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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002, or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from........to...........
Commission File Number 001-16381
CERISTAR, INC.
(Name of small business issuer in its charter)
DELAWARE 87-0642448
(State or other jurisdiction (IRS Employer
of incorporation or organization) identification number)
50 West Broadway, Suite 1100, Salt Lake City, Utah 84119
(Address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code: (801) 350-2017
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001 per share
(Title of Class)
Indicate by checkmark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes (X) No ( )
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-B is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-KSB or any
amendment to this Form 10-KSB. ( )
Registrant's revenues for the fiscal year ended December 31, 2002,
were $521,000
The aggregate market value of the voting stock held by non-affiliates
of the Registrant as of March 31, 2003, was approximately $3,571,000 based on
the closing price on that date on the OTC Bulletin Board.
As of March 31, 2003, Registrant had outstanding 6,002,276 shares of
Common Stock.
PART I
Item 1. Description of Business
CeriStar, Inc. is a Delaware corporation ("CeriStar"), incorporated in
December of 1999 for the development of a new generation of telecommunication
services using fiber optic cable. Its principal product is the delivery of
voice, video and data services over a fiber network. These services include
local and long distance telephone, video conferencing, cable television with
video on demand, computer email and a host of other related services. Its
markets are wide and varied, including residential, commercial, governmental
and educational institutions. CeriStar's products were in the development
stage throughout 2001 with marketing commencing in 2002.
On September 10, 2002, in order to attract the capital needed to
commence its marketing strategies, CeriStar entered into a forward triangular
merger with Planet Resources, Inc. ("Planet"), a Delaware corporation, in which
all of the outstanding common and preferred shares of CeriStar were exchanged
for common shares of Planet. In particular, each share of CeriStar Common Stock
issued and outstanding immediately prior to the effective date was canceled and
converted into .322 shares of Planet Common Stock; each share of Series A
Convertible Preferred Stock issued and outstanding prior to the effective date
was exchanged for .757 shares of Planet Common Stock; and each share of Series
B Convertible Preferred Stock issued and outstanding prior to the effective
date was exchanged for .757 shares of Planet Common Stock. Prior to the merger,
Planet authorized a 1 for 5.23 share reverse stock split. Planet had no
operations for the prior two years. The merger transaction was accounted for
as a reverse merger. On October 15, 2002, Planet Resources Inc. was renamed
CeriStar, Inc.
CeriStar's foundation product is its CeriNet IP (Internet Protocol)
Utility Network. IP technology and standards have enabled the voice and
computer industry to adopt one, unified architecture that delivers information
across a common fiber or copper line. CeriNet is an IP open standard
architecture that integrates software and electronic hardware from IP compliant
vendors to handle packets of voice, video and data from origination to
termination of that packet.
Components of the IP Utility Network are:
* Layer 2-3 packet switches
* Layer 3+ packet routers
* Voice, video and data gateways
* UNIX, Sun, and Linux based servers
* Class 5E equivalent soft switch
* Video head end systems (Wholesale to Retail)
* OSS/BSS management software
* Universal Power Supply (UPS) backup units
CeriNet connects to Local Area Network (LAN) through its standard ports
consisting of:
* RJ-11 standard two-wire modular connectors
* Quad Cable connectors of four-wire (two twisted-pairs)
insulated conductors for CAT-5 wiring
* Fiber Optic Terminals connecting copper wire to optical fiber
cable
* Fiber to Fiber SC APC and SC UPC connection
* Fiber to RF conversion for edge devices
* RJ-45 eight-pin modular connector in the 10/100BaseT standard
for unshielded twisted pair (UTP) connections to smart
wiring hubs
* Coax RG6 Quad Cable connectors for analog video feeds
The CeriNet product connects Local Area Network (LAN) customers
including state government, education, municipalities and greenfield
developments to a wider Metro Area Network (MAN) and international Wide Area
Network (WAN).
CeriStar's CS-1000, CS-2000, CS-3000 and CS-4000 modules represent
CeriStar's version of bundled services and equipment that connects to CeriNet
as customer premise equipment (CPM) module. Other third party modules
representing similar bundles of services can easily be connected to CeriNet and
provide similar performance to CeriStar's CS series of products.
The consumer interface modules, either CeriStar supplied or third
party supplied, are connected to the CPM modules and allow IP and analog
signals to be sent to CeriNet for routing within the LAN, MAN and WAN at
guaranteed performance levels.
CeriStar has identified and developed a business plan to penetrate a
large, identifiable market, capitalizing on the convergence of voice, video and
data communications. CeriStar's utility network technology platform, CeriNet,
enhances communications and networking capabilities within any enterprise.
CeriStar targets its marketing and is offering customized solutions to the
following major market segments:
* State/Local Governments - "Economic Development Networks"
* Education Systems - "Knowledge Networks"
* Commercial Building and Enterprises - "Smart Buildings and
Smart Environments"
* Greenfields and Legacy Communities - "Smart Homes and
Businesses"
CeriStar is poised to capitalize on the imminent IP converged network
upgrade cycle by providing each of these market segments with paths to
converged IP network communications. CeriStar is currently testing this model
in Utah and plans to deploy it in the surrounding Western states after the
testing has been completed.
Over the next five years, CeriStar's business model will take into
account the premise that the majority of businesses will be running converged
managed networks. Most educational and governmental institutions will have
partial converged solutions in use. Greenfield residential will be populated
with converged solutions in the new developments. Legacy retrofit residential
will still be in its early stages of evolution.
Competitors exist at all levels in the LAN environment to provide
bundled converged services. Competitors exist in the WAN environment to
deliver connectivity. CeriStar is still unique in deploying a brand of IP
Network that is plug and play compatible with LAN and WAN solutions.
CeriStar deploys an IEEE and 7-layer standard network and equipment.
It consists of core, aggregation and edge equipment. All equipment can be
interchanged because of this open standard adherence. All equipment can be
bought from multiple vendors with no barriers to entry.
CeriStar is in the early stages of marketing its products and, as a
consequence, its cash needs are more dependent on capital funding than on any
major customer.
CeriStar filed four provisionary patent applications in 2001, which
were consolidated into one broad patent in 2002. These patents relate to the
architecture of an IP Utility Network that enables smart homes, smart commercial
buildings, and smart residential communities.
CeriStar enters into revenue sharing arrangements with commercial
building owners and residential developers. These contracts vary depending
upon project size, equipment ownership and local market conditions. The shared
revenues are based on the difference between CeriStar's wholesale and retail
prices.
CeriStar is a Common Local Exchange Carrier (CLEC) licensed with the
Utah Public Utility Commission. With this license, CeriStar is able to provide
telephony services in competition with the Local Exchange Carrier, which is
Qwest. As a CLEC, CeriStar is able to compete with not only Qwest but also
other CLEC's in providing a myriad of services and converge them with non-
regulated services into a single converged network.
