UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PARA MAS INTERNET, INC.
-----------------------------
(Name of small business issuer in its charter)
NEVADA 59-3383240
- ------ ----------
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1337 S. Gilbert Road, Suite 104, Mesa, Arizona 85204 (480) 892-2189
-------------------------------------------------------------------
(Address and telephone number of principal executive offices)
1337 S. Gilbert Road, Suite 104, Mesa, Arizona 85204
----------------------------------------------------
(Address of principal place of business or intended principal place of
business)
Rodney E. Sumpter, 139 Vassar St., Reno, NV 89502
---------------------------------------------------
(Name, address and telephone number of agent for service)
Approximate date of proposed sale to the public: As soon as practicable after
the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |__|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |__|
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |__|
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. |__|
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
TITLE OF EACH PROPOSED PROPOSED
CLASS OF MAXIMUM MAXIMUM
SECURITIES OFFERING AGGREGATE AMOUNT OF
TO BE AMOUNT TO BE PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED SHARE PRICE FEE
- --------------------------------------------------------------------------------
Common Stock 20,000,000 shares $0.25 $5,000,000 $633.50
Common Stock 9,980,105 shares $0.25 $2,495,026 $316.12
Total 29,980,105 shares $0.25 $7,495,026 $949.62
- --------------------------------------------------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
COPIES OF COMMUNICATIONS TO:
Gary R. Henrie, Esq.
10616 Eagle Nest Street
Las Vegas, NV 89141
(702) 616-3093
PROSPECTUS
PARA MAS INTERNET, INC.
29,980,105 SHARES
COMMON STOCK
----------------
Para Mas Internet, Inc. is offering to sell 20,000,000 shares of its common
stock on a self-underwritten basis at an offering price of $0.25 per share.
There is no minimum number of shares that must be sold in this offering. This
is the initial public offering of shares of its common stock and will proceed
for a period of twenty months or until all shares are sold.
The selling shareholders named in this prospectus are offering 9,980,105 shares
of common stock at an offering price of $0.25 per share. If the shares are
quoted in the future in the Pink Sheets or some exchange, selling shareholders
may sell shares at market price. Para Mas Internet, Inc. will not receive any
proceeds from shares sold by selling shareholders.
Our common stock is presently not traded on any market or securities exchange.
Proceeds to Para Mas
from its self
underwritten offering Proceeds to selling
Offering Price Commissions before expenses (2) shareholders
-------------- ----------- -------------------- ------------
Per Share in Offering by
Para Mas . . . . . . . . $ 0.25 $ 0.025 (1) $ 0.225
Per Share in Offering by
Selling Shareholders. . $ 0.25 $ 0.00 $ 0.25
Totals for Offering by
Para Mas . . . . . . . . $ 5,000,000 $500,000 (1) $ 4,500,000 (2)
Totals for Offering by
Selling Shareholders . . $ 2,495,026.20 $ 0.00 $2,495,026.20
- ----------------------------------------------------------------------------------------------
(1) The offering by Para Mas will be self-underwritten unless it is
determined at a later time to sell the offering through the use of underwriters.
The table sets forth commission amounts assuming underwriters are used.
(2) Offering expenses are estimated to be $50,000.00 which will leave Para
Mas proceeds of $4,450,000.00 if all shares offered by Para Mas are sold and
underwriters are used to sell the offering.
THE PURCHASE OF THE SECURITIES OFFERED THROUGH THIS PROSPECTUS INVOLVES A HIGH
DEGREE OF RISK. SEE SECTION ENTITLED "RISK FACTORS" ON PAGES 6 THROUGH 7.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is: _____________________
-1-
TABLE OF CONTENTS
PAGE
Summary----------------------------------------------------------------------
Risk Factors-----------------------------------------------------------------
Use of Proceeds--------------------------------------------------------------
Determination of Offering Price----------------------------------------------
Dilution---------------------------------------------------------------------
Selling Shareholders---------------------------------------------------------
Plan of Distribution---------------------------------------------------------
Legal Proceedings------------------------------------------------------------
Directors, Executive Officers, Promoters and Control Persons-----------------
Security Ownership of Certain Beneficial Owners and Management---------------
Description of Securities----------------------------------------------------
Interest of Named Experts and Counsel----------------------------------------
Disclosure of Commission Position of Indemnification for Securities Act------
Liabilities------------------------------------------------------------------
Description of Business------------------------------------------------------
Description of Property------------------------------------------------------
Market for Common Equity and Related Stockholder Matters---------------------
Executive Compensation-------------------------------------------------------
Financial Statements---------------------------------------------------------
Changes in and Disagreements with Accountants--------------------------------
Available Information--------------------------------------------------------
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SUMMARY
OUR BUSINESS
Para Mas Internet, Inc., a Nevada corporation ("Para Mas") Amerigroup, Inc. is
an issuer of retail discount cards to entertainment venues and for other
retail purposes. Amerigroup also is engaged in other related business
enterprises.
Even though our products are developed and have been introduced into the market,
we need the proceeds from this offering to grow our client base in a major way.
The successful completion of this offering will fund the expansion of Para Mas
and the marketing of our products
-----------------------------------
We were incorporated as a Nevada corporation on June 6, 1994. Our principal
executive offices are located at 1337 S. Gilbert Road, Suite 104, Mesa, Arizona
85204. Our telephone number is 480-892-2189.
THE OFFERING
SECURITIES OFFERED 29,980,105 shares of Para Mas common stock. 20,000,000
of the shares will be offered by Para Mas on a self-underwritten basis.
9,980,105 of the shares may also be sold from time to time by selling
shareholders.
OFFERING PRICE The offering price for all shares of common stock is $0.25
per share. In the event Para Mas either sells all 20,000,000 shares offered by
it or terminates the offering of the 20,000,000 shares, if a public market for
our common shares develops, then the actual price of the common stock to be sold
thereafter by the selling shareholders may be determined by prevailing market
prices at the time of sale. Selling shareholders may sell at the market price
only after the shares are quoted on the Pink Sheets or on some exchange.
MINIMUM NUMBER
OF SHARES TO BE SOLD
IN THIS OFFERING None.
USE OF PROCEEDS If all shares offered by Para Mas are sold, net proceeds
from this offering will be approximately $4,950,000 and will be used by Para
Mas for working capital and to market its products. If underwriters are engaged
to sell the offering, net offering proceeds will total approximately $4,450,000.
Para Mas will not receive any proceeds from the sale of common stock by the
selling shareholders.
BEST EFFORTS OFFERING The offering is being sold by our president on a
self-underwritten efforts basis. Management may enter into an underwriting
agreement for this offering at a later date.
THIS OFFERING
WILL EXPIRE This offering will close whenever all of the shares are sold or
twenty months after the effective date of this prospectus, whichever is sooner.
-3-
SUMMARY FINANCIAL INFORMATION
Balance Sheet Data:
June 30, 2004
Cash $ 28,865
Total Assets $ 1,013,038
Liabilities $ 1,753,547
Total Stockholders' Equity $ (740,508)
Income Statement Data:
Net Revenues for three months ended June 30, 2004 $ 238,098
Expenses for three months ended June 30, 2004 $ 163,053
Income for three months ended June 30, 2004 $ 56,175
RISK FACTORS
An investment in our common stock involves a high degree of risk. You should
carefully consider the risks described below and the other information in this
prospectus before investing in our common stock. If any of the following risks
occur, our business, operating results and financial condition could be
seriously harmed and you could lose all or part of your investment.
WE HAVE ONLY RECENTLY BEGUN GENERATING REVENUES AT A LEVEL MATERIAL TO THE
BUSINESS OPERATIONS OF PARA MAS AND WE MUST CONTINUE TO DO SO IF PARA MAS IS TO
BE SUCCESSFUL.
During the fiscal quarter ended June 30, 2004, we generated revenues totaling
$238,098 but overall have an accumulated deficit related to our current business
operations of $1,911,371. If we are to succeed, we must continue to generate
revenues totaling a minimum of $30,000 per month or be able to raise additional
working capital through the sale of equity in Para Mas. The likelihood of
success must also be considered in light of the ongoing problems, expenses,
difficulties, complications and delays encountered in connection with the
development of our business plan. There is a limited history upon which to base
any assumption as to the likelihood that we will prove successful. If we are
unsuccessful in addressing these risks, our business will most likely fail.
INVESTORS WILL BE UNABLE TO SELL THEIR SECURITIES IF NO MARKET DEVELOPS FOR
THOSE SECURITIES.
No market exists at the present time for our common shares. Investors in the
offering will purchase securities that cannot be resold by those investors since
no market exists. Even though at some time in the future we intend to create a
public market for our common shares, there can be no assurance when the market
will develop or if the market will ever develop. If we are not successful in
developing a market for our common shares, investors will not be able to sell
their securities and will suffer a loss of their investment.
WE DEPEND ON GARY WHITING WHOM WE MAY NOT BE ABLE TO RETAIN, IN WHICH EVENT WE
COULD NOT CONTINUE TO DEVELOP OUR BUSINESS PLAN.
Gary Whiting is our only officer and director and who has the expertise to run
and oversee the development of our business. We would not be able to retain Mr.
Whiting if he should die, become
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disabled or become engaged in other business
pursuits to the extent he cannot devote sufficient time to our business. In
such event, we could not prosecute our business plan unless we can replace Mr.
Whiting. It is uncertain whether we would be able to do so. In addition, we
have no key-man life insurance on Mr. Whiting.
SINCE THERE IS NO MINIMUM OFFERING AMOUNT, THE FIRST INVESTORS IN THE OFFERING
ARE AT GREATER RISK IN THE EVENT SUFFICIENT FUNDS ARE NOT RAISED IN THE OFFERING
TO FUND OUR CONTINUED GROWTH.
Para Mas is dependant upon the proceeds of this offering to aggressively
implement its business plan. There is no minimum offering amount assigned to
this offering. Accordingly, upon acceptance of offering subscriptions, the
proceeds of such subscriptions are immediately transferred into the operating
account of Para Mas and used to conduct the business affairs of Para Mas. In
the event Para Mas is not successful in raising sufficient capital in this or
other offerings to aggressively continue its business development, it is
possible that subscribers that have invested will lose their investments.
BECAUSE GARY WHITING BENEFICIALLY OWNS 65% OF OUR OUTSTANDING COMMON STOCK, HE
WILL CONTROL AND MAKE CORPORATE DECISIONS, WHICH DECISIONS MAY DIFFER FROM THOSE
THAT WOULD HAVE BEEN MADE BY OTHER STOCKHOLDERS.
Gary Whiting owns approximately 65% of the outstanding shares of our common
stock. Accordingly, he will have a significant influence in determining the
outcome of all corporate transactions, including mergers, consolidations and the
sale of all or substantially all of our assets, and also the power to prevent or
cause a change in control. The interests of Gary Whiting may differ from the
interests of the other stockholders and thus result in corporate decisions that
are disadvantageous to other shareholders.
FORWARD-LOOKING STATEMENTS
- ---------------------------
This prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as anticipate, believe, plan expect, future,
intend and similar expressions to identify such
forward-looking statements. You should not place too much reliance on these
forward-looking statements. Our actual results are most likely to differ
materially from those anticipated in these forward-looking statements for many
reasons, including the risks faced by us described in the this Risk Factors
section and elsewhere in this prospectus.
USE OF PROCEEDS
The net proceeds we will receive from the sale of the shares of common stock
offered by us will be approximately $4,450,000, if the maximum numbers of shares
are sold, after deducting offering expenses of $50,000 and if commissions are
paid to underwriters. If the offering is self-underwritten, net proceeds will
total approximately $4,950,000 if all shares offered by Para Mas are sold.
The principal purpose of this offering is to increase our working capital in
order for us to proceed with the execution of our business plan in an aggressive
manner. Our management will have significant flexibility in applying the net
proceeds of the offering. Pending any use, the net proceeds of this offering
will be placed in an interest bearing bank account.
The actual expenditures of the proceeds of the offering may differ substantially
from the estimated use of proceeds. The actual expenditures of the proceeds of
this offering will be determined by our board of directors in the best interests
of advancing our business. Factors that could cause a reallocation of
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proceeds
include an immediate demand for our products upon our initial production of
those products or a need for manufacturing facilities beyond those currently
available to us. If a demand exists for our product upon production, offering
proceeds ear marked for marketing will be shifted to working capital. If demand
for our products exceeds current manufacturing availability, more working
capital will be used to expand manufacturing capability than would otherwise be
the case.
We expect to use the net proceeds from this offering as follows:
ASSUMING 50% ASSUMING 25% OF
ASSUMING ALL OF THE SHARES THE SHARES ARE
SHARES ARE SOLD ARE SOLD SOLD
----------------- ---------------- ---------------
Gross Proceeds. . . . . . $ 5,000,000 $ 2,500,000 $ 1,250,000
Offering Expenses . . . . 50,000 50,000 50,000
Net Proceeds. . . . . . . 4,950,000 2,450,000 1,200,000
Purchase of Equipment (1) 2,000,000 1,000,000 500,000
Inventory . . . . . . . . 2,000,000 1,000,000 500,000
Marketing/Sales (2) . . . 500,000 250,000 100,000
Working Capital (3) . . . 450,000 200,000 100,000
----------------- ---------------- ---------------
TOTAL . . . . . . . . . . $ 5,000,000 $ 2,500,000 $ 1,250, 000
================= ================ ===============
(1) Equipment purchases will include kiosks which house point of sale
terminals for our products by our card holders.
(2) Marketing and sales expenses will include primarily travel to and
presentations to potential clients for the sale of our products and franchises
of our business.
(3) Working capital will be used to support our business operations
including without limitation, salaries, rent, utilities and supplies.
DETERMINATION OF OFFERING PRICE
The $0.25 per share offering price of our common stock was arbitrarily
determined based on our current perceived financing needs. There is no
relationship whatsoever between this price and our assets, book value or any
other objective criteria of value.
DILUTION
An investment in this offering will undergo immediate dilution when compared
with the net tangible assets of Para Mas. The following table illustrates the
per share dilution in net tangible book value to new investors if 100% of the
20,000,000 shares offered by Para Mas are sold, if 50% of the 20,000,000 shares
are sold, and if 25% of the 20,000,000 shares are sold. Calculations are based
on 281,248,039 capital shares outstanding, and at the different levels of the
offering sold as indicated after the deduction of offering expenses and assuming
all shares of Para Mas sold are on a self-underwritten basis with no commissions
paid. The 9,980,105 shares to be sold by the selling shareholders is common
stock that is currently issued and outstanding. Accordingly, there will be no
dilution as a result of the sale of those shares.
-6-
PERCENT OF OFFERING SOLD 100% 50% 25%
Public offering price per
Share. . . . . . . . . . . . . . . . $ 0.25 $ 0.25 $ 0.25
Net tangible book value per share as
of June 30, 2004 . . . . . . . . . $0.000 $0.000 $0.000
Increase per share attributed to
investors in this offering. . . . . $0.014 $0.006 $0.001
Net tangible book value per share as
of June 30, 2004, after this
Offering . . . . . . . . . . . . . . $0.014 $0.006 $0.001
Net tangible book value
dilution per share
to new investors. . . . . . . . . . . $0.236 $0.244 $0.249
Net tangible book value
dilution per share to new
investors expressed as a
percentage
94.4% 97.6% 99.6%
SELLING SHAREHOLDERS
The selling shareholders named in this prospectus are offering 9,980,105 shares
of common stock. The following table provides as of May 31, 2004, information
regarding the beneficial ownership of our common stock held by each of the
selling shareholders, including:
1. the number of shares owned by each prior to this offering;
2. the total number of shares that are to be offered for each;
3. the total number of shares that will be owned by each upon completion of
the offering; and
4. the percentage owned by each following the offering.
Shares Total Number
Owned Of Shares To Total Shares To Percent
Prior To Be Offered For Be Owned Owned Upon
Name of Selling This Shareholders Completion Of Completion
Stockholder Offering Account This Offering Offering
ABBEY, Lloyd & Alice . . . . . . . . 5,000 5,000 -0- -0-
AMBERIDIS, Diane . . . . . . . . . . 5,000 5,000 -0- -0-
ANDREWS, Linda . . . . . . . . . . . 2,000 2,000 -0- -0-
APOSTOLIC Faith Church . . . . . . . 400,000 400,000 -0- -0-
ARNASON, Sheryl. . . . . . . . . . . 20,000 20,000 -0- -0-
BEATTIE, Dave. . . . . . . . . . . . 5,000 5,000 -0- -0-
BEAUCOCK, Orlin. . . . . . . . . . . 5,000 5,000 -0- -0-
BERGET, Kelly. . . . . . . . . . . . 32,433 32,433 -0- -0-
BOTTOMLEY, Geneva. . . . . . . . . . 20,000 20,000 -0- -0-
BRABANT, Denis . . . . . . . . . . . 3,417 3,417 -0- -0-
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BRAJCICH, Elinor . . . . . . . . . . 10,000 10,000 -0- -0-
BRISBIN, Bonnie. . . . . . . . . . . 11,653 11,653 -0- -0-
BROWN, Christopher . . . . . . . . . 2,680 2,680 -0- -0-
BRUNDIN, Elizabeth . . . . . . . . . 102,181 102,181 -0- -0-
BRUNDIN, V . . . . . . . . . . . . . 6,670 6,670 -0- -0-
BRYANT, Peter & Ann. . . . . . . . . 40,000 40,000 -0- -0-
BURECK Investments Ltd.. . . . . . . 30,000 30,000 -0- -0-
BUSCHAU, Sandra. . . . . . . . . . . 20,000 20,000 -0- -0-
BELLEFONTAINE, Deborah and BUSH, George 10,000 10,000 -0- -0-
BUTLER, Craig. . . . . . . . . . . . 16,000 16,000 -0- -0-
CAMERON, Karen . . . . . . . . . . . 3,300 3,300 -0- -0-
CARDINAL, Sean . . . . . . . . . . . 20,000 20,000 -0- -0-
CARDINAL, Sean & Kim . . . . . . . . 7,000 7,000 -0- -0-
CASTLE, Alice. . . . . . . . . . . . 20,000 20,000 -0- -0-
CHISHOLM, Dan. . . . . . . . . . . . 60,000 60,000 -0- -0-
CHISHOLM, R.J. & J.M.. . . . . . . . 100,000 100,000 -0- -0-
CHORNOBAY, Linda . . . . . . . . . . 20,000 20,000 -0- -0-
CHORNOBAY, William . . . . . . . . . 200,000 200,000 -0- -0-
CHRISTIANSEN, Rose . . . . . . . . . 2,000 2,000 -0- -0-
CLARKSON, Laura. . . . . . . . . . . 5,000 5,000 -0- -0-
COCHRANE, Tara . . . . . . . . . . . 1,333 1,333 -0- -0-
COHOE, Lila. . . . . . . . . . . . . 10,000 10,000 -0- -0-
CURRIE, Bruce. . . . . . . . . . . . 12,000 12,000 -0- -0-
CURRIE, Elann M. . . . . . . . . . . 10,000 10,000 -0- -0-
DANCE, Gail. . . . . . . . . . . . . 1,340 1,340 -0- -0-
DOMONKOS, John . . . . . . . . . . . 6,667 6,667 -0- -0-
Dragon Descent Holdings Ltd. . . . . 400,000 400,000 -0- -0-
ENGLESON, Karen, . . . . . . . . . . 20,000 20,000 -0- -0-
ERICKSON, Beverley . . . . . . . . . 17,000 17,000 -0- -0-
ERICKSON, Christopher. . . . . . . . 7,000 7,000 -0- -0-
FAUCHER, Darryl. . . . . . . . . . . 9,340 9,340 -0- -0-
FIORELLA, Donna Jean . . . . . . . . 40,000 40,000 -0- -0-
FREEMAN, Don . . . . . . . . . . . . 30,000 30,000 -0- -0-
FREEMAN, Jonathan. . . . . . . . . . 10,000 10,000 -0- -0-
FREEMAN, Lynette . . . . . . . . . . 4,000 4,000 -0- -0-
FREEMAN, Ron . . . . . . . . . . . . 5,000 5,000 -0- -0-
FROESE, Evelyn . . . . . . . . . . . 60,000 60,000 -0- -0-
FURBER, Marjorie Lynn. . . . . . . . 2,000 2,000 -0- -0-
FURBER, Winifred . . . . . . . . . . 4,340 4,340 -0- -0-
GALANDIE, Gary . . . . . . . . . . . 13,400 13,400 -0- -0-
GEERTSEMA, Hermen. . . . . . . . . . 10,000 10,000 -0- -0-
GEMMELL, Isabel. . . . . . . . . . . 2,680 2,680 -0- -0-
GERVAIS, Ron . . . . . . . . . . . . 6,667 6,667 -0- -0-
HILL, Ann I. . . . . . . . . . . . . 6,670 6,670 -0- -0-
HOFFARD, Ron . . . . . . . . . . . . 6,670 6,670 -0- -0-
HOFFMAN, Richard . . . . . . . . . . 61,667 61,667 -0- -0-
HOGAN, Emerald . . . . . . . . . . . 1,340 1,340 -0- -0-
HORBACHEWSKY, Dorothy. . . . . . . . 222,670 222,670 -0- -0-
HORBACHEWSKY, Mary . . . . . . . . . 5,360 5,360 -0- -0-
HORBACHEWSKY, William J. . . . . . . 1,340 1,340 -0- -0-
HOVLAND, Ola . . . . . . . . . . . . 20,000 20,000 -0- -0-
HOWARD, Robert & Julie . . . . . . . 8,000 8,000 -0- -0-
HOYER, Gail. . . . . . . . . . . . . 42,200 42,200 -0- -0-
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IUZ, Larry . . . . . . . . . . . . . 20,000 20,000 -0- -0-
JENSEN, Warren . . . . . . . . . . . 78,853 78,853 -0- -0-
JORDAN, Michael T. . . . . . . . . . 12,000 12,000 -0- -0-
JUDD, Barbara Ann Boyd and Peter Alan 13,340 13,340 -0- -0-
KELLER, Perry. . . . . . . . . . . . 6,700 6,700 -0- -0-
KEN Glover & Associates in
trust for Anthony Dwayne Prosk . . . 6,670 6,670 -0- -0-
KENNEDY, Linda . . . . . . . . . . . 15,000 15,000 -0- -0-
KILMARTIN, Fergus. . . . . . . . . . 6,670 6,670 -0- -0-
KING, Leigh. . . . . . . . . . . . . 1,340 1,340 -0- -0-
KLIPPENSTEIN, Maria. . . . . . . . . 6,670 6,670 -0- -0-
KORHONEN, Jennifer . . . . . . . . . 2,680 2,680 -0- -0-
KRINBILL, Dan. . . . . . . . . . . . 5,360 5,360 -0- -0-
LeCLAIR, Teresa. . . . . . . . . . . 13,000 13,000 -0- -0-
LEE, Shirley . . . . . . . . . . . . 40,000 40,000 -0- -0-
LOU, Anja C. . . . . . . . . . . . . 10,000 10,000 -0- -0-
LUKOMSKI, Donna. . . . . . . . . . . 25,671 25,671 -0- -0-
LUTWICK, Emmanuel. . . . . . . . . . 5,000 5,000 -0- -0-
MANKULICH, Gary. . . . . . . . . . . 10,700 10,700 -0- -0-
MANKULICH, Mike. . . . . . . . . . . 26,658 26,658 -0- -0-
MARZIN, Selena . . . . . . . . . . . 2,000 2,000 -0- -0-
MAYNER, Linda. . . . . . . . . . . . 2,000 2,000 -0- -0-
McCORD, Joanne . . . . . . . . . . . 8,670 8,670 -0- -0-
McFADYEN, Danielle . . . . . . . . . 253,000 253,000 -0- -0-
McFADYEN, Debra. . . . . . . . . . . 440,000 440,000 -0- -0-
McFADYEN, Garry. . . . . . . . . . . 54,000 54,000 -0- -0-
McINNIS, John. . . . . . . . . . . . 7,606 7,606 -0- -0-
MEARS, Karen . . . . . . . . . . . . 5,000 5,000 -0- -0-
MENGES, Hanelore . . . . . . . . . . 50,000 50,000 -0- -0-
MERCIER, Kevin . . . . . . . . . . . 1,000 1,000 -0- -0-
MICHALUK, Judy . . . . . . . . . . . 1,340 1,340 -0- -0-
MILLER, Ruby . . . . . . . . . . . . 6,700 6,700 -0- -0-
MINCHIN, Carolyn . . . . . . . . . . 3,300 3,300 -0- -0-
MITCHELL, Eva. . . . . . . . . . . . 1,340 1,340 -0- -0-
MOORE, Lorraine. . . . . . . . . . . 1,335 1,335 -0- -0-
MORRISON, Don. . . . . . . . . . . . 1,000 1,000 -0- -0-
OMELANIEC, Simon & Pamela. . . . . . 287,336 287,336 -0- -0-
PARKIN, Carol. . . . . . . . . . . . 4,020 4,020 -0- -0-
PAULIUK, Aaron . . . . . . . . . . . 8,000 8,000 -0- -0-
PIECHOCKI, Elizabeth . . . . . . . . 20,000 20,000 -0- -0-
PETRUNIA, Michael & Maureen. . . . . 30,000 30,000 -0- -0-
PILSON, Chris. . . . . . . . . . . . 9,380 9,380 -0- -0-
PILSON Enterprises Ltd.. . . . . . . 250,000 250,000 -0- -0-
POLLARD, Phillip . . . . . . . . . . 15,000 15,000 -0- -0-
POLOWAY, Richard . . . . . . . . . . 35,000 35,000 -0- -0-
PROCTOR, Craig . . . . . . . . . . . 120,000 120,000 -0- -0-
ROBERTSON, Linda . . . . . . . . . . 4,000 4,000 -0- -0-
ROESSLER, Michael. . . . . . . . . . 25,000 25,000 -0- -0-
ROON, Shaunna. . . . . . . . . . . . 5,000 5,000 -0- -0-
RUTLEY, Harvey and/or Iona . . . . . 100,010 100,010 -0- -0-
SABATINI, Anthony. . . . . . . . . . 10,720 10,720 -0- -0-
SANDBERG, Dale . . . . . . . . . . . 5,000 5,000 -0- -0-
SANSALONE, Janet . . . . . . . . . . 4,005 4,005 -0- -0-
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SCHINDEL, Gerd Maria Katrina . . . . 6,000 6,000 -0- -0-
SCHULTZ, Grant . . . . . . . . . . . 13,333 13,333 -0- -0-
SIATECKI, Wayne. . . . . . . . . . . 11,000 11,000 -0- -0-
SICKMUELLER, Karin . . . . . . . . . 2,680 2,680 -0- -0-
SJOGREN, David . . . . . . . . . . . 10,000 10,000 -0- -0-
SJOGREN, Erik. . . . . . . . . . . . 2,000 2,000 -0- -0-
SLOAN, Mitch . . . . . . . . . . . . 5,000 5,000 -0- -0-
SMANTIOTTO, Loretta. . . . . . . . . 5,360 5,360 -0- -0-
SNELL, Barbara . . . . . . . . . . . 6,670 6,670 -0- -0-
SOMERVILLE, William G. . . . . . . . 10,000 10,000 -0- -0-
SOOBOTIN, Korby. . . . . . . . . . . 6,700 6,700 -0- -0-
SOOBOTIN, Nettie . . . . . . . . . . 25,863 25,863 -0- -0-
SOOBOTIN, Sherry . . . . . . . . . . 6,700 6,700 -0- -0-
SORGE, Mia . . . . . . . . . . . . . 7,000 7,000 -0- -0-
STONE, Kenneth . . . . . . . . . . . 20,000 20,000 -0- -0-
SUTHERLAND, Daryl. . . . . . . . . . 16,733 16,733 -0- -0-
SWANSON, Laverna . . . . . . . . . . 8,040 8,040 -0- -0-
TAYLOR, David. . . . . . . . . . . . 1,335 1,335 -0- -0-
TJOMSAAS, Eleanor. . . . . . . . . . 8,000 8,000 -0- -0-
TJOMSAAS, Judy . . . . . . . . . . . 116,670 116,670 -0- -0-
TOWNSEND, Valerie Kless. . . . . . . 2,000 2,000 -0- -0-
TRENT, Brian & Patti . . . . . . . . 142,000 142,000 -0- -0-
TRICKETT, Sharron. . . . . . . . . . 1,340 1,340 -0- -0-
VAILLANT, Shirley. . . . . . . . . . 20,000 20,000 -0- -0-
VATTOY, Barrie . . . . . . . . . . . 64,000 64,000 -0- -0-
VATTOY, Shelly . . . . . . . . . . . 4,660 4,660 -0- -0-
VENTRESS, Irene. . . . . . . . . . . 20,000 20,000 -0- -0-
VINCE McDonald Ent. Ltd. . . . . . . 160,000 160,000 -0- -0-
WAN-Lim, Sien. . . . . . . . . . . . 8,000 8,000 -0- -0-
WARTBERG, Thomas . . . . . . . . . . 50,000 50,000 -0- -0-
WIENS, Alvin & Winona. . . . . . . . 5,000 5,000 -0- -0-
WILSON, Renee. . . . . . . . . . . . 6,000 6,000 -0- -0-
WITTMEIER, Sherwood. . . . . . . . . 23,700 23,700 -0- -0-
566,000 B.C. Ltd.. . . . . . . . . . 6,000 6,000 -0- -0-
516,316 B.C. Ltd.. . . . . . . . . . 13,400 13,400 -0- -0-
391,972 B.C. Ltd.. . . . . . . . . . 27,000 27,000 -0- -0-
Laurentian Bank of Canada in trust . 6,670 6,670 -0- -0-
for Steven Pospolita SD 0201087
Yorkton Securities Inc. in trust for 10,000 10,000 -0- -0-
Gene Lukomski RRSP #63-8596-7
Investor Company in trust for. . . . 53,340 53,340 -0- -0-
Acc. #7P619ZS, TD Evergreen
HSBC Securities (Canada) Inc. in . . 13,340 13,340 -0- -0-
Trust for Dorothy Horbachewsky
Goepel McDermid Inc. in trust for. . 13,340 13,340 -0- -0-
Rick Campbell RRSP #15-E61S-5
BREDESEN, Harald . . . . . . . . . . 25,000 25,000 -0- -0-
FULLER, Brian. . . . . . . . . . . . 25,000 25,000 -0- -0-
CRAWFORD, Malcolm. . . . . . . . . . 25,000 25,000 -0- -0-
JUCHNEIWICZ, Ed. . . . . . . . . . . 25,000 25,000 -0- -0-
DIGHTON, Jeff. . . . . . . . . . . . 20,000 20,000 -0- -0-
NAQVI, Shahrukh. . . . . . . . . . . 6,000 6,000 -0- -0-
SAVOIE, Pat. . . . . . . . . . . . . 2,000 2,000 -0- -0-
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TEAT, James Albert . . . . . . . . . 20,000 20,000 -0- -0-
HOYT, Dennis . . . . . . . . . . . . 6,000 6,000 -0- -0-
HUNTER, Elsie. . . . . . . . . . . . 2,743,045 2,743,045 -0- -0-
KOOP, John . . . . . . . . . . . . . 20,000 20,000 -0- -0-
KPMG . . . . . . . . . . . . . . . . 207,622 207,622 -0- -0-
Lyons Hamilton . . . . . . . . . . . 67,000 67,000 -0- -0-
TJELTA, Sven . . . . . . . . . . . . 274,000 274,000 -0- -0-
Terrence E King Law Corp.. . . . . . 12,000 12,000 -0- -0-
COCHRANE, Floyd. . . . . . . . . . . 225,000 225,000 -0- -0-
STEWART, Raymond. . . . . . . . . . 300,000 300,000 -0- -0-
GALANDIE, Cheryl . . . . . . . . . . 4,000 4,000 -0- -0-
LEE, Colin . . . . . . . . . . . . . 20,000 20,000 -0- -0-
WITTMEIER, Adam. . . . . . . . . . . 2,000 2,000 -0- -0-
MILLER, Patrick. . . . . . . . . . . 4,000 4,000 -0- -0-
STOLL, Terrance. . . . . . . . . . . 1,350 1,350 -0- -0-
HESKE, David . . . . . . . . . . . . 2,000 2,000 -0- -0-
LONGPHEE, Myles. . . . . . . . . . . 2,000 2,000 -0- -0-
GAIL, Dawn . . . . . . . . . . . . . 4,000 4,000 -0- -0-
FRASER, Marie. . . . . . . . . . . . 2,500 2,500 -0- -0-
NAHAL, Surjeet Singh . . . . . . . . 2,000 2,000 -0- -0-
HORBACHEWSKY, Sherry . . . . . . . . 15,000 15,000 -0- -0-
HOTH Ventures Inc. . . . . . . . . . 27,000 27,000 -0- -0-
METHODICAL Management Inc. . . . . . 27,000 27,000 -0- -0-
TJOMSAAS, Judy . . . . . . . . . . . 400,000 400,000 -0- -0-
TJOMSAAS, Ralph. . . . . . . . . . . 417,622 417,622 -0- -0-
The named party beneficially owns and has sole voting and investment power over
all shares or rights to these shares. The numbers in this table assume that
none of the selling shareholders sells shares of common stock not being offered
in this prospectus or purchases additional shares of common stock, and assumes
that all shares offered are sold.
