UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

________________________

 

**FORM 10-QSB**

 

Quarterly Report Pursuant to Section 13 or 15(d)

of            the Securities Exchange Act of 1934

 

For the            Quarter Period Ended

|   | June 30, 2007 | Commission File No. 0-18399 |
|--------|---------------|-----------------------------|

 

**SIRICOMM, INC.**

(Exact name of Company as specified in its Charter)

 

|   | Delaware | 62-1386759 |
|--------|----------|------------|

|   | (State or jurisdiction of incorporation or                            organization) | (IRS Employer Identification No.) |
|--------|-------------------------------------------------------------------------------------|-----------------------------------|

 

|   | 4710 East 32nd Street, Joplin,                            Missouri | 64804 |
|--------|--------------------------------------------------------------------|-------|

|   | (Address of Principal Executive Office) | (Zip Code) |
|--------|-----------------------------------------|------------|

 

|   | Company’s telephone number, including area                            code:   | (417) 626-9971 |
|--------|-----------------------------------------------------------------------------------------------|----------------|

 

Former name, former address and former fiscal year, if changed since            last report:N/A

 

Indicate by check mark whether the Company (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 a shorter period that the Company was required            to file such reports), and (2) has been subject to such filing requirements for the            past 90 days.

 

|   | Yesx | No o |
|--------|------|------|

 

The            number of shares outstanding of the Company’s Common Stock, $.001 par value, as            of August 10, 2007 was 25,327,991.

             

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**PART I - FINANCIAL INFORMATION**

 

| **Item 1:** | **Financial Statements** |
|-------------|--------------------------|

 

| Condensed Consolidated Balance Sheets as of                                                              |   |
|----------------------------------------------------------------------------------------------------------|--------|
| June30, 2007 and September 30, 2006                                                                      | 3      |
|                                                                                                     |   |
| Condensed Consolidated Statements of Operations for the                            three and nine months |   |
| ended June 30, 2007 and June 30, 2006                                                                    | 4      |
|                                                                                                     |   |
| Condensed Consolidated Statements of Cash Flows for the                            nine                  |   |
| months ended June 30, 2007 and June 30, 2006                                                             | 5      |
|                                                                                                     |   |
| Notes to the Condensed Consolidated Financial                            Statements                      | 6      |

 

 

 

2

 

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| **SIRICOMM, INC.**                                                                                 |
|----------------------------------------------------------------------------------------------------|
| **CONDENSED CONSOLIDATED BALANCE SHEETS**                                                          |
|                                                                                               | June 30, 2007 (unaudited) |   | September 30, 2006 |
| Assets                                                                                             |   |   |   |
| Current Assets                                                                                     |   |   |   |
| Cash and cash equivalents                                                                          | $   302,455 |   | $     943,137  |
| Accounts receivable                                                                                | 74,146 |   | 36,256  |
| Other receivable                                                                                   | - |   | 25,500  |
| Prepaid expenses and other                                                                         | 24,513 |   | 12,965  |
| Deposit on Pulse-ST devices                                                                        | 153,120 |   | -  |
|                                                                                               |   |   |   |
| Total current assets                                                                               | 554,234 |   | 1,017,858  |
|                                                                                               |   |   |   |
| Property and Equipment, at cost                                                                    |   |   |   |
| Equipment                                                                                          | 4,458,771 |   | 4,021,922  |
| Network equipment in progress of installation                                                      | 220,010 |   | 385,054  |
|                                                                                               |   |   |   |
|                                                                                               | 4,678,781 |   | 4,406,976  |
| Less accumulated depreciation                                                                      | 1,951,035 |   | 1,167,782  |
|                                                                                               |   |   |   |
|                                                                                               | 2,727,746 |   | 3,239,194  |
|                                                                                               |   |   |   |
| Software, net of accumulated amortization of                            $92,929                    | 667,932 |   | 760,856  |
|                                                                                               |   |   |   |
| Prepaid consulting fees                                                                            | 41,310 |   | 55,080  |
|                                                                                               |   |   |   |
| Total assets                                                                                       | $  3,991,222 |   | $   5,072,988  |
|                                                                                               |   |   |   |
| Liabilities and Stockholders’ Equity                                                         |   |   |   |
| Current Liabilities                                                                                |   |   |   |
| Convertible note payable to related party                                                          | $    456,443 |   | $                 - |
| Convertible note payable                                                                           | 399,351 |   |  - |
| Note Payable – current portion                                                               | 331,885 |   | - |
| Accounts payable                                                                                   | 244,246 |   | 742,309  |
| Accrued salaries                                                                                   | 35,248 |   | 26,873  |
| Customer deposit                                                                                   | 168,432 |   | -  |
| Capital lease - current portion                                                                    | 1,563 |   | -  |
| Other accrued expenses - network equipment                                                         | 27,234 |   | 185,031  |
| Other accrued expenses                                                                             | 245,529 |   | 142,328  |
| Deferred revenue                                                                                   | 163,748 |   | 148,812  |
|                                                                                               |   |   |   |
| Total current liabilities                                                                          | 2,073,679 |   | 1,245,353  |
|                                                                                               |   |   |   |
| Other Long Term Liabilities                                                                        |   |   |   |
| Note Payable – non-current                                                                   | 712,789 |   | - |
| Capital lease obligation                                                                           | 2,133 |   | -  |
| Asset retirement obligation                                                                        | 238,094 |   | 225,960  |
|                                                                                               |   |   |   |
| Total liabilities                                                                                  | 3,026,695 |   | 1,471,313  |
|                                                                                               |   |   |   |
| Preferred stock - Series A, cumulative, par value $.001;                            500, 000       |   |   |
| shares authorized; 213,417 shares issued and                            outstanding; dividend      |   |   |
| rate of $0.025 per share per quarter commencing March                            2004: liquidation |   |   |
| preference of $1 per outstanding share cash                            payment                     | 309,455 |   | 293,449 |
|                                                                                               |   |   |   |
| Stockholders’ Equity                                                                         |   |   |   |
| Common stock - par value $.001; 100,000,000 shares                            authorized; issued   |   |   |   |
| and outstanding 2007- 25,327,991shares, 2006- 25,054,676                            shares         | 25,328 |   | 25,055  |
| Additional paid-in capital                                                                         | 21,942,169 |   | 20,768,645  |
| Treasury stock, at cost, common; 2007 - 90,000 shares,                            2006 -           | (90,000) |   | (90,000) |
| 90,000 shares                                                                                      |   |   |   |
| Deferred compensation                                                                              | (76,736) |   | (261,600) |
| Retained deficit                                                                                   | (21,145,689) |   | (17,133,874) |
|                                                                                               |   |   |   |
| Total stockholders’ equity                                                                   | 655,072 |   | 3,308,226  |
|                                                                                               |   |   |   |
| Total liabilities and stockholders’                            equity                        | $  3,991,222 |   | $   5,072,988  |
|                                                                                               |   |   |   |
| See Notes to Condensed Consolidated Financial                            Statements                |   |   |   |

 

3

 

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|   | **SIRICOMM, INC.**                                                                  |
|--------|-------------------------------------------------------------------------------------|
|   | **CONDENSED CONSOLIDATED STATEMENTS OF                            OPERATIONS**      |
|   |                                                                                |   |   |   |   |   |   |   |
|   |                                                                                |   | June 30, 2007 |   | June 30, 2006 |   |
|   |                                                                                |   | 3 Months Ended | 9 Months Ended |   | 3 Months Ended | 9 Months Ended |   |
|   |                                                                                |   | (Unaudited) | (Unaudited) |   | (Unaudited) | (Unaudited) |   |
|   |                                                                                |   |   |   |   |   |   |   |
|   | Revenues                                                                            |   | $    499,399  | $  1,570,233  |   | $       294,913  | $      650,609  |   |
|   | Cost of Goods Sold                                                                  |   | -  | 23,760  |   | -  | -  |   |
|   |                                                                                |   |   |   |   |   |   |   |
|   | Gross Profit                                                                        |   | $    499,399  | $  1,546,473  |   | $      294,913  | $      650,609  |   |
|   |                                                                                |   |   |   |   |   |   |   |
|   | Operating Expenses:                                                                 |   |   |   |   |   |   |   |
|   | General and   administrative                                         |   | 266,941  | 1,572,745  |   | 1,031,437  | 1,722,318  |   |
|   | Salaries                                                                            |   | 434,377  | 1,590,619  |   | 456,755  | 1,126,727  |   |
|   | Satellite accessfees                                                                |   | 457,315  | 1,371,011  |   | 441,585  | 742,798  |   |
|   | Impairment loss                                                                     |   | -  | 49,900  |   | -  | -  |   |
|   | Depreciation andamortization                                                        |   | 314,759  | 877,387  |   | 210,455  | 735,359  |   |
|   |                                                                                |   |   |   |   |   |   |   |
|   | Total operating expenses                                                            |   | 1,473,392  | 5,461,662  |   | 2,140,232  | 4,327,202  |   |
|   |                                                                                |   |   |   |   |   |   |   |
|   |                                                                                |   |   |   |   |   |   |   |
|   | Operating loss                                                                      |   | (973,993) | (3,915,189) |   | (1,845,319) | (3,676,593) |   |
|   |                                                                                |   |   |   |   |   |   |   |
|   | Other Income (Expense)                                                              |   |   |   |   |   |   |   |
|   | Interest income                                                                     |   | 6  | 2,524  |   | 25,432  | 52,543  |   |
|   | Gain on forgiveness of debt                                                         |   | 95,587  | 110,560  |   | -  | -  |   |
|   | Interest expense                                                                    |   | (196,088) | (209,710) |   | (6,541) | (448,817) |   |
|   |                                                                                |   |   |   |   |   |   |   |
|   | Total Other Income (Expense)                                                        |   | (100,495) | (96,626) |   | 18,891  | (396,274) |   |
|   |                                                                                |   |   |   |   |   |   |   |
|   | Net loss                                                                            |   | $  (1,074,488) | $  (4,011,815) |   | $  (1,826,428) | $ (4,072,867) |   |
|   |                                                                                |   |   |   |   |   |   |   |
|   | Add: Dividends declared on preferred stock                                          |   | (5,335) | (16,005) |   | (5,336) | (16,008) |   |
|   |                                                                                |   |   |   |   |   |   |   |
|   | Loss available to common shareholders                                               |   | $  (1,079,823) | $  (4,027,820) |   | $  (1,831,764) | $ (4,088,875) |   |
|   |                                                                                |   |   |   |   |   |   |   |
|   | Net loss per share, basic and diluted                                               |   | $           (0.04) | $           (0.16) |   | $           (0.07) | $          (0.18) |   |
|   |                                                                                |   |   |   |   |   |   |   |
|   | Weighted average shares, basic and diluted                                          |   | 25,280,189  | 25,202,382  |   | 25,004,391  | 22,672,396  |   |
|   |                                                                                |   |   |   |   |   |   |   |
|   | See Notes to Condensed Consolidated Financial                            Statements |   |   |   |   |