As a CLEC, CeriStar is subject to all Public Utility Commission and
Federal Communications Commission rules and regulations for telephony services.
Regulation changes that may occur will only affect our voice services, while
data and video services remain unchanged. Because CeriStar is already a
certificated CLEC in Utah any regulation changes will have a minimal affect to
the business model.
Over the past two years CeriStar spent an estimated 96 man-months on
research and development activities at an estimate cost of $550,000. The
majority of this cost has been borne by investors.
CeriStar currently has 10 full time employees.
Item 2. Description of Property
CeriStar's property consists primarily of computers, and computer
related equipment that are located at CeriStar's headquarters in Salt Lake City
and in or near various customer locations. Currently, this equipment is
maintained and serviced by head office personnel.
CeriStar currently leases a facility located at 50 West Broadway,
Suite 1100, Salt Lake City, Utah on a month-to-month basis. The facility
consists of approximately 3,000 square feet of leased office space at a monthly
rate of $3,524.
Item 3. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Security Holders
None
PART II
Item 5. Market for Common Equity and Related Shareholder Matters
CeriStar's Common Stock currently trades on the OTC Bulletin Board under
the ticker symbol of CTRI.OB. Following CeriStar's merger with Planet
Resources in September 2002, CeriStar was traded under the ticker symbol
PLNT.OB, which was later changed to CTRI.OB. Prior to the merger, Planet
Resources was traded on the OTC Bulletin Board under the ticker symbol of
PLNT.OB. As of March 25, 2003, the closing sales price of the Common Stock was
$.95 per share. The following are high and low sales prices for the Common
Stock by quarter since the merger as reported by the OTC Bulletin Board:
Common Stock Price Range
Period (Calendar Year) High Low
2002
Third Quarter (since
September 12, 2002) $3.10 $1.30
Fourth Quarter $2.25 $1.05
2003
First Quarter $1.55 $ .55
CeriStar has never paid any cash dividends on its common or preferred
shares and does not anticipate paying any cash dividends on its common or
preferred shares in the foreseeable future. At the time of the merger with
Planet, CeriStar's common and preferred shares were exchanged for Planet's
Common Stock. CeriStar currently intends to retain future earnings, if any, to
fund the development and growth of its proposed business and operation. Any
payment of cash dividends in the future on the Common Stock will be dependent
upon CeriStar's financial condition, results of operations, current and
anticipated cash requirements, plans for expansion, restrictions, if any, under
any debt obligations, as well as other factors that CeriStar's Board of
Directors deems relevant.
As of March 31, 2003, CeriStar had 1,615 shareholders.
CeriStar's common stock is also registered on the Berlin Stock Exchange.
Item 6. Management's Discussion and Analysis of Financial Condition and Results
for Operations
This report contains forward looking statements that involve risks and
uncertainties. Words, such as "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates" and "views" are intended to identify forward
looking statements. Such statements are based upon current expectations and
projections about our business and assumptions made by the management and are
no guarantee of future performance. Therefore, actual events and results may
differ materially from those expressed or forecasted in the forward looking
statements due to risk factors identified in the Management's Discussion and
Analysis of Financial Condition and Results of Operations.
On September 10, 2002, CeriStar merged with a wholly owned subsidiary
of Planet Resources Inc., a non-operating company, together referred to as
Planet, in which all the issued and outstanding stock of CeriStar, including
CeriStar Common Stock, CeriStar Series A Convertible Preferred Stock and
CeriStar Series B Convertible Preferred Stock were exchanged for shares of
Planet Common Stock. Shares of CeriStar Series A Convertible Preferred Stock
and Series B Convertible Preferred Stock were each exchanged for .757
shares of Planet Common Stock and shares of CeriStar Common Stock were each
canceled and converted into .322 shares of Planet Common Stock. Just prior to
the merger, Planet authorized a 1 for 5.23 reverse stock split. The merger was
accounted for as a reverse merger with CeriStar being the accounting acquirer.
On October 15, 2002, Planet was renamed CeriStar, Inc. Since Planet had no
operations for the two years prior to the merger, only CeriStar's financial
condition and results of operations will be discussed.
Plan of Operation
During 2001 CeriStar was engaged in developing and testing various
Internet Protocol (IP) products. These products emerged in marketable form in
2002. CeriStar has proven its technology and can now deliver technically
dvanced products to a wide range of residential, commercial, educational and
governmental customers. Since these products are significantly advanced from
current products in the market place, it is estimated that it will take another
year before they become generally accepted allowing for substantial market
penetration. The current marketing plan will require between $2 and $3
million of new capital to fund operations through 2003, with additional capital
needed for geographic expansion into neighboring states. By the end of 2003,
CeriStar expects to be profitable, provided that additional capital can be
obtained to expand into new markets. A majority of this funding will have
to be raised in the equity markets. It is anticipated that debt financing for
equipment will become available as product revenues and market acceptance
increases. To accelerate that acceptance, CeriStar has partnered with IBM and
others who can introduce CeriStar to senior executives and add credibility to
our products. They also assist in the acquisition of low cost, high quality
equipment and services. In the short term, CeriStar will remain dependent on
new capital with no assurances that this new capital will be raised.
Previously, CeriStar had expended significant amounts of capital for
equipment, which has the capacity to handle a substantially larger customer
volume. Now new customers can be added without significant costs.
Results of Operations
A detailed comparison of the differences between operations of 2002
compared to 2001 is difficult due to the fact that in 2001 CeriStar was
principally a development company, developing and testing new ideas and turning
those ideas into new products. Fiscal 2002 continued some of the development
effort but a majority of the year was spent marketing those new ideas and
products. When combined with merger related expenses and investment services
expenses, comparisons between the two years becomes even more difficult.
Revenues increased to $521,000 in 2002, compared to $260,000 in 2001.
The increase was due to sales of IP services, primarily to commercial customers.
Services revenue increased from $35,000 in 2001 to $269,000 in 2002, a $234,000
increase, accounting for 90% of the revenue increase. Equipment sales
increased from $212,000 in 2001 to $214,000 in 2002, or a $2,000 increase.
Cost of sales increased from $245,000 in 2001 to $465,000 in 2002.
This increase was due to increased service and labor costs associated with the
services revenue. Labor costs increased by $30,000, increasing from $90,000 in
2001 to $120,000 in 2002. Service costs increased from $59,000 in 2001 to
$253,000 in 2002. The high service costs in 2002 resulted in a margin of
$16,000 for services, or a 6% margin for 2002. This margin is expected to
increase significantly in the future as new customers are added as CeriStar's
excess bandwidth purchases and equipment is able to service a substantially
larger customer base.