PLAN OF DISTRIBUTION
SHARES OFFERED BY PARA MAS
The following officer and director is selling the common stock being offered by
Para Mas through this prospectus:
Name of Officer/Director Position
- -------------------------- --------
Gary Whiting President and Director
Mr. Whiting is not registered as a broker-dealer under the Securities Act of
1934 and is relying on Rule 3a4-1 under the 1934 Act to allow him to sell the
shares as an officer of Para Mas. We believe that Mr. Whiting is qualified
under this rule because:
- - he is not subject to a statutory disqualification as set forth in section
3(a)(39) of the Securities Exchange Act of 1934;
-11-
- - he will not be compensated for his participation in the offering by the
payment of commissions or other remuneration based directly or indirectly on the
sale of the offering;
- - he has never been and will not be at the time of his participation in the
offering an associated person of a broker or dealer;
- - he has never participated before in selling a registered offering for any
issuer; and
- - he will perform substantial duties for Para Mas other than in connection
with the sale of the shares.
In order to make the necessary sales, this officer and director plans to
directly contact selected individuals and entities with whom he has a prior
relationship and whom he believes will have an interest in the offering.
Management, however, may enter into an underwriting agreement for this offering
at a later date and at that time pay a commission to any participating
underwriters. If we enter into an underwriting agreement after this offering
becomes effective, we will file with the SEC a post-effective amendment
identifying the underwriter and providing material information about the
underwriting arrangements.
We are therefore offering the shares on a self-underwritten basis. There is no
minimum number of shares required to be sold in this offering.
In order to subscribe for shares, an investor must complete and execute the form
of subscription agreement attached to this prospectus and deliver the executed
subscription agreement to us together with payment of the purchase price for the
shares payable to Para Mas Incorporated.
We may reject or accept any subscription in whole or in part at our discretion.
We may close the offering without notice to subscribers. We may immediately use
the proceeds obtained from the offering.
Upon our acceptance of a subscription agreement, we will deliver to each
subscriber a copy of the fully executed agreement evidencing the number of
shares subscribed for. If we do not accept any subscription or any portion of a
subscription, the amount of the subscription not accepted will be promptly
returned by us to the subscriber.
The estimated costs of this offering are as follows:
Securities and Exchange Commission registration fee. $ 950
Transfer Agent Fees. . . . . . . . . . . . . . . . . $ 500
Accounting fees and expenses . . . . . . . . . . . . $20,000
Legal fees and expenses. . . . . . . . . . . . . . . $10,000
Blue Sky fees and expenses . . . . . . . . . . . . . $ 5,000
Miscellaneous. . . . . . . . . . . . . . . . . . . . $12,108
-------
Total (1). . . . . . . . . . . . . . . . . . . . . . $50,000
=======
(1) If underwriters are used to sell the offering, they will be paid
commissions of up to 10% creating additional offering expenses of $500,000 if
all shares offered by Para Mas are sold.
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SHARES OFFERED BY SELLING SHAREHOLDERS
This prospectus is part of a registration statement that enables the selling
shareholders to sell their shares on a continuous or delayed basis for a period
of twenty months. We have advised the selling shareholders that they shall only
be permitted to sell their shares in jurisdictions where it is lawful to sell
such securities. Thus, the selling shareholders will be permitted to sell their
shares in foreign countries if they comply with all rules and regulations of
that particular jurisdiction. Additionally, the selling shareholders shall be
permitted to sell their shares in the United States only upon this registration
statement becoming effective. Furthermore, the selling shareholders' selling
efforts shall be limited to unsolicited brokerage transactions that comply with
the provisions of Regulation M.
The selling shareholders may sell some or all of their common stock in one or
more transactions, including block transactions:
1. On such public markets or exchanges as the common stock may from time to
time be trading;
2. In privately negotiated transactions;
3. In short sales; or
4. In any combination of these methods of distribution.
The sales price to the public is fixed at $0.25 per share until such time as the
shares of our common stock become traded in the Pink Sheets or an exchange.
Although we intend to build a trading market for our common stock in the Pink
Sheets or on the Over-The-Counter Bulletin Board, public trading of our common
stock may never materialize. If our common stock becomes traded in the Pink
Sheets or on the Over-The-Counter Bulletin Board or another exchange, then the
sales price to the public will vary according to the selling decisions of each
selling shareholder and the market for our stock at the time of resale. In
these circumstances, the sales price to the public may be:
1. The market price of our common stock prevailing at the time of sale;
2. A price related to such prevailing market price of our common stock; or
3. Such other price as the selling shareholders determine from time to time.
The selling shareholders may also sell their shares directly to market makers
acting as agents in unsolicited brokerage transactions. Any broker or dealer
participating in such transactions as agent may receive a commission from the
selling shareholders, or, if they act as agent for the purchaser of such common
stock, from such purchaser. The selling shareholders will likely pay the usual
and customary brokerage fees for such services. If applicable, the selling
shareholders may distribute shares to one or more of their partners who are
unaffiliated with us. Such partners may, in turn, distribute such shares as
described above.
The selling shareholders whose shares are being registered under this prospectus
and registration statement may choose not to sell their shares.
We are bearing all costs relating to the registration of the common stock. The
selling shareholders, however, will pay any commissions or other fees payable to
brokers or dealers in connection with any sale of the common stock.
The selling shareholders must comply with the requirements of the Securities Act
of 1933 and the Securities Exchange Act in the offer and sale of the common
stock. In particular, during such times as
-13
the selling shareholders may be
deemed to be engaged in a distribution of the common stock, and therefore be
considered to be an underwriter, they must comply with applicable law and may,
among other things:
1. Not engage in any stabilization activities in connection with our common
stock;
2. Furnish each broker or dealer through which common stock may be offered,
such copies of this prospectus, as amended from time to time, as may be required
by such broker or dealer; and
3. Not bid for or purchase any of our securities or attempt to induce any
person to purchase any of our securities other than as permitted under the
Securities Exchange Act.
LEGAL PROCEEDINGS
We are not currently a party to any legal proceedings. Our agent for service of
process in Nevada is Rodney E. Sumpter, 139 Vassar Street, Reno, Nevada 89502.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our executive officers and directors and their respective ages as of May 31,
2004 are as follows:
DIRECTORS:
Name of Director Age
- ---------------------- -----
Gary Whiting 48
EXECUTIVE OFFICERS:
Name of Officer Age Office
- -------------------- ----- -------
Gary Whiting 48 President, Principal Executive Officer
Principal Accounting Officer
Principal Financial Officer
Secretary/treasurer
Mr. Whiting became an officer and a director of Para Mas on or about February
11, 2004. He is an entrepreneur having both a legal and a management
background. Mr. Whiting graduated from BYU Law School with a Master in Public
Administration in 1988. Mr. Whiting served as Legislative Counsel to the Utah
State Legislature from 1998 to 1990. From 1998 to September, 2001, Mr. Whiting
served as president and CEO of WorldGroup, Inc., a holding company for Internet
and technology based companies. From September, 2001 to the present, Mr.
Whiting has been the president and CEO of AmeriGroup, the operating subsidiary
of Para Mas. Mr. Whiting has been the manager of a scanning company and has
practiced law since 1989.
TERM OF OFFICE
Our Directors are appointed for terms of one year to hold office until the next
annual general meeting of the holders of our common stock, as provided by the
Nevada Revised Statutes, or until removed
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from office in accordance with our
bylaws. Our officers are appointed by our board of directors and hold office
until removed by the board.
SIGNIFICANT EMPLOYEES
We have no significant employees other than the officers and directors described
above.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides the names and addresses of each person known to us
to own more than 5% of our outstanding common stock as of May 31, 2004, and by
Mr. Whiting who is our sole officer and director at the present time. All
shares are owned directly.
Percentage of Common
Stock Beneficially Owned
------------------------
Name and Address Amount and Nature Prior to After
Title of Class of Beneficial Owner of Beneficial Owner Offering Offering(1)
- ------------------------------------------------------------------------------
Common Stock Gary Whiting 181,506,778 shares 64.5% 60.3%
1337 S. Gilbert Road
Mesa, Arizona 85204
Common Stock All Officers and 181,506,778 shares 64.5% 60.3%
Directors as a Group
(1 person)
- ------------------------------------------------------------------------------
(1) The percentage calculations in this column are based on 281,248,039
shares outstanding and assume that the entire offering by Para Mas of 20,000,000
shares will be sold.
DESCRIPTION OF SECURITIES
GENERAL
Our authorized capital stock consists of 500,000,000 shares of common stock at a
par value of $0.001 per share and 10,000,000 shares of preferred stock at a par
value of $0.001 per share.
COMMON STOCK
As of May 31, 2004, there were 281,248,039 shares of our common stock issued and
outstanding that were held by approximately 725 stockholders.
Holders of our common stock are entitled to one vote for each share on all
matters submitted to a stockholder vote. Holders of common stock do not have
cumulative voting rights. Therefore, holders of a majority of the shares of
common stock voting for the election of directors can elect all of the
directors. Holders of our common stock representing a majority of the voting
power of our capital stock issued and outstanding and entitled to vote,
represented in person or by proxy, are necessary to constitute a quorum at any
meeting of our stockholders. A vote by the holders of a majority of our
-15-
outstanding shares is required to effectuate certain fundamental corporate
changes such as a liquidation, merger or an amendment to our Articles of
Incorporation.
Holders of common stock are entitled to share in all dividends that the board of
directors, in its discretion, declares from legally available funds. In the
event of a liquidation, dissolution or winding up, each outstanding share
entitles its holder to participate pro rata in all assets that remain after
payment of liabilities and after providing for each class of stock, if any,
having preference over the common stock. Holders of our common stock have no
pre-emptive rights, no conversion rights and there are no redemption provisions
applicable to our common stock.
PREFERRED STOCK
As of May 31, 2004, there were no shares of our preferred stock issued and
outstanding. Holders of the preferred shares are entitled to receive cumulative
dividends at the annual rate of 7% or $.07 per share, payable quarterly. The
dividends may be payable in cash or through a dividend of additional shares of
preferred shares.
The preferred shares rank senior to the common shares. The preferred shares
have a liquidation preference of $1.00 per share plus any declared and unpaid
dividends.
The preferred shares are convertible, in whole or in part, at the option of the
holders thereof, into shares of common stock at an amount equal to the average
closing bid price of the common stock for thirty days immediately preceding the
conversion divided by the liquidation preference of $1.00 per share.
Para Mas may, at its option, convert the preferred shares into common stock by
dividing the average closing price of the common stock over a 20 day period by
the liquidation preference of $1.00 per share. In order to exercise this
option, the average price of the common stock must be at least $1.50 per share.
INTERESTS OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or certified
any part of this prospectus or having given an opinion upon the validity of the
securities being registered or upon other legal matters in connection with the
registration or offering of the common stock was employed on a contingency
basis, or had, or is to receive, in connection with the offering, a substantial
interest, direct or indirect, in the registrant or any of its parents or
subsidiaries. Nor was any such person connected with the registrant or any of
its parents or subsidiaries as a promoter, managing or principal underwriter,
voting trustee, director, officer, or employee.
Gary R. Henrie, our independent legal counsel, has provided an opinion on the
validity of our common stock.
CFO Advantage, Inc., independent certified accountants, audited the financial
statements for the year ended December 31, 2003, and presented their report with
respect to the audited financial statements. CFO Advantage, Inc.'s report was
given upon their authority as an expert in accounting and auditing.
-16-
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
Our directors and officers are indemnified as provided by the Nevada Revised
Statutes and our Bylaws. We have been advised that in the opinion of the
Securities and Exchange Commission indemnification for liabilities arising under
the Securities Act is against public policy as expressed in the Securities Act,
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities is asserted by one of our directors, officers, or
controlling persons in connection with the securities being registered, we will,
unless in the opinion of our legal counsel the matter has been settled by
controlling precedent, submit the question of whether such indemnification is
against public policy to a court of appropriate jurisdiction. We will then be
governed by the court's decision.
DESCRIPTION OF BUSINESS
HISTORY
Para Mas was incorporated on June 6, 1994 as U.S. Medical Management, Inc., a
subsidiary of Waterloo Wheels, Inc., a British Columbia company. On June 27,
1994, the shareholders of Waterloo Wheels exchanged all of their shares for
shares in U.S. Medical Management and Waterloo Wheels was dissolved. The
activities of Waterloo Wheels and U.S. Medical Management were confined to
organizational matters and identifying business opportunities. They conducted no
business.
In June 1995, U.S. Medical Management acquired the business of Ken Venturi Golf
Centers, Inc. and changed its name to Ken Venturi Golf, Inc. ("KVGI"). KVGI was
listed on the OTC Bulletin Board and was engaged in franchising indoor golf
training centers under a license from Ken Venturi, a noted golf professional.
The business of KVGI did not succeed and the company ceased operations in May
1997. Upon ceasing operations, Para Mas attempted to locate and negotiate the
acquisition of other business opportunities. On November 1, 2000, Para Mas
entered into agreements that would lead to the acquisition of the business
assets of International Bible Games Inc. and Destination T.B.G. Development &
Marketing Corp. Though pursued over a period of time, Para Mas was ultimately
unable to acquire these assets. On April 12, 2004, Para Mas acquired 100% of
the issued and outstanding shares of AmeriGroup, Inc., a Nevada corporation.
The business operations of AmeriGroup, Inc. now constitute all of the business
operations of Para Mas.
OUR BUSINESS
AmeriGroup operates as:
- - A one source, cross-promotional business-to-business medium for local and
national businesses under the name and style of Itzyourmall.com;
- - A complete e-commerce solution for local and national businesses;
- - A benefit services program for individuals, families and organizations as
evidenced by a loyalty/rewards card given to individuals by local businesses.
Our business strategy is to sell marketing rights to geographic areas as a means
of implementing the Itzyourmall system throughout the United States, Canada and
eventually internationally. We derive fee and other income from the operation
of the territories sold. To date, we have sold marketing rights for three
regions: 1) the country of Canada; 2) the California 10 state region; and 3)
the Texas 10 state region, each for $100,000.00. We are currently working with
individuals interested in the New York
-17-
10 state region and the Florida 10 state
region. Our business plan calls for the distribution of marketing rights in all
fifty states.
Although we are more than three years old, we view our business operations as
being in the start-up phase and we have yet to generate significant revenues.
THE CONCEPT
We have built AmeriGroup on the following assumptions which we believe to be
true:
- - Most retail dollars are spent locally;
- - It will be important to the success of small retail businesses to achieve
a web presence for the purpose of advertising and selling product;
- - Most small businesses do not have the resources necessary to achieve the
requisite web presence and will embrace the chance to do so at an affordable
price;
- - Purchasers will welcome the chance to shop locally on the web if they can
receive a discount for doing so;
- - A merchant's web site needs a place to reside where it can be located
easily by purchasers using the internet.
Our research shows that most retailing on the internet to date has been a direct
selling by businesses of their own products or the products of others. So far,
this approach has generally not proven to be profitable. Our approach is
different. We create virtual malls on the internet that reflect the actual
brick and mortar malls that exist in a given area. The businesses in the malls
obtain a web presence and a base of loyal customers who are Itzyourmall card
holders. Card holders in return are provided with a free genuine and
significant discount program on their purchases both locally and nationally. It
creates a win, win, win situation among the retailers, the cardholders and
AmeriGroup.
COMPANY STRATEGY
Our business consists of creating e-commerce solutions for buyers and sellers in
the retail market place through the creation of e-malls. Mall merchants are
motivated to participate because it gives their companies a web presence and the
technical capability of selling products in e-commerce. Participation also
exposes and promotes their products to a growing base of card associates as
discussed herein. Card associates are motivated to participate in the program
because they are allowed to shop Itzyourmall's e-malls via the internet or by
kiosk and receive significant discounts on products or services purchased.
We have created and beta tested e-malls in the Mesa, Arizona area. Our e-malls
and other concepts within our business plan have potential for revenue
generation in the following ways.
Co-brander. A business that purchases a 1,000 cards or more becomes co-brander.
- ----------
A co-brander receives their own domain and their own loyalty/rewards card. The
co-brander pays an annual fee for the card-holder's account to be hosted on the
Itzyourmall server. A co-brander also receives their own customized e-mall.
This co-brander's mall is actually the Itzyourmall with the co-brander's
template. This mall allows the co-brander to cross-market with all of the other
co-branders nation- and internationally-wide. Co-branders pay an annual fee for
hosting and maintenance of their domain and web-mall. Merchants must also offer
discounts on purchases made by card associates.
-18-
Card sales. We are creating a base of card associates who for an annual fee
receive a card allowing them to shop in AmeriGroup e-malls and receive discounts
on products purchased from e-mall merchants.
e-Business. After reviewing on the internet, products available at the local
mall, card associates can then physically travel to the mall to purchase
products or they can purchase products on-line. AmeriGroup will provide e-mall
merchants with the electronic ability to process on-line sales for a fee per
transaction. Cardholders will also be able to purchase tickets through kiosks
that will be located throughout the United States in stores next to the theaters
and places of amusements.
Territory Marketing Rights. Our business plan to implement local e-malls
throughout the United States and in selected provinces in Canada calls for the
sale of marketing rights for specific geographical areas. Market owners will
arrange for the development of e-malls within their allowed areas by signing up
merchants in local malls to participate in the program. AmeriGroup receives fee
income from the initial sale of the marketing rights, from wholesale and retail
and other fees from the transactions within e-malls created by the Market
owners.
MARKETING
Though AmeriGroup has the right to create e-malls directly in areas where market
rights have not been sold, we have determined to develop the Itzyourmall
community through the sale of marketing rights. We believe the Itzyourmall
community can grow to sizeable proportion by Market owners developing e-malls
within the geographic area assigned to their territory.
Card sales to card associates are made primarily in the form of employee benefit
packages to the employees of companies that may or may not be e-mall merchants.
COMPETITION
No one is providing discounts quite like Itzyourmall. Consequently, we have no
direct competitor. There are, however, businesses that have components similar
to ours. These businesses include coupon book, entertainment books, loyalty
cards and coupon mailers. None of these have created a program like
Itzyourmall. We feel that our situation is analogous to Blockbuster Video.