 

 

4

 

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| **SIRICOMM, INC.**                                                                                                  |
|---------------------------------------------------------------------------------------------------------------------|
| **CONDENSED CONSOLIDATED STATEMENTS OF CASH                            FLOWS**                                      |
| **NINE MONTHS ENDED JUNE 30, 2007 AND 2006                            (UNAUDITED)**                                 |
|                                                                                                                |   |   |
|                                                                                                                |   | 2007 |   | 2006 |
|                                                                                                                |   |   |   |   |
| Operating Activities                                                                                                |   |   |   |   |
| Net loss                                                                                                            |   | $   (4,011,815) |   | $(4,072,867) |
| Items not requiring cash                                                                                            |   |   |   |   |
| Depreciation and amortization                                                                                       |   | 877,387  |   | 735,359  |
| Stock-based compensation for services                                                                               |   | 383,687  |   | 167,631  |
| Amortization of discount on note payable                                                                            |   | 162,337  |   |   |
| Write-off imputed discount upon debt                            conversion                                          |   | -  |   | 76,271  |
| Fair value of beneficial conversion option and warrants                            associated with convertible debt |   | -  |   | 344,620  |
| Accretion                                                                                                           |   | 4,154  |   | -  |
| Recognition of deferred compensation                                                                                |   | 184,864  |   | 159,576  |
| Software impairment loss                                                                                            |   | 49,900  |   | -  |
| Other Non-cash charges                                                                                              |   | -  |   | 114,221  |
| Changes in                                                                                                          |   |   |   |   |
| Current assets                                                                                                      |   | (23,938) |   | (50,585) |
| Deposit on Pulse-ST devices                                                                                         |   | (153,120) |   | -  |
| Accounts payable                                                                                                    |   | 280,114  |   | 702,013  |
| Customer deposit                                                                                                    |   | 168,432  |   | -  |
| Accrued expenses                                                                                                    |   | 123,589  |   | (164,346) |
| Deferred revenues                                                                                                   |   | 14,936  |   | 64,681  |
|                                                                                                                |   |   |   |   |
| Net cash flows used in operating activities                                                                         |   | (1,939,473) |   | (1,923,426) |
|                                                                                                                |   |   |   |   |
| Investing Activities                                                                                                |   |   |   |   |
| Certificate of deposit purchased                                                                                    |   | -  |   | (500,000) |
| Purchase of furniture and equipment                                                                                 |   | (72,737) |   | (1,447,412) |
| Software development costs capitalized                                                                              |   | (27,250) |   | -  |
|                                                                                                                |   |   |   |   |
| Net cash flows used in investing activities                                                                         |   | (99,987) |   | (1,947,412) |
|                                                                                                                |   |   |   |   |
| Financing Activities                                                                                                |   |   |   |   |
| Borrowings under line of credit, net                                                                                |   | -  |   | 82,654  |
| Borrowings from related party                                                                                       |   | 800,000  |   | 500,000  |
| Borrowings from Convertible Note Payable                                                                            |   | 600,000  |   | -  |
| Purchase of treasury stock                                                                                          |   | -  |   | (90,000) |
| Proceeds from exercise of stock options and                            warrants                                     |   | -  |   | 107,114  |
| Proceeds from sale of common stock                                                                                  |   | -  |   | 4,488,215  |
| Payments on capital lease obligation                                                                                |   | (1,223) |   | -  |
|                                                                                                                |   |   |   |   |
| Net cash flows provided by financing                            activities                                          |   | 1,398,777  |   | 5,087,983  |
|                                                                                                                |   |   |   |   |
| Increase (decrease in cash and cash                            equivalents                                          |   | (640,683) |   | 1,217,145  |
| Cash and cash equivalents, beginning of                            period                                           |   | 943,138  |   | 931,787  |
|                                                                                                                |   |   |   |   |
| Cash and cash equivalents, end of period                                                                            |   | $       302,455  |   | $ 2,148,932  |
|                                                                                                                |   |   |   |   |
|                                                                                                                |   |   |   |   |
| Supplemental Cash Flows Information                                                                                 |   |   |   |   |
|                                                                                                                |   |   |   |   |
| Accounts payable incurred for acquisition of network                            equipment (to note 06/07)           |   | $         366,069 |   | $               -  |
| Cash paid for interest                                                                                              |   |  $                  -  |   | $                                  25,782  |
| Accrued dividends for Series A preferred                            stock                                           |   | $          16,006  |   | $                                  16,007  |
| Property acquired by issuance of capital lease                            obligation                                |   | $           4                            ,919  |   | $               -  |
| Conversion of debt to equity                                                                                        |   | $                   -  |   | $     504,603  |
| Accrued liabilities incurred for purchase of                            software                                    |   | $                   -  |   | $     250,000  |
| Recognition of warrants earned for software                            received                                     |   | $                   -  |   | $                                  92,000  |
| Recognition of warrants earned for network site                            installations                            |   | $                   -  |   | $      143,500  |
| Imputed discount for warrants issued                            with convertible debt                          |   | $                                    704,430  |   | $                                  76,271  |
| Imputed discount for warrants issued with note                            payable                                   |   | $                                    101,686  |   | -  |
| Accounts Payable converted to Note Payable                                                                          |   | $                                 1,144,246  |   | -  |

 

 
| See Notes to Condensed Consolidated Financial                        Statements |   |   |   |   |
|---------------------------------------------------------------------------------|--------|--------|--------|--------|

 

5

 

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|   |   |   |   |   |
|--------|--------|--------|--------|--------|

 

SIRICOMM, INC

NOTES            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

**1.** **Nature            of Operations and Summary of Significant Accounting Policies:**

 

*Nature of Operations:*

             

SiriCOMM, Inc., a Delaware corporation (the “Company”),            through its wholly owned subsidiary of the same name, which was incorporated in the            State of Missouri on April 24, 2000, has developed broadband wireless application            service technologies intended for use in the transportation industries. We commenced            our initial product offering of internet access in October 2004 and began revenue            generation in December 2004.

             

SiriCOMM Digital Media Group, Inc. was incorporated June 21, 2006 in the            State of Delaware. This Corporation was formed in anticipation of offering multimedia            services via our hot spots. To date, this entity has not commenced            operations.

*Going Concern:*

             

As shown in the accompanying financial statements, we have incurred            recurring losses from operations and although there have been significant efforts to            eliminate and/or restructure certain payables, as of June 30, 2007 our current            liabilities exceeded our current assets by $1,519,445. This raises substantial doubt            about our ability to continue as a going concern. We are currently seeking additional            sources of capital to fund operations. Management believes this factor will contribute            to the achievement of profitability. The accompanying financial statements do not            include any adjustments that might be necessary if we are unable to continue as a going            concern.

             

*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 disclosures of contingent assets and liabilities at the date of the            financial statements and the reported amounts of revenues and expenses during the            reporting period. Actual results could differ from those estimates.

             

*Interim Information: Basis of Presentation:*

             

The accompanying unaudited consolidated financial statements reflect all            adjustments that are in the opinion of our management, necessary to fairly present the            financial position, results of operations and cash flows of the Company. Those            adjustments consist only of normal recurring adjustments.

             

Our consolidated balance sheet as of September 30, 2006 has been derived            from the audited consolidated balance sheet of the Company as of that date. Certain            information and note disclosures normally included in our annual financial statements            prepared in accordance with accounting principles generally accepted in the United            States of America have been condensed or omitted. These consolidated financial            statements should

             

6

 

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be read in conjunction with the consolidated financial statements and            notes thereto included in our Form 10-KSB annual report for fiscal year ended September            30, 2006 filed with the Securities and Exchange Commission.

             

The results of operations for the period are not necessarily indicative            of the results to be expected for the full year.

             

*Stock-based Compensation:*

 

At June 30, 2007 we have a stock based employee compensation plan, which            is described more fully in Item 2. Prior to October 1 2006, we accounted for this plan            under the recognition and measurement principles of APB Opinion No. 25,            “Accounting for Stock Issued to Employees” and related Interpretations.            Accordingly, for the fiscal year ended September 30, 2006 and prior years the only            stock based employee compensation cost reflected in net income was recognized on the            intrinsic value method.

             

Effective October 1, 2006, we adopted the fair value recognition            provisions of Statement of Financial Accounting Standards (SFAS) No. 123R,            “Share-Based Payment”. We selected the modified prospective application.            Accordingly, after October 1, 2006, we began expensing the fair value of stock options            granted, modified, repurchased or cancelled.

             

The following table illustrates the effect on net income and net income            per share if we had applied the fair value recognition provisions of SFAS 123 to            options granted under our stock based compensation plans prior to October 1, 2006. For            purposes of this pro forma disclosure, the value of the options was estimated using the            Black Scholes option pricing formula and amortized on a straight line basis over the            respective vesting periods of the awards.

             

|                                         |   | Nine months ended |
|----------------------------------------------|--------|-------------------|
|                                         |   | June 30, 2006     |
| Net loss, as reported                        |   | $ (4,072,867)     |
| Less: stock-based employee compensation      |   |              |
| Under the fair value based method            |   | (5,661)           |
| Pro forma net loss under fair value method   |   | $ (4,078,528)     |
|                                         |   |              |
| Net loss per common share-basic and diluted: |   |              |
| As reported under fair value method          |   | $ (0.18)          |
| Pro forma under fair value method            |   | $ (0.18)          |

             

Disclosures for the nine months ended June 30, 2007 are not presented            because stock-based payments were accounted for under SFAS 123R’s fair value            method during this period. See Note 6.