Total administrative expense in 2002 was $2,768,000 compared to
$1,420,000 in 2001, an increase of $1,348,000. Approximately $1,012,000 of this
increase was for expenses paid to consultants in the form of common stock for
services relating to the merger with Planet Resources. An additional $353,000
was paid, primarily in the form of common stock, to consultants that are
advising CeriStar on product positioning, customer identification and offshore
expansion, as CeriStar converts from a development company to an operating
company, marketing its IP application products and services. Payroll expense
decreased from $1,116,000 in 2001 to $912,000 in 2002 as salary and staff
reductions were implemented in late 2001 and early 2002. Depreciation expense
increased from $12,000 in 2001 to $64,000 in 2002 due to new equipment
acquisitions for the network. Professional fees also increased from $65,000 in
2001 to $152,000 in 2002, an $87,000 increase as accounting, legal, sales and
staffing personnel were hired to assist in a variety of areas.
During 2002 CeriStar borrowed $75,000 on a convertible long-term note
that may be converted to CeriStar's common stock. This note also has warrants
to purchase 22,710 shares of common stock at $3.30 per share. Approximately
$20,400 of the interest expenses relates to this note.
Liquidity and Capital Resources
As of December 31, 2002, CeriStar's current liabilities were $672,000,
while current assets were only $93,000 equating to a $579,000 working capital
deficit. In order for CeriStar to continue operating, additional capital is
essential. CeriStar's operating revenues are not capable of supporting current
operations. Thus, in the short term, CeriStar is dependent on the capital
markets for funding. To meet these continuing funding needs, CeriStar has
engaged the financial consulting firm of AlphaWest to assist in the acquisition
of new equity capital. With access to both the public and private capital
markets, CeriStar will attempt to raise $2 to $3 million to fund operations for
2003.
With almost 200 residential customers in Provo, Utah and contracts
signed for over 400 additional residential customers in the surrounding area
that will be starting service throughout 2003 and early 2004, combined with
projected sales to new developments, CeriStar expects to be able to fund
operations from service revenues by the end of 2003. As previously mentioned,
CeriStar remains dependent on new capital but there can be no assurance that
any new capital will be raised. A majority of the merger expenses and a
significant portion of consulting expenses relating to the raising of new
capital and other professional expenses were paid with Common Stock, thus
conserving cash for operations. Approximately $1,322,000 in stock was issued
during 2002 to pay for these services as well as a portion of payroll expense,
primarily incentives to retain key employees.
Item 7. Financial Statements
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of CeriStar Inc. and Subsidiary
We have audited the accompanying consolidated balance sheet of Ceristar,
Inc. as of December 31, 2002 and 2001, and the related statements of
operations, stockholders' deficit and cash flows for the years then ended.
These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the consolidated financial statements. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
CeriStar, Inc. as of December 31, 2002 and 2001 and the results of its
operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3, the Company
has a deficit in working capital, negative cash flows from operations, and
recurring net losses. These issues raise substantial doubt about its ability
to continue as a going concern. Management's plans in regard to these
matters are also described in Note 3. The accompanying financial statements
do not include any adjustment that might result from the outcome of this
uncertainty.
TANNER + CO.
Salt Lake City, Utah
February 7, 2003
CERISTAR, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31
Assets 2002 2001
------
---------------- ---------------
Current assets:
$ $
Cash 28,210 2,518
Accounts receivable, net of allowance for
doubtful accounts of $16,117 and $0, repectively 52,945 2,206
Prepaid expenses 3,954 3,954
Deposits 8,338 -
---------------- ---------------
Total current assets 93,447 8,678
Property and equipment, net 339,395 49,322
---------------- ---------------
$ $
432,842 58,000
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Liabilities and Stockholders' Deficit
Current liabilities:
$ $
Accounts payable 385,615 34,084
Accrued payroll liabilities 101,888 61,399
Unearned revenue 94,300 21,704
Deferred purchase obligation 86,996 -
Convertible long-term debt 2,708 -
---------------- ---------------
Total current liabilities 671,507 117,187
Stockholders' deficit:
Preferred stock, $.001 par value; 1,000,000 shares
authorized, no shares issued and outstanding - -
Common stock, $.001 par value, voting, 25,000,000
shares authorized, 5,852,197, and 4,180,078
issued and outstanding, respectively. 5,852 4,180
Additional paid-in capital 8,546,387 5,284,625
Deferred compensation (615,011) (821,033)
Subscriptions receivable (996,289) (80,630)
Accumulated deficit (7,179,604) (4,446,329)
---------------- ---------------
Total stockholders' deficit: (238,665) (59,187)
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$ $
432,842 58,000
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CERISTAR, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
DECEMBER 31
2002 2001
------------------ ------------------
Sales $ 520,952 $ 259,639
Cost of sales (465,202) (244,908)
Selling, general, and administrative expense (2,767,581) (1,420,320)
------------------ ------------------
Loss from operations (2,711,831) (1,405,589)
Other income 1,753 4,795
Interest expense (23,197) -
------------------ ------------------
Loss before benefit for income taxes (2,733,275) (1,400,794)
Benefit for income taxes - -
------------------ ------------------
Net loss $ (2,733,275) $ (1,400,794)
------------------ ------------------
$ $
Loss per common share basic and diluted (0.58) (0.35)
------------------ ------------------
Weighted average shares - basic and diluted 4,724,000 3,982,000
------------------ ------------------
CERISTAR, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
YEARS ENDED DECEMBER 31, 2002 AND 2001
Additional Deferred Subscrip- Accumulated
Preferred Stock Common Stock Paid-in Compen- tions Deficit
Shares Amount Shares Amount Capital sation Receivable
------- ----------- ----------- ---------- ------------- ------------- ----------
$ $ $ $ $
Balance, January 1, 2001 1,273,924 1,274 7,101,961 7,102 3,565,840 (49,500) (17,414)(3,045,535)
Recapitalization of Ceristar from reverse
merger with Planet Resources, Inc. (1,273,924) (1,274) (3,457,843) (3,458) 41,399 - (36,667) -
Issuance of common stock for:
Cash - - 322 - 1,000 - - -
Services - - 72,585 73 225,347 - - -
Subscription receivable and compensation - - 315,238 315 996,685 (788,033) (26,799) -
Stock subscription received - - - - - - 250 -
Issuance of common stock for cash
(net of offering costs) - - 147,815 148 454,354 - - -
Amortization of deferred compensation - - - - - 16,500 - -
Net loss - - - - - - - (1,400,794)
----------- ----------- ----------- ---------- ------------- ------------- ------
Balance, December 31, 2001 - - 4,180,078 4,180 5,284,625 (821,033) (80,630) (4,446,329)
Issuance of common stock for:
Cash - - 328,654 329 482,584 -
Services - - 1,072,968 1,073 2,207,017 - (911,932) -
Subscription receivables and compensation - - 175,322 175 352,328 (320,000) (6,211) -
Debt - - 147,768 148 308,708 - - -
Non-vested common stock reacquired
through employee terminations (52,593) (53) (163,875) 161,444 2,484 -
Amortization of deferred compensation - - - - - 364,578 - -
Preferential conversion feature and issue of
warrants with long-term debt - - - - 75,000 - - -
Net loss - - - - - - - (2,733,275)
----------- ----------- ----------- ---------- ------------- ------------- ------
$ $ $ $ $
Balance, December 31, 2002 - - 5,852,197 5,852 8,546,387 (615,011) (996,289) (7,179,604)
----------- ----------- ----------- ---------- ------------- -------------
CERISTAR, INC.