When they started building their stores, there were thousands of little "mom and
pop" video businesses everywhere. Blockbuster wiped out all of those little
stores, because they were bigger and better. We believe we can do the same with
the other discount businesses in the market today.
GOVERNMENT REGULATION
We are subject to all of the government regulations that regulate businesses
generally. We are not aware of any government regulations that are specific to
the Para Mas business. We anticipate that our products will be marketed over a
wide geographic area involving several states and eventually all of the states
in the United States. Accordingly, we will be subject to any rules regulating
interstate commerce that may apply to us. Also, as a business focused on the
Internet, there is a risk that our activities and the Internet generally may
become the subject of government regulation in the future or that governments
will interpret their laws as having jurisdiction over Internet business. Due to
the increasing popularity and use of the Internet, it is possible that a number
of laws and regulations may be adopted with respect to the Internet generally,
covering issues such as user privacy, pricing, and
-19-
characteristics and quality
of products and services. Similarly, the growth and development of the market
for Internet commerce may prompt calls for more stringent consumer protection
laws that may impose additional burdens on those companies conducting business
over the Internet. The adoption of any additional laws or regulations may
decrease the growth of commerce over the Internet, increase our cost of doing
business or otherwise have a harmful effect on our business.
DESCRIPTION OF PROPERTY
The business operations of Para Mas are located at 1337 S. Gilbert Road, Suite
104, Mesa, Arizona 85204. At that location we have office space of
approximately 2,000 square feet for which we pay a monthly rent payment of
$1,471. Our lease of this space expires in September 2004. We do not expect
any difficulty in locating space upon the expiration of the lease that will be
suitable to our needs.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
NO PRESENT PUBLIC MARKET
There is no active public market for our common stock.
OPTION, WARRANTS AND REGISTRATION RIGHTS
We have no outstanding options or warrants to purchase, or securities
convertible into, common equity of Para Mas. Other than the shares for the
selling shareholders listed herein, there are no shares Para Mas has agreed to
register under the Securities Act. There are 29,042,105 common shares being
registered pursuant to this registration statement, 20,000,000 of which will be
offered by Para Mas and 9,042,105 of which may be offering by the selling
shareholders.
RULE 144 SHARES
A total of 278,718,600 shares of our common stock is available for resale to the
public in accordance with the volume and trading limitations of Rule 144 of the
Act.
In general, under Rule 144 as currently in effect, a person who has beneficially
owned shares of a company's common stock for at least one year is entitled to
sell within any three month period a number of shares that does not exceed the
greater of:
1. 1% of the number of shares of the company's common stock then outstanding
which, in our case equals 2,812,480 shares as of the date of this prospectus; or
2. The average weekly trading volume of the company's common stock during
the four calendar weeks preceding the filing of a notice on form 144 with
respect to the sale.
Sales under Rule 144 are also subject to manner of sale provisions and notice
requirements and to the availability of current public information about the
company.
Under Rule 144(k), a person who is not one of the company's affiliates at any
time during the three months preceding a sale, and who has beneficially owned
the shares proposed to be sold for at least 2 years, is entitled to sell shares
without complying with the manner of sale, public information, volume
-20-
limitation
or notice provisions of Rule 144. There are 97,211,822 common shares of Para
Mas that may be sold at the present time under Rule 144(k).
The Division of Corporate Finance of the Securities and Exchange Commission has
taken the position that promoters or affiliates of a blank check company and
their transferees would act as underwriters under the Securities Act of 1933
when reselling the securities of the blank check company and that the securities
could only be resold through a registered offering and that Rule 144 would not
be available for those resale transactions. Accordingly, Rule 144 may not be
available for the resale of all issued and outstanding shares of Para Mas.
PENNY STOCK RULES
The Securities Exchange Commission has also adopted rules that regulate
broker-dealer practices in connection with transactions in penny stocks. Penny
stocks are generally equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system).
The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, deliver a standardized risk
disclosure document prepared by the Commission, which:
- - contains a description of the nature and level of risk in the market for
penny stocks in both public offerings and secondary trading;
- - contains a description of the broker's or dealer's duties to the customer
and of the rights and remedies available to the customer with respect to a
violation to such duties or other requirements of Securities' laws;
- - contains a brief, clear, narrative description of a dealer market,
including "bid" and "ask" prices for penny stocks and significance of the
spread between the "bid" and "ask" price;
- - contains a toll-free telephone number for inquiries on disciplinary
actions;
- - defines significant terms in the disclosure document or in the conduct of
trading in penny stocks; and
- - contains such other information and is in such form (including language,
type, size and format), as the Commission shall require by rule or regulation.
The broker-dealer also must provide, prior to effecting any transaction in a
penny stock, the customer:
- - with bid and offer quotations for the penny stock;
- - the compensation of the broker-dealer and its salesperson in the
transaction;
- - the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the market for
such stock; and
- - monthly account statements showing the market value of each penny stock
held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks,
-21-
and a signed and dated copy of a written suitability statement.
These disclosure requirements will have the effect of reducing the trading
activity in the secondary market for our stock because it will be subject to
these penny stock rules and because many broker-dealers refuse to enter into
penny stock transactions rather than comply with the rules. Therefore,
stockholders may have difficulty selling those securities.
HOLDERS OF OUR COMMON STOCK
As of the date of this registration statement, we have approximately 725
registered shareholders.
DIVIDENDS
There are no restrictions in our Articles of Incorporation or bylaws that
restrict us from declaring dividends. The Nevada Revised Statutes, however, do
prohibit us from declaring dividends where, after giving effect to the
distribution of the dividend:
1. We would not be able to pay our debts as they become due in the usual
course of business; or
2. Our total assets would be less than the sum of our total liabilities,
plus the amount that would be needed to satisfy the rights of shareholders who
have preferential rights superior to those receiving the distribution.
We have not declared any dividends. We do not plan to declare any dividends in
the foreseeable future.
EXECUTIVE COMPENSATION
COMPENSATION
The following table sets forth certain information as to our officers and
Directors.
Annual Compensation Table
Annual Compensation Long Term Compensation
------------------------- -----------------------
Other All
Annual Other
Com- Com-
pen- Restricted pen-
Fiscal sa- Stock Options/ LTIP sa-
Name Title Year Salary Bonus tion Awarded SARs(#) payouts($)tion
- ---- ----- --------- -------- ----- ------ ------- ------- --------- ----
Gary Pres.
Whiting and 2003 $15,000 0 0 0 0 0 0
Dir. $ 0 0 0 0 0 0 0
-22-
EMPLOYMENT AGREEMENTS
No officer or director has an employment agreement with Para Mas at the present
time.
FINANCIAL STATEMENTS
-23
PARA MAS INTERNET, INC.
JUNE 30, 2004
(UNAUDITED)
F-1
TABLE OF CONTENTS
Financial statements
Balance Sheet F-3
Statement of Income and Accumulated Deficit F-4
Statement of Cash Flows F-5
Notes to financial statements F-6 - F-9
F-2
PARA MAS INTERNET, INC.
-----------------------
BALANCE SHEETS
-------------------------
AS OF JUNE 30, 2004
--------------------
UNAUDITED
---------
ASSETS
As of
6/30/2004
---------
CURRENT ASSETS
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 28,865
Accounts Receivable . . . . . . . . . . . . . . . . . . . . 385,000
Note Receivable - Related Party . . . . . . . . . . . . . . 68,355
-----------
Total current assets . . . . . . . . . . . . . . . . . . 482,220
-----------
FIXED ASSETS
Accumulated Depreciation . . . . . . . . . . . . . . . . . (15,957)
Vehicle. . . . . . . . . . . . . . . . . . . . . . . . . . 24,850
Office Equipment . . . . . . . . . . . . . . . . . . . . . 11,131
Computer Equipment. . . . . . . . . . . . . . . . . . . . 11,894
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . 470,500
-----------
Total Fixed Assets . . . . . . . . . . . . . . . . . 502,418
-----------
OTHER ASSETS
Service Receivable . . . . . . . . . . . . . . . . . . . . 4,500
Intangible Assets. . . . . . . . . . . . . . . . . . . . . 23,900
-----------
OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . 28,400
-----------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,013,038
===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable. . . . . . . . . . . . . . . . . . . . . . 45,394
Interest payable. . . . . . . . . . . . . . . . . . . . . . 833
Salary payable. . . . . . . . . . . . . . . . . . . . . . . 1,263,829
Payroll liabilities . . . . . . . . . . . . . . . . . . . . 36,238
Note payable - Related Party . . . . . . . . . . . . . . . 320,706
----------
Total current liabilities. . . . . . . . . . . . . . . . 1,667,000
----------
LONG TERM LIABILITIES
Notes payable. . . . . . . . . . . . . . . . . . . . . . . 86,546
----------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . 1,753,547
----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $0.001 par value, 100,000,000 shares
authorized, 48,294,395 shares issued and outstanding as of
June 30, 2004 and December 31, 2003, respectively . . . . . 76,237
Additional paid in capital . . . . . . . . . . . . . . . . . . 1,094,626
Accumulated deficit. . . . . . . . . . . . . . . . . . . . . . (1,911,371)
----------
Total stockholders' equity (deficit) . . . . . . . . . . (740,508)
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY . . . . . . . . . . $ 1,013,038
===========
The accompanying notes to financial statements should be
read in conjunction with this Balance Sheet
F-3
PARA MAS INTERNET, INC.
STATEMENT OF INCOME AND ACCUMULATED DEFICIT
FOR THE THREE MONTHS AND SIX MONTHS ENDED
JUNE 30, 2004
--------------
For the three months ended For the six months ended
June 30, 2004 June 30, 2004
-------------------------------------------------------
REVENUES . . . . . . . . . . . . . . . . . . . $ 238,098 $ 330,521
COST OF REVENUES . . . . . . . . . . . . . . . 19,766 19,766
-------------------------------------------------------
GROSS PROFIT (LOSS). . . . . . . . . . . . . . $ 218,332 $ 310,755
-------------------------------------------------------
EXPENSES:
General and administrative. . . . . . . . . 128,071 234,914
Depreciation. . . . . . . . . . . . . . . . 1,547 3,094
Professional fees . . . . . . . . . . . . . 33,435 33,435
-------------------------------------------------------
Total expenses . . . . . . . . . . . . . 163,053 271,443
-------------------------------------------------------
Operating income (loss). . . . . . . . . . . . 55,279 39,312
-------------------------------------------------------
OTHER INCOME (EXPENSE)
Other expenses. . . . . . . . . . . . . . . 896 896
-------------------------------------------------------
Total other income (expense) . . . . . . 896 896
-------------------------------------------------------
LOSS FROM OPERATIONS . . . . . . . . . . . . . 56,175 40,208
-------------------------------------------------------
NET INCOME (LOSS). . . . . . . . . . . . . . . 56,175 40,208
=======================================================
ACCUMULATED DEFICIT - Beginning. . . . . . . . (1,967,546) (1,951,579)
ACCUMULATED DEFICIT - End. . . . . . . . . . . (1,911,371) (1,911,371)
LOSS PER SHARE BASIC AND DILUTED . . . . . . . $ (0.00) $ (0.00)
=======================================================
PER SHARE INFORMATION:
Basic and dilulted Weighted average Number of
Shares Outstanding . . . . . . . . . . . . . . 48,294,395 48,294,395
=======================================================
The accompanying notes to pro forma financial statements should be
read in conjunction with these Statements of Income and Accumulated Deficit
F-4
PARA MAS INTERNET, INC.
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS AND SIX MONTHS
ENDED JUNE 30, 2004
-------------------
Six Three
Months Months
Ended Ended
6/30/2004 6/30/2004
-----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income / (Loss) from Operations . . . . . . . . . $ 40,208 $ 56,175
Adjustments to reconcile net income
to net cash provided
Depreciation Expense. . . . . . . . . . . . . . . . . 3,094 1,547
(Increase) / Decrease in Accounts Receivable. . . . . (145,000) (145,000)
(Increase) / Decrease in Note Receivable. . . . . . . (81,180) (21,180)
(Increase) / Decrease in Note Payable . . . . . . . . 5,358 44,990
Increase / (Decrease) in Payroll Liability. . . . . . 72,020 -
Increase / (Decrease) in Accounts Payable . . . . . . 16,932 16,932
-----------------------
Net cash provided by (used in) operating activities (88,568) (46,536)
-----------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Purchase)/Sale of Equipment. . . . . . . . . . . . . (5,131) -
-----------------------
Net cash provided by (used in) investing activities (5,131) -
-----------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of sale of common stock, net . . . . . . . . - -
Issuance of Stock . . . . . . . . . . . . . . . . . . - -
Increase/(Decrease) in Short Term Notes Payable . . . - -
Increase/(Decrease) in Short Term Notes Payable -
Related Party . . . . . . . . . . . . . . . . . . - -
-----------------------
Net cash provided by (used in) financing activities - -
-----------------------
Net increase (decrease) in cash . . . . . . . . . . . . (93,699) (46,536)
Balance at beginning of Period. . . . . . . . . . . . . 85,563 38,400
End of Period . . . . . . . . . . . . . . . . . . . . . $ (8,136) $ (8,136)
=======================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
SUPPLEMENTAL INFORMATION: -----------------------
Interest Paid . . . . . . . . . . . . . . . . . . . . . $ - $ -
-----------------------
Taxes Paid. . . . . . . . . . . . . . . . . . . . . . . $ - $ -
-----------------------
Cash paid during the year for interest. . . . . . . . $ - $ -
-----------------------
Cash paid during the year for taxes . . . . . . . . . $ - $ -
-----------------------
Preferred stock dividends payable . . . . . . . . . . $ - $ -
-----------------------
Stock options issued in exchnage for services . . . . $ - $ -
-----------------------
The accompanying notes to financial statements should be
read in conjunction with these Statements of Cash Flows
F-5
PARA MAS INTERNET, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2004
(UNAUDITED)
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES
---------------------------------
A summary of the significant accounting policies applied in the preparation of
the accompanying consolidated financial statements as follows.
BUSINESS AND BASIS OF PRESENTATION - Para Mas Internet, Inc. ("Company" or "Para
Mas") was incorporated under the laws of the State of Nevada on June 6, 1994 as
U.S. Medical Management, Inc., a wholly owned subsidiary of Waterloo Wheels,
Inc. The Company is inactive with no significant operations and is seeking to
merge or acquire an interest in business opportunities. Waterloo Wheels, Inc.
was incorporated on June 2, 1986 under the laws of British Columbia. In June
1995, the shareholders of Waterloo Wheels, Inc. exchanged all their outstanding
stock for shares of the Company on a share for share basis. In June 1995, the
Company completed a merger with Ken Venturi Golf Training Center, Inc.
Effective with the merger, all previously outstanding common stock of Ken
Venturi Golf Center, Inc. was exchanged for 4,000,000 shares of the Company's
common stock. Immediately following the merger, the Company changed its name to
Ken Venturi Golf, Inc.
In November 1997, the Company changed its name to Transcontinental Waste,
Industries. In April 1999, the Company changed its name to Financial Depot
Online, Inc. In August 1999 the Company changed its name to Para Mas Internet,
Inc.
The Company has generated no sales revenues, has incurred expenses and has
sustained losses. Consequently, its operations are subject to all the risks
inherent in the establishment of a new business enterprise. For the period from
inception through June 30, 2004 the Company has an accumulated deficit of
$1,911,371.
LIQUIDITY - The Company is inactive with no significant operations and is
seeking to merge or acquire an interest in business opportunities. To date, the
Company has incurred expenses and has sustained losses. As shown in the
accompanying financial statements, the Company incurred a net loss of $ 0
during the period ended June 30, 2004. The Company's current liabilities
exceeded its current assets by $1,184,780.
ADVERTISING - The Company will recognize advertising expenses in accordance with
SOP 93-7 "Reporting on Advertising Costs." The Company did not incur advertising
costs during the period ended June 30, 2004.
INCOME TAXES - Income taxes are provided based on the liability method for
financial reporting purposes in accordance with the provisions of Statements of
Financial Standards No. 109, "Accounting for Income Taxes". Under this method
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be removed or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
the statement of operations in the period that includes the enactment date.
CASH EQUIVALENTS - For purposes of the Statements of Cash Flows, the Company
considers all highly liquid debt instruments purchased with a maturity date of
three months or less to be cash equivalents.
PROPERTY AND EQUIPMENT - For financial statement purposes, property and
equipment will be depreciated using straight-line method over their estimated
useful lives (five years for furniture, fixtures and equipment). The
straight-line method of depreciation is also used for tax purposes.
CONCENTRATIONS OF CREDIT RISK - Financial instruments and related items, which
potentially subject the Company to concentrations of credit risk, consist
primarily of cash, cash equivalents and trade receivables. The Company places
its cash and temporary cash investments with high credit quality institutions.
At times, such investments may be in excess of the FDIC insurance limit.
F-6
PARA MAS INTERNET, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE THREE MONTHS ENDED JUNE 30, 2004
(UNAUDITED)
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES-The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amount and disclosures.
Accordingly actual results could differ from those estimates.
LONG-LIVED ASSETS - The Company has adopted Statement of Financial Accounting
Standards No. 144 (SFAS 144). The Statement requires that long-lived assets and
certain identifiable intangibles held and used by the Company be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Events relating to
recoverability may include significant unfavorable changes in business
conditions, recurring losses, or a forecasted inability to achieve break-even
operating results over an extended period. The Company evaluates the
recoverability of long-lived assets based upon forecasted undercounted cash
flows. Should an impairment in value be indicated, the carrying value of
intangible assets will be adjusted, based on estimates of future discounted cash
flows resulting from the use and ultimate disposition of the asset. SFAS No.
144 also requires assets to be disposed of be reported at the lower of the
carrying amount or the fair value less costs to sell.
COMPREHENSIVE INCOME - The Company does not have any items of comprehensive
income in any of the periods presented.
NET LOSS PER SHARE - The Company has adopted Statement of Financial Accounting
Standards No. 128, "Earnings Per Share," specifying the computation,
presentation and disclosure requirements of earnings per share information.
Basic earnings (loss) per share has been calculated based upon the weighted
average number of common shares outstanding. Stock options and warrants will be
excluded as common stock equivalents in the diluted earnings per share
because they are either antidilutive, or their effect is not material.
FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying values of cash and cash
equivalents, accounts receivable, accounts payable and accrued expenses
approximate fair value due to the relatively short maturity of these instruments
RECLASSIFICATIONS - Certain reclassifications have been made in prior years'
financial statements to conform to classifications in the current year.
STOCK BASED COMPENSATION - In December 2002, the FASB issued Statement of
Financial Accounting Standards No.148 ("SFAS No.148"),"Accounting for
Stock-Based Compensation-Transition and Disclosure-an amendment of SFAS 123."
This statement amends SFAS No. 123, "Accounting for Stock-Based Compensation,"
to provide alternative methods of transition for a voluntary charge to the fair
value based method of accounting for stock-based employee compensation. In
addition, this statement amends the disclosure requirements of SFAS No. 123 to
require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. The Company has chosen to
continue to account for stock-based compensation using the intrinsic value
method prescribed in APB Opinion No. 25 and related interpretations.
Accordingly, compensation expense for stock options is measured as the excess,
if any, of the fair market value of the Company's stock at the date of the
grant over the exercise price of the related option. The Company has adopted the
annual disclosure provisions of SFAS No. 148 in its financial reports for the
year ended December 31, 2003 and will adopt the interim disclosure provisions
for its financial reports for the quarter ended June 30, 2004.
F-7
PARA MAS INTERNET, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE THREE MONTHS ENDED JUNE 30, 2004
(UNAUDITED)
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
FOREIGN CURRENCY TRANSLATION - The Company translates the foreign currency
financial statements of its Canadian subsidiary in accordance with the
requirements of Statement of Financial Accounting Standards No. 52, "Foreign
Currency Translation." Assets and liabilities are translated at current
exchange rates, and related revenue and expenses are translated at average
exchange rates in effect during the period. Resulting translation adjustments
are recorded as a separate component in stockholders' equity. Foreign currency
transaction gains and losses are included in the statement of income.
NOTE 2 - GOING CONCERN MATTERS
The accompanying statements have been prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. As shown in the financial statements, from its
inception the Company has incurred losses of $1,911,371. This factor among
others may indicate that the Company will be unable to continue as a going
concern for a reasonable period of time. The Company's existence is dependent
upon management's ability to develop profitable operations and resolve it's
Liquidity problems. The accompanying financial statements do not include any
adjustments that might result should the Company be unable to continue as a
going concern.
In order to improve the Company's liquidity, the Company is actively pursing
additional equity financing through discussions with investment bankers and
private investors. There can be no assurance the Company will be successful in
its effort to secure additional equity financing.
NOTE 3 - STOCKHOLDERS' EQUITY
There were no issuances of stock for either services or cash during the three
months ended June 30, 2004.
NOTE 4 - WARRANTS AND OPTIONS
As of June 30, 2004, there are no warrants or options outstanding to acquire
any additional shares of common stock that are not disclosed in the equity
section of the balance sheet.
NOTE 5 - ACCRUED EXPENSES
For the 3 months ended June 30, 2004, there is approximately $37,000 of accrued
payroll, with corresponding payroll liabilities (taxes) accrued of $0, as the
officer is deemed an independent contractor. The amount due to the company
executives is as follows:
Gary Whiting $ 37,500
---------
Total $ 37,500
NOTE 6 - REVENUE AND ACCOUNTS RECEIVABLE
During the three months ended June 30, 2004, the company sold the exclusive
rights to sell and distribute discount cards, websites, and store front listings
for the Florida Region (defined as ten U.S. States in the agreement). The
Company has received $5,000 towards the purchase of these rights and has
recognized the remaining $145,000 as accounts receivable which is to be received
in full prior to November 16, 2004.
F-8
NOTE 6 - REVENUE AND ACCOUNTS RECEIVABLE (CONTINUED)
This package was sold to the Fred Gagnon, who was the previous Senior Vice
President of the recently acquired Amerigroup, Inc.
The balance of the revenue earned during the quarter is made up of $60,000 for
similar sales of marketing rights, along with sales of consignment tickets and
revenues from the store front and co-branding packages.
NOTE 7 - RELATED PARTY TRANSACTIONS
During the three months ended June 30, 2004, the company sold the exclusive
rights to sell and distribute discount cards, websites, and store front listings
for the Florida Region (defined as ten U.S. States in the agreement). The
Company has received $5,000 towards the purchase of these rights and has
recognized the remaining $145,000 as accounts receivable which is to be received
in full prior to November 16, 2004. This package was sold to the Fred Gagnon,
who was the previous Senior Vice President of the recently acquired Amerigroup,
Inc.
F-9
AMERIGROUP, INC.
----------------
(A Development Stage Company)
-----------------------------
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------
DECEMBER 31, 2003
-----------------
F-10
CONTENTS--------
INDEPENDENT AUDITORS' REPORT F-12
FINANCIAL STATEMENTS:
Balance Sheet F-13
Statement of Income and Accumulated Deficit F-14
Statement of Changes of Stockholders' Equity F-15
Statement of Cash Flows F-16
NOTES TO FINANCIAL STATEMENTS F-17 - F-24
F-11
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Amerigroup, Inc.:
We have audited the accompanying balance sheet of Amerigroup, Inc. (a Nevada
Corporation) as of December 31, 2003, and the related statement of income and
accumulated deficit from January 1, 2003 to December 31, 2003, changes in
stockholders' equity, and cash flows for the year ended December 31, 2003.
All information included in these financial statements is the
representation of the management of Amerigroup, Inc. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Amerigroup, Inc. as of December
31, 2003, and the result of its operations and its cash flows for the periods
ended December 31, 2003, in accordance with generally accepted accounting
principles in the United States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As disclosed in Note 5 to the financial
statements, the Company has had limited operations and has not established a
long-term source of revenue. This raises substantial doubt about its ability to
continue as a going concern. Management's plan in regards to these matters is
also described in Note 5. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
CFO Advantage, Inc.
June 9, 2004
Las Vegas, Nevada
F-12
AMERIGROUP, INC.
----------------
(A Development Stage Company)
-----------------------------
BALANCE SHEETS
--------------
AS OF DECEMBER 31, 2003
-----------------------
AUDITED
-------
ASSETS
12/31/2003
----------
CURRENT ASSETS
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 85,563
----------
OTHER CURRENT ASSETS
Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . 180,000
Note Receivable - Related Party. . . . . . . . . . . . . . . . . . . . . 7,543
----------
Total Other Current Assets. . . . . . . . . . . . . . . . . . . . . . . . . 187,543
-----------
FIXED ASSETS
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . (12,863)
Vehicle. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,850
Office Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000
Computer Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,894
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 470,500
----------
Total Fixed Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,382
-----------
OTHER ASSETS
Service Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500
Intangible assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,900
----------
Total Other Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,400
-----------
Total Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 801,888
===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES
CURRENT LIABILITIES
Interest Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 833
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,462
Salary payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,226,828
Payroll liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . 36,238
----------
Total Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 1,292,361
OTHER CURRENT LIABILITIES
Note payable - Related Party . . . . . . . . . . . . . . . . . . . . . . 242,252
----------
Total Other Current Liabilities . . . . . . . . . . . . . . . . . . . . . . 242,252
LONG TERM LIABILITIES
Notes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,991
----------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,582,604
----------
STOCKHOLDERS' EQUITY
Common stock, $0.0001 par value, 80,000,000 shares authorized,
276,418,600,shares issued and outstanding as of December 31, 2003. . . . 27,642
Additional paid in capital - common stock. . . . . . . . . . . . . . . . 1,871,438
Minority interest-Amerigroup . . . . . . . . . . . . . . . . . . . . . . -
Minority interest-Mobile Scan. . . . . . . . . . . . . . . . . . . . . . -
Subscribed Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . (432,936)
Accumulated Deficit. . . . . . . . . . . . . . . . . . . . . . . . . . . (2,246,860)
----------
Total Stockholders' Equity. . . . . . . . . . . . . . . . . . . . . . . . . (780,716)
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT). . . . . . . . . . . . $ 801,888
==========
The accompanying independent auditors report and notes to financial statements
should be read in conjunction with this Balance Sheet.