             

*Net loss per share:*

 

Net loss per share represents the net loss available to common            stockholders divided by the weighted average number of common shares outstanding during            the year. Diluted earnings per share reflect the potential dilution that could occur if            convertible preferred stock was converted into common stock. Diluted net loss per share            is considered to be the same as basic net loss per share since the effect of the            issuance of common stock associated with the convertible stock is            anti-dilutive.

 

7

 

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*Reclassification:*

 

Certain reclassifications have been made to prior year financial            statements to conform to the current year financial statement presentation. These            reclassifications had no effect on our net losses.

             

**2.** **Stockholders’ Equity:**

             

During the nine months ended June 30, 2007, 273,315 common shares were            issued for various services provided. The total equity value recorded based on these            transactions was $138,837.

During the nine months ended June 30, 2007, 528,143 warrants were issued            or granted for compensation and various services resulting in $142,400 of additional            paid in capital and expense.

During the nine months ended June 30, 2007, 445,000 options were also            granted to employees as compensation. These options are being valued and expensed as            they are earned. $102,450 has been recorded as expense relating to employee options for            the nine months ended June 30, 2007.

As a result of the loan agreement with Sunflower Capital, LLC, a related            party, we agreed to issue a number of warrants to be determined based on the market            price of our stock in the future. The number of warrants to be issued would be equal to            $500,000 divided by the conversion price, which if not earlier determined, shall be            determined as of the maturity date based on the market price of our stock during the            loan period. Based on the current and recent market prices, we would be required to            issue approximately 2,777,778 warrants with an exercise price of $0.18. The fair market            value of these warrants based on current conditions would be approximately $1,110,278.            As part of the agreement, we also extended the term on an aggregate of 4,537,661            warrants previously issued to Sunflower and its affiliates from various expiration            dates to March 31, 2012. These extensions were valued at $425,079. See note 5 for            further explanation of this note.

In April and May SiriCOMM entered into a $1,100,000 in loan agreements            with Quest Capital Alliance II, LLC, Robert M. Allison, the Jay D. Burchfield Trust,            theRonald A. Neville Revocable Trust, SRC Holdings Corp and            William R. Fotsch and Joy C. Fotsch. As a condition of this loan agreement SiriCOMM            issued 3,300,000 warrantswith an exercise price of $.31 per            share. The fair market value of the warrants based on current conditions on the date of            issuance was $775,710.

In June SiriCOMM entered into an agreement with ViaSat, Inc. to convert            outstanding accounts payable into a two year promissory note. As a condition of this            promissory note SiriCOMM issued 500,000 warrants with an exercise price of $.25 per            share. The fair market value of the warrants based on current conditions on the date of            issuance was $110,400.

**3.     Preferred Stock**

 

On December 20, 2003 we issued an aggregate of 213,417 shares of our            Series A Preferred Stock to two investors upon conversion of debt in the aggregate            principal amount of $200,000 plus accrued interest of $13,417. The Series A Preferred            Stock provides the holders the right to force the Company to redeem these shares            together with all accrued and unpaid dividends at a redemption price equal to 110% of            the stated value ($1.00) at any time commencing three years from issuance (December 10,            2006). In the event the holders elect to force redemption, the Company would be            required to pay the holders approximately $300,000. It is unlikely that the            Company would be able to make this payment in such event or have funds            legally available therefore.

             

8

 

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**4.** **Commitments and Contingencies:**

* Employment agreements:*

As of June 30, 2007, we had entered into two employment agreements with            certain officers and directors.

On July 5, 2006, we entered into an employment agreement with Henry O.            Hoffman, our former Chairman and CEO. The initial term of the agreement was two (2)            years and provided Mr. Hoffman with annual compensation of $175,000. On June 1,            2007 the Company notified Mr. Hoffman that it was terminating the employment            agreement due to Mr. Hoffman’s intentional breach of various provisions of            the employment agreement.

The second agreement, which we entered into on February 12, 2007, is            with our current President and Chief Executive Officer and calls for annual            compensation of $150,000, an immediate grant of 150,000 options to purchase shares of            our common stock, and 150,000 options to be awarded by at the discretion of the Board,            based on performance measures, at the end of this fiscal year.

 

**5.     Notes Payable:**

             

On March 15, 2007, the Company entered into a Loan Agreement            (“Loan Agreement”) with Sunflower Capital, LLC, a limited liability company            managed by a Director of the Company. The loan is in the principal amount of up to            $500,000 of which $300,000 has been funded to date and is evidenced by a 10%            Convertible Promissory Note due February 29, 2008 (the “Note”). As            consideration for Sunflower making the loan, the Company amended an aggregate of            4,537,661 warrants previously issued to Sunflower and its affiliates to extend the            expiration date of all those warrants to March 31, 2012 and eliminate all redemption            rights contained in those warrants. The loan is secured by all of the Company’s            assets. However, Sunflower has subordinated its security interest in the            Company’s network to the security interest of Quest Capital Alliance, L.L.C.,            described below. A discount of $250,963 was recorded based on the estimated fair value            of both the extended warrants and the additional warrants to be issued and will be            expensed over the life of the loan as interest expense. As of June 30, 2007, the            unamortized discount was $174,892 and the balance of the note payable, net of discount            was $125,108. The amount of discount amortized into interest expense in the nine months            ended June 30, 2007 was $76,701.

             

As additional consideration for making the loan commitment, the Company            shall issue Sunflower a 5-year warrant on the earlier of the date of conversion or            maturity date. The number of warrants to be issued will be equal to $500,000 divided by            Conversion Price (which, if not earlier determined, shall be determined as of the            Maturity Date). This warrant will be issued regardless of whether Sunflower elects to            convert the Note. The exercise price of these warrants shall be equal to the conversion            price of the Note.

             

The Note converts at any time and from time to time at the option of the            holder, into shares of the Company’s common stock at a variable conversion price            determined by taking the lowest volume weighted average price of the Company’s            common stock for any five consecutive trading days during the period from the date of            issuance to the date of the conversion notice. See note 2 for further explanation of            the loan agreement.

 

9

 

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In April and May 2007, the Company entered into a Securities Purchase            Agreement with Quest Capital Alliance II, LLC, a limited liability company managed by            Steven Fox, a director of the Company, and several other investors. The securities sold            were secured convertible debentures in the aggregate principal amount of $1,100,000 due            April 15, 2008 (the “Debentures”). Quest Capital Alliance acquired $500,000            of the Debentures. The Debentures bear interest at the rate of 12% per annum and are            convertible into the Company’s common stock at any time at the rate of $0.31 per            share. As part of this transaction, the Company issued to the investors three (3)            common stock purchase warrants for each dollar invested, or an aggregate of 3,300,000            warrants (the “Warrants”). A discount of $454,468 was recorded based on the            estimated fair value of the warrants issued and will be expensed over the life of the            loan as interest expense. As of June 30, 2007, the unamortized discount was $168,665            and the balance of the note payable, net of discount was $331,335 for related parties            and the unamortized discount was $200,649 and the balance of the note payable, net of            discount was $399,351 for non-related parties. The amount of discount amortized into            interest expense in the nine months ended June 30, 2007 was $85,154.

             

Each Warrant entitles the holder to purchase one share of common stock            at an exercise price of $0.31 per share commencing on the date of issuance and expiring            on the close of business on the fifth anniversary of the issuance date. The Warrants            contain provisions that protect the holder against dilution by adjustment of the            exercise price upon the occurrence of certain events, including, but not limited to,            stock dividends, stock splits, reclassifications or mergers.

             

The Debentures are secured by all network equipment including, without            limitation, (i) all access point servers and supporting infrastructure equipment, (ii)            all agreements regarding the network pertaining to the placement and use/operative of            the network, and (iii) any proceeds from the sale of the network equipment and            inventory.

             

In connection with the sale of the Debentures, the Company issued an            aggregate of 300,000 warrants to Quest Capital Alliance I, LLC (150,000) and Quest            Capital Alliance II, LLC (150,000) as a finder’s fee.

             

On June 26, 2007, SiriComm, Inc. (the “Registrant”) executed            and delivered a Promissory Note (“Note”) in the principal amount of            $1,144,426.48 to ViaSat, Inc., the Registrant’s satellite provider. The Note            converts amounts currently reflected on the Registrant’s balance sheet as            Accounts Payable into a 24-month loan. Pursuant to the Note, the Registrant is required            to make interest only payments for the first six months commencing July 15, 2007 and            subsequent payments are due the 15th day of each month thereafter. Principal            and interest payments will commence on January 15, 2008. All principal and interest            shall be paid on or before June 15, 2009. The Note bears interest at the rate of 9.5%            per annum.

             

The Note provides for mandatory prepayment in the event of: (i) the            Registrant’s dissolution or liquidation, (ii) the consummation by the Registrant            of any merger, consolidation or business combination, whereby the beneficial owners of            the Registrant’s common stock own less than 50% of the combined entity            immediately after giving effect to such transactions or (iii) the acquisition by a            third party of all or substantially all of the Registrant’s capital stock, equity            interests or assets. In addition, all amounts due and payable under the Note shall be            prepaid in the event the Registrant borrows or receives an equity infusion of an amount            in excess of $10,000,000.00.

             

10

 

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As consideration for accepting the Note, the Registrant agreed to issue            ViaSat 500,000 common stock purchase warrants exercisable at $.25 per share (the            “Warrants”). The Warrants may be exercised in whole or in part at any time            for a period of two (2) years from the date of issuance. A discount of $100,686 was            recorded based on the estimated fair value of the warrants issued and will be expensed            over the life of the loan as interest expense. As of June 30, 2007, the current            unamortized discount was $31,634 and the current balance of the note payable, net of            discount was $331,885 and the non-current unamortized discount was $67,939 and the            non-current balance of the note payable, net of discount was $712,789. The amount of            discount amortized into interest expense in the nine months ended June 30, 2007 was            $1,113.

 

6**.**               **Stock-Based Compensation**

 

*Adoption of SFAS 123R:*

             

Prior to October 1, 2006, our stock-based employee compensation plan was            accounted for under the recognition and measurement principles of APB Opinion No. 25,            “Accounting for Stock Issued to Employees”, and related Interpretations, as            permitted by FASB Statement No. 123 “Accounting for Stock Based            Compensation” (“SFAS 123”). We generally did not recognize stock            based compensation cost in our statement of operations for periods prior to October 1,            2006 as most options granted had an exercise price equal to the market value of the            underlying common stock on the date of grant. However, compensation expense was            recognized under APBO 25 for certain options based upon the intrinsic value (the            difference between the exercise price and the deemed fair value of the common stock at            the date of grant.)