Consolidated Statement of Cash Flow
YEAR ENDED DECEMBER 31
2002 2001
------------------ ------------------
Cash flows from operating activities:
Net loss $ (2,733,275) $ (1,400,794)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 63,682 12,072
Stock issued for services 1,322,450 407,588
Amortization of deferred compensation 364,578 16,500
Amortization of discount on long-term debt 10,000 -
Bad debt expense 16,117 -
Decrease (increase) in:
Accounts receivable (66,856) (2,206)
Prepaid expense - (430)
Deposits (8,338) -
Increase (decrease) in:
Accounts payable 186,990 34,084
Accrued liabilities 40,489 40,347
Deferred revenue 56,396 21,704
------------------ ------------------
Net cash used in operating activities (747,767) (871,135)
------------------ ------------------
Cash flows used in investing activities-
purchase of property and equipment (86,018) (12,507)
------------------ ------------------
Cash flows from financing activities:
Proceeds from issuance of common stock 482,913 455,752
Proceeds from convertible long-term debt 75,000 -
Proceeds from related party note 140,300 -
Proceeds from notes payable 228,394 -
Payments on notes payable (59,838) -
Payments on convertible long-term debt (7,292) -
------------------ ------------------
Net cash provided by financing activities 859,477 455,752
------------------ ------------------
Net increase (decrease) in cash
and cash equivalents 25,692 (427,890)
Cash and cash equivalents at beginning of year 2,518 430,408
------------------ ------------------
$ $
Cash and cash equivalents at end of year 28,210 2,518
------------------ ------------------
Notes to Consolidated Financial Statement
December 31, 2002, and 2001
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1.Organization and CeriStar, Inc. (formerly Planet Resources, Inc.) (the Company) operates in
Description of the communications industry as a hi-tech developer of IP technology applied
Business to data convergence. The Company is located in Salt Lake City, Utah, and was
formed in December 1999.
On September 10, 2002 the Company entered into an Agreement and Plan of
Merger with Planet Resources, Inc and its wholly owned subsidiary together
referred to as (Planet) in which all the issued and outstanding stock of the
Company, including Convertible Preferred Series A shares (Series A) and
Convertible Preferred Series B shares (Series B), were exchanged for the
issued and outstanding stock of Planet. Series A and B shares were exchanged
at a rate of approximately .757 for every common share of Planet and common
shares of the Company were converted into approximately .322 shares of Planet
common share. Just prior to the merger Planet authorized a 1 to 5.23 reverse
stock split. The merger was accounted for as a reverse merger with the
Company being the accounting acquirer and thus the historical operations
presented in the condensed financial statements of operations, cash flows and
stockholder's deficit, are those of the Company.
2. Summary of Concentration of Credit Risk
Significant Financial instruments which potentially subject the Company to concentration
Accounting Policies of credit risk consist primarily of trade receivables. In the normal course
of business, the Company provides on-going credit
evaluations of its customers and maintains
allowances for possible losses which, when realized,
have been within the range of management's
expectations.
The Company maintains its cash in bank deposit
accounts which, at times, may exceed federally
insured limits. The Company has not experienced any
losses in such accounts and does not believe it is
exposed to any significant credit risk on cash and
cash equivalents.
Cash and Cash Equivalents
Cash includes all cash and investments with original
maturities to the Company of three months or less.
Property and Equipment Property and equipment are
recorded at cost less accumulated depreciation.
Depreciation and amortization on capital leases and
property and equipment are determined using the
straight-line method over the estimated useful lives
of the assets or terms of the leases. Depreciation
and amortization periods are as follows:
Computer equipment and software 3 - 5 years
Furniture and fixtures 5 years
Revenue Recognition
Revenue is recognized when a valid contract or purchase order has
been executed or received, services have been performed
or product has been delivered, the selling price is fixed or
determinable, and collectibility is reasonably assured. Payments received
prior to performance are recorded as unearned revenue.
Income Taxes
Deferred taxes are computed using the asset and
liability method. Under the asset and liability
method, deferred tax assets and liabilities are
recognized for future tax consequences attributable
to differences between the financial statement
carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in
which those temporary differences are expected to be
recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is
recognized in income in the period that includes the
enactment date. Deferred tax assets are not
recognized unless it is more likely than not that
the asset will be realized in future years.
Earnings Per Common and Common Equivalent Share
The computation of basic earnings per common share
is computed using the weighted average number of
common shares outstanding during the year.
Earnings Per Common and Common Equivalent Share Continued
The computation of diluted earnings per common share
is based on the weighted average number of shares
outstanding during the year plus common stock
equivalents which would arise from the exercise of
warrants outstanding using the treasury stock method
and the average market price per share during the
year. Warrants to purchase 324,466 and 83,724 common
stock equivalents are not included in the diluted
earnings per share calculation for 2002 and 2001,
respectively, since their effect is anti-dilutive.
Impairment of Long-Lived Assets
The Company reviews its long-lived assets for
impairment whenever events or changes in
circumstances indicate that the carrying amount of
the assets may not be recoverable through
undiscounted future cash flows. If it is determined
that an impairment loss has occurred based on
expected cash flows, such loss is recognized in the
statement of operations.
Use of Estimates
The preparation of financial statements in
conformity with accounting principles generally
accepted in the United States of America requires
management to make estimates and assumptions that
affect the reported amounts of assets and
liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements
and the reported amounts of revenues and expenses
during the reporting periods. Actual results could
differ from those estimates.
Stock-Based Compensation
The Company has adopted the disclosure only
provisions of Statement of Financial Accounting
Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation." Accordingly, no
compensation expense is recognized when stock
options or warrants are granted to employees. No
options or warrants were issued to employees for the
years ended December 31, 2002 and 2001. Warrants
issued in 2002 and 2001 were in connection with
purchases of stock, conversion of debt and issuance
of debt.