F-13
Amerigroup, Inc.
----------------
(A Development Stage Company)
-----------------------------
STATEMENTS OF INCOME AND ACCUMULATED DEFICIT
--------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 2003
------------------------------------
(AUDITED)
---------
Audited
1/1/2003
to
12/31/2003
------------
REVENUES. . . . . . . . . . . . . . . . . . . . . $ 419,323
COST OF REVENUES. . . . . . . . . . . . . . . . . 29,591
------------
GROSS PROFIT (LOSS) . . . . . . . . . . . . . . . 389,732
------------
EXPENSES:
General and administrative . . . . . . . . . . 468,868
Consulting . . . . . . . . . . . . . . . . . . 42,950
Depreciation . . . . . . . . . . . . . . . . . 12,374
Interest Expense . . . . . . . . . . . . . . . 1,300
Payroll. . . . . . . . . . . . . . . . . . . . 243,500
Taxes. . . . . . . . . . . . . . . . . . . . . 2,908
------------
Total Expenses. . . . . . . . . . . . . . . . . . 771,900
------------
Deficit from operations in the development stage. (382,168)
ACCUMULATED DEFICIT, beginning of period. . . . . (1,864,692)
------------
ACCUMULATED DEFICIT, end of period. . . . . . . . $(2,246,860)
============
PER SHARE INFORMATION:
Weighted average number of shares outstanding
(basic and diluted) . . . . . . . . . . . . . 2,024,751
============
Earnings Per Share of common stock
(basic and diluted) . . . . . . . . . . . . . $ (0.153)
============
The accompanying independent auditors report and notes
to financial statements should be read in conjunction with this
Statement of Income and Accumulated Deficit.
F-14
AMERIGROUP, INC.
----------------
(A Development Stage Company)
-----------------------------
STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
-------------------------------------------
AS OF DECEMBER 31, 2003
-----------------------
AUDITED
-------
Common Common Additional
Stock Stock Paid-in Subscription Income Total
Shares Amount Capital Receivable (Deficit) Equity
----------- ------------ ----------- -------------- ---------- -----------
Issuance of common
stock for cash . . . . 261,595,000 $ 26,160 $ 275,784 $ (32,080) $ - $ 269,863
Issuance of common
stock for services . . 4,465,000 447 129,791 - - 130,237
Deficit for the year
ended December
31, 2001 - - - - (977,778) (977,778)
----------- ------------ ----------- -------------- ---------- -----------
Balance at December
31, 2001 266,060,000 26,606 405,574 (32,080) (977,778) (577,678)
Issuance of common
stock for cash . . . . 6,794,000 679 668,683 (345,575) - 323,788
Issuance of common
stock for services . . 375,000 38 37,500 - - 37,538
Issuance of common
stock for fixed assets 250,000 25 24,975 - - 25,000
Deficit for the year
ended December 31,
2002 - - - - (886,914) (886,914)
----------- ------------ ----------- -------------- ---------- -----------
Balance at December
31, 2002 273,479,000 27,348 1,136,732 (377,655) (1,864,692) (1,078,267)
Issuance of common
stock for cash . . . . 1,517,600 152 379,348 (55,281) - 324,219
Issuance of common
stock for fixed assets 1,422,000 142 355,358 - - 355,500
Deficit for the period
ended December 31,
2003 - - - - (382,168) (382,168)
----------- ------------ ----------- -------------- ---------- -----------
Balance at December
31, 2003 276,418,600 $ 27,642 $ 1,871,438 $(432,936) $(2,246,860) $ (780,717)
=========== =========== ============= ============= ============ ============
The accompanying independent auditors report and notes to financial statements
should be read in conjunction with this Statement of Changes in Stockholders
Equity
F-15
Amerigroup, Inc.
----------------
(A Development Stage Company)
-----------------------------
STATEMENTS OF CASH FLOWS
-----------------------------
AS OF DECEMBER 31, 2003
------------------------
(AUDITED)
---------
Audited
Twelve months ended
12/31/2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Deficit from operations in the development stage $ (382,168)
Depreciation . . . . . . . . . . . . . . . . . 12,374
Subscribed stock . . . . . . . . . . . . . . . (55,281)
Accounts receivable. . . . . . . . . . . . . . (180,000)
Salary payable . . . . . . . . . . . . . . . . 238,500
---------------------
Net cash provided by Operating Activities. . . . (366,575)
---------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Notes payable - related party. . . . . . . . . 179,648
Additional paid in capital . . . . . . . . . . 256,744
---------------------
Net cash provided by Financing Activities. . . . 436,392
---------------------
Balance at beginning of period . . . . . . . . . . 15,746
Net increase in cash . . . . . . . . . . . . . . . 69,817
---------------------
Balance at end of period . . . . . . . . . . . . . $ 85,563
=====================
SUPPLEMENTAL INFORMATION:
Interest Paid. . . . . . . . . . . . . . . . . . . $ 1,300
=====================
Taxes Paid . . . . . . . . . . . . . . . . . . . . $ 2,908
=====================
The accompanying independent auditors report and notes to financial statements
should be read in conjunction with this Statement of Cash Flows.
F-16
AMERIGROUP, INC.
----------------
(A Development Stage Company)
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
AS OF DECEMBER 31, 2003
-----------------------
(AUDITED)
---------
NOTE 1 - ORGANIZATION AND PURPOSE
Amerigroupmall Inc. ("Amerigroup") is the parent company and head of the
respective divisions, WorldGroup Inc. ("Worldgroup") and Mobilescan Inc.
("Mobilescan"). Amerigroupmall Inc. was previously a division of Worldgroup.
When Amerigroup was incorporated, Worldgroup remained a majority shareholder in
the company. Amerigroup was subsequently merged with Worldgroup during 2002.
Given the majority percentage ownership and control of the divisions, for 2002
and 2001, the financial statements of Amerigroup include the consolidated
financial information of Worldgroup and Mobilescan as well.
Mobilescan was previously a subsidiary of Amerigroup. Upon the merger of
Worldgroup and Amerigroup, Mobilescan became a direct subsidiary of the parent
company, Amerigroup. The financial statements here within represent the
activities of Amerigroup, Mobilescan, and Worldgroup, for the periods ending
December 31, 2002 and 2001, respectively.
The purpose of Amerigroup and Worldgroup is a provider of one source, the least
of cross-markets promotionals for local and national business under the name and
style of Itzyourmall.com; a complete e-commerce solutions provider for local and
national business with benefit services for individuals, families and
organizations as evidenced by a personalized loyality rewards card with a
diverse network of other services which become available to card holders. The
network of services is offered under the co-brand name "itzyourmall" evidenced
by a logo included on the card.
Mobilescan, Inc. was incorporated under the laws of the state of Nevada on
September 27, 2002. While the transactions of the Mobilescan, Inc. were treated
as if it were a corporation, until such time of incorporation, the company was
organized as a partnership, with each of the individual owners being partners.
Upon incorporation, the partnership interests were exchanged for shares of stock
of the corporation. All income and losses derived up and until the time of
incorporation would be attributable to the individual partners themselves,
rather than the company as a whole. Given the majority ownership and control of
Worldgroup over Mobilescan, all income and expenses during the entire period are
reflected in the consolidated financial statements of Amerigroup.
Mobilescan, Inc. is a provider of a national lawyers affinity program which
utilizes an on-line, one source Internet Mall, CD Rom law libraries and custom
Legal Forms and Billing Software; a marketing program for attorneys through the
virtual offices under the name and style of mobilescaninc.com; and complete
benefits services for individuals, families and law offices as evidenced by a
service card.
No federal income tax return has been filed on behalf of the Company or any of
its subsidiaries with respect to the years ending December 31, 2002 and 2001.
F-17
AMERIGROUP, INC.
----------------
(A Development Stage Company)
-----------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
AS OF DECEMBER 31, 2003
-----------------------
(AUDITED)
---------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
- ---------------------
The Company's policy is to prepare the financial statements on the accrual basis
of accounting. The fiscal year end is December 31.
Cash and Cash Equivalents
- ----------------------------
Cash and cash equivalents consist of highly liquid investments with maturities
of three months or less when purchased.
Use of Estimates
- ------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires that management make estimates and assumptions,
which affect the reported amounts of assets and liabilities at the date of the
financial statements and revenues and expenses for the period reported. Actual
results may differ from these estimates.
Prepaid Expenses
- -----------------
Prepaid expenses are prepayments made to secure the use of assets or the receipt
of services at a future date.
Investments and Marketable Securities
- ----------------------------------------
The Company has adopted FASB No. 115. Equity securities are classified as
available for sale and reported at fair value.
Investments are recorded at the lower of cost or market. Any reductions in
market value below cost are shown as unrealized losses in the consolidated
statement of operations.
Inventory Valuation
- --------------------
Inventories are stated at the lower of cost or market, cost being determined on
the first in, first out (FIFO) basis.
Equipment
- ---------
Fixed assets acquired will be stated at cost. Expenditures that materially
increase the life of the assets are capitalized. Ordinary maintenance and
repairs are charged to expense as incurred. When assets are sold or otherwise
disposed of, the cost and the related accumulated depreciation and amortization
are removed from the accounts and any resulting gain or loss is recognized at
that time. Depreciation is computed primarily on the straight-line method and
accelerated method for financial statement purposes over the following estimated
useful lives:
F-18
AMERIGROUP, INC.
----------------
(A Development Stage Company)
-----------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
AS OF DECEMBER 31, 2003
-----------------------
(AUDITED)
---------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Computer Equipment 5 Years
Furniture & Fixtures 7 Years
Office Equipment 5 Years
The depreciation expense for the twelve months ended December 31, 2003 was
$6,187.
Intangible Assets
- ------------------
The Company has adopted SFAS No. 142, "Goodwill and Other Intangible Assets",
which requires that goodwill and other indefinite lived intangible assets are no
longer amortized, but renewed annually, or sooner if deemed necessary, for
impairment. Under guidance from SFAS No. 142, management has no goodwill or
other intangible assets as of December 31, 2003.
Compensated Absences
- ---------------------
The Company has made no accrual for vacation or sick pay because the Company
does not provide for these benefits. Therefore, the amount of compensation is
not reasonably estimable.
Summary of Non-Cash Transactions
- -----------------------------------
There were non-cash transactions during the twelve-month period ending December
31, 2003 and the twelve-month period ending December 31, 2002 and 2001,
respectively. (See Note 4)
Stock Based Compensation
- --------------------------
The Company accounts for stock based compensation in accordance with SFAS 123,
"Accounting for Stock-Based Compensation." The provisions of SFAS 123 allow
companies to either expense the estimated fair value of stock options or to
continue to follow the intrinsic value method set forth in APB Opinion 25,
"Accounting for Stock Issued to Employees" (APB 25) but disclose the pro forma
effects on net income (loss) had the fair value of the options been expensed.
The Company has elected to continue to apply APB 25 in accounting for its stock
option incentive plans. The Company has issued its common stock as compensation
to non-employees. The Company measures the amount of stock-based compensation
based on the fair value of the equity instrument issued or the services or goods
provided as of the earlier of (1) the date at which an agreement is reached with
the non-employee as to the number of shares to be issued for performance, or (2)
the date at which the non-employees' performance is complete.
Dividend Policy
- ----------------
The Company has not yet adopted any policy regarding payment of dividends.
F-19
AMERIGROUP, INC.
----------------
(A Development Stage Company)
-----------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
AS OF DECEMBER 31, 2003
-----------------------
(AUDITED)
---------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
- -------------
The Company experienced losses during the previous fiscal tax year reported.
The Company will review its need for a provision for federal income tax after
each operating quarter. The Company has adopted FASB No. 109, as discussed in
Note 6.
Revenue and Cost Recognition
- -------------------------------
The company plans on recognizing revenue using the accrual basis of accounting
and will thus recognize the revenue when earned.
Research and Development
- --------------------------
The Company expenses its research and development in the periods incurred.
Comprehensive Income
- ---------------------
Statements of Financial Accounting Standards No. 130, Reporting Comprehensive
Income (SFAS 130), requires that total comprehensive income be reported in the
financial statements. The Company does not have any items considered to be
other comprehensive income for the years ended December 31, 2003 and December
31, 2002 and 2001, respectively.
Earnings Per Share Calculations
- ----------------------------------
Basic earnings per common share, ("EPS") is computed by dividing income
available to common stockholders by the weighted-average number of common shares
outstanding for the period. The weighted-average number of common shares
outstanding for computing basic EPS was 2,024,751, for the year ended December
31, 2003. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock. The weighted-average number of common shares outstanding for
computing diluted EPS was equal to the basic earnings per share for the period
ended December 31, 2003.
Statement of Cash Flows
- --------------------------
The statement of cash flows classifies changes in cash and cash equivalents
according to operating, investing, or financing activities. For purposes of the
statement of cash flows, the Company considers all highly liquid investments
purchased with maturity of three months or less to be cash equivalents.
Advertising
- -----------
Advertising costs are expensed when incurred. There were no advertising
expenses for the year ended December 31, 2003.
F-20
AMERIGROUP, INC.
----------------
(A Development Stage Company)
-----------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
AS OF DECEMBER 31, 2003
-----------------------
(AUDITED)
---------
NOTE 3 - RELATED PARTY
Mobile Scan's Senior Executive Vice President, Freddy H. Gagon was held liable
in a state securities litigation resulting in a judgment issued on July 19, 1996
and filed with the clerk of court on October 21, 1996. Case No. CV95-02582.
The Superior Court of the State of Arizona in the County of Maricopa found that
Mr. Gagon had not registered to sell securities, had received commissions and
partnerships in exchange for the sale of securities, and that the documents of
the respective entities that were used to sell the securities made material
misrepresentations of fact. Damages of $700,000 were awarded to the plaintiffs.
Mr. Gagon has been permanently enjoined from selling unregistered or non-exempt
securities within the state of Arizona.
The officer's of the company assisted in performing additional duties for
services above and beyond their employment contract for the company and were
paid for such services. For the period ending December 31, 2003, the officers
did not perform any additional services.
An officer of the Company, Gary Whiting has made loans to the company for
operations and expenses. On December 14, 2002, Mr. Whiting, exchanged the land,
whose value on the books was $90,000, with a third party for more loans for the
company against the loans due to him. The land was made up of 6 parcels at
$15,000 each.
NOTE 4 - STOCKHOLDERS' EQUITY
Stock Issuances
- ----- ---------
A chronological history of Stockholders' Equity is as follows:
Amerigroup, Inc.
- -----------------
June 13, 2001 - Amerigroup, Inc. incorporated in Nevada. The Company is
authorized to issue 500,000,000 shares of its $0.0001 par value common stock.
April 24, 2001 through October 8, 2001 - Amerigroup Inc. sold $228,680 worth of
stock (264,025,000 shares) to 13 different investors with $26,403 as common
stock and $202,278 as additional paid in capital, through 504 series A stock
offering.
January 7, 2002 through November 8, 2003 - Amerigroup Inc. sold $1,670,400 worth
of stock (12,393,600 shares) to 67 different investors with $1,239 as common
stock and $1,669,161 as additional paid in capital, through two 506 series B
stock offerings.
In 2001, 261,595,000 shares of common stock were issued for cash in the amount
of $269,800. Of the total amount, $26,097 was common stock and $275,784 was
additional paid in capital.
In 2001, 6,794,000 shares of common stock were issued for services in the amount
of $130,300. Of the total amount, $510 was common stock and $129,791 was
additional paid in capital.
F-21
AMERIGROUP, INC.
----------------
(A Development Stage Company)
-----------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
AS OF DECEMBER 31, 2003
-----------------------
(AUDITED)
---------
In 2002, 261,595,000 shares of common stock were issued for cash in the amount
of $323,788. Of the total amount, $680 was common stock and $668,683 was
additional paid in capital.
NOTE 4 - STOCKHOLDERS' EQUITY (CONTINUED)
In 2002, 375,000 shares of common stock were issued for services in the amount
of $37,538. Of the total amount, $38 was common stock and $37,500 was
additional paid in capital.
In 2003, 250,000 shares of common stock were issued for cash in the amount of
$269,800. Of the total amount, $25 was common stock and $24,975 was additional
paid in capital.
Worldgroup, Inc.
- ----------------
May 24, 2001 - Worldgroup, Inc. incorporated in Nevada. The Company is
authorized to issue 500,000,000 shares of its $0.0001 par value common stock.
January 17, 2001 and April 16, 2001 - Worldgroup, Inc. sold $165,021 worth of
stock (250,000,000 shares) to 39 different investors with $25,000 as common
stock and $140,021 as additional paid in capital, through 504 stock offering.
In 2001, 234,804,000 shares of common stock were issued for cash in the amount
of $127,751. Of the total amount, $23,480 was common stock and $104,271 was
additional paid in capital.
In 2001, 375,000 shares of common stock were issued for services in the amount
of $538. Of the total amount, $1,470 was common stock and $35,750 was
additional paid in capital.
In 2001, 14,696,000 shares of common stock were issued for compensation in the
amount of $50. Of the total amount, $50 was common stock and $0 was additional
paid in capital.
Mobilescan, Inc.
- -----------------
September 27, 2002 - Mobilescan, Inc. incorporated in Nevada. The Company is
authorized to issue 500,000,000 shares of its $0.0001 par value common stock.
July 1, 2001 and October 8, 2001 - Mobilescan, Inc. sold $199,000 worth of stock
(10,200,000 shares) to 15 different investors with $1,020 as common stock and
$197,980 as additional paid in capital, through 504 stock offering.
August 13, 2002 and November 12, 2002 - Mobilescan, Inc. sold $292,500 worth of
stock (2,925,000 shares) to 17 different investors with $293 as common stock and
$292,207 as additional paid in capital, through 506 stock offering.
NOTE 5 - GOING CONCERN
The company's financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which assumes the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has no significant source of
F-22
AMERIGROUP, INC.
----------------
(A Development Stage Company)
-----------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
AS OF DECEMBER 31, 2003
-----------------------
(AUDITED)
---------
revenue. Without
realization of additional capital, it would be unlikely for the Company to
continue as a going concern. It is management's plan to seek additional capital.
NOTE 6 - WARRANTS AND OPTIONS
As of December 31, 2003 and December 31, 2002 and 2001, respectively, there are
no warrants or options outstanding to acquire any additional shares of common
stock that are not disclosed in the equity section of the balance sheet.
NOTE 7 - MINORITY INTEREST IN EARNINGS
As of December 31, 2002 and 2001, respectively, Amerigroup, Inc. held a 0%
interest in Worldgroup, Inc.
As of December 31, 2002 and 2001, respectively, Amerigroup, Inc. held a 91%
interest in Mobilescan, Inc.
NOTE 8 - RECENT PRONOUNCEMENTS
In April 2002, the Financial Accounting Standards Board released SFAS 145 which
is to be applied starting with fiscal years beginning after SFAS 145 eliminate
SFAS 4 "Reporting Gains and Losses from Extinguishments of Debt" and thus allows
for only those gains or losses on the extinguishments of debt that meet the
criteria of extraordinary items to be treated as such in the financial
statements. SFAS No. 145 also amends SFAS 13, "Accounting for Leases" to
require sale-leaseback accounting for certain lease modifications that have
economic effects that are similar to sale-leaseback transactions. The adoption
of SFAS No. 145 had no effect on the Company's reported financial positions,
results of operations or cash flows.
In June 2002, the Financial Accounting Standards Board released SFAS 146 which
is to be applied starting with fiscal years beginning after December 31, 2002.
SFAS 146 addresses significant issues regarding the recognition, measurement and
reporting of costs that are associated with exit and disposal activities,
including restructuring activities that are currently accounted for pursuant to
the guidance set forth in EITF Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity". The
Company will adopt this standard as required on January 1, 2003. Adoption of the
standard is not expected to have a material financial statement impact on the
Company.
In October 2002, the Financial Accounting Standards Board released SFAS 147
which is to be applied starting with transactions occurring on or after October
1, 2002. SFAS 147 addresses Acquisitions of Certain Financial Institutions,
along with amending previous SFAS issuances. The provisions of this Statement
that relate to the application of the purchase method of accounting applies to
all acquisitions of financial institutions, except transactions between two or
more mutual enterprises. The provisions of this Statement that relate to the
application of Statement 144 apply to certain long-term customer-relationship
intangible assets recognized in an acquisition of a financial institution,
including those acquired in transactions between mutual
F-23
AMERIGROUP, INC.
----------------
(A Development Stage Company)
-----------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
AS OF DECEMBER 31, 2003
-----------------------
(AUDITED)
---------
enterprises. The
Company has adopted this standard as required. Adoption of this standard is not
expected to have a material financial statement impact on the Company.
NOTE 8 - RECENT PRONOUNCEMENTS (CONTINUED)
In December 2002, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 148, "Accounting for Stock-Based
Compensation, Transition and Disclosure." SFAS No. 148 provides alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. SFAS No. 148 also requires
that disclosures of the pro forma effect of using the fair value method of
accounting for stock-based employee compensation be displayed more prominently
and in a tabular format. Additionally, SFAS No. 148 requires disclosure of the
pro forma effect in interim financial statements. The transition and annual
disclosure requirements of SFAS No. 148 are effective immediately. The interim
disclosure requirements are effective for the first quarter of 2003. The
adoption of SFAS No. 148 did not have a material effect on the Company's results
of operations or financial condition.
In January 2003, the FASB issued FASB Interpretation No. 46 (FIN 46),
"Consolidation of Variable Interest Entities, an Interpretation of Accounting
Research Bulletin No. 51." FIN 46 requires certain variable interest entities to
be consolidated by the primary beneficiary of the entity if the equity investors
in the entity do not have the characteristics of a controlling financial
interest or do not have sufficient equity at risk for the entity to finance its
activities without additional subordinated financial support from other parties.
FIN 46 is effective for all new variable interest entities created or acquired
after January 31, 2003. For variable interest entities created or acquired prior
to February 1, 2003, the provisions of FIN 46 must be applied for the first
interim or annual period beginning after June 15, 2003. Adoption of this
standard is not expected to have a material financial statement impact on the
Company.
F-24
AMERIGROUP, INC.
(A Development Stage Company)
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
--------------------------
F-25
CONTENTS
- --------
INDEPENDENT AUDITORS' REPORT F-27
FINANCIAL STATEMENTS:
Balance Sheet F-28
Statement of Income and Accumulated Deficit F-29
Statement of Changes of Stockholders' Equity F-29
Statement of Cash Flows F-30
NOTES TO FINANCIAL STATEMENTS F-31
F-26
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Amerigroup, Inc.:
We have audited the accompanying consolidated balance sheet of Amerigroup, Inc.
(a Nevada Corporation) and its subsidiaries as of December 31, 2002 and 2001,
respectively, and the related statement of income and accumulated deficit from
January 1, 2002 to December 31, 2002 and January 1, 2001 to December 31, 2001,
changes in stockholders' equity, and cash flows for the twelve months ended
December 31, 2002 and 2001, respectively. All information included in these
financial statements is the representation of the management of WorldGroup, Inc.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Amerigroup, Inc.
and its subsidiaries as of December 31, 2002 and 2001, respectively, and the
result of its operations and its cash flows for the periods ended December 31,
2002 and 2001, respectively, in accordance with generally accepted accounting
principles in the United States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As disclosed in Note 5 to the financial
statements, the Company has had limited operations and has not established a
long-term source of revenue. This raises substantial doubt about its ability to
continue as a going concern. Management's plan in regards to these matters is
also described in Note 5. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ CFO Advantage, Inc.
January 22, 2004
Las Vegas, Nevada
F-27
AMERIGROUP, INC.
(A Development Stage Company)
BALANCE SHEETS
AS OF DECEMBER 31, 2002 AND 2001
(AUDITED)
ASSETS
Audited Audited
12/31/2002 12/31/2001
CURRENT ASSETS
Cash. . . . . . . . . . . . . . . . . . . . $ 1,489 $ 300
------------ ------------
OTHER CURRENT ASSETS
Note Receivable - Related Party . . . . . . (36,792) (13,192)
Prepaid expense . . . . . . . . . . . . . . - -
------------ ------------
Total Other Current Assets . . . . . . . . . . (36,792) (13,192)
------------ ------------
FIXED ASSETS
Accumulated depreciation. . . . . . . . . . (6,675) (1,575)
Vehicle . . . . . . . . . . . . . . . . . . 24,850 5,850
Computer Equipment. . . . . . . . . . . . . 8,894 8,894
Land. . . . . . . . . . . . . . . . . . . . 115,000 -
------------ ------------
Total Fixed Assets . . . . . . . . . . . . . . 142,069 13,169
------------ ------------
OTHER ASSETS
Service Receivable. . . . . . . . . . . . . 6,500 -
Intangible assets . . . . . . . . . . . . . 23,900 23,900
------------ ------------
Total Other Assets . . . . . . . . . . . . . . 30,400 23,900
------------ ------------
Total Assets . . . . . . . . . . . . . . . . . $ 137,166 $ 24,177
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES
CURRENT LIABILITIES
Interest Payable. . . . . . . . . . . . . . 833 -
Accounts payable. . . . . . . . . . . . . . 28,462 23,668
Salary payable. . . . . . . . . . . . . . . 988,328 468,173
Payroll liabilities . . . . . . . . . . . . 36,238 22,838
------------ ------------
Total Current Liabilities. . . . . . . . . . . 1,053,861 514,679
------------ ------------
OTHER CURRENT LIABILITIES
Note payable - Related Party. . . . . . . . 134,696 76,165
------------ ------------
Total Other Current Liabilities. . . . . . . . 134,696 76,165
------------ ------------
LONG TERM LIABILITIES
Notes payable . . . . . . . . . . . . . . . 26,875 11,010
------------ ------------
Total Liabilities. . . . . . . . . . . . . . . $ 1,215,433 $ 601,854
------------ ------------
STOCKHOLDERS' EQUITY
Common stock, $0.0001 par value,
80,000,000 shares authorized,
273,479,000 and 266,066,000,
shares issued and outstanding as
of December 31, 2002 and 2001.
