the
Company will issue shares of the common stock so that Atlantis will own
that number of shares which constitutes up to 4.0% of the common stock then
outstanding, and in addition, cash compensation of $250,000.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Not applicable
(b) Reports on Form 8-K
None
14
CERTIFICATION AND SIGNATURE
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 thereunto duly authorized.
CONNECTIVCORP
Dated: November 19, 2002 by: /s/ Elliot Goldman
--------------------
Elliot Goldman
President and Chief Executive Officer
(Principal Financial Officer)
Dated: November 19, 2002 by: /s/ Robert Ellin
------------------
Robert Ellin
Chairman of the Board
(Principal Executive Officer)
15
CERTIFICATION
I, Robert Ellin, certify that:
1. I have reviewed this quarterly report on Form 10-Q of ConnectivCorp;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
November 19, 2002 /s/ Robert Ellin
Date Robert Ellin
Chairman of the Board
(Principal Executive Officer)
16
CERTIFICATION
I, Elliot Goldman, certify that:
1. I have reviewed this quarterly report on Form 10-Q of ConnectivCorp;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
5. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
November 19, 2002 /s/ Elliot Goldman
Date Elliot Goldman
President and Chief Executive Officer
(Principal Financial Officer)
17