             

Effective October 1, 2006, we adopted Statement of Financial Accounting            Standards No. 123R, “Share-Based Payment” (“SFAS 123R”)            using the modified prospective transition method. Results from prior periods have not            been restated.

             

We recorded additional employee expenses of $102,450 as a result of the            adoption of SFAS 123R for the nine months ended June 30, 2007. Operating loss, net loss            and loss available to common stockholders was greater due to this additional expense.            Basic and diluted loss per share available to common shareholders was more as a result            of recording this additional expense.

             

*Equity Incentive Plan:*

             

We have adopted a stock option plan under which we may grant options            that vest immediately to its employees for up to 3,000,000 shares of common stock.            Pursuant to the stock option plan, we may issue to eligible persons: stock options,            stock appreciation rights, restricted stock performance awards and bonus stock until            May 15, 2012. The exercise price of each qualified incentive option is greater than or            equal to the fair value of our stock on the date of grant. We may issue non-qualified            options at any price the Board of Directors deems fair. An option’s maximum term            is 10 years.

             

A summary of the status of the plan at June 30, 2007 and 2006 and            changes during the years then ended is presented below:

 

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|                     | 2007    | 2006                            |
|--------------------------|---------|---------------------------------|
|                     | Shares  | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term |
| Outstanding at October 1 | 387,000 | $1.53                           |   | 423,500 | $1.84 |   |
| Granted                  | 445,000 | $0.61                           |   | 100,000 | $1.47 |   |
| Exercised                | -       | -                               |   | 69,000 | $1.01 |   |
| Forfeited                | 305,000 | $1.04                           |   | 92,500 | $2.46 |   |
|                     |    |                            |   |   |   |   |
| Outstanding at June 30   | 527,000 | $1.04                           | 5.4 years | 362,000 | $1.76 | 7.4 years |
|                     |    |                            |   |   |   |   |
| Options exercisable at   |    |                            |   |   |   |   |
| June 30                  | 339,000 | $1.30                           | 8.5 years | 312,000 | $1.46 | 6.0 years |

 

The fair value of options granted is estimated on the date of the grant            using the Black Scholes model. We had previously used the trinomial model, but because            it is more commonly accepted, changed to Black Scholes in 2007. The comparative results            of both methods did not materially differ. We use the following weighted-average            assumptions:

             

|                                                                                                                                                                          | **2007**  | **2006**  |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|-----------|
|                                                                                                                                                                          |      |      |
| Dividend per share                                                                                                                                                            | $ 0       | $ 0       |
| Risk-free interest rate                                                                                                                                                       | 2-5%      | 2-5%      |
| Expected life of options                                                                                                                                                      | 1-6 years | 1-6 years |
| Expected volatility                                                                                                                                                           | 287%      | 75%       |
| Weighted-average fair value of options granted during                            the year (less options both granted and expired in the same                            year) | $0.30     | $0.45     |
|                                                                                                                                                                          |      |      |

 

 

A summary of the status of our non-vested shares as of June 30, 2007 and            changes during the nine months ended June 30, 2007 is presented below:

             

|                        | **Shares**         | **Weighed Average Grant Date Fair Value** |
|-----------------------------|--------------------|-------------------------------------------|
| Non-vested, October 1, 2006 |    6,000 | .46                                       |
| Granted                     | 295,000            | .30                                       |
| Vested                      |   13,000      | .37                                       |
| Forfeited                   | 100,000            | .34                                       |
| Non-vested, June 30, 2007   | 188,000            | .27                                       |

             

We had 188,000 and 50,000 non-vested options as of June 30, 2007 and            2006.

 

12 

 

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As of June 30, 2006, there was $30,357 of total unrecognized            compensation cost related to non-vested share-based compensation arrangements granted            under the Plan. That cost is expected to be recognized over a weighted-average period            of 2 quarters. 3,000 options vested during the quarter ended June 30, 2007. There were            50,000 options which vested during the quarter ended June 30, 2006.

 

Prior to the adoption of SFAS 123R, we presented all tax benefits of            deductions resulting from the exercise of stock options as operating cash flows in our            statement of cash flows. In accordance with guidance in SFAS 123R, the cash flows            resulting from excess tax benefits (tax benefits related to the excess of proceeds from            employee’s exercises of stock options over the stock-based compensation cost            recognized for those options) are classified as financing cash flows. We did not record            excess tax benefits as financing cash inflows during the period ended June 30, 2007            because of the full valuation allowance established against our deferred tax            assets.

 

The following table summarizes information about stock options under the            plan outstanding at June 30, 2007:

             

|                     |                             | Options Outstanding                         | Options Exercisable             |                             |
|--------------------------|----------------------------------|---------------------------------------------|---------------------------------|----------------------------------|
| Range of Exercise Prices | Number Outstanding               | Weighted-Average Remaining Contractual Life | Weighted-Average Exercise Price | Number Exercisable               | Weighted-Average Exercise Price |
|                     |                             |                                        |                            |                             |   |
| $0.20 – 0.99       |      420,000 | 4.4 years                                   | 0.63                            |      235,000 | $0.72 |
| $1.06 – 1.90       |      62,000       | 7.9 years                                   | 1.64                            | 59,000                           | $1.67 |
| $4.05 – 4.50       | 45,000                           | 3.8 years                                   | 4.15                            | 45,000                           | $4.15 |
|                     |                             |                                        |                            |                             |   |
|                          |                                  |                                             |                                 |                                  |  |  |

 

**7.** **Subsequent Events:**

             

On July 1, 2007 SiriCOMM and ACS State and Local Solutions, Inc.            “ACS” executed a termination, settlement and full release agreement related            to the Network Access Services Agreement dated April 19, 2006. SiriCOMM will continue            to receive $100 per site (as contemplated by the agreement ) utilized by ACS through            June 30, 2007. SiriCOMM is released from removing SiriCOMM equipment located at            ACS’s PrePass sites. At no charge to SiriCOMM, ACS will retrieve from ACS sites            and return to a location provided by SiriCOMM the SiriCOMM remote server and Linkstar            Satellite modem at the convenience of ACS. Any remaining equipment will be disposed of            at the discretion and expense of ACS.

             

There were 14 revenue producing sites tied to this agreement and the            termination of this agreement will mean a $1,400 per month reduction to SiriCOMM            revenue beginning with July 2007.

             

On July 20, 2007 the Company drew down the remaining $200,000 of a            $500,000 Loan Agreement (“Loan Agreement”) entered into with Sunflower            Capital, LLC, a limited liability company managed by a Director of the Company, on            March 15, 2007. The loan is evidenced by a 10% Convertible Promissory Note due February            29, 2008 (the “Note”).

 

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| **Item 2:** | **Management’s Discussion and Analysis of                            Financial Condition** |
|-------------|--------------------------------------------------------------------------------------------------|
|        | **and Results of Operations**                                                                    |

             

**Background**

 

We            are an application service provider specializing in wireless Internet connectivity and            productivity applications tailored to the trucking transportation industry. We are            guided by our mission to provide products and services that allow truck drivers and            trucking fleets to increase productivity and reduce costs, while improving safety,            security and quality of life. To achieve that goal, we have deployed a nationwide            network of SiriCOMM Wi-Fi hot spots at locations along major highways in the            continental United States. Our proprietary network, the foundation for our            applications, delivers wireless Internet connectivity, providing both Internet access            and a robust application host platform. We believe our network delivers a more            responsive and convenient way for all industry stakeholders to interact with            information needed on a regular basis.

 

We            believe our network is the most widely available wireless Internet access network built            for the highway transportation market. To date we have installed over 480 SiriCOMM hot            spots at major truck stops in 44 states.

 

Our            network technology is built upon a distributed server model that uses satellite for            data backhaul. Each network hot spot is installed at locations near Interstate and            secondary highway systems and is configured to provide adequate coverage over the            entire location partner’s property. Every SiriCOMM hot spot consists of industry            standard IEEE 802.11 (“Wi-Fi”) and proprietary radio frequency            technologies, and a dedicated proxy server (“RS”) that is connected by            satellite to our central server (“Hub”) and Operational Support System            (“OSS”) (collectively, the “Network”).

 

We            believe this architecture provides key competitive advantages:

 

1) The network is truly go-anywhere and operates independently of any            terrestrial-based  communication infrastructure;

2) The satellite multicast features allows data to be simultaneously            available at all SiriCOMM Wi-Fi hot spots;

3) Bandwidth management is handled from a single location as opposed to            multiple points that would be required by a nationwide terrestrial network;

4) The remote server makes each hot spot an extension of fleet            operations;

5) Proprietary technologies mitigate inherent weaknesses found in            conventional satellite networks. The complete Network provides subscribers with            wireless access to the Internet and a robust host platform for application            services.

 

We            market our products and services principally through direct Internet sales, a direct            sales force and value-added resellers. As the trucking industry is highly fragmented            and comprises many small to medium-sized fleets, we use numerous resellers to maximize            our sales reach. Our direct sales force is focused on the large fleets as well as            coordinating the efforts of our value-added resellers. We continue to concentrate our            sales efforts on InTouch, our Internet access service. With the launch of our Pulse-ST            device, our direct sales staff will transition fleet sales efforts to leverage the            capabilities of this vehicle telematics service to reduce cost and improve            productivity.

 

We            were incorporated as a Delaware corporation under the name DFW Technologies, Inc., in            March 1989. In 1992, DFW Technologies, Inc. changed their name to Fountain            Pharmaceuticals, Inc. In approximately November

 

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November 2002, the shareholders of SiriCOMM, Inc., a privately-held            Missouri corporation, incorporated in 2000 (“SiriCOMM Missouri”), exchanged            all of the issued and outstanding common stock of SiriCOMM Missouri for a controlling            interest in Fountain Pharmaceuticals, Inc. (the “Reverse Transaction”). As            part of the Reverse Transaction, all of the then officers and directors of Fountain            Pharmaceuticals, Inc. resigned and were replaced by persons designated by SiriCOMM            Missouri and the name of Fountain Pharmaceuticals, Inc. was changed to SiriCOMM, Inc.            As a result of the Reverse Transaction, SiriCOMM Missouri became a wholly-owned            subsidiary of the Company and the prior shareholders of SiriCOMM Missouri became the            controlling shareholders, officers and directors of the Company.