Common Stock - Class A. . . . . . . . . 26,403 26,403
Common Stock - Class B. . . . . . . . . 945 204
Additional paid in capital - common stock . 1,136,732 405,574
Minority interest-Amerigroup. . . . . . . . - -
Minority interest-Mobile Scan . . . . . . . - -
Subscribed Stock. . . . . . . . . . . . . . (377,655) (32,080)
Accumulated Deficit . . . . . . . . . . . . (1,864,692) (977,778)
------------ ------------
Total Stockholders' Equity . . . . . . . . . . (1,078,267) (577,678)
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) . . . . . . $ 137,166 $ 24,177
============ ============
The accompanying independent auditors report and notes to financial
statements should be read in conjunction with this Balance Sheet.
F-28
AMERIGROUP, INC.
(A Development Stage Company)
STATEMENTS OF INCOME AND ACCUMULATED DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 2002 AND 2001
(AUDITED)
Audited Audited
1/1/2002 1/1/2001
to to
12/31/2002 12/31/2001
---------- ----------
REVENUES . . . . . . . . . . . . . . . . . . . $ 102,465 $ 12,977
COST OF REVENUES . . . . . . . . . . . . . . . 34,230 4,893
------------- ------------
GROSS PROFIT (LOSS). . . . . . . . . . . . . . 68,234 8,085
------------- ------------
EXPENSES:
General and administrative. . . . . . . . . 256,598 199,199
Consulting. . . . . . . . . . . . . . . . . 113,500 193,200
Depreciation. . . . . . . . . . . . . . . . 5,100 1,575
Interest Expense. . . . . . . . . . . . . . 4,959 1,010
Payroll . . . . . . . . . . . . . . . . . . 556,337 579,556
Taxes . . . . . . . . . . . . . . . . . . . 18,654 11,323
------------- ------------
Total Expenses . . . . . . . . . . . . . . . . 955,149 985,863
------------- ------------
Deficit from operations in
the development stage. . . . . . . . . . . (886,914) (977,778)
ACCUMULATED DEFICIT,
beginning of period. . . . . . . . . . . . (977,778) -
------------- ------------
ACCUMULATED DEFICIT,
end of period . . . . . . . . . . . . . . . $ (1,864,692) $ (977,778)
============= ============
PER SHARE INFORMATION:
Weighted average number of
shares outstanding
(basic and diluted). . . . . . . . . . . . 272,182,984 29,221,411
============= ============
Earnings Per Share of common stock
(basic and diluted). . . . . . . . . . . . $ (0.003) $ (0.034)
============= ============
The accompanying independent auditors report and notes to financial
statements should be read in conjunction with these Statements of
Income and Accumulated Deficit.
F-29
AMERIGROUP, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
AS OF DECEMBER 31, 2002
AUDITED
Common Common Additional
Stock Stock Paid-in Subscription Income Total
Shares Amount Capital Receivable (Deficit) Equity
------ ------ ------- ---------- --------- ------
Issuance of common
stock for cash. . . . . . . . 261,595,000 $ 26,160 $ 275,784 $ (32,080) $ 269,863
Issuance of common
stock for services. . . . . . 4,465,000 447 129,791 130,237
Deficit for the year
ended December 31, 2001 . . . . - - - - (977,778) (977,778)
----------- --------- ----------- ------------ ---------- ---------
Balance at December 31,
2001 266,060,000 26,606 405,574 (32,080) (977,778) (577,678)
Issuance of common
stock for cash. . . . . . . . . 6,794,000 679 668,683 (345,575) 323,788
Issuance of common
stock for services. . . . . . . 375,000 38 37,500 37,538
Issuance of common
stock for fixed assets. . . . . 250,000 25 24,975 25,000
Deficit for the year
ended December 31, 2002 . . . . (886,914) (886,914)
----------- --------- ----------- ------------ ---------- ---------
Balance at December 31,
2002 273,479,000 $ 27,348 $ 1,136,732 $(377,655) $(1,864,692)$(1,078,267)
The accompanying independent auditors report and notes to financial
statements should be read in conjunction with this Statement of
Changes in Stockholders Equity.
F-30
AMERIGROUP, INC.
----------------
(A Development Stage Company)
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
AS OF DECEMBER 31, 2002 AND 2001
--------------------------------
(AUDITED)
---------
NOTE 1 - ORGANIZATION AND PURPOSE
Amerigroupmall Inc. ("Amerigroup") is the parent company and head of the
respective divisions, WorldGroup Inc. ("Worldgroup") and Mobilescan Inc.
("Mobilescan"). Amerigroupmall Inc. was previously a division of Worldgroup.
When Amerigroup was incorporated, Worldgroup remained a majority shareholder in
the company. Amerigroup was subsequently merged with Worldgroup during 2002.
Given the majority percentage ownership and control of the divisions, for 2002
and 2001, the financial statements of Amerigroup include the consolidated
financial information of Worldgroup and Mobilescan as well.
Mobilescan was previously a subsidiary of Amerigroup. Upon the merger of
Worldgroup and Amerigroup, Mobilescan became a direct subsidiary of the parent
company, Amerigroup. The financial statements here within represent the
activities of Amerigroup, Mobilescan, and Worldgroup, for the periods ending
December 31, 2002 and 2001, respectively.
The purpose of Amerigroup and Worldgroup is to be a provider of one source of
promotionals for local and national business under the name and style of
AmerigroupMall.com; a complete e-commerce solutions provider for local and
national business with benefit services for individuals, families and
organizations as evidenced by a service card; and a company who issues a reward
card combining a personalized loyalty card for business with a diverse network
of other services which become available to card holders by virtue of
membership. The network of services is offered under the co-brand name
"itzyourmall" evidenced by a logo included on the card.
Mobilescan, Inc. was incorporated under the laws of the state of Nevada on
September 27, 2002. While the transactions of the Mobilescan, Inc. were treated
as if it were a corporation, until such time of incorporation, the company was
organized as a partnership, with each of the individual owners being partners.
Upon incorporation, the partnership interests were exchanged for shares of stock
of the corporation. All income and losses derived up and until the time of
incorporation would be attributable to the individual partners themselves,
rather than the company as a whole. Given the majority ownership and control of
Worldgroup over Mobilescan, all income and expenses during the entire period are
reflected in the consolidated financial statements of Amerigroup.
Mobilescan, Inc. purpose is as a lawyers affinity program which utilizes
on-line, one source Internet Mall, CD Rom law libraries and custom Legal Forms
and Billing Software; a marketing program for attorneys through the virtual
offices under the name and style of mobilescaninc.com; and complete benefits
services for individuals, families and law offices as evidenced by a service
card.
No federal income tax return has been filed on behalf of the Company or any of
its subsidiaries with respect to the years ending December 31, 2002 and 2001.
F-31
AMERIGROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 2002 AND 2001
(AUDITED)
---------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
- ---------------------
The Company's policy is to prepare the financial statements on the accrual basis
of accounting. The fiscal year end is December 31.
Cash and Cash Equivalents
- ----------------------------
Cash and cash equivalents consist of highly liquid investments with maturities
of three months or less when purchased.
Use of Estimates
- ------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires that management make estimates and assumptions,
which affect the reported amounts of assets and liabilities at the date of the
financial statements and revenues and expenses for the period reported. Actual
results may differ from these estimates.
Prepaid Expenses
- -----------------
Prepaid expenses are prepayments made to secure the use of assets or the receipt
of services at a future date.
Investments and Marketable Securities
- ----------------------------------------
The Company has adopted FASB No. 115. Equity securities are classified as
available for sale and reported at fair value.
Investments are recorded at the lower of cost or market. Any reductions in
market value below cost are shown as unrealized losses in the consolidated
statement of operations.
Inventory Valuation
- --------------------
Inventories are stated at the lower of cost or market, cost being determined on
the first in, first out (FIFO) basis.
Equipment
- ---------
Fixed assets acquired will be stated at cost. Expenditures that materially
increase the life of the assets are capitalized. Ordinary maintenance and
repairs are charged to expense as incurred. When assets are sold or otherwise
disposed of, the cost and the related accumulated depreciation and amortization
are removed from the accounts and any resulting gain or loss is recognized at
that time. Depreciation is computed primarily on the straight-line method and
accelerated method for financial statement purposes over the following estimated
useful lives:
F-32
AMERIGROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 2002 AND 2001
(AUDITED)
---------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Computer Equipment 5 Years
Furniture & Fixtures 7 Years
Office Equipment 5 Years
The depreciation expense for the twelve months ended December 31, 2002 and 2001,
respectively, was $5,100 and $1,575.
Intangible Assets
- ------------------
The Company has adopted SFAS No. 142, "Goodwill and Other Intangible Assets",
which requires that goodwill and other indefinite lived intangible assets are no
longer amortized, but renewed annually, or sooner if deemed necessary, for
impairment. Under guidance from SFAS No. 142, management has no goodwill or
other intangible assets as of December 31, 2002.
Compensated Absences
- ---------------------
The Company has made no accrual for vacation or sick pay because the Company
does not provide for these benefits. Therefore, the amount of compensation is
not reasonably estimable.
Summary of Non-Cash Transactions
- -----------------------------------
There were non-cash transactions during the twelve-month period ending December
31, 2002 and 2001, respectively. (See Note 4)
Stock Based Compensation
- --------------------------
The Company accounts for stock based compensation in accordance with SFAS 123,
"Accounting for Stock-Based Compensation." The provisions of SFAS 123 allow
companies to either expense the estimated fair value of stock options or to
continue to follow the intrinsic value method set forth in APB Opinion 25,
"Accounting for Stock Issued to Employees" (APB 25) but disclose the pro forma
effects on net income (loss) had the fair value of the options been expensed.
The Company has elected to continue to apply APB 25 in accounting for its stock
option incentive plans. The Company has issued its common stock as compensation
to non-employees. The Company measures the amount of stock-based compensation
based on the fair value of the equity instrument issued or the services or goods
provided as of the earlier of (1) the date at which an agreement is reached with
the non-employee as to the number of shares to be issued for performance, or (2)
the date at which the non-employees' performance is complete.
Dividend Policy
- ----------------
The Company has not yet adopted any policy regarding payment of dividends.
F-33
AMERIGROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 2002 AND 2001
(AUDITED)
---------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
- -------------
The Company experienced losses during the previous fiscal tax year reported.
The Company will review its need for a provision for federal income tax after
each operating quarter. The Company has adopted FASB No. 109, as discussed in
Note 6.
Revenue and Cost Recognition
- -------------------------------
The company plans on recognizing revenue using the accrual basis of accounting
and will thus recognize the revenue when earned.
Research and Development
- --------------------------
The Company expenses its research and development in the periods incurred.
Comprehensive Income
- ---------------------
Statements of Financial Accounting Standards No. 130, Reporting Comprehensive
Income (SFAS 130), requires that total comprehensive income be reported in the
financial statements. The Company does not have any items considered to be
other comprehensive income for the years ended December 31, 2002 and 2001,
respectively.
Earnings Per Share Calculations
- ----------------------------------
Basic earnings per common share, ("EPS") is computed by dividing income
available to common stockholders by the weighted-average number of common shares
outstanding for the period. The weighted-average number of common shares
outstanding for computing basic EPS was 272,182,984 and 29,221,411 for the year
ended December 31, 2002 and 2001, respectively. Diluted EPS reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock. The
weighted-average number of common shares outstanding for computing diluted EPS
was equal to the basic earnings per share for the period ended December 31, 2002
and 2001 respectively.
Statement of Cash Flows
- --------------------------
The statement of cash flows classifies changes in cash and cash equivalents
according to operating, investing, or financing activities. For purposes of the
statement of cash flows, the Company considers all highly liquid investments
purchased with maturity of three months or less to be cash equivalents.
Advertising
- -----------
Advertising costs are expensed when incurred. There were no advertising
expenses for the year ended December 31, 2001 and 2002, respectively.
F-34
AMERIGROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 2002 AND 2001
(AUDITED)
---------
NOTE 3 - RELATED PARTY
Mobile Scan's Senior Executive Vice President, Freddy H. Gagon was held liable
in a securities fraud litigation resulting in a judgment issued on July 19, 1996
and filed with the clerk of court on October 21, 1996. Case No. CV95-02582.
The Superior Court of the State of Arizona in the County of Maricopa found that
Mr. Gagon had not registered to sell securities, had received commissions and
partnerships in exchange for the sale of securities, and that the documents of
the respective entities that were used to sell the securities made material
misrepresentations of fact. Damages of $700,000 were awarded to the plaintiffs.
Mr. Gagon has been permanently enjoined from selling unregistered or non-exempt
securities within the state of Arizona.
The officer's of the company assisted in performing additional duties for
services above and beyond their employment contract for the company and were
paid for such services.
An officer of the Company, Gary Whiting has made loans to the company for
operations and expenses. On December 14, 2002, Mr. Whiting, exchanged the land,
whose value on the books was $90,000, against the loans due to him. The land
was made up of 6 parcels at $15,000 each.
NOTE 4 - STOCKHOLDERS' EQUITY
Stock Issuances
- ----- ---------
A chronological history of Stockholders' Equity is as follows:
Amerigroup, Inc.
- -----------------
June 13, 2001 - Amerigroup, Inc. incorporated in Nevada. The Company is
authorized to issue 500,000,000 shares of its $0.0001 par value common stock.
April 24, 2001 through October 8, 2001 - Amerigroup Inc. sold $228,680 worth of
stock (264,025,000 shares) to 13 different investors with $26,403 as common
stock and $202,278 as additional paid in capital, through 504 series A stock
offering.
January 7, 2002 through November 8, 2003 - Amerigroup Inc. sold $1,670,400 worth
of stock (12,393,600 shares) to 67 different investors with $1,239 as common
stock and $1,669,161 as additional paid in capital, through two 506 series B
stock offerings.
In 2001, 261,595,000 shares of common stock were issued for cash in the amount
of $269,800. Of the total amount, $26,097 was common stock and $275,784 was
additional paid in capital.
F-35
AMERIGROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 2002 AND 2001
(AUDITED)
---------
NOTE 4 - STOCKHOLDERS' EQUITY (CONTINUED)
In 2001, 6,794,000 shares of common stock were issued for services in the amount
of $130,300. Of the total amount, $510 was common stock and $129,791 was
additional paid in capital.
In 2002, 261,595,000 shares of common stock were issued for cash in the amount
of $323,788. Of the total amount, $680 was common stock and $668,683 was
additional paid in capital.
In 2002, 375,000 shares of common stock were issued for services in the amount
of $37,538. Of the total amount, $38 was common stock and $37,500 was
additional paid in capital.
Worldgroup, Inc.
- ----------------
May 24, 2001 - Worldgroup, Inc. incorporated in Nevada. The Company is
authorized to issue 500,000,000 shares of its $0.0001 par value common stock.
January 17, 2001 and April 16, 2001 - Worldgroup, Inc. sold $165,021 worth of
stock (250,000,000 shares) to 39 different investors with $25,000 as common
stock and $140,021 as additional paid in capital, through 504 stock offering.
In 2001, 234,804,000 shares of common stock were issued for cash in the amount
of $127,751. Of the total amount, $23,480 was common stock and $104,271 was
additional paid in capital.
In 2001, 375,000 shares of common stock were issued for services in the amount
of $538. Of the total amount, $1,470 was common stock and $35,750 was
additional paid in capital.
In 2001, 14,696,000 shares of common stock were issued for compensation in the
amount of $50. Of the total amount, $50 was common stock and $0 was additional
paid in capital.
Mobilescan, Inc.
- -----------------
September 27, 2002 - Mobilescan, Inc. incorporated in Nevada. The Company is
authorized to issue 500,000,000 shares of its $0.0001 par value common stock.
July 1, 2001 and October 8, 2001 - Mobilescan, Inc. sold $199,000 worth of stock
(10,200,000 shares) to 15 different investors with $1,020 as common stock and
$197,980 as additional paid in capital, through 504 stock offering.
August 13, 2002 and November 12, 2002 - Mobilescan, Inc. sold $292,500 worth of
stock (2,925,000 shares) to 17 different investors with $293 as common stock and
$292,207 as additional paid in capital, through 506 stock offering.
F-36
AMERIGROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 2002 AND 2001
(AUDITED)
---------
NOTE 5 - GOING CONCERN
The company's financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which assumes the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has limited source of revenue. Without
realization of additional capital, it would be unlikely for the Company to
continue as a going concern. It is management's plan to seek additional capital.
NOTE 6 - WARRANTS AND OPTIONS
As of December 31, 2002 and 2001, respectively, there are no warrants or options
outstanding to acquire any additional shares of common stock that are not
disclosed in the equity section of the balance sheet.
NOTE 7 - MINORITY INTEREST IN EARNINGS
As of December 31, 2002 and 2001, respectively, Amerigroup, Inc. held a 0%
interest in Worldgroup, Inc.
As of December 31, 2002 and 2001, respectively, Amerigroup, Inc. held a 91%
interest in Mobilescan, Inc.
NOTE 8 - RECENT PRONOUNCEMENTS
In April 2002, the Financial Accounting Standards Board released SFAS 145 which
is to be applied starting with fiscal years beginning after SFAS 145 eliminate
SFAS 4 "Reporting Gains and Losses from Extinguishments of Debt" and thus allows
for only those gains or losses on the extinguishments of debt that meet the
criteria of extraordinary items to be treated as such in the financial
statements. SFAS No. 145 also amends SFAS 13, "Accounting for Leases" to
require sale-leaseback accounting for certain lease modifications that have
economic effects that are similar to sale-leaseback transactions. The adoption
of SFAS No. 145 had no effect on the Company's reported financial positions,
results of operations or cash flows.
In June 2002, the Financial Accounting Standards Board released SFAS 146 which
is to be applied starting with fiscal years beginning after December 31, 2002.
SFAS 146 addresses significant issues regarding the recognition, measurement and
reporting of costs that are associated with exit and disposal activities,
including restructuring activities that are currently accounted for pursuant to
the guidance set forth in EITF Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity". The
Company will adopt this standard as required on January 1, 2003. Adoption of the
standard is not expected to have a material financial statement impact on the
Company.
In October 2002, the Financial Accounting Standards Board released SFAS 147
which is to be applied starting with transactions occurring on or after October
1, 2002. SFAS 147 addresses
F-37
AMERIGROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 2002 AND 2001
(AUDITED)
---------
NOTE 8 - RECENT PRONOUNCEMENTS (CONTINUED)
Acquisitions of Certain Financial Institutions, along with amending previous
SFAS issuances. The provisions of this Statement that relate to the application
of the purchase method of accounting applies to all acquisitions of financial
institutions, except transactions between two or more mutual enterprises. The
provisions of this Statement that relate to the application of Statement 144
apply to certain long-term customer-relationship intangible assets recognized in
an acquisition of a financial institution, including those acquired in
transactions between mutual enterprises. The Company has adopted this standard
as required. Adoption of this standard is not expected to have a material
financial statement impact on the Company.
In December 2002, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 148, "Accounting for Stock-Based
Compensation, Transition and Disclosure." SFAS No. 148 provides alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. SFAS No. 148 also requires
that disclosures of the pro forma effect of using the fair value method of
accounting for stock-based employee compensation be displayed more prominently
and in a tabular format. Additionally, SFAS No. 148 requires disclosure of the
pro forma effect in interim financial statements. The transition and annual
disclosure requirements of SFAS No. 148 are effective immediately. The interim
disclosure requirements are effective for the first quarter of 2003. The
adoption of SFAS No. 148 did not have a material effect on the Company's results
of operations or financial condition.
In January 2003, the FASB issued FASB Interpretation No. 46 (FIN 46),
"Consolidation of Variable Interest Entities, an Interpretation of Accounting
Research Bulletin No. 51." FIN 46 requires certain variable interest entities to
be consolidated by the primary beneficiary of the entity if the equity investors
in the entity do not have the characteristics of a controlling financial
interest or do not have sufficient equity at risk for the entity to finance its
activities without additional subordinated financial support from other parties.
FIN 46 is effective for all new variable interest entities created or acquired
after January 31, 2003. For variable interest entities created or acquired prior
to February 1, 2003, the provisions of FIN 46 must be applied for the first
interim or annual period beginning after June 15, 2003. Adoption of this
standard is not expected to have a material financial statement impact on the
Company.
F-38
PARA MAS INTERNET, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 2003
(AUDITED)
(With Report of Independent Accountant's Thereon)
F-39
TABLE OF CONTENTS
Independent Accountant's Report F-41
Financial statements
Balance sheet F-42
Statements of Income and Accumulated Deficit F-43
Statement of Changes in Stockholders' Equity F-44
Statements of cash flows F-45
Notes to financial statements F-46 - F-51
F-40
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of
Para Mas Internet, Inc.
We have audited the accompanying balance sheet of Para Mas Internet, Inc. (a
Nevada Corporation) as of December 31, 2003, and the related statement of income
and accumulated deficit from July 1, 2003 to December 31, 2003, changes in
stockholders' equity, and cash flows for the six months ended December 31,
2003. All information included in these financial statements is the
representation of the management of Para Mas Internet, Inc. Our responsibility
is to express an opinion on these financial statements based on our audit. The
Financial Statements of Para Mas Internet, Inc. as of June 30, 2003, was audited
by other accountants, whose report dated August 2003, stated that they were not
aware of any material modifications that should be made to those statements in
order for them to be in conformity with generally accepted accounting principles
in the United States of America.
We conducted our audit in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Para Mas Internet, Inc. as of
December 31, 2003, and the result of its operations and its cash flows for the
periods ended December 31, 2003, in accordance with generally accepted
accounting principles in the United States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As disclosed in Note 1 to the financial
statements, the Company has had limited operations and has not established a
long-term source of revenue. This raises substantial doubt about its ability to
continue as a going concern. Management's plan in regards to these matters is
also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/CFO Advantage, Inc.
June 9, 2004
Las Vegas, Nevada
F-41
PARA MAS INTERNET, INC.
----------------
BALANCE SHEETS
--------------
AS OF DECEMBER 31, 2003
-----------------------
AUDITED
-------
ASSETS
(Audited) (Audited)
12/31/2003 6/30/2003
------------ ------------
CURRENT ASSETS
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ - $ -
----------- -----------
Total current assets . . . . . . . . . . . . . . . . . . - -
----------- -----------
PROPERTY AND EQUIPMENT, net of accumulated depreciation. . . . - -
OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . - -
----------- -----------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . $ - $ -
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable. . . . . . . . . . . . . . . . . . . . . . $ - $ -
Notes payable . . . . . . . . . . . . . . . . . . . . . . . 15,000 15,000
Accrued expenses . . . . . . . . . . . . . . . . . . . . . 5,319 5,319
Preferred stock dividends payable . . . . . . . . . . . . . 21,000 21,000
----------- -----------
Total current liabilities. . . . . . . . . . . . . . . . 41,319 41,319
------------ ------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . 41,319 41,319
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $0.001 par value, 100,000,000 shares
authorized, 48,294,395 shares issued and outstanding as of
December 31, 2003. . . . . . . . . . . . . . . . . . . . . . 48,295 48,295
Additional paid in capital . . . . . . . . . . . . . . . . . . 1,817,932 1,817,932
Preferred stock,authorized 10,000,000 shares,
60,000 shares issued . . . . . . . . . . . . . . . . . . . . 60,000 60,000
Additional paid in capital - preferred stock . . . . . . . . . - -
Accumulated deficit. . . . . . . . . . . . . . . . . . . . . . (1,967,546) (1,967,546)
----------- -----------
Total stockholders' equity (deficit) . . . . . . . . . . 1,926,227 1,926,227
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY . . . . . . . . . . $ 1,967,546 $ 1,967,546
=========== ==========
The accompanying independent accountants review report and notes to financial statements
should be read in conjunction with this Balance Sheet.
F-42
PARA MAS INTERNET, INC.
----------------
STATEMENTS OF INCOME AND ACCUMULATED DEFICIT
--------------
FOR SIX MONTHS ENDED
--------------------
DECEMBER 31, 2003
-----------------------
AUDITED
-------
(Audited) (Audited)
July 1, 2003 July 1, 2002
to to
December 31, 2003 June 30, 2003
----------------- -------------
REVENUES . . . . . . . . . . . . . . . . . . . $ - $ -
COST OF REVENUES . . . . . . . . . . . . . . . - -
----------------- -------------
GROSS PROFIT (LOSS). . . . . . . . . . . . . . - -
------------------ --------------
EXPENSES:
General and administrative. . . . . . . . . - -
Depreciation. . . . . . . . . . . . . . . . - -
----------------- -------------
Total expenses . . . . . . . . . . . . . - -
------------------ --------------
Operating income (loss). . . . . . . . . . . . - -
----------------- -------------
OTHER INCOME (EXPENSE)
Other expenses. . . . . . . . . . . . . . . - (1,050)
----------------- -------------
Total other income (expense) . . . . . . - (1,050)
----------------- -------------
LOSS FROM OPERATIONS BEFORE AND
PREFERRED STOCK DIVIDENDS. . . . . . . . . . . - -
PROVISION FOR INCOME (TAX) BENEFIT . . . . . . - -
----------------- -------------
NET INCOME (LOSS). . . . . . . . . . . . . . . - (1,050)
PREFERRED STOCK DIVIDENDS. . . . . . . . . . . - 4,200
----------------- -------------
NET LOSS AVAILABLE TO COMMON
SHAREHOLDERS . . . . . . . . . . . . . . . . . $ - $ (5,250)
================== ==============
LOSS PER SHARE BASIC AND DILUTED . . . . . . . $ (0.00) $ (0.00)
================== ==============
ACCUMULATED DEFICIT, beginning of period . . . (1,967,546) (1,967,546)
------------------ --------------
ACCUMULATED DEFICIT, end of period . . . . . . $ (1,967,546) $ (1,968,596)
================== ==============
PER SHARE INFORMATION:
Basic and dilulted Weighted average Number of
Shares Outstanding . . . . . . . . . . . . . . 48,294,395 44,127,695
================= =============
The accompanying independent accountants review report and notes to financial statements
should be read in conjunction with these Statements of Income and
Accumulated Deficit.