The fair value of each warrant ted on the date of
grant using the Black-Scholes option pric the
following assumptions at December 31:
2002 2001
-------------------------
Expected dividend yield $ - $ -
Expected stock price volatility 50.41% NA
Risk-free interest rate 4.25% 4.75%
Expected life of options 5 years 5 years
The weighted average fair value of each warrant
granted during 2002 and 2001 was $1.63 and $.52,
respectively.
Reclassifications
Certain accounts in the 2001 financial statement
have been reclassified to conform with the current
year presentation.
3. Going Concern The Company has a working capital deficit, a stockholders'
deficit, and recurring net losses. These factors create
substantial doubt about the
Company's ability to continue as a going concern.
The financial statements do not include any
adjustment that might be necessary if the Company is
unable to continue as a going concern.
The ability of the Company to continue as a going
concern is dependent on the Company generating cash
from the sale of its common stock or obtaining debt
financing and attaining future profitable
operations. Management's plans include selling its
equity securities and obtaining debt financing to
fund its capital requirements and ongoing
operations, however, there can be no assurance the
Company will be successful in these efforts.
4. Property and Equipment Property and equipment consists at December 31:
2002 2001
------------------------------------
Computer equipment and software $ 410,598 $ 57,707
Furniture and fixtures 10,587 9,723
------------------------------------
421,185 67,403
Less accumulated depreciation
and amortiziation (81,790) (18,108)
------------------------------------
$ 339,395 $ 49,322
====================================
5. Deferred Purchase
Obligation During the year ended December 31, 2002, the Company entered into an agreement to
finance the purchase of equipment through a residential
developer. The obligation has no stated interest
rate and will be repaid solely from net revenues
generated from the use of the equipment. The
obligation is secured by the equipment, and the
maturity of the obligation is contingent on net
future revenues generated from the equipment. The
balance of the obligation at December 31, 2002 is
$86,996.
6. Convertible Long-Term Convertible long-term debt consists of a note payable to a
Debt financial institution with an original amount due of $75,000. The
note is payable in
monthly installments of $1,744, including interest
at 14%, secured by equipment, and matures on May 30,
2007.
The note includes a beneficial conversion feature
wherein the holder of the note, at the holders
option, may covert the note to shares of the
Company's common stock at $1.65 per share. The
Company also issued to the note holder a warrant to
purchase 22,710 shares of the Company's stock at an
exercise price of $3.30 per share. Based on the
value of the warrants, calculated using the Black
Scholes option pricing model at the date of grant,
together with the intrinsic value of the beneficial
conversion feature, the note was discounted for the
full face value and the discount is being amortized
over the life of the loan.
As of December 31, 2002 the principle balance
remaining on the note was $67,708 which is reduced
by the unamortized discount of $65,000 equaling a
net book value of the debt of $2,708 which is
recorded on the balance sheet.
Future maturities of long-term debt are as follows:
Year Ending December 31: Amount
------------------------ -------------
2003 $ 12,217
2004 14,041
2005 16,138
2006 18,548
2007 6,764
-------------
67,708
Less Discount (65,000)
-------------
$ 2,708
=============
7. Income Taxes The benefit for income taxes is
different than amounts which would be provided by
applying the statutory income tax rate to loss before
benefit for income taxes for the following reasons:
Years Ended
December 31,
----------------------------------
2002 2001
----------------------------------
----------------------------------
Income tax benefit at
statutory rate $ 1,020,000 $ 518,000
Stock valuation for services (472,000) (149,000)
Change in valuation allowance (546,000) (367,000)
Other (2,000) (2,000)
----------------------------------
----------------------------------
$ - $ -
----------------------------------
2002 2001
----------------------------------
----------------------------------
Net operating loss carry-forwards $ 1,370,000$ 783,000
Amortization of license technology 298,000 321,000
Depreciation (48,000) (6,000)
Deferred revenue 26,000 8,000
Allowance for doubtful accounts 6,000 -
Valuation allowance (1,652,000) (1,106,000)
----------------------------------
----------------------------------
$ -$ -
----------------------------------
At December 31, 2002, the Company has net operating loss
carry-forwards available to offset future taxable income
of approximately $3,674,000 of which will begin to expire in 2019. The
utilization of the net operating loss carry-forwards is dependent upon the
tax laws in effect at the time the net operating loss carry-forwards can be
utilized. A valuation allowance has been recorded against the deferred tax asset
due to the uncertainty surrounding its realization caused by the Company's
recurring losses.
8. Common Stock Warrants The Company has issued warrants in conjunction with the sale of
its securities and convertible debt. Warrants that were issued
generally do not have a life that exceeds five years.
Information regarding warrants to purchase common stock is summarized below:
Exercise
Number of Price Per
Warrants Share
----------------------------------
----------------------------------
Outstanding at January 1, 2001
Granted 83,724$ 1.67
Expired - -
----------------------------------
----------------------------------
Outstanding at December 31, 2001 83,724 1.67
Granted 240,742 1.67 - 4.50
Expired - -
----------------------------------
----------------------------------
Outstanding at December 31, 2002 324,466$ 1.67 - 4.50
----------------------------------
The following table summarizes information about outstanding warrants for common stock at
December 31, 2002:
Outstanding Exercisable
-----------------------------------------------------------------
Weighted
Average
Remaining Weighted
Range of Number Contractual Average Average
Exercise Out- Life Exercise Number Exercise
Prices standing (Years) Price Exercisable Price
--------------------------------------------------------------------------------
$ 1.67 - 2.30 91,902 2.53 $ 2.10 91,902 $ 2.10
3.30 - 4.50 232,564 2.99 3.65 232,564 3.65
--------------------------------------------------------------------------------
$ 3.21 324,466 2.86 $ 3.21 324,466 $ 3.21
--------------------------------------------------------------------------------
9. Stock Subscription Subscriptions receivable consist of the obligation of employees to
Receivable purchase, at $.031 per share, approximately 2,716,295 and
2,596,286 of the Company's common shares at December 31, 2002 and
2001, respectively. The difference between the fair value of the
shares and the subscription receivable is recognized as
compensation according to the vesting period set forth in the
stock purchase agreements which range from two to three years.
Deferred compensation related to these subscriptions was $615,011
and $821,033 at December 31, 2002 and 2001. The measurement date
of compensation is the date the shares were granted.
In addition to the employee subscription receivable,
the company has also issued 443,131 shares of its
common stock related to consultant agreements for
which services will be rendered in 2003. The stock
issuances have been recorded as subscriptions
receivable with a value of $911,933.
