UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
--- OF 1934
For the quarterly period ended June 30, 2004
TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE
--- ACT OF 1934
For the transition period from ________ to ________
Commission file number 0-26790
MERGENCE CORPORATION
(Exact name of small business issuer as specified in its charter)
DELAWARE 87-0461856
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Technology Drive
Building H
Irvine, CA 92618
(Address of principal executive offices)
(949) 753-0593
(Issuer's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
State the number of shares outstanding of each of
the issuer's classes of common equity, as of the
latest practicable date: at August 9, 2004:
9,224,934
Transitional Small Business Disclosure Format (Check one): Yes No X
MERGENCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, DECEMBER 31,
2004 2003
------------- --------------
ASSETS
CURRENT ASSETS
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ - $ -
------------- --------------
TOTAL CURRENT ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . - -
OTHER ASSETS
Advances and deposits . . . . . . . . . . . . . . . . . . . . . . . . . 12,750 -
------------- --------------
TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,750 $ -
============= ==============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,468,597 2,419,803
Accounts Payable - Related Party. . . . . . . . . . . . . . . . . . . . 31,768 33,800
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 1,589,721 2,615,821
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . 833,400 833,400
Preferred dividends payable . . . . . . . . . . . . . . . . . . . . . . - 353,067
------------- --------------
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . 4,923,486 6,255,891
------------- --------------
STOCKHOLDERS' DEFICIT
Series J convertible preferred stock - $10,000 stated value per share;
275 shares authorized; -O- and 58.2 shares outstanding,
liquidation preference of $-0- and $457,000;. . . . . . . . . . . . - 457,000
Series K convertible preferred stock - $10,000 stated value per share;
250 shares authorized; -0- 18.3 shares outstanding,
liquidation preference of $58,000 . . . . . . . . . . . . . . . . . - 58,000
Series M convertible preferred stock - $10,000 stated value per share;
220 shares authorized; 196.9 shares outstanding;
liquidation preference of $1,969,000 . . . . . . . . . . . . . . . . - 2,616,862
Undesignated preferred stock - $0.001 par value, 399,055 shares
authorized; no shares outstanding. . . . . . . . . . . . . . . . . . - -
Common Stock - $0.001 par value; 250,000,000 shares authorized;
8,000,273 and 4,605,923 shares issued and outstanding. . . . . . . . 8,000 4,606
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . 53,112,216 48,690,169
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . (58,030,952) (58,082,528)
------------- --------------
TOTAL STOCKHOLDERS' DEFICIT . . . . . . . . . . . . . . . . . . . . . (4,910,736) (6,255,891)
------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT . . . . . . . . . . . . . . . $ 12,750 $ -
============= ==============
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2
MERGENCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
------------------------- -------------------------
2004 2003 2004 2003
----------- ----------- ------------ -----------
Revenues
Revenue $ - $ - $ - $ -
Cost of products sold - - - -
----------- ----------- ----------- -----------
Gross Profit - - - -
----------- ----------- ----------- -----------
Operating and Other Expenses
General and administrative 116,635 86,924 154,014 153,759
Stock issued for services 96,500 24,000 628,510 694,000
Stock based compensation- - 10,000 252,000 621,000
Interest expense, net 30,000 13,381 59,654 26,762
Gain on forgiveness of debt - (119,972) - (119,972)
----------- ----------- ----------- -----------
Total Operating and Other
Expenses 243,135 14,333 1,094,178 1,375,549
----------- ----------- ----------- -----------
Forgiveness of Liability - - 1,145,754 -
----------- ----------- ----------- -----------
Net Income (Loss) (243,135) ( 14,333) 51,576 (1,375,549)
Preferred Stock Dividends - (43,351) - (214,202)
----------- ----------- ----------- -----------
Loss Applicable to Common Shares $ (243,135) $ ( 57,684) $ 51,576 $(1,589,751)
=========== =========== =========== ===========
Basic and Diluted Loss per
Common Share $ (0.03) $ (0.02) $ 0.01 $ (0.48)
=========== =========== =========== ===========
Weighted average number of
common shares used in per
share calculations 7,336,689 3,634,722 6,424,837 3,283,987
=========== =========== =========== ===========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
MERGENCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE SIX MONTHS
ENDED JUNE 30,
--------------------------
2004 2003
----------- ------------
Cash Flows From Operating Activities
Net income (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . $ 51,576 $(1,375,549)
Adjustments to reconcile net loss to net cash used by operating
activities:
Stock issued for services and stock based compensation. . . . . . . 880,510 1,315,000
Forgiveness of accounts payable . . . . . . . . . . . . . . . . . . - 119,972
Changes in operating assets and liabilities:
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . (12,750) -