 

Our            corporate address is 4710 East 32nd Street, Joplin, Missouri 64804, our telephone            number is 417-626-9971, and our fax number is 417-782-0475.

 

**Critical Accounting Policies and Estimates:**

 

Our            financial statements have been prepared in accordance with accounting principles            generally accepted in the United States of America. The preparation of these financial            statements requires us to make significant estimates and judgments that affect the            reported amounts of assets, liabilities, revenues, expenses and related disclosure of            contingent assets and liabilities. We evaluate our estimates, including those related            to contingencies, on an ongoing basis. We base our estimates on historical experience            and on various other assumptions that are believed to be reasonable under the            circumstances, the results of which form the basis for making judgments about the            carrying values of assets and liabilities that are not readily apparent from other            sources. Actual results may differ from these estimates under different assumptions or            conditions.

 

We            believe the following critical accounting policies involve the more significant            judgments and estimates in the preparation of our consolidated financial            statements:

 

**Fair Value of Equity Instruments**

 

The            valuation of certain items, including valuation of warrants or restricted stock that            may be offered as compensation for goods or services received, involve significant            estimations with underlying assumptions. Warrants are valued using the most reliable            measure of fair value, such as the value of the goods or services rendered, if            obtainable. If such value is not readily obtainable, the valuation of warrants and            stock options are then based upon a Black Scholes valuation model, which involves            estimates of stock volatility, expected life of the instruments and other assumptions.            As our stock is thinly traded, the amounts recorded for equity instruments, which are            based partly on historical pricing of our stock, are subject to the assumptions used by            management in determining the fair value.

 

**Impairment of Long-lived Assets**

 

Long-lived assets are reviewed for impairment whenever events or changes            in circumstances indicate the carrying amount of an asset may not be recoverable. When            events or changes in circumstances indicate an asset may not be recoverable, we            estimate the future cash flows expected to result from the use of the asset. If the sum            of the expected undiscounted future cash flows is less than the carrying value of the            asset, an impairment loss is recognized. The impairment loss is recognized by measuring            the difference between the carrying value of the assets and the estimated fair value of            the assets. Our estimates of fair values are based on the best information available            and require the use of estimates, judgments and projections as considered necessary.            The actual results may vary.

 

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In            the second quarter of 2007, we recorded an impairment loss in accordance with Financial            Accounting Standards No. 144 – Accounting for the Impairment or Disposal of            Long-Lived Assets. We determined that costs that had been capitalized as part of our            Beacon product line would not be recoverable due to the phase-out by the manufacturer            of the device for which the applications were written. Since we do not anticipate            realizing any revenue from the Beacon application as it is currently developed, we have            reduced the carrying value to zero and recorded an impairment loss of            $49,900.

 

**Information Relating To Forward-Looking Statements**

 

**When used in this Report on Form 10-QSB, the words “may,”            “will,” “expect,” “anticipate,”            “continue,” “estimate,” “intend,”            “plans” and similar expressions are intended to identify forward-looking            statements within the meaning of Section 27A of the Securities Act of 1933 and Section            21E of the Securities Exchange Act of 1934 regarding events, conditions and financial            trends which may affect our future plans of operations, business strategy, operating            results and financial position. Such statements are not guarantees of future            performance and are subject to risks and uncertainties. Actual results may differ            materially from those included within the forward-looking statements as a result of            various factors. Such factors include, among others: (i) our ability to obtain            additional sources of capital to fund continuing operations in the event it is unable            to timely generate revenues; (ii) our ability to retain existing or obtain additional            licensees who will act as distributors of its products; and (iii) other economic,            competitive and governmental factors affecting our operations, market, products and            services. Additional factors are described in our other public reports and filings with            the Securities and Exchange Commission. Readers are cautioned not to place undue            reliance on these forward-looking statements, which speak only as of the date made. We            undertake no obligation to publicly release the result of any revision of these            forward-looking statements to reflect events or circumstances after the date they are            made or to reflect the occurrence of unanticipated events.**

 

**Results of Operations**

 

**For the Three Months Ended June 30, 2007 and 2006**

 

***Revenues***

 

Our            revenues were primarily derived from sales of InTouch and related services, which            increased from $294,913 in 2006 to $499,399 in the current period. The increase in            revenues is largely a result of the expansion of our network and “word of            mouth” advertising which has resulted in the increase in the number of people            subscribing to our service.

 

We            have seen InTouch revenue drop from $569,043 in the three months ended March 31, 2007            and attribute this to network performance issues. We have started a network performance            improvement plan and we anticipate increasing our advertising for InTouch, however no            assurances can be offered that we will generate meaningful revenues in the            future.

 

While we began shipping units of our Pulse-ST device in the three months            ended March 31, 2007, no additional revenue was recognized as there were no Pulse-ST            shipments in the three months ended June 30, 2007.

 

16

 

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***Cost of Goods Sold***

 

Cost            of goods sold for the three months ended June 30, 2007 were $0. While we began initial            delivery of the Pulse-ST units during the three months ended March 31, 2007 there we no            Pulse ST shipments in the three months ended June 30, 2007 and no associated costs in            the three months ended June 30, 2006. There was no cost of goods sold in the three            months ended June 30, 2006.

 

***Operating Expenses***

 

Our            operating expenses consist of selling, general and administrative costs, salaries,            satellite access fees and depreciation and amortization, including the amortization of            long-term prepaid assets.

 

During the three months ended June 30, 2007, net operating losses            totaled $973,993 as compared to net operating losses of $1,845,319 for the three months            ended June 30, 2006.

 

***General and Administrative Expenses***

 

Our            General and Administrative expenses consist of corporate overhead costs, administrative            support and professional fees.

 

For            the three months ending June 30, 2007, general and administrative expenses totaled            $266,941, or 18.1% of total operating expenses, while for the three months ended June            30, 2006, general and administrative expenses totaled $1,031,437 or 48.2% of total            operating expenses.

 

General and administrative expenses decreased over 2006 primarily as a            result of reduced legal, accounting and outside consultant fees and investor relations            fees.

 

***Salaries***

 

For            the three months ending June 30, 2007, we incurred salaries of $434,377, representing            29.5% of the operating expenses, as compared to $456,755, representing 21.4% of total            operating expenses for the three months ended June 30, 2006. This decrease is a result            of headcount reductions.

 

***Satellite Access Fees***

 

Satellite access fees for the three months ending June 30, 2007 were            $457,315 or 91.6% of total revenue as compared to $441,585, which was 149.7% of total            revenue for the three months ending June 30, 2006.

 

***Impairment Loss***

 

Long-lived assets to be held and used are reviewed for impairment at            each balance sheet date, or whenever events or changes in circumstances indicate that            the carrying amount of such assets may not be recoverable. If an indication exists that            assets may have suffered an impairment loss, the recoverable amount of the asset is            estimated in order to determine the extent of the loss (if any). Determination of            recoverability and measurement of an impairment loss for assets management expects to            hold and use is based on the fair value of the asset.

 

During the quarter ending June 30, 2007 there were no impairment losses            and there were no impairment losses for the comparable period of the prior            year.

 

17

 

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***Depreciation and Amortization***

 

Depreciation and amortization expense was $314,759 or 21.4% of operating            expenses for the three month period ending June 30, 2007 and $210,455 or 9.8% for the            same period ending June 30, 2006. Depreciation and amortization expense increased            $104,304 over the same quarter of the prior year, primarily due to the expansion and            installation of network equipment and the placing in service of the Pulse-ST            application. This increase is partially offset by the reduction in non-cash            amortization of $27,895. In the period ending June 30, 2006 we were amortizing an            intangible asset related to prepaid bandwidth. This intangible asset was deemed to be            impaired at September 30, 2006 and was written off at that point. As a result, there is            no amortization associated with this asset during fiscal year 2007.

 

***Interest Expense***

 

For            the three months ending June 30, 2007, interest expense was $196,088 as compared to            interest expense of $6,541 during the three months ended June 30, 2006. The higher            interest expense for the quarter ended June 30, 2007 was primarily a result of the            valuation of warrants and a beneficial conversion option given to Quest Capital as well            as accrued interest on the notes payable from Quest Capital and SunflowerCapitaland the promissory note with            ViaSat.

 

***Gain on Forgiveness of Debt***

 

For            the three months ending June 30, 2007, we reported a gain on forgiveness of debt of            $95,587. This was a result of cancellation and forgiveness of certain accounts payable.            We did not have this gain in the three months ending June 30, 2006.

 

**For            the Nine Months Ended June 30, 2007 and 2006**

 

***Revenues***

 

Our            revenues were primarily derived from sales of InTouch and related services, which            increased from $650,609 in 2006 to $1,570,233 in 2007. The increase in revenues is            largely a result of the expansion of our network and “word of mouth”            advertising which has resulted in the increase in the number of people subscribing to            our service. We have started a network performance improvement plan and we anticipate            increasing our advertising for InTouch, however no assurances can be offered that we            will generate meaningful revenues in the future.

 

During the nine months ended June 30, 2007, we began shipping units of            our Pulse-ST device. The units were delivered in the second quarter as part of 1,000            unit order from Idling Solutions. Total revenues from sales of the Pulse-ST device for            the period were $26,136. There were no additional shipments or related revenue in the            nine months ended June 30, 2007.

 

***Cost of Goods Sold***

 

Cost            of goods sold for the nine months ended June 30, 2007 were $23,760. This amount            represents the cost of the Pulse-ST devices sold during the second quarter. Since we            began initial delivery of the Pulse-ST units during the nine months ended June 30,            2007, there were no associated costs in the nine months ended June 30, 2006.

 

18

 

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***Operating Expenses***

 

Our            operating expenses consist of selling, general and administrative costs, salaries,            satellite access fees and depreciation and amortization, including the amortization of            long-term prepaid assets. In 2007, our operating expenses also included an impairment            loss of $49,900.