10. Supplemental Cash During the years ended December 31, 2002, the Company:
Flow Information
o Financed the purchase of equipment with a
deferred purchase obligation of $103,196.
o Effected a payment of $16,200 on the
deferred purchase obligation and recorded
an increase of $16,200 in deferred revenue.
o Issued 1,248,290 of the Company's common
shares for services of $1,325,660, deferred
compensation of $320,000 and subscriptions
receivable of $914,933.
o Exchanged 147,768 shares of the Company's
common stock for $308,708 of notes payable.
o Issued 45,420 warrants with a beneficial
conversion feature attached to long-term
debt, which resulted in a discount against
the long-term debt of $75,000.
o Reacquired, through employee terminations,
52,593 shares of the Company's common stock
for a reduction in deferred compensation of
$161,444 and subscriptions receivable of
$800.
o Acquired equipment in exchange for accounts
payable of $164,541.
During the year ended December 31, 2001, the
Company:
o Issued 315,238 shares to employees in
exchange for services of $182,168, deferred
compensation of $788,033, and employee
stock subscriptions receivable of $26,799.
Cash paid for interest and income taxes are as
follows:
Years Ended
December 31,
----------------------------------
2002 2001
Interest $ 23,197 $ -
---------------------------------
Income Taxes $ - $ -
---------------------------------
11. Related Party
Transactions Related party transactions are as follows:
During the year ended December 31, 2002, an
officer of the Company and relatives of the Officer
exchanged $127,200 of notes payable for 59,585 shares of the Company's common stock.
During the year ended December 31, 2001, an Officer
and relatives of an officer purchased 27,200 Series
B convertible preferred stock for $68,000.
12. Major Customers Sales to customers which exceeded 10% of total sales are as follows for the
years ended December 31:
2002 2001
----------------------------------
Customer A $152,000 $ -
Customer B $ 91,000 $ 172,000
Customer C $ 60,000 $ -
13. Commitments and Contingencies Litigation
The Company may
become or is
subject to
investigations,
claims or
lawsuits ensuing
out of the
conduct of its
business. The
Company is
currently not
aware of any
such items which
it believes
could have a
material effect
on its financial
position.
14. Fair Value of The
Company's financial
instruments consist of
cash, receivables and
Financial Instruments
payables. The carrying
amount of cash,
receivables,
convertible long-term
debt and payables approximates fair value because of
the short-term nature of these items.
15. Recent Accounting In June 2001, the FASB issued Statement of Financial
Accounting Standards No. Pronouncements 143, "Accounting for Asset Retirement
Obligations". This Statement addresses
financial accounting and reporting for obligations
associated with the retirement of tangible
long-lived assets and the associated asset
retirement costs. This Statement is effective for
financial statements issued for fiscal years
beginning after June 15, 2002. This Statement
addresses financial accounting and reporting for the
disposal of long-lived assets. The Company is
currently assessing the impact of this statement.
In April 2002, the FASB issued Statement of
Financial Accounting Standards (SFAS) No. 145,
"Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical
Corrections." This statement requires the
classification of gains or losses from the
extinguishments of debt to meet the criteria of
Accounting Principles Board Opinion No. 30 before
they can be classified as extraordinary in the
income statement. As a result, companies that use
debt extinguishment as part of their risk management
cannot classify the gain or loss from that
extinguishment as extraordinary. The statement also
requires sale-leaseback accounting for certain lease
modifications that have economic effects similar to
sale-leaseback transactions. The Company does not
expect Adoption of SFAS No. 145 did have a material
impact on financial position or future operations.
In June 2002, the FASB issued SFAS No. 146,
"Accounting for Costs Associated with Exit or
Disposal Activities." This standard, which is
effective for exit or disposal activities initiated
after December 31, 2002, provides new guidance on
the recognition, measurement and reporting of costs
associated with these activities. The standard
requires companies to recognize costs associated
with exit or disposal activities when they are
incurred rather than at the date the company commits
to an exit or disposal plan. The adoption of SFAS
No. 146 by the Company is not expected to have a
material impact on the Company's financial position
or future operations.
In December 2002, the FASB issued SFAS No. 148
"Accounting for Stock-Based Compensation--Transition
and Disclosure--an amendment of FASB Statement No.
123," which is effective for all fiscal years ending
after December 15, 2002. SFAS No. 148 provides
alternative methods of transition for a voluntary
change to the fair value based method of accounting
for stock-based employee compensation under SFAS No.
123 from the intrinsic value based method of
accounting prescribed by Accounting Principles Board
Opinion No. 25. SFAS 128 also changes the disclosure
requirements of SFAS 123, requiring a more prominent
disclosure of the pro-forma effect of the fair value
based method of accounting for stock-based
compensation. The adoption of SFAS No. 148 by the
Company did not have a material impact on the
Company's financial position or future operations.
In January 2003, the Financial Accounting Standards
Board (FASB) issued Interpretation No. 46,
Consolidation of Variable Interest Ethics (FIN No.
46), which addresses consolidation by business
enterprises of variable interest entities. FIN No.
46 clarifies the application of Accounting Research
Bulletin No. 51, Consolidated Financial Statements,
to certain entities in which equity investors do not
have the characteristics of a controlling financial
interest or do not have sufficient equity at risk
for the entity to finance its activities without
additional subordinated financial support from other
parties. FIN No. 46 applies immediately to variable
interest entities created after January 31, 2003,
and to variable interest entities in which an
enterprise obtains an interest after that date. It
applies in the first fiscal year or interim period
beginning after June 15, 2003, to variable interest
entities in which an enterprise holds a variable
interest that it acquired before February 1, 2003.
The Company does not expect to identify any variable
interest entities that must be consolidated. In the
event a variable interest entity is identified, the
Company does not expect the requirements of FIN No.
46 to have a material impact on its financial
condition or results of operations.
In November 2002, the FASB issued Interpretation No.
45, Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others (FIN No. 45).
FIN No. 45 requires certain guarantees to be
recorded at fair value, which is different from
current practice to record a liability only when a
loss is probable and reasonably estimable, as those
terms are defined in FASB Statement No. 5,
Accounting for Contingencies. FIN No. 45 also
requires the Company to make significant new
disclosures about guarantees. The disclosure
requirements of FIN No. 45 are effective for the
Company in the first quarter of fiscal year 2003.
FIN No. 45's initial recognition and initial
measurement provisions are applicable on a
prospective basis to guarantees issued or modified
after December 31, 2002. The Company's previous
accounting for guarantees issued prior to the date
of the initial application of FIN No. 45 will not be
revised or restated to reflect the provisions of FIN
No 45. The Company does not expect the adoption of
FIN No. 45 to have a material impact on its
consolidated financial position, results of
operations or cash flows.
SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, was issued in September 2000. SFAS No. 140
is a replacement of SFAS No. 125, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities. Most of the provisions
of SFAS No. 125 were carried forward to SFAS No. 140 without reconsideration
by the Financial Accounting Standards Board (FASB), and some were changed
only in minor ways. In issuing SFAS No. 140, the FASB included issues and
decisions that had been addressed and determined since the original
publication of SFAS No. 125. SFAS No. 140 is effective for transfers after
March 31, 2001. Management does not expect the adoption of SFAS No. 140 to
have a significant impact on the financial position or results of operations
of the Company.
16. Subsequent Event On March 1, 2003, the Company entered into an agreement with Wired LLC, in
which the Company is obligated to purchase equipment in the amount of
$343,840 in exchange for 45,000 warrants to purchase the Company's common
shares at $1.05 per share and issuance of 109,400 of the Company's common
shares. The equipment will be used in a revenue sharing venture in which
Wired LLC will receive all net profits from communications services as
provided in the agreement until it has recovered the sales price of the
equipment plus 12%. After Wired LLC has recovered the sales price of the
equipment plus 12%, net profits will be divided evenly from communications
service revenue. The Company has an obligation to service, and maintain the
equipment, and support the communications services for the duration of the
contract years.
Item 8. Change In and Disagreements with Accountants
None
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons
The following table sets forth the officers and directors of CeriStar
as of March 31, 2003
Name Age Position
David L Bailey 63 Chairman of the Board, President and Chief Executive Officer
Dane P. Goodfellow 57 Vice President of Marketing and Director
Mark S. Hewitt 51 Director
G. Earl Demorest 48 Vice President of Engineering and Finance
Paul D. Losee 54 Vice President of Corporate Development
Lark M. Allen 58 Director (resigned as of March 31, 2003)
David L Bailey has served as Chairman of the Board, President and
Chief Executive Officer of CeriStar since December 1999. From May 1997 to
December 1999, Mr. Bailey served as Managing Partner of DL Group, a limited
liability corporation, which marketed computer software and telecommunications
products. From 1993 to 1997, he was Chairman and Chief Executive Officer of VZ
Corp., a software development company. Mr. Bailey has also been Chairman and
Chief Executive Officer of Clyde Digital Systems and Cericor, and
was the lead founder and Chief Executive Officer of Iomega, Inc.
Dane P. Goodfellow has served as Vice President of Marketing and a
director of CeriStar since December 1999. >From 1998 to 1999, Mr. Goodfellow
served as Vice President of Sales of ViewPoint, Inc. a software development
company. From 1994 to 1997, he served as Vice President of Marketing and Sales
of VZ Corp., a software development company.
Mark S. Hewitt has served as a director of CeriStar since April 2000.
Mr. Hewitt is the Chief Technology Officer of Nextbend Inc. a consumer
electronics company based in Florida. Previously, he was Chief Technology
Officer of Mediacentric Group, a communications solutions provider. And prior
to that position, he was Senior Vice President of I-Link, a unified messaging
and IP telephony company.
G. Earl Demorest has served as Vice President of Engineering and
Finance since December 1999. >From 1997 to 1999, Mr. Demorest served as Chief
Financial Officer and Network Administrator of DL Group, a limited liability
corporation, which marketed computer software and telecommunications products.
From 1995 to 1997, he was Controller and Network Administrator of VZ Corp, a
software development company. Mr. Demorest is also the son-in-law of Mr.
Bailey.
Paul D. Losee has served as Vice President of Development since March
2001. From 1999 to 2001, Mr. Losee was the Chief Operating Officer of
Xboundary.com, Inc., an internet centric software developer. From 1998 to
1999, he was the Chief Operating Officer of IQ Telecommunications, Inc. Mr.
Losee was President and founder of M+, Inc., a marketing consultancy firm.
Lark M. Allen served as a director of CeriStar since April of 2000,
until his resignation in March of 2003.
Item 10. Executive Compensation
Executive and Director compensation for the past three years is as
follows:
Summary Compensation Table
Long-Term Compensation
Annual Compensation
Awards Payouts
Other Securities
Annual Restricted Underlying
Long-term All Other
Name and Compensa- Stock Options/ Incentive
Compensa-
Principal Position Period Salary($) Bonus($) tion($) Awards($) SARs(#) Payout($) tion ($)(4)
D.L. Bailey, 2002(1) $75,000 0 0 0 0 0 0
President, Chief 2001(2) $136,154 0 0 0 0 0 0
Executive Officer 2000(3) $150,000 0 0 0 0 0 0
and Director
D.P. Goodfellow, 2002(1) $71,923 0 0 0 0 0 0
Vice President 2001(2) $79,788 0 0 0 0 0 0
Marketing, Director 2000(3) $120,000 0 0 0 0 0 0
G.E. Demorest, 2002(1) $81,923 0 0 0 0 0 0
Vice President 2001(2) $103,615 0 0 0 0 0 $123,750
Engineering and 2000(3) $90,000 0 0 0 0 0 0
Finance
P.D. Losee, 2002(1) $95,539 0 0 0 0 0 0
Vice President 2001(2) $92,961 0 0 0 0 0 $569,250
Corporate 2000(3) N/A n/a n/a n/a n/a n/a n/a
Development
___________________
(1) For the fiscal year ended December 31, 2002.
(2) For the fiscal year ended December 31, 2001
(3) For the fiscal year ended December 31, 2000.
(4) Prior to CeriStar's merger with Planet, shares of CeriStar common
stock were issued to Messrs. Demorest and Losee. These
shares vest monthly over three years. The shares were valued at
$1.00 per share based on the conversion feature and the
price paid for preferred stock less any obligation to purchase vested
shares. These shares were accompanied with an
obligation of such employee to purchase such shares at $.01 per share.
If employment is terminated before the end of the
vesting period, CeriStar can at its option repurchase the unvested
portion at $.01 per share.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the beneficial ownership of the
outstanding shares of CeriStar common stock for (i) each executive officer of
CeriStar, (ii) each director, (iii) each person known to be the beneficial
owner of more than 5% of the outstanding shares of CeriStar and (iv) all
directors and officers as a group:
Percentage
Name and addresses(1) Number of Shares of Ownership
David L Bailey (2) 821,493 13.7%
Dane P. Goodfellow 454,865 7.6
George E. Demorest 311,653 5.2
A. W. Dugan 305,324 5.1
Paul D. Losee 137,150 2.3
Mark S. Hewitt 20,192 *
Lark M. Allen 20,192 *
Executive officers and directors
as a group (6 persons) 1,765,545 (a) 29.4%
________________
* Less than 1%.
(1) The address for Mr. Bailey is 1971 Summerwood Dr, Farmington UT 84025.