Accounts payable and accounts payable - related party . . . . . . 46,764 (152,170)
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . (1,026,100) 56,762
----------- -----------
Net Cash Used in Operating Activities . . . . . . . . . . . . . . . . (60,000) (35,985)
----------- -----------
Cash Flows From Financing Activities
Stock Issued for Cash . . . . . . . . . . . . . . . . . . . . . . . 60,000 -
Proceeds from borrowing . . . . . . . . . . . . . . . . . . . . . . . - 35,000
----------- ----------
Net Cash Provided by Financing Activities 60,000 35,000
----------- ----------
Net Increase (Decrease) in Cash . . . . . . . . . . . . . . . . . . . . - (985)
Cash at Beginning of Period . . . . . . . . . . . . . . . . . . . . . . - 985
----------- -----------
Cash at End of Period . . . . . . . . . . . . . . . . . . . . . . . . . $ - $ -
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION AND NON-CASH INVESTING AND FINANCING
ACTIVITIES
In July 2003, the holders of all of the Company's outstanding Series J, K and M
preferred stock agreed to exchange the Preferred Stock and accrued dividends
for 575,000 shares (post-split) of the Company's common stock. The closing took
place simultaneously with the reverse spilt of the Company's common stock at a
rate of 40 for 1, which occurred on February 13, 2004.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
MERGENCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1--NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The primary activities of Mergence Corporation (Mergence or the Company),
formerly eSynch Corporation, have consisted of raising capital, acquiring
businesses, developing and marketing video-on-demand services and video
streaming through the Internet, software sales through the Internet, and DVD
video encoding, compression and authoring. The Company has curtailed all of
these activities due to lack of financial resources. The Company is pursuing
acquisition and Oxford Media Corp., a Mergence-owned subsidiary focusing on
acquiring digital video on demand companies, has entered into a letter of
intent on to acquire eMOD Systems, Inc, a digital solutions company
concentrating on the secure high quality distribution of digital video content
to the hotel industry.
Principles of Consolidation - The accompanying consolidated financial
statements include the accounts of Mergence and of its wholly owned
subsidiaries. All inter- company transactions and balances have been eliminated
in consolidation.
Use Of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts in the financial statements
and accompanying notes. Actual results could differ from those estimates.
Interim Unaudited Financial Information - The accompanying condensed financial
statements have been prepared by the Company and are not audited. In the
opinion of management, all adjustments necessary for a fair presentation have
been included and consist only of normal recurring adjustments except as
disclosed herein. The financial position and results of operations presented in
the accompanying financial statements are not necessarily indicative of the
results to be generated for the remainder of 2004.
These financial statements have been condensed pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
disclosures normally included in financial statements have been condensed or
omitted. These financial statements should be read in connection with annual
financial statements included in the Company's Form 10-KSB for the year ended
December 31, 2003 as filed with the Securities and Exchange Commission on April
15, 2004.
Business Condition - The accompanying consolidated financial statements have
been prepared on the basis of the Company continuing as a going concern. The
Company has incurred losses from operations, negative cash flows from operating
activities and has accumulated a deficit at June 30, 2004 in the amount of
$58,030,952 and has a working capital deficiency and a capital deficiency of
$4,923,786 and 4,910,736 at June 30, 2004, respectively. The Company has
numerous judgments against it and is unable to pay its current liabilities.
Management's plans are to seek a merger for the Company and to request
compromise of existing liabilities. Management does not anticipate that the
Company can obtain additional debt or equity financing. These financial
statements do not include any adjustments relating to the recoverability and
classification of recorded assets or amounts and classifications of liabilities
that might be necessary should the Company be unable to continue as a going
concern.
Concentration Of Risk And Major Customers - The Company operates exclusively in
the software industry; accordingly, segment information relating to operations
in different industries is not presented in these financial statements. The
concentration of business in the highly competitive software industry subjects
the Company to a concentration of market risk. Sales to any customer in 2003and
2002did not exceed 10% of total sales.
Fair Values Of Financial Instruments - The amounts reported as accounts
payable, accrued liabilities, and capital lease obligations are considered to
be reasonable approximations of their fair values. The fair value estimates
were estimated by management and were not based on comparable debt, as the
Company is unable to obtain outside financing.