F-43
PARA MAS INTERNET, INC.
----------------
STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
--------------
AS OF DECEMBER 31, 2003
-----------------------
AUDITED
-------
Pre- Pre-
Common Common ferred ferred
Stock Stock Stock Stock Paid-in Accumulated Total
Shares Amount Shares Amount Capital (Deficit) Equity
---------- -------- ------- ---------- ---------- ------------- ------------
Balances at
June 30, 2001 . . . . 44,127,570 $ 44,128 60,000 $ 60,000 $1,411,749 $ (1,546,696) $ (30,819)
Preferred stock
dividend payable . - - - - (4,200) - (4,200)
Shares issued in
exchange for
cash in July 2001
at $.03 per
share . . . . . . 4,166,667 4,167 - - 120,833 - 125,000
4,166,667 stock
options issued in
7/1/2001 valued at
$0.0705 per
stock option in
exchange for
services. . . . . . - - - - 293,750 - 293,750
Rounding. . . . . . . 158 - - - - -
Loss for the
year ended
June 30, 2002 . . . . - - - - - (419,800) (419,800)
---------- -------- ------- ---------- ---------- ------------- ------------
Balance at
June 30, 2002 . . . . 48,294,395 48,295 60,000 60,000 1,822,132 (1,966,496) (36,069)
Preferred stock
dividend payable. . . - - - - (4,200) - (4,200)
Loss for the
year ended
June 30, 2003 . . . . - - - - - (1,050) (1,050)
---------- -------- ------- ---------- ---------- ------------- ------------
Balance at
June 30, 2003 . . . . 48,294,395 48,295 60,000 60,000 1,817,932 (1,967,546) (41,319)
Loss for the
year ended
December 31,
2003 - - - - - - -
---------- -------- ------- ---------- ---------- ------------- ------------
Balance at
December 31,
2003 48,294,395 $ 48,295 60,000 $ 60,000 $ 1,817,932 $(1,968,596) $ (41,319)
========== ======== ====== ========== ============ ============== ===========
The accompanying independent auditors review report and notes to financial statements
should be read in conjunction with this Statement of Changes in
Stockholders Equity.
F-44
PARA MAS INTERNET, INC.
----------------
STATEMENTS OF CASH FLOWS
--------------
FOR SIX MONTHS ENDED
--------------------
DECEMBER 31, 2003
-----------------------
AUDITED
-------
Six Months Twelve Months
Ended Ended
12/31/2003 6/30/2003
------------ ----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income / (Loss) from Operations . . . . . . . . . . . . . . $ - $ (1,050)
Adjustments to reconcile net income
to net cash provided
Change in assets and liabilities:
Increase (decrease) in accounts payable and accured liabilities - 1,050
Depreciation Expense. . . . . . . . . . . . . . . . . . . . . . - -
------------ --------------
Net cash provided by (used in) operating activities . . . . . - -
------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES: . . . . . . . . . . . . . . - -
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of sale of common stock, net . . . . . . . . . . . . . - -
------------- --------------
Net cash provided by (used in) financing activities . . . . . - -
------------- --------------
Net increase (decrease) in cash . . . . . . . . . . . . . . . . . - -
Balance at beginning of Period. . . . . . . . . . . . . . . . . . - -
------------- --------------
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . - -
============= ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest. . . . . . . . . . . . . $ - $ -
============ ===============
Cash paid during the year for taxes . . . . . . . . . . . . . . $ - $ -
============ ===============
Preferred stock dividends payable . . . . . . . . . . . . . . . $ 4,200 $ 4,200
============ ===============
Stock options issued in exchnage for services . . . . . . . . . $ - $ -
============ ===============
The accompanying independent accountants review report and notes to financial statements
should be read in conjunction with these Statements of Cash Flows.
F-45
PARA MAS INTERNET, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2003
AUDITED
1. SUMMARY OF ACCOUNTING POLICIES
---------------------------------
A summary of the significant accounting policies applied in the preparation of
the accompanying consolidated financial statements as follows.
Business and Basis of Presentation - Para Mas Internet, Inc. ("Company" or "Para
Mas") was incorporated under the laws of the State of Nevada on June 6, 1994 as
U.S. Medical Management, Inc., a wholly owned subsidiary of Waterloo Wheels,
Inc. The Company is inactive with no significant operations and is seeking to
merge or acquire an interest in business opportunities. Waterloo Wheels, Inc.
was incorporated on June 2, 1986 under the laws of British Columbia. In June
1995, the shareholders of Waterloo Wheels, Inc. exchanged all their outstanding
stock for shares of the Company on a share for share basis. In June 1995, the
Company completed a merger with Ken Venturi Golf Training Center, Inc.
Effective with the merger, all previously outstanding common stock of Ken
Venturi Golf Center, Inc. was exchanged for 4,000,000 shares of the Company's
common stock. Immediately following the merger, the Company changed its name to
Ken Venturi Golf, Inc.
In November 1997, the Company changed its name to Transcontinental Waste,
Industries. In April 1999, the Company changed its name to Financial Depot
Online, Inc. In August 1999 the Company changed its name to Para Mas Internet,
Inc.
The Company has generated no sales revenues, has incurred expenses and has
sustained losses. Consequently, its operations are subject to all the risks
inherent in the establishment of a new business enterprise. For the period from
inception through December 31, 2003 the Company has an accumulated deficit of
$1,967,546.
Liquidity - The Company is inactive with no significant operations and is
seeking to merge or acquire an interest in business opportunities. To date, the
Company has incurred expenses and has sustained losses. As shown in the
accompanying financial statements, the Company incurred a net loss of $ 0
during the period ended December 31, 2003. The Company's current liabilities
exceeded its current assets by $41,319.
Advertising - The Company will recognize advertising expenses in accordance with
SOP 93-7 "Reporting on Advertising Costs." The Company did not incur advertising
costs during the period ended December 31, 2003.
Income Taxes - Income taxes are provided based on the liability method for
financial reporting purposes in accordance with the provisions of Statements of
Financial Standards No. 109, "Accounting for Income Taxes". Under this method
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be removed or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
the statement of operations in the period that includes the enactment date.
Cash Equivalents - For purposes of the Statements of Cash Flows, the Company
considers all highly liquid debt instruments purchased with a maturity date of
three months or less to be cash equivalents.
Property and Equipment - For financial statement purposes, property and
equipment will be depreciated using straight-line method over their estimated
useful lives (five years for furniture, fixtures and equipment). The
straight-line method of depreciation is also used for tax purposes.
Concentrations of Credit Risk - Financial instruments and related items, which
potentially subject the Company to concentrations of credit risk, consist
primarily of cash, cash equivalents and trade receivables. The Company places
its cash and temporary cash investments with high credit quality institutions.
At times, such investments may be in excess of the FDIC insurance limit.
F-46
PARA MAS INTERNET, INC.
A DEVELOPMENT STAGE COMPANY
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
Use of Estimates-The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amount and disclosures.
Accordingly actual results could differ from those estimates.
Long-Lived Assets - The Company has adopted Statement of Financial Accounting
Standards No. 144 (SFAS 144). The Statement requires that long-lived assets and
certain identifiable intangibles held and used by the Company be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Events relating to
recoverability may include significant unfavorable changes in business
conditions, recurring losses, or a forecasted inability to achieve break-even
operating results over an extended period. The Company evaluates the
recoverability of long-lived assets based upon forecasted undercounted cash
flows. Should an impairment in value be indicated, the carrying value of
intangible assets will be adjusted, based on estimates of future discounted cash
flows resulting from the use and ultimate disposition of the asset. SFAS No.
144 also requires assets to be disposed of be reported at the lower of the
carrying amount or the fair value less costs to sell.
ComprehensiveIncome - The Company does not have any items of comprehensive
income in any of the periods presented.
Net Loss Per Share - The Company has adopted Statement of Financial Accounting
Standards No. 128, "Earnings Per Share," specifying the computation,
presentation and disclosure requirements of earnings per share information.
Basic earnings (loss) per share has been calculated based upon the weighted
average number of common shares outstanding. Stock options and warrants will be
excluded as common stock equivalents in the diluted earnings per share
because they are either antidilutive, or their effect is not material.
Fair Value of Financial Instruments - The carrying values of cash and cash
equivalents, accounts receivable, accounts payable and accrued expenses
approximate fair value due to the relatively short maturity of these instruments
Segment Information - The Company adopted Statement of Financial Accounting
Standards No. 131, Disclosures about Segments of an Enterprise and Related
Information ("SFAS 131") in the year ended December 31, 1998. SAFAS establishes
standards for reporting information regarding operating segments in annual
financial statements and requires selected information for those segments to
be presented in interim financial reports issued to stockholders. SFAS 131
also establishes standards for related disclosures about products and
services and geographic areas. Operating segments are identified as components
of an enterprise about which separate discrete financial information is
available for evaluation by the chief operating decision maker, or decision
making group, in making decisions how to allocate resources and assess
performance. The information disclosed herein, materially represents all of the
financial information related to the Company's principal operating segment.
Reclassifications - Certain reclassifications have been made in prior years'
financial statements to conform to classifications in the current year.
Stock Based Compensation - In December 2002, the FASB issued Statement of
Financial Accounting Standards No.148 ("SFAS No.148"),"Accounting for
Stock-Based Compensation-Transition and Disclosure-an amendment of SFAS 123."
This statement amends SFAS No. 123, "Accounting for Stock-Based Compensation,"
to provide alternative methods of transition for a voluntary charge to the fair
value based method of accounting for stock-based employee compensation. In
addition, this statement amends the disclosure requirements of SFAS No. 123 to
require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect
F-47
PARA MAS INTERNET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
of the method used on reported results. The Company has chosen to continue to
account for stock-based compensation using the intrinsic value method
prescribed in APB Opinion No. 25 and related interpretations. Accordingly,
compensation expense for stock options is measured as the excess, if any, of
the fair market value of the Company's stock at the date of the grant over
the exercise price of the related option. The Company has adopted the annual
disclosure provisions of SFAS No. 148 in its financial reports for the year
ended December 31, 2003 and will adopt the interim disclosure provisions for its
financial reports for the quarter ended March 31, 2004.
Foreign CurrencyTranslation - The Company translates the foreign currency
financial statements of its Canadian subsidiary in accordance with the
requirements of Statement of Financial Accounting Standards No. 52, "Foreign
Currency Translation." Assets and liabilities are translated at current
exchange rates, and related revenue and expenses are translated at average
exchange rates in effect during the period. Resulting translation adjustments
are recorded as a separate component in stockholders' equity. Foreign currency
transaction gains and losses are included in the statement of income.
New Accounting Pronouncements - In July 2001, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting Standards No.141, Business
Combinations" (SFAS No. 141), and Statement of Financial Accounting Standards
No. 142, "Goodwill and Other Intangible Assets" (SFAS No. 142). The FASB also
issued Statement of Financial Accounting Standards No. 143, "Accounting for
Obligations Associated with the Retirement of Long-Lived Assets" (SFAS No.143),
and Statement of Financial Accounting Standards No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets"(SFAS No. 144) in August and
October 2001, respectively.
SFAS No. 141 requires the purchase method of accounting for business
combinations initiated after June 30, 2001 and eliminates the
pooling-of-interest method. The adoption of SFAS No. 141 had no material impact
on the Company's consolidated financial statements.
Effective January 1, 2002, the Company adopted SFAS No. 142. Under the new
rules, the Company will no longer amortize goodwill and other intangible assets
with indefinite lives, but such assets will be subject to periodic testing for
impairment. On an annual basis, and when there is reason to suspect that their
values have been diminished or impaired, these assets must be tested for
impairment, and write-downs to be included in results from operations may be
necessary. SFAS No.142 also requires the Company to complete a transitional
goodwill impairment test six months from the date of adoption.
2. CAPITAL STOCK
In November, 1997, the Company approved, by unanimous consent of its Board of
Directors, to amend the Company's articles of incorporation to increase the
number of shares of common stock, par value $.001 per share from 25,000,000
shares to 100,000,000 shares and to create 10,000,000 shares of preferred stock,
par value $.001 per share.
In May 1998, the Company issued 60,000 shares of Series B 7% Cumulative
Redeemable Convertible Preferred Stock ("Preferred Shares") in exchange for
legal services rendered to the Company. Holders of the Preferred Shares are
entitled to receive cumulative cash dividends at the annual rate of 7% per
annum, or $.07 per share, payable quarterly. The dividends may be payable in
cash or through a dividend of additional shares of Preferred Shares. The Company
has accrued the unpaid $ 4,200 Series B Preferred Stock dividend to the
holders of the Preferred Shares during the years ended December 31, 2003,
respectively. The aggregate unpaid Series B Preferred Stock dividends at
December 31, 2003 is $21,000 (see Note 9).
F-48
PARA MAS INTERNET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
2. CAPITAL STOCK (CONTINUED)
The Preferred Shares rank senior to the common stock. The Preferred Shares have
a liquidation preference of $1.00 per share plus any and all declared and unpaid
dividends.
The Preferred Shares are convertible, in whole or in part, at the option of the
holders thereof, into shares of common stock at amount equal to the Company's
average closing bid price of the common stock for thirty days immediately
preceding the conversion divided by the liquidation preference of $1.00 per
share.
The Company may, at its option, convert the Preferred Shares into the Company's
common stock by dividing the average closing price of the Company's common stock
over a twenty (20) day period by the liquidation preference of $1.00 per share.
In order to exercise this option, the average price of the Company's common
stock must be at least $1.50 per share.
In July 2001, the Company issued a total of 4,166,667 shares of common stock in
exchange for exercised options with an exercise price of $.03 per share (see
Note 3).
3. STOCK OPTIONS
The following table summarizes the changes in options outstanding and the
related prices for the shares of the Company's common stock issued to the
Company consultants. These options were granted in lieu of cash compensation for
services performed.
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ----------------------------------------------------------------- --------------------------------
Weighted Weighted
Weighted Average Average Average
Exercise Number Remaining Contractual Exercise Number Exercise
- -------------------- -------------------- ---------------------- -------- ----------- --------
Prices Outstanding Life (Years) Price Exercisable Price
- -------------------- -------------------- ---------------------- -------- ----------- --------
$ $
- -------------------- -------------------- ---------------------- -------- ----------- --------
Transactions involving options issued to non-employees are summarized as
follows:
Weighted Average
Number of Shares Price Per Share
----------------- ----------------
Outstanding at July 1, 2001. 0 $ 0.00
Granted . . . . . . . . . 4,166,667 0.03
Exercised . . . . . . . . (4,166,667) 0.03
Canceled or expired . . . 0 0.00
- ---------------------------- ----------------- ----------------
Outstanding June 30, 2002. . 0 0.00
Granted. . . . . . . . . 0 0.00
Exercised. . . . . . . . 0 0.00
Canceled or expired. . . 0 0.00
- ---------------------------- ----------------- ----------------
Outstanding at June 30, 2003 0 0.00
- ---------------------------- ----------------- ----------------
The estimated value of the options granted to consultants was determined using
the Black-Scholes option pricing model and the following assumptions:
contractual term of 3.3 months, a risk free interest rate of 4.0 %, a dividend
yield of 0% and volatility of 50%. The amount of the expense charged to
operations in connection with granting the options was $ 293,750 during 2002.
F-49
PARA MAS INTERNET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
4. NOTES PAYABLE
Notes payable consist of the following as of December 31, 2003:
7% Note payable; unsecured and in default $ 15,000
=========
Accrued and unpaid interest in connection with the note payable is $5,319 at
December 31, 2003 (see Note 9).
5. INCOME TAXES
The Company has adopted Financial Accounting Standard number 109, which requires
the recognition of deferred tax liabilities and assets for the expected future
tax consequences of events that have been included in the financial statement or
tax returns. Under this method, deferred tax liabilities and assets are
determined based on the difference between financial statements and tax basis of
assets and liabilities using enacted tax rates in effect for the year in which
the differences are expected to reverse. Temporary differences between taxable
income reported for financial reporting purposes and income tax purposes are
insignificant.
For income tax reporting purposes, the Company's aggregate unused net operating
losses approximate $1,900,000, expiring in the year 2021 that may be used to
offset future taxable income. The Company has provided a valuation reserve
against the full amount of the net operating loss benefit, since in the opinion
of management based upon the earnings history of the Company, it is more likely
than not that the benefits will not be realized. Due to significant changes in
the Company's ownership, the Company's future use of its existing net operating
losses may be limited.
Components of deferred tax assets as of December 31, 2003 are as follows:
Non-Current:
Net operating loss carry forward $ 660,000
Valuation allowance . . . . . . . (660,000)
----------
Net deferred tax asset . . . . . $ 0
6. LOSSES PER COMMON SHARE
The following table presents the computation of basic and diluted loss per
share:
December 31, 2003 June 30, 2003
----------------- -------------
Net loss available for common shareholders $ (.00) $ (5,250)
- ------------------------------------------ ----------------- -------------
Basic and fully diluted loss per share . . $ (.00) $ (.00)
- ------------------------------------------ ----------------- -------------
Weighted average common shares outstanding $ 48,294,395 $ 44,127,695
- ------------------------------------------ ----------------- -------------
Net loss per share is based upon the weighted average of shares of common stock
outstanding.
7. RELATED PARTY TRANSACTIONS
The Company's majority shareholder is International Bible Games, Inc. ("IBG"), a
company formed under the laws of British Columbia, Canada. IBG has paid certain
nominal costs of maintaining the Company's corporate status. The amount of the
costs incurred are not material to the Company's financial statements taken as
a whole.
F-50
PARA MAS INTERNET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
8. GOING CONCERN MATTERS
The accompanying statements have been prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. As shown in the financial statements, from its
inception the Company has incurred loses of $1,967,546. This factor among
others may indicate that the Company will be unable to continue as a going
concern for a reasonable period of time. The Company's existence is dependent
upon management's ability to develop profitable operations and resolve it's
Liquidity problems. The accompanying financial statements do not include any
adjustments that might result should the Company be unable to continue as a
going concern.
In order to improve the Company's liquidity, the Company is actively pursing
additional equity financing through discussions with investment bankers and
private investors. There can be no assurance the Company will be successful in
its effort to secure additional equity financing. If cash flows continue to
improve through these efforts, management believes that the Company can continue
to operate. However, no assurance can be given that management's actions will
result in the resolution of its liquidity problems.
9. SUBSEQUENT EVENT
Subsequent to the date of the financial statements, the Company entered into an
Agreement of Plan and Tender Offer ("Agreement")which provides for a tender
offer of 100% of the issued and outstanding shares of Amerigroup, Inc., a
company formed under the laws of the state of Nevada, in which the Company will
issue one share of its common stock for each share of Amerigroup, Inc. common
stock tendered. The Company will also issue approximately 10,042,105 shares of
its common stock to IBG shareholders and IBG creditors (see Note 7) in exchange
for releases of claims against IBG.
Subsequent to the date of the financial statements, the Company entered into an
Agreement and Release ("Release")with the holder of the Company's $15,000 note
payable, together with accrued and unpaid interest (see Note 4) in exchange for
60,000 shares of the Company's restricted common stock.
Subsequent to the date of the financial statements, the Company entered into a
Share Exchange Agreement ("Exchange") with the holder of 60,000 shares of the
Company's preferred stock and accrued dividends (see Note 2) in exchange for
240,000 shares of the Company's restricted common stock.
F-51
FINANCIAL STATEMENTS AND SCHEDULES
JUNE 30, 2003
PARA MAS INTERNET, INC.
F-52
PARA MAS INTERNET, INC.
INDEX TO FINANCIAL STATEMENTS
-----------------------------
Page
--------
- ---
Report of Independent Registered Certified Public Accountants . . . . . . . . . . . . . . . . . . F-54
Balance Sheet at June 30, 2003. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-55
Statements of Losses for the years ended June 30, 2003 and June 30, 2002 . . . . . . . . . . . . F-56
Statements of Deficiency in Stockholders' Equity for the two years period ended June 30, 2003 F-57
Statements of Cash Flows for the years ended June 30, 2003 and June 30, 2002. . . . . . . . . . . F-58
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-59 to F-66
F-53
REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Para Mas Internet, Inc.
Coquitlane, British Columbia
We have audited the accompanying balance sheet of Para Mas Internet, Inc as of
June 30, 2003 and the related statements of losses , deficiency in stockholders'
equity, and cash flows for the two years in the period ended June 30, 2003.
These financial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial statements based
upon our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatements. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe our audits
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Para Mas Internet, Inc. as of
June 30, 2003, and the results of its operations and its cash flows for each of
the two years in the period ended June 30, 2003, in conformity with accounting
principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note G the Company is
experiencing difficulty in generating sufficient cash flow to meet its
obligations and sustain its operations, which raises substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note G. The financial statements do not include
any adjustments that might result form the outcome of this uncertainty.
/s/ RUSSELL BEDFORD STEFANOU MIRCHANDANI LLP
--------------------------------------------
Russell Bedford Stefanou Mirchandani LLP
Certified Public Accountants
McLean, Virginia
August 20, 2003
F-54
PARA MAS INTERNET, INC.
BALANCE SHEET
JUNE 30, 2003
ASSETS
Current Assets:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -
$ -
============
LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY
Current Liabilities:
Accrued expenses (Notes C and H). . . . . . . . . . . . . . . . . . . . . . . $ 5,319
Notes payable (Notes C and H). . . . . . . . . . . . . . . . . . . . . . . . 15,000
Preferred stock dividends payable (Notes B and H). . . . . . . . . . . . . . 21,000
------------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . . . . 41,319
DEFICIENCY IN STOCKHOLDERS' EQUITY
Preferred Stock; authorized 10,000,000 shares; 60,000 shares issued (Notes B and H) 60,000
Common stock, par value, $.001 per share, 100,000,000
Shares authorized; 48,294,395 shares issued. . . . . . . . . . . . . . . . . . . . . 48,295
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,817,932
Accumulated Deficit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,967,546)
------------
Total Deficiency in Stockholders' Equity. . . . . . . . . . . . . . . . . . . . . . (41,319)
$ -
============
See Accompanying Notes to Financial Statements
F-55
PARA MAS INTERNET, INC.
STATEMENT OF LOSSES
FOR THE TWO YEARS ENDED JUNE 30,
2003 2002
------------ ------------
Costs and Expenses:
Interest. . . . . . . . . . . . . . . . . . . . . . . . $ 1,050 $ 1,050
Equity-based compensation . . . . . . . . . . . . . . . - 293,750
Consulting fees . . . . . . . . . . . . . . . . . . . . - 125,000
------------ ------------
Total operating costs and expenses. . . . . . . . . . . 1,050 419,800
Loss from operations before and Preferred Stock Dividends. (1,050) (419,800)
Provision for income (tax) benefit . . . . . . . . . . . . - -
------------ ------------
Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . (1,050) (419,800)
Preferred Stock Dividends (Notes B and H). . . . . . . . . 4,200 4,200
------------ ------------
Net Loss Available to Common Shareholders. . . . . . . . . $ (5,250) $ (424,000)
============ ============
Loss per Share Basic and Diluted . . . . . . . . . . . . . $ (.00) $ (.01)
============ ============
Basic and diluted Weighted average Number of Shares
Outstanding. . . . . . . . . . . . . . . . . . . . . . . . 44,127,695 48,120,782
============ ============
See Accompanying Notes to Financial Statements
F-56
PARA MAS INTERNET, INC.