 

During the nine months ended June 30, 2007, net operating losses totaled            $3,915,189 as compared to net operating losses of $3,676,274 for the nine months ended            June 30, 2006.

 

***General and Administrative Expenses***

 

Our            General and Administrative expenses consist of corporate overhead costs, administrative            support and professional fees.

 

For            the nine months ending June 30, 2007, general and administrative expenses totaled            $1,572,745 or 28.8% of total operating expenses, while for the nine months ended June            30, 2006, general and administrative expenses totaled $1,722,318 or 39.8% of total            operating expenses.

 

General and administrative expenses decreased over 2006 primarily as a            result of reduced legal, accounting and outside consultant fees more than offsetting            increased investor relations fees, increased network maintenance costs and increased            credit card transaction fees resulting from increased InTouch sales.

 

***Salaries***

 

For            the nine months ending June 30, 2007, we incurred salaries of $1,590,619, representing            29.1% of the operating expenses, as compared to $1,126,727, representing 26.0% of total            operating expenses for the nine months ended June 30, 2006. This increase is a result            of additional executive personnel as well as customer service personnel to support our            InTouch customers.

 

***Satellite Access Fees***

 

Satellite access fees for the nine months ending June 30, 2007 were            $1,371,011 or 88.7% of total revenue as compared to $742,798, which was 114.2% of total            revenue for the nine months ending June 30, 2006. This increase in satellite access            fees is the direct result of an increase in the number of hot spots on our network and            an increase in the amount of bandwidth made available to our InTouch            customers.

 

***Impairment Loss***

 

Long-lived assets to be held and used are reviewed for impairment at            each balance sheet date, or whenever events or changes in circumstances indicate that            the carrying amount of such assets may not be recoverable. If an indication exists that            assets may have suffered an impairment loss, the recoverable amount of the asset is            estimated in order to determine the extent of the loss (if any). Determination of            recoverability and measurement of an impairment loss for assets management expects to            hold and use is based on the fair value of the asset.

 

19

 

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During the second quarter of the nine months ended June 30, 2007, we            determined that costs that had been capitalized as part of our Beacon product line            would not be recoverable due to the phase-out by the manufacturer of the device for            which the applications were written. Since we do not anticipate realizing any revenue            from the Beacon application as it is currently developed, we have reduced the carrying            value to zero and recorded an impairment loss of $49,900.

 

There were no impairment losses for the nine month period ended June 30,            2006.

 

***Depreciation and Amortization***

 

Depreciation and amortization expense was $877,387 or 16.1% of operating            expenses for the nine month period ending June 30, 2007 and $735,359 or 17.0% of            operating expenses for the same period ending June 30, 2006. Depreciation and            amortization expense increased $142,028 over the same period in 2006, primarily due to            the expansion and installation of network equipment and the placing in service of the            Pulse-ST application. This increase is partially offset by the reduction in non-cash            amortization of $279,913. In the period ending June 30, 2006 we were amortizing an            intangible asset related to prepaid bandwidth. This intangible asset was deemed to be            impaired at September 30, 2006 and was written off at that point. As a result, there is            no amortization associated with this asset during fiscal year 2007.

 

***Interest Expense***

 

For            the nine months ending June 30, 2007, interest expense was $209,710 as compared to            interest expense of $448,817 during the nine months ended June 30, 2006. The higher            interest expense for the period ended June 30, 2006 was primarily a result of the            valuation of warrants and a beneficial conversion option given to Sunflower Capital as            an inducement for a bridge loan given to us in advance of our closing on an equity            underwriting being in excess of the valuation of warrants and a beneficial conversion            option given to Quest Capital as well as accrued interest on the notes payable from            Quest Capital and SunflowerCapitaland the            promissory note with ViaSat.

 

***Gain on Forgiveness of Debt***

 

For            the nine months ending June 30, 2007, we reported a gain on forgiveness of debt of            $110,560. This was a result of cancellation and forgiveness of certain accounts            payable. We did not have this gain in the nine months ending June 30, 2006.

 

**Liquidity and Capital Resources**

 

We            continue to finance our operations almost entirely from invested and borrowed funds. We            have incurred operating losses since our inception and we anticipate losses for the            foreseeable future. No assurances can be given that revenues will increase sufficiently            to cover operating expenses or that we can continue to attract capital under terms            favorable to our shareholders.

 

As            of June 30, 2007, our current assets including cash, accounts receivables, other            current assets amounted to $554,234. Current liabilities amounted to $2,073,679 and            include accounts payable, notes payable, promissory notes, accrued salaries, customer            deposits and other accrued expenses. We currently have a deposit on Pulse-ST equipment            which is offset by the customer deposit liability.

 

20

 

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As            an emerging wireless applications services provider, we are involved in a number of            business development projects, continued network installation, network enhancement            projects and general operating capital requirements that will continue to require            external capital to finance us as we introduce the applications within our business            model. No assurances can be given as to the industry’s willingness to purchase            our products or services.

 

As            of June 30, 2007, we lack sufficient cash and cash equivalents to fund operations for            the next twelve months. We have obtained debt financing, disclosed below, and we are            pursuing financing and additional equity investment, however, there can be no            assurances that we will be able to raise the financing necessary to continue as a going            concern. Although not currently planned, realization of assets in other than the            ordinary course of business in order to meet liquidity needs could incur losses not            reflected in these financial statements.

 

On            December 20, 2003 we issued an aggregate of 213,417 shares of our Series A Preferred            Stock to two investors upon conversion of debt in the aggregate principal amount of            $200,000 plus accrued interest of $13,417. The Series A Preferred Stock provides the            holders the right to force the Company to redeem these shares together with all accrued            and unpaid dividends at a redemption price equal to 110% of the stated value ($1.00) at            any time commencing three years from issuance (December 10, 2006). In the event the            holders elect to force redemption, the Company would be required to pay the holders            approximately $300,000. It is unlikely that the Company would be able to make this            payment in such event or have funds legally available therefore.

 

On            March 15, 2007, the Company entered into a Loan Agreement (“Loan            Agreement”) with Sunflower Capital, LLC, a limited liability company managed by a            Director of the Company. The loan is in the principal amount of up to $500,000 of which            $300,000 has been funded to date and is evidenced by a 10% Convertible Promissory Note            due February 29, 2008 (the “Note”). As consideration for Sunflower making            the loan, the Company amended an aggregate of 4,537,661 warrants previously issued to            Sunflower and its affiliates to extend the expiration date of all those warrants to            March 31, 2012 and eliminate all redemption rights contained in those warrants. The            loan is secured by all of the Company’s assets. However, Sunflower has            subordinated its security interest in the Company’s network to the security            interest of Quest Capital Alliance, L.L.C., described below.

 

As            additional consideration for making the loan commitment, the Company shall issue            Sunflower a 5-year warrant on the earlier of the date of conversion or maturity date.            The number of warrants to be issued will be equal to $500,000 divided by Conversion            Price (which, if not earlier determined, shall be determined as of the Maturity Date).            This warrant will be issued regardless of whether Sunflower elects to convert the Note.            The exercise price of these warrants shall be equal to the conversion price of the            Note.

 

The            Note converts at any time and from time to time at the option of the holder, into            shares of the Company’s common stock at a variable conversion price determined by            taking the lowest volume weighted average price of the Company’s common stock for            any five consecutive trading days during the period from the date of issuance to the            date of the conversion notice.

 

During April and May, 2007, the Company entered into a Securities            Purchase Agreement with Quest Capital Alliance II, LLC, Robert M. Allison, the Jay D.            Burchfield Trust, The Ronald A. Neville Revocable Trust, SRC Holdings Corp and William            R. Fotsch and Joy C Fotsch. The securities sold were secured convertible debentures in            the aggregate principal amount of $1,100,000 due April 15, 2008 (the            “Debentures”). Quest Capital Alliance acquired $500,000 of the Debentures.            The Debentures bear interest at the rate of 12% per annum and are

 

21

 

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convertible into the Company’s common stock at any time at the            rate of $0.31 per share. As part of this transaction, the Company issued to the            investors three (3) common stock purchase warrants for each dollar invested, or an            aggregate of 3,300,000 warrants (the “Warrants”).

 

Each            Warrant entitles the holder to purchase one share of common stock at an exercise price            of $0.31 per share commencing on the date of issuance and expiring on the close of            business on the fifth anniversary of the issuance date. The Warrants contain provisions            that protect the holder against dilution by adjustment of the exercise price of certain            events including, but not limited to, stock dividends, stock splits, reclassifications            or mergers.

 

In            addition, the Company entered into a registration rights agreement with each investor            whereby the Company agreed to include the common stock underlying the Debentures and            Warrants in any future registration statement filed by the Company subject to certain            conditions contained in such agreement.

 

The            Debentures are secured by all network equipment, including, without limitation, (i) all            access point serves, and supporting infrastructure equipment, (ii) all agreements            regarding the network pertaining to the placement and use/operation of the network, and            (iii) any proceeds from the sale of network equipment and inventory.

 

In            connection with these transactions, the Company issued an aggregate of 300,000 Warrants            to Quest Capital Alliance I, L.L.C. (150,000) and Quest Capital Alliance II, L.L.C.            (150,000) as a finder’s fee. Steven W. Fox, a director of the Company, is the CEO            and General Manager of Quest Capital Alliance I and II, LLC.

 

On            June 26, 2007, SiriComm, Inc. (the “Registrant”) executed and delivered a            Promissory Note (“Note”) in the principal amount of $1,144,426.48 to            ViaSat, Inc., the Registrant’s satellite provider. The Note converts amounts            reflected on the Registrant’s balance sheet as Accounts Payable into a 24-month            loan. Pursuant to the Note, the Registrant is required to make interest only payments            for the first six months commencing July 15, 2007 and subsequent payments are due the            15th day of each month thereafter. Principal and interest payments will            commence on January 15, 2008. All principal and interest shall be paid on or before            June 15, 2009. The Note bears interest at the rate of 9.5% per annum.

 

The            Note provides for mandatory prepayment in the event of: (i) the Registrant’s            dissolution or liquidation, (ii) the consummation by the Registrant of any merger,            consolidation or business combination, whereby the beneficial owners of the            Registrant’s common stock own less than 50% of the combined entity immediately            after giving effect to such transactions or (iii) the acquisition by a third party of            all or substantially all of the Registrant’s capital stock, equity interests or            assets. In addition, all amounts due and payable under the Note shall be prepaid in the            event the Registrant borrows or receives an equity infusion of an amount in excess of            $10,000,000.