Stock-Based Compensation - Stock-based compensation to employees is measured by
the intrinsic value method. This method recognizes compensation expense related
to stock options granted to employees based on the difference between the fair
value of the underlying common stock and the exercise price of the stock option
on the date granted. Compensation expense related to stock options granted to
non-employees is determined based upon the fair value of the stock options on
the date granted.
Loss Per Share - Basic loss per common share is computed by dividing loss
before extraordinary gain and net loss, both adjusted by preferred dividends,
by the weighted-average number of common shares outstanding during the period.
Diluted loss per share is calculated to give effect to stock warrants, options
convertible preferred stock and convertible notes payable except during loss
periods when those potentially issuable common shares would decrease the loss
per share.
Revenue Recognition - The Company sells software products at fixed prices for
which the right to return is granted to the buyer. Accordingly, revenue is
recognized when the buyer has paid for the products and the amount of future
returns can be reasonably estimated. Cost of products sold is recognized at the
date the sale is recognized less an estimate for sales returns. Until the sale
is recognized, products purchased from publishers are accounted for, as
consigned product from publishers and the related cost is not reflected in the
financial statements with the exception of software inventory owned by the
Company. Revenue from DVD video encoding, compression and authoring and video-
on-demand services is recognized when the product or services are completed,
the products are transmitted or shipped to the customer and accepted by the
customer.
New Accounting Standards - The Company adopted FASB Statement of Financial
Accounting Standards No. 145, Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical Corrections on January 1,
2003. Among other provisions, this statement modified the criteria for
classification of gains or losses on debt extinguishment such that they are not
required to be classified as extraordinary items if they are not unusual and
infrequent. The adoption of this standard did not have a material effect on the
Company's financial position or results of operations.
In May 2003, the FASB issued Statement No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equities.
Statement No. 150 will require financial instruments that are mandatory
redeemable or that contain an obligation to repurchase the financial instrument
to be classified as liabilities. Statement No. 150 must be applied by the
Company beginning July 1, 2003. The adoption of Statement No. 150 is not
expected to have a material effect on the financial position of the Company.
NOTE 2-ACCRUED LIABILITIES
Included in accrued liabilities at June 30, 2004 is $705,000 in obligations to
state and federal governments for payroll taxes from the current years and from
previous years and estimated interest and penalties owing on such tax
obligations. At June 30, 2004 the Company has accrued salaries of $ 239,923.
Some of these employees have obtained judgments against the Company for
payments of these salaries and these amounts have been reclassified to accounts
payable. Additionally, during 2001 the Company withheld 401K contributions from
employees' wages that were not contributed to the plan. At June 30, 2004
amounts due to the plan were $43,467. The Company reduced its accrual on
previous estimates of accrued liabilities by $1,145,754 in the quarter ended
March 31, 2004, which represented for potential payroll taxes due by
individuals shareholders for the years 1997 and 1998. A review of individual
tax returns showed that returns were filed properly by these individuals.
NOTE 3-COMMITMENTS AND CONTINGENCIES
Litigation - The Company was involved in one lawsuit in the normal course of
business. A collection action filed on May 9, 2002 wherein Garfinkle Limited
Partnership II ("GLP") alleged breach of a $450,000 promissory note, plus
interest. GLP was granted a summary judgment in April 2004 against the
Company. All amounts are fully recorded in the financial statements.
Previous lawsuits resulted in Judgments against the Company totaling
$1,174,000. All amounts have been recorded in the Company's financial
statements as accounts payable. The Company is currently attempting to
negotiate settlements with all creditors.
NOTE4-STOCKHOLDERS' DEFICIT
In July 2003, the holders of all of the Company's outstanding Series J, K and M
preferred stock agreed to exchange the Preferred Stock and accrued dividends
for 575,000 shares (post-split) of the Company's common stock. The closing took
place simultaneously with the reverse spilt of the Company's common stock at a
rate of 40 for 1, which occurred on February 13, 2004.
Common Stock - On February 13, 2004, the shareholders of the Company approved a
1-for-40 reverse stock split of the Company's outstanding common stock. The
accompanying financial statements have been restated on a retroactive basis for
the effects of the reverse stock split for all periods presented.
During the three months ended June 30, 2004, the Company issued Common Stock as
follows: 350,000 shares to consultants for services valued at $96,500 and
907,853 shares for $60,000.