The address for Mr. Goodfellow is 8789 South Sutton
Way, Salt Lake City, UT 84121. The address for Mr. Demorest is 1529 E
Hilda Dr, Fruit Heights, UT 84037. The address for
Mr. Dugan is 1415 Louisiana, Suite 3100, Houston, TX 83846. The
address for Mr. Losee is 2783 Hobbs Creek Dr, Layton, UT
84040. The address for Mr. Hewitt is 5900 Corral Gate Lane, Sarasota,
FL 34241. The address for Mr. Allen is 1921 Hunting
Ridge Rd, Raleigh, NC 27615.
(2) Includes warrants to purchase 15,594 shares of common stock issued to
Mr. Bailey.
Item 12. Certain Relationships and Related Transactions
During 2002, David L. Bailey, his wife, Connie Bailey, and his nephew,
A. Brent Bailey, collectively loaned a total of $127,200 to CeriStar, which was
later exchanged for 4,736 shares of CeriStar Series B convertible preferred
stock (which was subsequently converted to 3,585 shares of CeriStar common
stock) and 56,000 shares of CeriStar common stock. During 2001, Mr. Bailey,
his wife Connie Bailey, and his brother, Daniel W. Bailey, purchased a total of
27,200 shares of Series B convertible preferred stock for $68,000.
Item 13. Exhibits and Reports on Form 10-K
(a) Exhibits
The following Exhibits are filed herewith pursuant to Rule 601 of
Regulation S-B or are incorporated herein by reference to previous filings.
Table
No. Document
3.1 Certificate of Incorporation(1)
3.2 Amended Certificate of Incorporation(1)
3.3 Bylaws(1)
4.1 Specimen Common Stock Certificate(1)
10.1 2002 Directors, Officers and Consultants Stock Option, Stock Warrant
and Stock Award Plan(2)
10.2 Agreement and Plan of Merger between Planet Resources, Inc. and
CeriStar, Inc.(3)
99.01 Certification Pursuant to Section 906 of Sarbanes-Oxley Act 2002
99.02 Certification Pursuant to Section 906 of Sarbanes-Oxley Act 2002
__________________
(1) Incorporated by reference from Form 8-A, as filed on March 1, 2001.
(2) Incorporated by reference from Registration Statement on Form S-8, as
filed on September 10, 2002.
(3) Incorporated by reference from Form 8-K, as filed on September 17, 2002.
(b) Reports on Form 8-K
On September 17, 2002, the Company filed a Form 8-K regarding the
merger between CeriStar, Inc. and Planet Resources, Inc.
On October 16, 2002, the Company filed a Form 8-K regarding name
change to CeriStar, Inc.
On November 25, 2002, the Company filed a Form 8-K/A regarding the
merger between CeriStar, Inc. and Planet Resources, Inc.
Item 14. Controls and Procedures
The Company's President and Chief Executive Officer and its Chief
Financial Officer (the "Certifying Officers"), are responsible for establishing
and maintaining disclosure controls and procedures for the Company. The
Certifying Officers have concluded (based on their evaluation of these controls
and procedures as of a date within 90 days of the filing of this report) that
the design and operation of the Company's disclosure controls and procedures
(as defined in Rule 13a-14c under the Securities Exchange Act of 1934) are
effective. No significant changes were made in the Company's internal controls
or in other factors that could significantly affect those controls subsequent
to the date of the evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
There were no significant changes made in our internal controls during
the period covered by this report, or to our knowledge, in other factors that
could significantly affect these controls subsequent to the date of their
evaluation.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CERISTAR, INC.
DATED April 23, 2003. By:/s/David L. Bailey
__________________________________
David L. Bailey, Chairman of the Board,
President and Chief Executive Officer
Pursuant to the requirements of the Securities exchange act of 1934,
this report has been signed by the following persons in counterpart on behalf
of the Company on the dates indicated.
Signature Title Date
/s/David L. Bailey
__________________________ Chairman of the Board, President and April 23, 2003
David L. Bailey Chief Executive Officer
(Principal Executive Officer)
/s/Mark S. Hewitt
_________________________ Director April 23, 2003
Mark S. Hewitt
/s/Dane P. Goodfellow
_________________________ Vice President of Marketing April 23, 2003
Dane P. Goodfellow and Director
/s/G. Earl Demorest
_________________________ Vice President of Engineering and Finance April 23, 2003
G. Earl Demorest and Chief Financial Officer (Principal
Financial and Accounting Officer)
CERTIFICATIONS
I, David L. Bailey, certify that:
1. I have reviewed this Annual Report on Form 10-KSB of CeriStar, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this quarterly
report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
(a) Designed such disclosure controls and procedures to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being prepared;
(b) Evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
(c) Presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any
material weaknesses in internal controls; and
(b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
CERISTAR, INC.
DATED April 23, 2003. By: /s/David L. Bailey
__________________________________
David L. Bailey, Chairman of the Board,
President and Chief Executive Officer
CERTIFICATIONS
I, G. Earl Demorest, certify that:
1. I have reviewed this Annual Report on Form 10-KSB of CeriStar, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report,
fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and
for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:
(a) Designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which
this quarterly report is being prepared;
(b) Evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the "Evaluation Date"); and
(c) Presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any
material weaknesses in internal controls; and
(b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
CERISTAR, INC.
DATED April 23, 2003. By: /s/G. Earl Demorest
__________________________________
G. Earl Demorest
Vice President of Engineering and Finance
and Chief Financial Officer
EXHIBIT 99.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES - OXLEY ACT OF 2002
In connection with the quarterly report of CeriStar, (the
"Company") on Form 10-KSB for the year ended December 31, 2002,
David L. Bailey, hereby certifies, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes - Oxley Act
of 2002, that to the best of his knowledge:
1. The annual report fully complies with the requirements of Section
13(a) of the Securities Exchange Act of 1934; and
2. The information contained in the annual report fairly presents,
in all material respects, the financial condition and
results of operations of the Company.
CERISTAR, INC.
DATED April 23, 2003. By: /s/David L. Bailey
__________________________________
David L. Bailey, Chairman of the Board,
President and Chief Executive Officer
EXHIBIT 99.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES - OXLEY ACT OF 2002
In connection with the quarterly report of CeriStar, (the "Company")
on Form 10-KSB for the year ended December 31, 2002, G.
Earl Demorest, hereby certifies, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes - Oxley Act
of 2002, that to the best of his knowledge:
1. The annual report fully complies with the requirements of Section
13(a) of the Securities Exchange Act of 1934; and
2. The information contained in the annual report fairly presents,
in all material respects, the financial condition and
results of operations of the Company.
CERISTAR, INC.
DATED April 23, 2003. By: /s/G. Earl Demorest
_____________________________________
G. Earl Demorest, Vice President of Engineering
and Finance and Chief Financial Officer