 

As            consideration for accepting the Note, the Registrant agreed to issue ViaSat 500,000            common stock purchase warrants exercisable at $.25 per share (the            “Warrants”). The Warrants may be exercised in whole or in part at any time            for a period of two (2) years from the date of issuance.

 

We            can only continue in business for the next twelve months if sufficient capital is            raised. We cannot guarantee that we will be able to raise the necessary capital to            continue operations, and if we do raise such capital, we cannot guarantee that we will            be able to operate profitably.

 

22

 

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**Contractual Obligations and Commercial Commitments**

 

Contractual obligations as of June 30, 2007 are as follows:

 

 

|                                                                       | Payments Due by Period                           |
|----------------------------------------------------------------------------|--------------------------------------------------|
| ContractualObligations                                                     | Total                                            | Less than1 year | 1-3 years | 4-5 years | After 5 years |
| Convertible note payable to related party                                  | $   800,000                       | $    800,000 | $                                       - | $     - | $     - |
| Convertible note payable to non-related                            parties | $   600,000                       |   600,000 | $                                       - | $     - | $     - |
| Promissory note payable to ViaSat                                          | $1,286,577                                       | $    465,093 | $821,484 | $     - | $     - |
| Operating leases                                                           | $   111,318                       |   $                                 76,218 | $  35,100 | $     - | $     - |
| Capital lease                                                              | $       3,696 |                                $        1,563 | $    2,133 | $     - | $     - |
| Total contractual cash  obligations                                   | $2,801,591                                       | $1,942,874  | $858,717 | $     - | $     - |

 

**Recent Accounting Pronouncements**

 

On            December 16, 2004, the Financial Accounting Standards Board (FASB) issued FASB            Statement No. 123 (revised 2004), Share-Based Payment, which is a revision of FASB            Statement No. 123, Accounting for Stock-Based Compensation. Statement 123R supersedes            APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends FASB Statement            No. 95, Statement of Cash Flows. The approach to accounting for share-based payments in            Statement 123R is similar to the approach described in Statement 123. However,            Statement 123R requires all share-based payments to employees, including grants of            employee stock options, to be recognized in the financial statements based on their            fair values and no longer allows pro forma disclosure as an alternative to financial            statement recognition. We adopted Statement 123R during the first quarter of our year            ending September 30, 2007.

 

In            September 2006, the Securities and Exchange Commission staff (“SEC”) issued            SAB 108. SAB 108 was issued to provide consistency to how companies quantify financial            statement misstatements. SAB 108 establishes an approach that requires companies to            quantify misstatements in financial statements based on effects of the misstatement on            both the consolidated balance sheet and statement of operations and the related            financial statement disclosures. Additionally, companies must evaluate the cumulative            effect on errors existing in prior years that previously had been considered            immaterial. We adopted SAB 108 in connection and found no adjustments            necessary.

 

In            September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS No.            157”). SFAS No. 157 defines fair value, establishes a framework for measuring            fair value in generally accepted accounting principles and expands disclosures about            fair value measurements. SFAS No. 157 does not require any new fair value measurements,            rather its application will be made pursuant to other accounting pronouncements that            require or permit fair value measurements. SFAS No. 157 is effective for financial            statements issued for fiscal years beginning November 15, 2007, and interim periods            within those years. The provisions of SFAS No. 157 are to be

 

23

 

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applied prospectively upon adoption, except for limited specified            exceptions. We are evaluating the requirements of SFAS No. 157 and do not expect the            adoption to have a material impact on our financial statements.

 

In            June 2006, the Financial Accounting Standards Board (“FASB”) issued            Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of            FASB Statement No. 109 (“FIN 48”). FIN 48 clarifies the accounting for            uncertainty in income taxes recognized in a company’s financial statements in            accordance with FASB Statement No. 109, Accounting for Income Taxes. It prescribes a            recognition threshold and measurement attribute for the financial statement recognition            and measurement of a tax position taken or expected to be taken in a tax return. FIN 48            also provides guidance on derecognition, classification, interest and penalties,            accounting in interim periods, disclosure and transition. FIN 48 is effective for            fiscal years beginning after December 15, 2006 and will be adopted by us on October 1,            2007. We have not been able to complete our evaluation of the impact of adopting FIN48            and as a result, are not able to estimate the effect the adoption will have on our            financial statements.

 

**OFF BALANCE SHEET ARRANGEMENTS**

 

We            do not have any off balance sheet arrangements.

 

| **Item 3:** | **Controls and Procedures** |
|-------------|-----------------------------|

 

Evaluation of Disclosure Controls and Procedures

 

Our            management, under the supervision of and with the participation of the Chief Executive            Officer and Chief Accounting Officer, has evaluated the effectiveness of            SiriCOMM’s disclosure controls and procedures, as such term is defined in Rules            13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the            “Exchange Act”), as of the end of the period covered by this Quarterly            Report on Form 10-QSB. Management has concluded that its disclosure controls and            procedures were still not effective as of June 30, 2007 as follows:

 

|   | **•** | We did not have adequate transaction controls over                            accounting review and processing of certain unusual or complex                            transactions; |
|--------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | We did not have a systematic and documented program of                            internal controls and procedures concerning accounting and financial                            reporting to ensure that unusual or complex transactions are recorded,                            processed, summarized and reported on a timely basis in our financial                            disclosures; and |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | There is a need for additional training of our                            accounting staff. |
|--------|------------|---------------------------------------------------------------------------------------------|

             

|   | **•** | The Chief Executive Officer and Chief Accounting Officer                            have the ability to perform EDI transactions, approve and sign checks                            with little or no oversight from other members of                            management. |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | There is not adequate segregation of duties within the                            Accounting Department, which can perform most functions within the                            revenue, receivables, fixed assets, payables, purchasing and payroll                            cycles. |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

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A            significant deficiency is a control deficiency, or combination of control deficiencies,            that adversely affects the Company’s ability to initiate, authorize, record,            process, or report external financial data reliably in accordance with generally            accepted accounting principles such that there is more than a remote likelihood that a            misstatement of the Company’s annual or interim financial statements that is more            than inconsequential will not be prevented or detected. As of June 30, 2007, we have            determined that significant deficiencies over financial reporting may exist.

 

Management’s Response to Significant Deficiencies

 

In            response to the significant deficiencies described above, we have undertaken the            following initiatives with respect to our internal controls and procedures that we            believe are reasonably likely to improve and materially affect our internal control            over financial reporting. We anticipate that remediation will be continuing throughout            fiscal 2008, during which we expect to continue pursuing appropriate corrective            actions, including the following:

 

|   | **•** | Preparing appropriate written documentation of our                            financial control procedures. We intend to complete written                            documentation of its financial control procedures during the fiscal                            year ended September 30, 2008; |
|--------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

             

|   | **•** | Scheduling training for accounting staff to heighten                            awareness of generally accepted accounting principles applicable to                            complex transactions |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

             

|   | **•** | Strengthening our internal review procedures in                            conjunction with our ongoing work to enhance our internal controls so                            as to enable us to identify and adjust items proactively. |
|--------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

We            cannot assure you that we will not in the future identify further significant            deficiencies or material weaknesses in our internal control over financial reporting,            however, our management and Audit Committee will monitor closely the implementation of            our remediation plan. The effectiveness of the steps we intend to implement is subject            to continued management review, as well as Audit Committee oversight, and we may make            additional enhancements or changes in our internal controls over financial            reporting.

 

Internal Control over Financial Reporting

 

As a            result of Section 404 of the Sarbanes-Oxley Act of 2002 and the rules issued            thereunder, we will be required to include in our Annual Report on Form 10-KSB for the            year ending September 30, 2008 a report on management’s assessment of the            effectiveness of our internal control over financial reporting. In that regard,            management did not prepare a report in conformity with paragraph (a) of Item 308 which            would have contained the following:

 

|   | **•** | A statement of management’s responsibility for                            establishing and maintaining adequate internal control over financial                            reporting; |
|--------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | A statement identifying the framework used by management                            to evaluate the effectiveness of our internal control over financial                            reporting; |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Management’s assessment of the effectiveness of                            our internal control over financial reporting, including a statement as                            to whether or not it is effective; and |
|--------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

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|   | **•** | A statement that our external auditor has issued an                            attestation report on management’s assessment. |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------|

 

We            were also not required to obtain and have not obtained an independent auditors’            report with respect to this voluntary assessment. In an effort to bolster existing            controls and prepare for the required management assessment of internal controls over            financial reporting which will be required to be included in our annual report on Form            10-KSB for the year ending September 30, 2008, we, to the extent that capital resources            allow, will be modifying and enhancing our internal controls utilizing the Internal            Control – Integrated Framework guidance issued by COSO (the Committee of            Sponsoring Organizations of the Treadway Commission). There are no assurances that we            will have the necessary capital available to properly complete this task.

 

 

26

 

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**PART II - OTHER INFORMATION**

 

| **Item 1:** | **Legal Proceedings** |
|-------------|-----------------------|

 

None.

 

| **Item 2** | **Unregistered Sales of Equity Securities and Use of                            Proceeds** |
|------------|--------------------------------------------------------------------------------------------|

 

On            April 16, 2007 we issued 30,000 shares of our common stock to Philip Snowden upon the            exercise of a warrant. The warrant had an exercise price of $0.50 per share but the            Company agreed to waive the payment of the exercise as additional consideration for            services performed by Mr. Snowden on behalf of the Company. The warrants were            issued to Mr. Snowden pursuant a consulting agreement in February 2004.

 

During April and May 2007, the Company entered into a Securities            Purchase Agreement with Quest Capital Alliance II, LLC, Robert M. Allison, the Jay D.            Burchfield Trust, the Ronald A. Neville Revocable Trust and SRC Holdings Corp. The            securities sold were secured convertible debentures in the aggregate principal amount            of $1,100,000 due April 15, 2008 (the “Debentures”). Quest Capital Alliance            acquired $500,000 of the Debentures. The Debentures bear interest at the rate of 12%            per annum and are convertible into the Company’s common stock at any time at the            rate of $0.31 per share. As part of this transaction, the Company issued to the            investors three (3) common stock purchase warrants for each dollar invested, or an            aggregate of 3,300,000 warrants (the “Warrants”).