NOTE 5-STOCK OPTIONS AND WARRANTS
The Company has issued stock options to employees and consultants under a
stock-based compensation plan and under individual contracts. Under the 1999
Stock Incentive Plan, which was approved by the shareholders in November 1999,
the Company may grant options to its employees and consultants for up to 75,000
shares of common stock. On September 6, 2002, the 1999 Stock Incentive
Plan was amended to allow the granting of options for up to 318,750 and on
January 6, 2004 was amended to allow the granting of options up to 10,000,000
shares of common stock. Under the 1998 Stock Option Plan, options may be
granted to employees and consultants for up to 15,000 common shares
During the three months ended June 30, 2004 the Company granted no stock
options or warrants.
NOTE 6 - SUBSEQUENT EVENT
The Company's subsidiary Oxford Media Corp. has issued a Letter of Intent to
acquire eMod Systems, Inc. and Skypath Satellite Systems, LLC. In conjunction
with these anticipated transactions the Company approved the spin out of Oxford
Media Corp. to the shareholders of record on August 27, 2004.
The company issued 1,224,661 shares of common stock in July and August 2004 for
advances of $12,000 and compensation and services of $129,699. In August 2004,
the Company transferred 1,000,000 shares of Oxford Media Corp. common stock to
officers of Mergenge Corporation for services rendered to Mergence during the
quarter ended June 30, 2004. This compensation expense has been accrued at
June 30, 2004.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The following discussion should be read in conjunction with the financial
statements and notes thereto found elsewhere herein. The discussion assumes
that the reader is familiar with or has access to the Company's financial
statements for the year ended December 31, 2003 found in the Company's Form 10-
KSB dated April 14, 2004.
The financial statements have been prepared on the basis of the Company
continuing as a going concern. The Company has incurred losses from operations
and negative cash flows from operating
During the three months and six months ended June 30, 2004 and 2003, net sales
were $ -0-. The sales result was attributable to the continued refocusing on
new business and discontinuing non-profitable operations.
The Company had a net loss of $243,135 for the three months ended June 30,
2004 compared with a net loss of $ 14,333 for the same period in the previous
year. The Company had net profit of $51,576 for the six months ended June 30,
2004 as compared with a net loss of $1,375,549 for the comparable period of the
prior year. The net profit was due to a reduction in estimates of accrued
expenses of $1,145,754 from previous periods
Interest expense was $30,000 and $59,654 during the three and six months ended
June 30, 2004, compared to interest expense of $13,381 and $26,762 for the
comparable periods of the prior year.
The Company incurred stock based compensation expense of $-0- and $252,000
during the three and six months ended June 30,2004, as compared with $10,000
and $621,000 for the comparable periods of the prior year. Stock issued for
services was $96,500 and $628,510 for the three and six months ended June 30,
2004 versus $24,000 and $694,000 for the same periods in the previous year.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2004 the Company had negative working capital of $4,923,486.
RISK FACTORS
Statements regarding the Company's plans, expectations, beliefs, intentions as
to future sales of software, future capital resources and other forward-
looking statements presented in this Form 10-QSB constitute forward looking
information within the meaning of the Private Securities Litigation Reform Act
of 1995. There can be no assurance that actual results will not differ
materially from expectations. Investors are cautioned not to ascribe undue
weight to such statements. In addition to matters affecting the Company's
industry generally, factors which could cause actual results to differ from
expectations include, but are not limited to (i) sales of the Company's
software which may not rise to the level of profitability; (ii) due to the
rapidly changing and intensely competitive nature of the industry, competitors
may introduce new products with significant competitive advantages over the
Company's products; (iii) the Company may not have sufficient resources,
including any future financing it is able to obtain, to sustain marketing and
other operations; (iv) the Company may be unable to attract and retain
sufficient management and technical expertise, or may lose key employees; (v)
the Company's contractual or legal efforts to protect its confidential
information or intellectual property may be inadequate or ineffective to
provide protection, and the Company may be unable financially to pursue legal
remedies that may be available; (vi) the Company's selection, due diligence,
execution, and integration of acquisitions may not prove effective or
reasonable; (vii) the Company may suffer from other technical or communications
problems, such as power outages, system failures, system crashes, or hacking;
and (viii) the Company may be subjected to unknown risks and uncertainties, or
be unable to assess risks and uncertainties as may exist.
PART II OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
Litigation - The Company has been involved in several lawsuits in the normal
course of business and all amounts for exposure to these lawsuits have been
recorded in our financial statements.
We are involved in one lawsuit in the normal course of business. A collection
action filed on May 9, 2002 wherein Garfinkle Limited Partnership II ("GLP")
alleged breach of a $450,000 promissory note, plus interest. GLP was granted a
summary judgment in April 2004 against the Company. All amounts are fully
recorded in the financial statements.