STATEMENTS OF DEFICIENCY IN STOCKHOLDERS' EQUITY
FOR THE TWO YEARS ENDED JUNE 30, 2003 AND 2002
Preferred Common Preferred Common
--------- ---------- ---------- -------
Stock Stock Stock Stock Paid-in Accumulated Total
--------- ---------- ---------- ------- ----------- ------------- -------
- ---
Shares Shares Amount Amount Capital deficit
--------- ---------- ---------- ------- ----------- -------------
BALANCE JUNE 30, 2001. . . 60,000 44,127,570 $ 60,000 $44,128 $1,411,749 $ (1,546,696) $ (30,819)
Preferred stock dividend
payable . . . . . . . . . - - - - (4,200) - (4,200)
Shares issued in exchange
for cash in July
2001 at $.03 per share. . - 4,166,667 - 4,167 120,833 - 125,000
4,166,667 stock options
issued in July 2001,
valued at $0.0705 per
stock option, in
exchange for services . . - - - - 293,750 - 293,750
Rounding . . . . . . . . . - 158 - - - - -
Loss for the year ended
June 30, 2002. . . . . . - - - - - (419,800) (419,800)
--------- ---------- ---------- ------- ----------- ------------- ----------
BALANCE AT JUNE 30, 2002 60,000 48,294,395 60,000 48,295 1,822,132 (1,966,496) (36,069)
Preferred stock dividend
payable. . . . . . . . . - - - - (4,200) - (4,200)
Loss for the year ended
June 30, 2002 . . . . . . - - - - - (1,050) (1,050)
--------- ---------- ---------- ------- ----------- ------------- -------
- ---
BALANCE AT JUNE 30, 2003 60,000 48,294,395 $ 60,000 $48,295 $1,524,182 $ (1,967,546) $ (41,319)
========= ========== ========== ======= =========== ============= ==========
F-57
See Accompanying Notes to Financial Statements
PARA MAS INTERNET, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30,
2003 2002
-------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss). . . . . . . . . . . . . . . . . . . . . . . . . . . . $(1,050) $(419,800)
Adjustments to reconcile net profit to net cash:
Common stock options issued in exchange for services rendered. - 293,750
Changes in assets and liabilities:
Increase (decrease) in accounts payable and accrued liabilities . 1,050 1,050
-------- ----------
NET CASH (USED) PROVIDED BY OPERATING ACTIVITIES. . . . . . . . . - (125,000)
CASH FLOWS FROM INVESTING ACTIVITIES. . . . . . . . . . . . . . . - -
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock, net . . . . . . . . . . . . . - 125,000
-------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES. . . . . . . . . . . . . . . - 125,000
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS. . . . . . . - -
Cash and Cash Equivalents
Beginning of Period. . . . . . . . . . . . . . . . . . . . . . - -
-------- ----------
End of the Period. . . . . . . . . . . . . . . . . . . . . . . $ - $ -
======== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest. . . . . . . . . . . . . $ - $ -
Cash paid during the year for taxes . . . . . . . . . . . . . . - -
Preferred stock dividends payable. . . . . . . . . . . . . . . 4,200 4,200
Stock options issued in exchange for services . . . . . . . . . - 293,750
F-58
See Accompanying Notes to Financial Statements
PARA MAS, INTERNET, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2003 AND JUNE 30, 2002
NOTE A - SUMMARY OF ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation of
the accompanying consolidated financial statements as follows.
BUSINESS AND BASIS OF PRESENTATION
Para Mas Internet, Inc. ("Company" or "Para Mas") was incorporated under the
laws of the State of Nevada on June 6, 1994 as U.S. Medical Management, Inc., a
wholly owned subsidiary of Waterloo Wheels, Inc. The Company is inactive with
no significant operations and is seeking to merge or acquire in interest in
business opportunities. Waterloo Wheels, Inc. was incorporated on June 2, 1986
under the laws of British Columbia. In June 1995, the shareholders of Waterloo
Wheels, Inc. exchanged all their outstanding stock for shares of the Company on
a share for share basis. In June 1995, the Company completed a merger with Ken
Venturi Golf Training Center, Inc. Effective with the merger, all previously
outstanding common stock of Ken Venturi Golf Center, Inc. was exchanged for
4,000,000 shares of the Company's common stock. Immediately following the
merger, the Company changed its name to Ken Venturi Golf, Inc.
In November 1997, the Company changed its name to Transcontinental Waste,
Industries. In April 1999, the Company changed its name to Financial Depot
Online, Inc. In August 1999 the Company changed its name to Para Mas Internet,
Inc.
The Company has generated no sales revenues, has incurred expenses and has
sustained losses. Consequently, its operations are subject to all the risks
inherent in the establishment of a new business enterprise. For the period from
inception through June 30, 2003 the Company has an accumulated deficit of $
1,967,546.
LIQUIDITY
The Company is inactive with no significant operations and is seeking to merge
or acquire in interest in business opportunities. To date, the Company has
incurred expenses and has sustained losses. As shown in the accompanying
financial statements, the Company incurred a net loss of $ 1,050 during the
year ended June 30, 2003. The Company's current liabilities exceeded its current
assets by $ 41,319.
ADVERTISING
The Company will recognize advertising expenses in accordance with SOP 93-7
"Reporting on Advertising Costs." The Company did not incur advertising costs
during the years ended June 30, 2003 and 2002.
INCOME TAXES
Income taxes are provided based on the liability method for financial reporting
purposes in accordance with the provisions of Statements of Financial Standards
No. 109, "Accounting for Income Taxes". Under this method deferred tax assets
and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be removed or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the statement of operations in the period
that includes the enactment date.
F-59
PARA MAS, INTERNET, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2003 AND JUNE 30, 2002
NOTE A - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
CASH EQUIVALENTS
For purposes of the Statements of Cash Flows, the Company considers all highly
liquid debt instruments purchased with a maturity date of three months or less
to be cash equivalents.
PROPERTY AND EQUIPMENT
For financial statement purposes, property and equipment will be depreciated
using straight-line method over their estimated useful lives (five years for
furniture, fixtures and equipment). The straight-line method of depreciation is
also used for tax purposes.
CONCENTRATIONS OF CREDIT RISK
Financial instruments and related items, which potentially subject the Company
to concentrations of credit risk, consist primarily of cash, cash equivalents
and trade receivables. The Company places its cash and temporary cash
investments with high credit quality institutions. At times, such investments
may be in excess of the FDIC insurance limit.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly actual results
could differ from those estimates.
LONG-LIVED ASSETS
The Company has adopted Statement of Financial Accounting Standards No. 144
(SFAS 144). The Statement requires that long-lived assets and certain
identifiable intangibles held and used by the Company be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Events relating to recoverability may include
significant unfavorable changes in business conditions, recurring losses, or a
forecasted inability to achieve break-even operating results over an extended
period. The Company evaluates the recoverability of long-lived assets based
upon forecasted undercounted cash flows. Should an impairment in value be
indicated, the carrying value of intangible assets will be adjusted, based on
estimates of future discounted cash flows resulting from the use and ultimate
disposition of the asset. SFAS No. 144 also requires assets to be disposed of
be reported at the lower of the carrying amount or the fair value less costs to
sell.
F-60
PARA MAS, INTERNET, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2003 AND JUNE 30, 2002
NOTE A - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
COMPREHENSIVE INCOME
The Company does not have any items of comprehensive income in any of the
periods presented.
NET LOSS PER SHARE
The Company has adopted Statement of Financial Accounting Standards No. 128,
"Earnings Per Share," specifying the computation, presentation and disclosure
requirements of earnings per share information. Basic earnings (loss) per share
has been calculated based upon the weighted average number of common shares
outstanding. Stock options and warrants will be excluded as common stock
equivalents in the diluted earnings per share because they are either
antidilutive, or their effect is not material.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values of cash and cash equivalents, accounts receivable, accounts
payable and accrued expenses approximate fair value due to the relatively short
maturity of these instruments
SEGMENT INFORMATION
The Company adopted Statement of Financial Accounting Standards No. 131,
Disclosures about Segments of an Enterprise and Related Information ("SFAS 131")
in the year ended December 31, 1998. SAFAS 131 establishes standards for
reporting information regarding operating segments in annual financial
statements and requires selected information for those segments to be presented
in interim financial reports issued to stockholders. SFAS 131 also establishes
standards for related disclosures about products and services and geographic
areas. Operating segments are identified as components of an enterprise about
which separate discrete financial information is available for evaluation by
the chief operating decision maker, or decision making group, in making
decisions how to allocate resources and assets performance. The information
disclosed herein, materially represents all of the financial information related
to the Company's principal operating segment.
RECLASSIFICATIONS
Certain reclassifications have been made in prior years' financial statements to
conform to classifications in the current year.
F-61
PARA MAS, INTERNET, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2003 AND JUNE 30, 2002
NOTE A - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
STOCK BASED COMPENSATION
In December 2002, the FASB issued Statement of Financial Accounting Standards
No. 148 ("SFAS No. 148"), "Accounting for Stock-Based Compensation-Transition
and Disclosure-an amendment of SFAS 123." This statement amends SFAS No. 123,
"Accounting for Stock-Based Compensation," to provide alternative methods of
transition for a voluntary charge to the fair value based method of accounting
for stock-based employee compensation. In addition, this statement amends the
disclosure requirements of SFAS No. 123 to require prominent disclosures in both
annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results. The Company has chosen to continue to account for stock-based
compensation using the intrinsic value method prescribed in APB Opinion No. 25
and related interpretations. Accordingly, compensation expense for stock options
is measured as the excess, if any, of the fair market value of the Company's
stock at the date of the grant over the exercise price of the related option.
The Company has adopted the annual disclosure provisions of SFAS No. 148 in its
financial reports for the year ended June 30, 2003 and will adopt the interim
disclosure provisions for its financial reports for the quarter ended September
30, 2003.
FOREIGN CURRENCY TRANSLATION
The Company translates the foreign currency financial statements of its Canadian
subsidiary in accordance with the requirements of Statement of Financial
Accounting Standards No. 52, "Foreign Currency Translation." Assets and
liabilities are translated at current exchange rates, and related revenue and
expenses are translated at average exchange rates in effect during the period.
Resulting translation adjustments are recorded as a separate component in
stockholders' equity. Foreign currency transaction gains and losses are
included in the statement of income.
NEW ACCOUNTING PRONOUNCEMENTS
In July 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 141, "Business Combinations" (SFAS No.
141), and Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets" (SFAS No. 142). The FASB also issued Statement of
Financial Accounting Standards No. 143, "Accounting for Obligations Associated
with the Retirement of Long-Lived Assets" (SFAS No. 143), and Statement of
Financial Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" (SFAS No. 144) in August and October 2001,
respectively.
F-62
PARA MAS, INTERNET, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2003 AND JUNE 30, 2002
NOTE A - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
SFAS No. 141 requires the purchase method of accounting for business
combinations initiated after June 30, 2001 and eliminates the
pooling-of-interest method. The adoption of SFAS No. 141 had no material impact
on the Company's consolidated financial statements.
Effective January 1, 2002, the Company adopted SFAS No. 142. Under the new
rules, the Company will no longer amortize goodwill and other intangible assets
with indefinite lives, but such assets will be subject to periodic testing for
impairment. On an annual basis, and when there is reason to suspect that their
values have been diminished or impaired, these assets must be tested for
impairment, and write-downs to be included in results from operations may be
necessary. SFAS No. 142 also requires the Company to complete a transitional
goodwill impairment test six months from the date of adoption.
NOTE B-CAPITAL STOCK
In November, 1997, the Company approved, by unanimous consent of its Board of
Directors, to amend the Company's articles of incorporation to increase the
number of shares of common stock, par value $.001 per share from 25,000,000
shares to 100,000,000 shares and to create 10,000,000 shares of preferred stock,
par value $.001 per share.
In May 1998, the Company issued 60,000 shares of Series B 7% Cumulative
Redeemable Convertible Preferred Stock ("Preferred Shares") in exchange for
legal services rendered to the Company . Holders of the Preferred Shares are
entitled to receive cumulative cash dividends at the annual rate of 7% per
annum, or $.07 per share, payable quarterly. The dividends may be payable in
cash or through a dividend of additional shares of Preferred Shares. The Company
has accrued the unpaid $ 4,200 Series B Preferred Stock dividend to the
holders of the Preferred Shares during the years ended June 30, 2003 and 2002,
respectively. The aggregate unpaid Series B Preferred Stock dividends at June
30, 2003 is $ 21,000 (see Note I).
The Preferred Shares rank senior to the common stock. The Preferred Shares have
a liquidation preference of $ 1.00 per share plus any and all declared and
unpaid dividends.
The Preferred Shares are convertible, in whole or in part , at the option of the
holders thereof, into shares of common stock at amount equal to the Company's
average closing bid price of the common stock for thirty days immediately
preceding the conversion divided by the liquidation preference of $1.00 per
share.
The Company may, at its option, convert the Preferred Shares into the Company's
common stock by dividing the average closing price of the Company's common
stock over a twenty (20) day period by the liquidation preference of $1.00 per
share. In order to exercise this option, the average price of the Company's
common stock must be at least $1.50 per share.
In July 2001, the Company issued a total of 4,166,667 shares of common stock
in exchange for exercised options with an exercise price of $.03 per share (see
Note C).
F-63
PARA MAS, INTERNET, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2003 AND JUNE 30, 2002
NOTE C- STOCK OPTIONS
The following table summarizes the changes in options outstanding and the
related prices for the shares of the Company's common stock issued to the
Company consultants. These options were granted in lieu of cash compensation for
services performed.
Options Outstanding Options Exercisable
------------------- -------------------
Weighed Weighted
Weighted Average Average Average
Exercise Number Remaining Contractual Exercise Number Exercise
- --------- --------- ---------
Prices Outstanding Life (Years) Price Exercisable Price
- --------- ----------- ---------------------- --------- ----------- ---------
$ - - - $ - - $ -
Transactions involving options issued to non-employees are summarized as
follows:
Weighted Average
Number of Shares Price Per Share
----------------- -----------------
Outstanding at July 1, 2001. - $ -
Granted . . . . . . . . . 4,166,667 0.03
Exercised . . . . . . . . (4,166,667) 0.03
Canceled or expired . . . - -
----------------- -----------------
Outstanding at June 30, 2002 - -
Granted . . . . . . . . . - -
Exercised . . . . . . . . - -
Canceled or expired . . . - -
----------------- -----------------
Outstanding at June 30, 2003 - $ -
================= =================
The estimated value of the options granted to consultants was determined using
the Black-Scholes option pricing model and the following assumptions:
contractual term of 3.3 months, a risk free interest rate of 4.0 %, a dividend
yield of 0% and volatility of 50%. The amount of the expense charged to
operations in connection with granting the options was $ 293,750 during 2002.
NOTE D-NOTES PAYABLE
Notes payable consist of the following as of June 30, 2003
7% Note payable; unsecured and in default $ 15,000
===================
Accrued and unpaid interest in connection with the note payable is $ 5,319 at
June 30, 2003 (see Note I).
F-64
PARA MAS INTERNET, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2003 AND 2002
NOTE E-INCOME TAXES
The Company has adopted Financial Accounting Standard number 109, which requires
the recognition of deferred tax liabilities and assets for the expected future
tax consequences of events that have been included in the financial statement or
tax returns. Under this method, deferred tax liabilities and assets are
determined based on the difference between financial statements and tax basis of
assets and liabilities using enacted tax rates in effect for the year in which
the differences are expected to reverse. Temporary differences between taxable
income reported for financial reporting purposes and income tax purposes are
insignificant.
For income tax reporting purposes, the Company's aggregate unused net operating
losses approximate $ 1,900,000, expiring in the year 2021 that may
be used to offset future taxable income. The Company has provided a valuation
reserve against the full amount of the net operating loss benefit, since in the
opinion of management based upon the earnings history of the Company, it is more
likely than not that the benefits will not be realized. Due to significant
changes in the Company's ownership, the Company's future use of its existing net
operating losses may be limited.
Components of deferred tax assets as of June 30, 2003 are as follows:
Non-Current:
Net operating loss carry forward $ 660,000
Valuation allowance (660,000)
-----------
Net deferred tax asset $ 0
==============
NOTE F-LOSSES PER COMMON SHARE
The following table presents the computation of basic and diluted loss per
share:
2003 2002
------------ ------------
Net loss available for common shareholders $ (5,250) $ (424,000)
Basic and fully diluted loss per share . . $ ( .00) $ ( .00)
============ ============
Weighted average common shares outstanding 44,127,695 48,120,782
============ ============
Net loss per share is based upon the weighted average of shares of common stock
outstanding.
NOTE G-RELATED PARTY TRANSACTIONS
The Company's majority shareholder is International Bible Games, Inc. ("IBG"), a
company formed under the laws of British Columbia, Canada. IBG has paid certain
nominal costs of maintaining the Company's corporate status. The amount of the
costs incurred are not material to the Company's financial statements taken as
a whole.
F-65
PARA MAS INTERNET, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2003 AND 2002
NOTE H - GOING CONCERN MATTERS
The accompanying statements have been prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. As shown in the financial statements, from its
inception the Company has incurred loses of $ 1,967,546. This factor among
others may indicate that the Company will be unable to continue as a going
concern for a reasonable period of time. The Company's existence is dependent
upon management's ability to develop profitable operations and resolve it's
liquidity problems. The accompanying financial statements do not include any
adjustments that might result should the Company be unable to continue as a
going concern.
In order to improve the Company's liquidity, the Company is actively pursing
additional equity financing through discussions with investment bankers and
private investors. There can be no assurance the Company will be successful in
its effort to secure additional equity financing. If cash flows continue to
improve through these efforts, management believes that the Company can continue
to operate. However, no assurance can be given that management's actions will
result in the resolution of its liquidity problems.
NOTE I - SUBSEQUENT EVENT
Subsequent to the date of the financial statements, the Company entered into an
Agreement of Plan and Tender Offer ("Agreement") which provides for a tender
offer of 100% of the issued and outstanding shares of Amerigroup, Inc., a
company formed under the laws of the state of Nevada, in which the Company will
issue one share of its common stock for each share of Amerigroup, Inc. common
stock tendered. The Company will also issue approximately 10,042,105 shares of
its common stock to IBG shareholders and IBG creditors (see Note G) in exchange
for releases of claims against IBG.
Subsequent to the date of the financial statements, the Company entered into an
Agreement and Release ("Release") with the holder of the Company's $15,000 note
payable, together with accrued and unpaid interest (see Note D) in exchange for
60,000 shares of the Company's restricted common stock.
Subsequent to the date of the financial statements, the Company entered into a
Share Exchange Agreement ("Exchange") with the holder of 60,000 shares of the
Company's preferred stock (see Note B) in exchange for 240,000 shares of the
Company's restricted common stock.
F-66
- ------
FINANCIAL STATEMENTS AND SCHEDULES
JUNE 30, 2002
PARA MAS INTERNET, INC.
F-67
PARA MAS INTERNET, INC.
INDEX TO FINANCIAL STATEMENTS
-----------------------------
Page
-----------
Report of Independent Registered Certified Public Accountants . . . . . . . . . . . . . . . . F-69
Balance Sheet at June 30, 2002. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-70
Statements of Losses for the years ended June 30, 2002 and June 30, 2001. . . . . . . . . . F-71
Statements of Deficiency in Stockholders' Equity for the two year period ended June 30, 2002 F-72
Statements of Cash Flows for the years ended June 30, 2002 and June 30, 2001. . . . . . . . . F-73
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-74 to F-81
F-68
REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Para Mas Internet, Inc.
Coquitlane, British Columbia
We have audited the accompanying balance sheet of Para Mas Internet, Inc as of
June 30, 2002 and the related statements of losses , deficiency in stockholders'
equity, and cash flows for the two years in the period ended June 30, 2002.
These financial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial statements based
upon our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatements. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe our audits
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Para Mas Internet, Inc. as of
June 30, 2002, and the results of its operations and its cash flows for each of
the two years in the period ended June 30, 2002, in conformity with accounting
principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note H the Company is
experiencing difficulty in generating sufficient cash flow to meet its
obligations and sustain its operations, which raises substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note H. The financial statements do not include
any adjustments that might result form the outcome of this uncertainty.
/s/ RUSSELL BEDFORD STEFANOU MIRCHANDANI LLP
--------------------------------------------
Russell Bedford Stefanou Mirchandani LLP
Certified Public Accountants
McLean, Virginia
August 20, 2003
F-69
PARA MAS INTERNET, INC.
BALANCE SHEET
JUNE 30, 2002
ASSETS
Current Assets:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -
============
LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY
Current Liabilities:
Accrued expenses (Notes D and I). . . . . . . . . . . . . . . . . . . . . . . $ 4,269
Notes payable (Notes D and I). . . . . . . . . . . . . . . . . . . . . . . . 15,000
Preferred stock dividends payable (Notes B and H). . . . . . . . . . . . . . 16,800
------------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . . . . 36,069
DEFICIENCY IN STOCKHOLDERS' EQUITY
Preferred Stock; authorized 10,000,000 shares; 60,000 shares issued (Notes B and I) 60,000
Common stock, par value, $.001 per share, 100,000,000
Shares authorized; 48,294,395 shares issued. . . . . . . . . . . . . . . . . . . . . 48,295
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,822,132
Accumulated Deficit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,966,496)
------------
Total Deficiency in Stockholders' Equity. . . . . . . . . . . . . . . . . . . . . . (36,069)
$ -
============
See Accompanying Notes to Financial Statements
F-70
PARA MAS INTERNET, INC.
STATEMENT OF LOSSES
FOR THE YEAR ENDED JUNE 30,
2002 2001
------------ ------------
Costs and Expenses:
Interest. . . . . . . . . . . . . . . . . . . . . . . . $ 1,050 $ 1,050
Equity based compensation (Note C). . . . . . . . . . . 293,750
Consulting and professional fees . . . . . . . . . . . 125,000 -
------------ ------------
Total operating costs and expenses. . . . . . . . . . . 419,800 1,050
Loss from operations before and Preferred Stock Dividends. (419,800) (1,050)
Provision for income (tax) benefit . . . . . . . . . . . . - -
------------ ------------
Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . (419,800) (1,050)
Preferred Stock Dividends (Notes B and I). . . . . . . . . 4,200 4,200
------------ ------------
Net Loss Available to Common Shareholders. . . . . . . . . $ (424,000) $ (5,250)
============ ============
Loss per Share Basic and Diluted . . . . . . . . . . . . . $ (.00) $ (.00)
============ ============
Basic and diluted Weighted average Number of Shares
Outstanding. . . . . . . . . . . . . . . . . . . . . . . . 48,120,782 44,127,695
============ ============
See Accompanying Notes to Financial Statements
F-71
PARA MAS INTERNET, INC.
STATEMENTS OF DEFICIENCY IN STOCKHOLDERS' EQUITY
FOR THE TWO YEARS ENDED JUNE 30, 2002 AND 2001
Preferred Common Preferred Common Paid-in Accumulated Total
Stock Stock Stock Stock Capital Deficit
Shares Shares Amount Amount
<S
BALANCE AT JUNE 30, 2000 60,000 44,127,695 $ 60,000 $44,128 $1,415,949 $ (1,545,646) $ (25,569)
Preferred stock dividend
Payable - - - - (4,200) - (4,200)
Loss for the year ended
June 30, 2001 - - - - - (1,050) (1,050)
--------- ---------- ---------- ------- ----------- ------------- ----------
BALANCE JUNE 30, 2001 60,000 44,127,570 60,000 44,128 1,411,749 (1,546,696) (30,819)
Preferred stock dividend
payable - - - - (4,200) - (4,200)
4,166,667 stock options
issued in July 2001, valued
at $0.0705 per stock option,
in exchange for services - - - - 293,750 - 293,750
Shares issued in exchange
for cash in July 2001 at
$.03 per share - 4,166,667 - 4,167 120,833 - 125,000
Rounding - 158 - - - - -
Loss for the year ended
June 30, 2002 - - - - - (419,800) (419,800)
--------- ---------- ---------- ------- ----------- ------------- ----------
BALANCE AT JUNE 30, 2002 60,000 48,294,395 $ 60,000 $48,295 $1,822,132 $ (1,966,496) $ (36,069)
========= ========== ========== ======= =========== ============= ==========
F-72
See Accompanying Notes to Financial Statements
PARA MAS INTERNET, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30,
2002 2001
---------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss). . . . . . . . . . . . . . . . . . . . . . . . . . . $(419,800) $(1,050)
Adjustments to reconcile net profit to net cash:
Common stock options issued in exchange for services . . . . . . 293,750 -
Changes in assets and liabilities:
Increase (decrease) in accounts payable and accrued liabilities. 1,050 1,050
---------- --------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES. . . . . . . (125,000) -
CASH FLOWS FROM INVESTING ACTIVITIES . . . . . . . . . . . . . . - -
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock, net. . . . . . . . . . . . . 125,000 -
---------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES. . . . . . . . . . . . 125,000 -
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . . - -
Cash and Cash Equivalents
Beginning of Period . . . . . . . . . . . . . . . . . . . . . - -
---------- --------
End of the Period . . . . . . . . . . . . . . . . . . . . . . $ - $ -
========== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest . . . . . . . . . . . . $ - $ -
Cash paid during the year for taxes. . . . . . . . . . . . . . - -
Preferred stock dividends payable . . . . . . . . . . . . . . 4,200 4,200
Stock options issued in exchange for services. . . . . . . . . 293,750
F-73
See Accompanying Notes to Financial Statements
PARA MAS, INTERNET, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2002 AND JUNE 30, 2001
NOTE A - SUMMARY OF ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation of
the accompanying consolidated financial statements as follows.
BUSINESS AND BASIS OF PRESENTATION
Para Mas Internet, Inc. ("Company" or "Para Mas") was incorporated under the
laws of the State of Nevada on June 6, 1994 as U.S. Medical Management, Inc., a
wholly owned subsidiary of Waterloo Wheels, Inc. The Company is inactive with
no significant operations and is seeking to merge or acquire in interest in
business opportunities. Waterloo Wheels, Inc. was incorporated on June 2, 1986
under the laws of British Columbia. In June 1995, the shareholders of Waterloo
Wheels, Inc. exchanged all their outstanding stock for shares of the Company on
a share for share basis. In June 1995, the Company completed a merger with Ken
Venturi Golf Training Center, Inc. Effective with the merger, all previously
outstanding common stock of Ken Venturi Golf Center, Inc. was exchanged for
4,000,000 shares of the Company's common stock. Immediately following the
merger, the Company changed its name to Ken Venturi Golf, Inc.
In November 1997, the Company changed its name to Transcontinental Waste,
Industries. In April 1999, the Company changed its name to Financial Depot
Online, Inc. In August 1999 the Company changed its name to Para Mas Internet,
Inc.
The Company has generated no sales revenues, has incurred expenses and has
sustained losses. Consequently, its operations are subject to all the risks
inherent in the establishment of a new business enterprise. For the period from
inception through June 30, 2002 the Company has an accumulated deficit of $
1,966,496.