 

Each            Warrant entitles the holder to purchase one share of common stock at an exercise price            of $0.31 per share commencing on the date of issuance and expiring on the close of            business on the fifth anniversary of the issuance date. The Warrants contain provisions            that protect the holder against dilution by adjustment of the exercise price of certain            events including, but not limited to, stock dividends, stock splits, reclassifications            or mergers.

 

In            addition, the Company entered into a registration rights agreement with each investor            whereby the Company agreed to include the common stock underlying the Debentures and            Warrants in any future registration statement filed by the Company subject to certain            conditions contained in such agreement.

 

The            Debentures are secured by all network equipment, including, without limitation, (i) all            access point servers, and supporting infrastructure equipment, (ii) all agreements            regarding the network pertaining to the placement and use/operation of the network, and            (iii) any proceeds from the sale of network equipment and inventory.

 

In            connection with this transaction, the Company issued an aggregate of 300,000 Warrants            to Quest Capital Alliance I, L.L.C. (150,000) and Quest Capital Alliance II, L.L.C.            (150,000) as a finder’s fee. Steven W. Fox, a director of the Company, is the CEO            and General Manager of Quest Capital Alliance I and II L.L.C.

 

Effective May 9, 2007, the Company issued 75,000 stock options            exercisable at $0.20 per share to John Hillring, the Company’s Chief Accounting            Officer. The options were issued pursuant to the Company 2002 Equity Incentive Plan and            are subject to vesting at the rate of 1⁄2 (37,500 options) vesting after six            months of his employment with the Company and the balance (37,500 options) vesting            after 12 months of his employment with the Company.

 

27

 

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On            May 30, 2007, the Company issued 50,000 shares of its common stock to the Interactive            Research Group, Inc. (“IRG”) in consideration for the termination            settlement and full release of the Company’s obligations under the consulting            agreement between the Company and IRG.

 

On            May 30, 2007, the Company issued 10,000 shares of its common stock to Tom Witty as            payment of an invoice in the amount of $2,474.00.

 

On            May 9, 2007, the Company granted Steven W. Fox 10,000 options exercisable at $ 0.22 per            share in connection with his election to the Board of Directors. These options were            priced at 110% of the market price of the Company’s common stock. These options            vest six months from the date of election.

 

On            June 26, 2007, SiriComm, Inc. (the “Registrant”) executed and delivered a            Promissory Note (“Note”) in the principal amount of $1,144,426.48 to            ViaSat, Inc., the Registrant’s satellite provider. The Note converts amounts            currently reflected on the Registrant’s balance sheet as Accounts Payable into a            24-month loan. Pursuant to the Note, the Registrant is required to make interest only            payments for the first six months commencing July 15, 2007 and subsequent payments are            due the 15th day of each month thereafter. Principal and interest payments            will commence on January 15, 2008. All principal and interest shall be paid on or            before June 15, 2009. The Note bears interest at the rate of 9.5% per annum.

 

The            Note provides for mandatory prepayment in the event of: (i) the Registrant’s            dissolution or liquidation, (ii) the consummation by the Registrant of any merger,            consolidation or business combination, whereby the beneficial owners of the            Registrant’s common stock own less than 50% of the combined entity immediately            after giving effect to such transactions or (iii) the acquisition by a third party of            all or substantially all of the Registrant’s capital stock, equity interests or            assets. In addition, all amounts due and payable under the Note shall be prepaid in the            event the Registrant borrows or receives an equity infusion of an amount in excess of            $10,000,000.00.

 

As            consideration for accepting the Note, the Registrant agreed to issue ViaSat 500,000            common stock purchase warrants exercisable at $.25 per share (the            “Warrants”). The Warrants may be exercised in whole or in part at any time            for a period of two (2) years from the date of issuance.

 

The            proceeds from these financings have been and will be used by the Company as general            working capital.

 

The            securities discussed above were offered and sold in reliance upon exemptions from the            registration requirements of Section 5 of the Securities Act of 1933, as amended (the            “Act”) pursuant to Section 4(2) of the Act and Rule 506 promulgated            thereunder. Such securities were sold exclusively to accredited investors as defined by            Rule 501(a) under the Act.

 

28

 

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| **Item 3:** | **Defaults upon Senior Securities** |
|-------------|-------------------------------------|

 

None

 

| **Item 4:** | **Submission of Matters to a Vote of Security                            Holders** |
|-------------|------------------------------------------------------------------------------------|

 

On            May 30, 2007, the Company held its annual meeting and submitted to shareholders a vote            for the election of the Board of Directors and a proposal to amend the Certificate of            Incorporation to increase the number of authorized shares of Common Stock of the            Company to 100,000,000. The shareholders approved the amendment to increase the number            of authorized shares of Common Stock of the Company to 100,000,000 and elected Mark L.            Grannell, Terry W. Thompson, William P. Moore, Richard P. Landis and Steven W. Fox as            the Board of Directors.

 

| **Item 5:** | **Other Information** |
|-------------|-----------------------|

 

On            May 9, 2007, SiriCOMM, Inc. (the “Company”) appointed Weaver & Martin,            LLC of Kansas City, Missouri as the Company’s independent Certified Public            Accountants for the fiscal year ended September 30, 2007.

 

On            May 9, 2007, our board of directors accepted the resignation of Matthew McKenzie as our            Chief Financial Officer, effective May 11, 2007.

 

On            May 9, 2007, John C. Hillring was appointed the Corporation’s Controller and            Chief Accounting Officer. Mr. Hillring formerly was Chief Financial Officer of            NavStar Technologies, Inc., a start-up company that develops, markets, sells, and            distributes mobile navigation devices & services. Prior to joining NavStar,            Mr. Hillring held a variety of management positions with Sprint and Nortel            Networks. Mr. Hillring has a Bachelors of Science, Accounting from Indiana            University School of Business, Bloomington, Indiana and a Masters of Business            Administration, Corporate Finance, from the University of Dallas Graduate School of            Management, Irving, Texas.

 

On            May 9, 2007, the Company elected Steven W. Fox to the Company’s Board of            Directors, effective immediately. Mr. Fox has 20 years experience in the financial            services industry. Prior to forming Quest Capital Alliance, L.L.C., Mr. Fox was            employed by Bank of America as Market Executive for Commercial Banking in Southwest            Missouri. Mr. Fox left Bank of America on September 29, 2000 to form Quest Capital            Alliance, L.L.C. serving as its CEO and General Manager. Mr. Fox received his MBA            and BSBA from the University of Missouri, Columbia.

 

On            June 1, 2007, the Company notified Henry P. Hoffman, the Company’s former            Chairman and CEO, that it was terminating his employment agreement with the Company            dated July 5, 2006. The Company’s decision to terminate the employment agreement            was due to Mr. Hoffman’s intentional breach of various provisions of the            employment agreement.

 

On            June 26, 2007, SiriComm, Inc. (the “Registrant”) executed and delivered a            Promissory Note (“Note”) in the principal amount of $1,144,426.48 to            ViaSat, Inc., the Registrant’s satellite provider. The Note converts amounts            currently reflected on the Registrant’s balance sheet as Accounts Payable into a            24-month loan. Pursuant to the Note, the Registrant is required to make interest only            payments for the first six months commencing July 15, 2007 and subsequent payments are            due the 15th day of each month thereafter. Principal and interest payments            will commence on January 15, 2008. All principal and interest shall be paid on or            before June 15, 2009. The Note bears

 

29

 

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interest at the rate of 9.5% per annum. A discount of $100,686 was            recorded based on the estimated fair value of the warrants issued and will be expensed            over the life of the loan as interest expense. As of June 30, 2007, the current            unamortized discount was $31,634 and the current balance of the note payable, net of            discount was $331,885 and the non-current unamortized discount was $67,939 and the            non-current balance of the note payable, net of discount was $712,789. The amount of            discount amortized into interest expense in the nine months ended June 30, 2007 was            $1,113.

 

The            Note provides for mandatory prepayment in the event of: (i) the Registrant’s            dissolution or liquidation, (ii) the consummation by the Registrant of any merger,            consolidation or business combination, whereby the beneficial owners of the            Registrant’s common stock own less than 50% of the combined entity immediately            after giving effect to such transactions or (iii) the acquisition by a third party of            all or substantially all of the Registrant’s capital stock, equity interests or            assets. In addition, all amounts due and payable under the Note shall be prepaid in the            event the Registrant borrows or receives an equity infusion of an amount in excess of            $10,000,000.00.

 

As            consideration for accepting the Note, the Registrant agreed to issue ViaSat 500,000            common stock purchase warrants exercisable at $.25 per share (the            “Warrants”). The Warrants may be exercised in whole or in part at any time            for a period of two (2) years from the date of issuance.

 

             

| **Item 6:** | **Exhibits** |
|-------------|--------------|

 

| The following exhibits are filed as part of this                            report: |
|-------------------------------------------------------------------------------------|
|                                                                                |   |
| 31.1                                                                                | Certification of Chief Executive Officer of Periodic                            Report Pursuant |
|                                                                                | to Rule 13a-14(a) and Rule 15d-14(a). |
| 31.2                                                                                | Certification of Chief Financial Officer of Periodic                            Report Pursuant |
|                                                                                | to Rule 13a-14(a) and Rule 15d-14(a). |
| 32.1                                                                                | Certification of Chief Executive Officer pursuant to 18                            U.S.C. Section 1350 |
| 32.2                                                                                | Certification of Chief Financial Officer pursuant to 18                            U.S.C. Section 1350 |

 

 

30

 

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**SIGNATURES**

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the            Company has caused this report to be signed on its behalf by the undersigned thereunto            duly authorized.

 

 

| Dated: August 10, 2007 | SIRICOMM, INC. |
|------------------------|----------------|
|                   |           |   |
|                   |           |   |
|                   |           |   |
|                   | By:            | /s/ Mark L. Grannell |
|                   |           | Mark L. Grannell, President and |
|                   |           | Chief Executive Officer |
|                   |           |   |
|                   |           |   |
|                   | By:            | /s/ John Hillring |
|                   |           | John Hillring |
|                   |           | Chief Accounting Officer and Controller |

 

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