ITEM 2 - CHANGES IN SECURITIES:
(a)The following securities were issued by the Company during the three
months ended June 30, 2004 without registration under the Securities Act
of 1933: None
a) Exhibits
Exhibit No. Description
31.1 Certification of Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer of Periodic Financial
Reports pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, 18 U.S.C. Section 1350.
32.2 Certification of Chief Financial Officer of Periodic Financial
Reports pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, 18 U.S.C. Section 1350.
(1) Incorporated by reference to the like-numbered exhibit to the Company's Form PRE-14C filed March 27,2003
(2) Incorporated by reference to the like-numbered exhibit to the Company's Form DEF-14C filed April 8, 2003
(3) Incorporated by reference to the like-numbered exhibit to the Company's Form 8-K filed July 30, 2003
(4) Incorporated by reference to the like-numbered exhibit to the Company's Form PRE-14C dated August 1, 2003
(5) Incorporated by reference to the like-numbered exhibit to the Company's Form S-8 filed September 15, 2003
(6) Incorporated by reference to the like-numbered exhibit to the Company's Form PRE-14C dated September 26, 2003
(7) Incorporated by reference to the like-numbered exhibit to the Company's Form S-8 filed February 17, 2004
(8) Incorporated by reference to the like-numbered exhibit to the Company's Form 10-K dated April 16, 2004
(9) Incorporated by reference to like number exhibit to the Company's Form Pre-14C filed July 29, 2004
(99.5) Incorporated by reference to exhibit 99 to the Company's Form 10-KA filed September 14, 2003.
(99.5) Incorporated by reference to exhibit 99 to the Company's Form 10-K filed April 16, 2004
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MERGENCE CORPORATION
Date: August 10, 2004 By: /s/ T. Richard Hutt
---------------------------------
T. Richard Hutt
Secretary and Chief Financial
Officer (Duly Authorized Officer and Principal
Financial and Accounting Officer)
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Thomas Hemingway, certify that:
1. I have reviewed this quarterly report on Form 10-QSB Amendment No. 1 of
Mergence Corporation;
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 report;
3. Based on my knowledge, the financial statements, and other financial
information included in this 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 report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have;
a) designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, 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 report is being prepared;
b) [reserved];
c) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
d) disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, 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 and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: August 10, 2004
/s/ Thomas Hemingway
-------------------------------
Thomas Hemingway, President and
Chief Executive Officer
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, T. Richard Hutt, certify that:
1. I have reviewed this quarterly report on Form 10-QSB Amendment No. 1 of
Mergence Corporation;
2. Based on my knowledge, this 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 report;
3. Based on my knowledge, the financial statements, and other financial
information included in this 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 report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, 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) [reserved];
c) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
d) disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal controls over financial reporting, to
the registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: August 10, 2004
/s/ T.Richard Hutt
-------------------
T. Richard Hutt
Chief Financial
Officer
Exhibit 32.1
CERTIFICATION OF PERIODIC FINANCIAL REPORT PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002, 18 U.S.C. SECTION 1350
The undersigned hereby certifies that he is the duly appointed and acting Chief
Executive Officer of Mergence Corporation, a Delaware corporation (the
"Company") and hereby further certifies as follows:
(1) The periodic report containing financial statements to which this
certificate is an exhibit fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the periodic report to which this certificate
is an exhibit fairly presents, in all material respects, the financial
condition and results of operations of the Company.
In witness whereof, the undersigned has executed and delivered this certificate
as of the date set forth opposite his signature below.
August 10, 2004 /s/ Thomas Hemingway
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Thomas Hemingway
President and Chief Executive Officer
EXHIBIT 32.2
CERTIFICATION OF PERIODIC FINANCIAL REPORT PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002, 18 U.S.C. SECTION 1350
The undersigned hereby certifies that he is the duly appointed and acting Chief
Financial Officer of Mergence Corporation, a Delaware corporation (the
"Company") and hereby certifies as follows:
(1) The periodic report containing financial statements to which this
certificate is an exhibit fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the periodic report to which this certificate
is an exhibit fairly presents, in all material respects, the financial
condition and results of operations of the Company.
In witness whereof, the undersigned has executed and delivered this certificate
as of the date set forth opposite his signature below.
August 10, 2004 /s/ T. Richard Hutt
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T. Richard Hutt
Chief Financial Officer