LIQUIDITY
The Company is inactive with no significant operations and is seeking to merge
or acquire in interest in business opportunities. To date, the Company has
incurred expenses and has sustained losses. As shown in the accompanying
financial statements, the Company incurred a net loss of $ 419,800 during the
year ended June 30, 2002. The Company's current liabilities exceeded its current
assets by $ 36,069.
ADVERTISING
The Company will recognize advertising expenses in accordance with SOP 93-7
"Reporting on Advertising Costs." The Company did not incur advertising costs
during the years ended June 30, 2002 and 2001.
INCOME TAXES
Income taxes are provided based on the liability method for financial reporting
purposes in accordance with the provisions of Statements of Financial Standards
No. 109, "Accounting for Income Taxes". Under this method deferred tax assets
and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be removed or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the statement of operations in the period
that includes the enactment date.
F-74
PARA MAS, INTERNET, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2002 AND JUNE 30, 2001
NOTE A - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
CASH EQUIVALENTS
For purposes of the Statements of Cash Flows, the Company considers all highly
liquid debt instruments purchased with a maturity date of three months or less
to be cash equivalents.
PROPERTY AND EQUIPMENT
For financial statement purposes, property and equipment will be depreciated
using straight-line method over their estimated useful lives (five years for
furniture, fixtures and equipment). The straight-line method of depreciation is
also used for tax purposes.
CONCENTRATIONS OF CREDIT RISK
Financial instruments and related items, which potentially subject the Company
to concentrations of credit risk, consist primarily of cash, cash equivalents
and trade receivables. The Company places its cash and temporary cash
investments with high credit quality institutions. At times, such investments
may be in excess of the FDIC insurance limit.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly actual results
could differ from those estimates.
LONG-LIVED ASSETS
The Company has adopted Statement of Financial Accounting Standards No. 144
(SFAS 144). The Statement requires that long-lived assets and certain
identifiable intangibles held and used by the Company be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Events relating to recoverability may include
significant unfavorable changes in business conditions, recurring losses, or a
forecasted inability to achieve break-even operating results over an extended
period. The Company evaluates the recoverability of long-lived assets based
upon forecasted undercounted cash flows. Should an impairment in value be
indicated, the carrying value of intangible assets will be adjusted, based on
estimates of future discounted cash flows resulting from the use and ultimate
disposition of the asset. SFAS No. 144 also requires assets to be disposed of
be reported at the lower of the carrying amount or the fair value less costs to
sell.
F-75
PARA MAS, INTERNET, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2002 AND JUNE 30, 2001
NOTE A - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
COMPREHENSIVE INCOME
The Company does not have any items of comprehensive income in any of the
periods presented.
NET LOSS PER SHARE
The Company has adopted Statement of Financial Accounting Standards No. 128,
"Earnings Per Share," specifying the computation, presentation and disclosure
requirements of earnings per share information. Basic earnings (loss) per share
has been calculated based upon the weighted average number of common shares
outstanding. Stock options and warrants will be excluded as common stock
equivalents in the diluted earnings per share because they are either
antidilutive, or their effect is not material.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values of cash and cash equivalents, accounts receivable, accounts
payable and accrued expenses approximate fair value due to the relatively short
maturity of these instruments
SEGMENT INFORMATION
The Company adopted Statement of Financial Accounting Standards No. 131,
Disclosures about Segments of an Enterprise and Related Information ("SFAS 131")
in the year ended December 31, 1998. SAFAS 131 establishes standards for
reporting information regarding operating segments in annual financial
statements and requires selected information for those segments to be presented
in interim financial reports issued to stockholders. SFAS 131 also establishes
standards for related disclosures about products and services and geographic
areas. Operating segments are identified as components of an enterprise about
which separate discrete financial information is available for evaluation by
the chief operating decision maker, or decision making group, in making
decisions how to allocate resources and assets performance. The information
disclosed herein, materially represents all of the financial information related
to the Company's principal operating segment.
RECLASSIFICATIONS
Certain reclassifications have been made in prior years' financial statements to
conform to classifications in the current year.
F-76
PARA MAS, INTERNET, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2002 AND JUNE 30, 2001
NOTE A - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
STOCK BASED COMPENSATION
In December 2002, the FASB issued Statement of Financial Accounting Standards
No. 148 ("SFAS No. 148"), "Accounting for Stock-Based Compensation-Transition
and Disclosure-an amendment of SFAS 123." This statement amends SFAS No. 123,
"Accounting for Stock-Based Compensation," to provide alternative methods of
transition for a voluntary charge to the fair value based method of accounting
for stock-based employee compensation. In addition, this statement amends the
disclosure requirements of SFAS No. 123 to require prominent disclosures in both
annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results. The Company has chosen to continue to account for stock-based
compensation using the intrinsic value method prescribed in APB Opinion No. 25
and related interpretations. Accordingly, compensation expense for stock options
is measured as the excess, if any, of the fair market value of the Company's
stock at the date of the grant over the exercise price of the related option.
The Company has adopted the annual disclosure provisions of SFAS No. 148 in its
financial reports for the year ended June 30, 2003 and will adopt the interim
disclosure provisions for its financial reports for the quarter ended September
30, 2003.
FOREIGN CURRENCY TRANSLATION
The Company translates the foreign currency financial statements of its Canadian
subsidiary in accordance with the requirements of Statement of Financial
Accounting Standards No. 52, "Foreign Currency Translation." Assets and
liabilities are translated at current exchange rates, and related revenue and
expenses are translated at average exchange rates in effect during the period.
Resulting translation adjustments are recorded as a separate component in
stockholders' equity. Foreign currency transaction gains and losses are
included in the statement of income.
NEW ACCOUNTING PRONOUNCEMENTS
In July 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 141, "Business Combinations" (SFAS No.
141), and Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets" (SFAS No. 142). The FASB also issued Statement of
Financial Accounting Standards No. 143, "Accounting for Obligations Associated
with the Retirement of Long-Lived Assets" (SFAS No. 143), and Statement of
Financial Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" (SFAS No. 144) in August and October 2001,
respectively.
F-77
PARA MAS, INTERNET, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2002 AND JUNE 30, 2001
NOTE A - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
SFAS No. 141 requires the purchase method of accounting for business
combinations initiated after June 30, 2001 and eliminates the
pooling-of-interest method. The adoption of SFAS No. 141 had no material impact
on the Company's consolidated financial statements.
Effective January 1, 2002, the Company adopted SFAS No. 142. Under the new
rules, the Company will no longer amortize goodwill and other intangible assets
with indefinite lives, but such assets will be subject to periodic testing for
impairment. On an annual basis, and when there is reason to suspect that their
values have been diminished or impaired, these assets must be tested for
impairment, and write-downs to be included in results from operations may be
necessary. SFAS No. 142 also requires the Company to complete a transitional
goodwill impairment test six months from the date of adoption.
NOTE B-CAPITAL STOCK
In November, 1997, the Company approved, by unanimous consent of its Board of
Directors, to amend the Company's articles of incorporation to increase the
number of shares of common stock, par value $.001 per share from 25,000,000
shares to 100,000,000 shares and to create 10,000,000 shares of preferred stock,
par value $.001 per share.
In May 1998, the Company issued 60,000 shares of Series B 7% Cumulative
Redeemable Convertible Preferred Stock ("Preferred Shares") in exchange for
legal services rendered to the Company . Holders of the Preferred Shares are
entitled to receive cumulative cash dividends at the annual rate of 7% per
annum, or $.07 per share, payable quarterly. The dividends may be payable in
cash or through a dividend of additional shares of Preferred Shares. The Company
has accrued the unpaid $ 4,200 Series B Preferred Stock dividend to the
holders of the Preferred Shares during the years ended June 30, 2002 and 2001,
respectively. The aggregate unpaid Series B Preferred Stock dividends at June
30, 2002 is $16,800 (see Note I)
The Preferred Shares rank senior to the common stock. The Preferred Shares have
a liquidation preference of $ 1.00 per share plus any and all declared and
unpaid dividends.
The Preferred Shares are convertible, in whole or in part , at the option of the
holders thereof, into shares of common stock at amount equal to the Company's
average closing bid price of the common stock for thirty days immediately
preceding the conversion divided by the liquidation preference of $1.00 per
share.
The Company may, at its option, convert the Preferred Shares into the Company's
common stock by dividing the average closing price of the Company's common
stock over a twenty (20) day period by the liquidation preference of $1.00 per
share. In order to exercise this option, the average price of the Company's
common stock must be at least $1.50 per share.
In July 2001, the Company issued a total of 4,166,667 shares of common stock
in exchange for exercised options with an exercise price of $.03 per share (see
Note C).
F-78
PARA MAS, INTERNET, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2002 AND JUNE 30, 2001
NOTE C- STOCK OPTIONS
The following table summarizes the changes in options outstanding and the
related prices for the shares of the Company's common stock issued to the
Company consultants. These options were granted in lieu of cash compensation for
services performed.
Options Outstanding Options Exercisable
------------------- -------------------
Weighed Weighted
Weighted Average Average Average
Exercise Number Remaining Contractual Exercise Number Exercise
- --------- --------- ---------
Prices Outstanding Life (Years) Price Exercisable Price
- --------- ----------- ---------------------- --------- ----------- ---------
$ - - - $ - - $ -
Transactions involving options issued to non-employees are summarized as
follows:
Number of Shares Weighted Average Price Per Share
----------------- ---------------------------------
Outstanding at July 1, 2000. - $ -
Granted . . . . . . . . . - -
Exercised . . . . . . . . - -
Canceled or expired . . . - -
----------------- ---------------------------------
Outstanding at June 30, 2001 - -
Granted . . . . . . . . . 4,166,667 0.03
Exercised . . . . . . . . (4,166,667) 0.03
Canceled or expired . . . - -
----------------- ---------------------------------
Outstanding at June 30, 2002 - $ -
================= =================================
The estimated value of the options granted to consultants was determined using
the Black-Scholes option pricing model and the following assumptions:
contractual term of 3.3 months, a risk free interest rate of 4.0 %, a dividend
yield of 0% and volatility of 50%. The amount of the expense charged to
operations in connection with granting the options was $ 293,750 during 2002.
NOTE D-NOTES PAYABLE
Notes payable consist of the following as of June 30, 2002
7% Note payable; unsecured and in default $ 15,000
===================
Accrued and unpaid interest in connection with the note payable is $ 4,269 at
June 30, 2002 (see Note I).
F-79
PARA MAS INTERNET, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002 AND 2001
NOTE E-INCOME TAXES
The Company has adopted Financial Accounting Standard number 109, which requires
the recognition of deferred tax liabilities and assets for the expected future
tax consequences of events that have been included in the financial statement or
tax returns. Under this method, deferred tax liabilities and assets are
determined based on the difference between financial statements and tax basis of
assets and liabilities using enacted tax rates in effect for the year in which
the differences are expected to reverse. Temporary differences between taxable
income reported for financial reporting purposes and income tax purposes are
insignificant.
For income tax reporting purposes, the Company's aggregate unused net operating
losses approximate $ 1,900,000, expiring in the year 2021 that may
be used to offset future taxable income. The Company has provided a valuation
reserve against the full amount of the net operating loss benefit, since in the
opinion of management based upon the earnings history of the Company, it is more
likely than not that the benefits will not be realized. Due to significant
changes in the Company's ownership, the Company's future use of its existing net
operating losses may be limited.
Components of deferred tax assets as of June 30, 2002 are as follows:
Non-Current:
Net operating loss carry forward $ 660,000
Valuation allowance (660,000)
-----------
Net deferred tax asset $ 0
==============
NOTE F-LOSSES PER COMMON SHARE
The following table presents the computation of basic and diluted loss per
2002 2001
------------ ------------
Net loss available for common shareholders $ (424,000) $ (5,250)
Basic and fully diluted loss per share . . $ ( .00) $ ( .00)
============ ============
Weighted average common shares outstanding 48,120,782 44,127,695
============ ============
share:
Net loss per share is based upon the weighted average of shares of common stock
outstanding.
NOTE G-RELATED PARTY TRANSACTIONS
The Company's majority shareholder is International Bible Games, Inc. ("IBG"), a
company formed under the laws of British Columbia, Canada. IBG has paid certain
nominal costs of maintaining the Company's corporate status. The amount of the
costs incurred are not material to the Company's financial statements taken as
a whole.
F-80
PARA MAS INTERNET, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002 AND 2001
NOTE H - GOING CONCERN MATTERS
The accompanying statements have been prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. As shown in the financial statements, from its
inception the Company has incurred loses of $ 1,966,496. This factor among
others may indicate that the Company will be unable to continue as a going
concern for a reasonable period of time. The Company's existence is dependent
upon management's ability to develop profitable operations and resolve it's
liquidity problems. The accompanying financial statements do not include any
adjustments that might result should the Company be unable to continue as a
going concern.
In order to improve the Company's liquidity, the Company is actively pursing
additional equity financing through discussions with investment bankers and
private investors. There can be no assurance the Company will be successful in
its effort to secure additional equity financing. If cash flows continue to
improve through these efforts, management believes that the Company can continue
to operate. However, no assurance can be given that management's actions will
result in the resolution of its liquidity problems.
NOTE I - SUBSEQUENT EVENT
Subsequent to the date of the financial statements, the Company entered into an
Agreement of Plan and Tender Offer ("Agreement") which provides for a tender
offer of 100% of the issued and outstanding shares of Amerigroup, Inc., a
company formed under the laws of the state of Nevada, in which the Company will
issue one share of its common stock for each share of Amerigroup, Inc. common
stock tendered. The Company will also issue approximately 10,042,105 shares of
its common stock to IBG shareholders and IBG creditors (see Note F) in exchange
for releases of claims against IBG.
Subsequent to the date of the financial statements, the Company entered into an
Agreement and Release ("Release") with the holder of the Company's $15,000 note
payable, together with accrued and unpaid interest (see Note D) in exchange for
60,000 shares of the Company's restricted common stock.
Subsequent to the date of the financial statements, the Company entered into a
Share Exchange Agreement ("Exchange") with the holder of 60,000 shares of the
Company's preferred stock (see Note B) in exchange for 240,000 shares of the
Company's restricted common stock.
F-81
- ------
MANAGEMENTS DISCUSSION AND ANALYSIS
Para Mas acquired Amerigroup, Inc. on or about April 12, 2004. Prior to that
time, the active business operations of Para Mas had been limited for some time.
The business operations of Amerigroup now constitute 100% of the business
operations of Para Mas. This management's discussion will therefore focus on
the business operations and the financial results of Amerigroup.
For the six month period ended December 31, 2003, Amerigroup had revenues of
$419,323. During the same period, expenses totaled $699,750 yielding an
operating loss for the period of $310,018. For the six month period ended
June 30, 2004, Amerigroup had revenues of $330,521. Total expenses for the same
period totaled $271,443 for operating income during the six month period of
$39,312.
As of June 30, 2004, Amerigroup had cash on hand totaling $28,865. This is
sufficient working capital to meet the day to day operational cash needs of
Amerigroup for approximately 30 days. Management estimates it will require
$360,000 in working capital to sustain the business operations of Amerigroup for
the next 12 months. Management believes that this working capital will be
available from operating revenues during the next twelve months.
To actively grow the business pursuant its current business plan however,
Amerigroup needs $5,000,000 in operating capital for the next 12 months. We
plan on raising this capital through a registered sale of our common stock
pursuant to this registration statement. However, it cannot be certain as to
whether we will be successful in selling the offering.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
As of February 18, 2004, the auditor-client relationship between the Registrant
and Russell Bedford Stefanou Mirchandani LLP of McLean, Virginia ("RBSM"), had
been terminated by the Registrant. The termination was not recommended or
approved by the board of directors of the Registrant. The Registrant does not
have an audit or similar committee. RBSM had been serving as the independent
accountant for the Registrant engaged as the principal accountant to audit the
Registrant's financial statements. The report of RBSM dated August 20, 2003,
with respect to its audit of the balance sheet of the Registrant as of June 30,
2003, and the related statements of losses, deficiency in stockholders' equity
and cash flows for the two years in the period then ended, stated that certain
factors listed in the report raised substantial doubt about the Registrant's
ability to continue as a going concern. Otherwise, no report of RBSM with
respect to any financial statement of the Registrant contained an adverse
opinion or a disclaimer of opinion, or was qualified or modified as to
uncertainty, audit scope, or accounting principles. Furthermore, during the
Registrant's two most recent fiscal years and, without limitation, the interim
period from June 30, 2003, the date of the last audited financial statements, to
February 18, 2004, the date of termination, RBSM and the Registrant have not had
any disagreements on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure.
During the Registrant's two most recent fiscal years and, without limitation,
the interim period from June 30, 2003, the date of the last audited financial
statements, to February 18, 2004, the date of termination, RBSM has not:
- - Advised the Registrant that the internal controls necessary for the
Registrant to develop reliable financial statements do not exist;
- - Advised the Registrant that information has come to RBSM's attention that
has led it to no longer be able to rely on management's representations, or that
has made it unwilling to be associated with the financial statements prepared by
management;
- - Advised the Registrant of the need to expand significantly the scope of
its audit, or that information has come to RBSM's attention during the time
period to which this paragraph applies, that if further investigated may; (i)
materially impact the fairness or reliability of either: a previously issued
audit report or the underlying financial statements; or the financial statements
issued or to be issued covering the fiscal period(s) subsequent to the date of
the most recent financial statements covered by an audit report (including
information that may prevent it from rendering an unqualified audit report on
those financial statements, or (ii) cause RBSM to be unwilling to rely on
management's representations or be associated with the Registrant's financial
statements; and due to RBSM's termination (due to audit scope limitations or
otherwise) or for any other reason, expanded the scope of RBSM's audit or
conduct such further investigation; or
- - Advised the Registrant that information has come to RBSM's attention that
it has concluded materially impacts the fairness or reliability of either (i) a
previously issued audit report or the underlying financial statements, or (ii)
the financial statements issued or to be issued covering the fiscal period(s)
subsequent to the date of the most recent financial statements covered by an
audit report (including information that, unless resolved to RBSM's
satisfaction, would prevent it from rendering an unqualified audit report on
those financial statements); and due to RBSM's termination or for any other
reason, the issue has not been resolved to RBSM's satisfaction prior to its
termination.
As of February 18, 2004, the Registrant engaged CFO Advantage, Inc. of Las
Vegas, Nevada, as the independent accountant for the Registrant to audit the
Registrant's financial statements. Prior to engaging the new accountant,
neither the Registrant nor any one on the Registrant's behalf consulted with the
new accountant on any matter. The Registrant has obtained the review by the new
accountant of this disclosure.
AVAILABLE INFORMATION
We have filed a registration statement on form SB-2 under the Securities Act of
1933 with the Securities and Exchange Commission with respect to the shares of
our common stock offered through this prospectus. This prospectus is filed as a
part of that registration statement and does not contain all of the information
contained in the registration statement and exhibits. Statements made in the
registration statement are summaries of the material terms of our contracts,
agreements or documents. We refer you to our registration statement and each
exhibit attached to it for a more complete description of matters involving our
company, and the statements we have made in this prospectus are qualified in
their entirety by reference to these additional materials. You may inspect the
registration statement and exhibits and schedules and any other materials filed
by us with the Securities and Exchange Commission at the Commission's principle
office in Washington, D.C. Copies of all or any part of the registration
statement may be obtained from the Public Reference Section of the Securities
and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the Commission at 1-800-SEC-0330 for further information on the
operation of the public reference room. The Securities and Exchange Commission
also maintains a web site at http://www.sec.gov that contains reports, proxy
------------------
statements and information regarding registrants that file electronically with
the Commission. Our registration statement and the referenced exhibits can also
be found on this site.
Upon the effective date of this registration statement and thereafter, we will
file with the Securities and Exchange Commission annual and quarterly periodic
reports on forms 10-KSB and 10-QSB respectively and current reports on form 8-K
as needed. We are not required to deliver annual reports to our shareholders
and at this time we do not intend to do so. We incourage our shareholders,
however, to access and review all materials that we will file with the
Securities and Exchange Commission at http://www.sec.gov.
------------------
Until ______, all dealers that effect transactions in these securities whether
or not participating in this offering, may be required to deliver a prospectus.
This is in addition to the dealer' obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our officers and directors are indemnified as provided by the Nevada Revised
Statutes and our bylaws.
Under the NRS, director immunity from liability to a company or its shareholders
for monetary liabilities applies automatically unless it is specifically limited
by a company's Articles of Incorporation. This is not the case with our
Articles of Incorporation. Excepted from that immunity are: (a) a willful
failure to deal fairly with the company or its shareholders in connection with a
matter in which the director has a material conflict of interest; (b) a
violation of criminal law unless the director had reasonable cause to believe
that his or her conduct was lawful or no reasonable cause to believe that his or
her conduct was unlawful; (c) a transaction from which the director derived an
improper personal profit; and (d) willful misconduct.
Our bylaws provide that we will indemnify our directors and officers to the
fullest extent not prohibited by Nevada law; provided, however, that we may
modify the extent of such indemnification by individual contracts with our
directors and officers; and, provided, further, that we shall not be required to
indemnify any director or officer in connection with any proceeding, or part
thereof, initiated by such person unless such indemnification: (a) is expressly
required to be made by law, (b) the proceeding was authorized by our Board of
Directors, (c) is provided by us, in our sole discretion, pursuant to the powers
vested us under Nevada law or (d) is required to be made pursuant to the bylaws.
Our bylaws provide that we will advance to any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was a director or officer, of our company, or
is or was serving at the request of our company as a director or executive
officer of another company, partnership, joint venture, trust or other
enterprise, prior to the final disposition of the proceeding, promptly following
request therefor, all expenses incurred by any director or officer in connection
with such proceeding upon receipt of an undertaking by or on behalf of such
person to repay said amounts if it should be determined ultimately that such
person is not entitled to be indemnified under our bylaws or otherwise.
Our bylaws provide that no advance shall be made by us to an officer of our
company in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, if a determination is reasonably and promptly
made (a) by the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to the proceeding, or (b) if such quorum is not
obtainable, or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, that the facts known
to the decision-making party at the time such determination is made demonstrate
clearly and convincingly that such person acted in bad faith or in a manner that
such person did not believe to be in or not opposed to the best interests of
Para Mas. An exception to this prohibition against advances applies when the
officer is or was a director of our company.
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ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated costs of this offering are as follows:
Securities and Exchange Commission registration fee. $ 950
Transfer Agent Fees. . . . . . . . . . . . . . . . . $ 500
Accounting fees and expenses . . . . . . . . . . . . $20,000
Legal fees and expenses. . . . . . . . . . . . . . . $10,000
Blue Sky fees and expenses . . . . . . . . . . . . . $ 5,000
Miscellaneous. . . . . . . . . . . . . . . . . . . . $12,108
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Total (1). . . . . . . . . . . . . . . . . . . . . . $50,000
=======
(1) If underwriters are used to sell the offering, they will be paid
commissions of up to 10% creating additional offering expenses of $500,000 if
all shares offered by Para Mas are sold.
All amounts are estimates other than the Commission's registration fee.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
On or about April 12, 2004, Para Mas issued 276,418,600 shares of common stock
to the shareholders of AmeriGroup in exchange for 100% of the issued and
outstanding common shares of AmeriGroup on a share for share basis. The
transaction was a transaction by Para Mas not involving any public offering.
The shares were issued pursuant to Section 4(2) of the Securities Act of 1933.
There was no money raised and the transaction was a share exchange transaction
on a share for share basis.
On or about April 12, 2004, Para Mas issued 10,042,105 shares of common stock
in exchange for a release of certain rights in which the Company had an
interest. The transaction was a transaction by Para Mas not involving any
public offering. The shares were issued pursuant to Section 4(2) of the
Securities Act of 1933. There was no money raised.
ITEM 27. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
- ------- --------------------
3.1 Articles of Incorporation (1)
3.2 By-Laws (1)
5.1 Opinion of Gary R. Henrie , LLC, with consent to use (2)
23.1 Consent of CFO Advantage, Inc. for use of Audited Financial Statements
23.2 Consent of Russell Bedford Stefanou Mirchandani LLP for use of Audited
Financial Statements
23.3 Consent of Russell Bedford Stefanou Mirchandani LLP for use of Audited
Financial Statements
(1) Previously filed as an exhibit to the 10-KSB on September 20, 2000.
(2) Previously filed as an exhibit to Form SB-2 on June 18, 2004.
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ITEM 28. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
- - To include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
- - To reflect in the prospectus any facts or events arising after the
effective date of this registration statement, or most recent post-effective
amendment, which, individually or in the aggregate, represent a fundamental
change in the information set forth in this registration statement; and
- - To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in the registration statement.
2. That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
3. To remove from registration by means of a post-effective amendment any of
the securities being registered hereby which remain unsold at the termination of
the offering.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons pursuant to the
provisions above, or otherwise, we have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities, other
than the payment by us of expenses incurred or paid by one of our directors,
officers, or controlling persons in the successful defense of any action, suit
or proceeding, is asserted by one of our directors, officers, or controlling
person sin connection with the securities being registered, we will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification is against public policy as expressed in the Securities Act, and
we will be governed by the final adjudication of such issue.
-27-
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Mesa,
State of Arizona on September 1, 2004.
PARA MAS CORP.
By: /s/ Gary Whiting
----------------------------
Gary Whiting, President
In accordance with the requirements of the Securities Act of 1933, the following
persons in the capacities and on the dates stated signed this registration
statement.
SIGNATURE CAPACITY IN WHICH SIGNED DATE
Principal Executive Officer
Principal Financial Officer
Principal Accounting Officer September 17, 2004
/s/ Gary Whiting Director
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Gary Whiting