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GOLDONLINE INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENT
JANUARY 31, 2000
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GOLDONLINE INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
Page
No.
Consolidated Balance Sheets - 3
January 31, 2000 and July 31, 1999
Consolidated Statements of Operations - 4
Three and Six Months Ended January 31, 2000
Consolidated Statement of Stockholders' Equity - 5
Six Months Ended January 31, 2000
Consolidated Statements of Cash Flows - 6-7
Six Months Ended January 31, 2000
Notes to Consolidated Financial Statements - 8-11
Six Months Ended January 31, 2000
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GOLDONLINE INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JANUARY 31, JULY 31,
2000 1999
(UNAUDITED) (AUDITED)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 199,237 $ 34,426
Trade accounts receivable 83,519 30,999
Inventory 550,164 413,208
Prepaid expenses and other assets 500 500
Deferred income taxes 44,103 31,648
---------- ----------
877,523 510,781
Property and equipment, net 169,997 154,597
Goodwill, net of amortization of $4,448 and $1,112, respectively 95,672 99,008
Other assets 6,141 6,141
---------- ----------
$1,149,333 $ 770,527
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current installments of long-term debt and notes payable 222,193 202,146
Accounts payable 163,892 86,901
Bank overdraft 89,935 52,555
Accrued expenses 10,271 10,568
Income taxes payable -- 5,384
Due to shareholder 3,659 8,012
---------- ----------
489,950 365,566
Deferred income taxes 10,004 10,004
Long-term debt less current installments 68,572 76,674
Stockholders' equity
Common stock, $.0001 par value, 200,000,000 shares authorized,
87,616,408 and 86,996,408 shares issued and outstanding at
January 31, 2000 and July 31, 1999, respectively 9,320 8,700
Additional paid-in capital 503,500 217,420
Retained earnings (deficit) 67,987 92,163
---------- ----------
580,807 318,283
---------- ----------
$1,149,333 $ 770,527
========== ==========
See accompanying notes to consolidated financial statements.
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GOLDONLINE INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JANUARY 31, 2000 AND 1999
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JANUARY 31, JANUARY 31,
2000 1999 2000 1999
Sales and revenues $ 501,483 $ 511,176 $ 910,961 $ 858,171
Cost of sales 391,330 271,594 748,342 459,966
--------- --------- --------- ---------
Gross profit 110,153 239,582 162,619 398,205
Selling, general and administrative expense 123,368 177,641 187,497 340,841
--------- --------- --------- ---------
Loss from operations (13,215) 61,941 (24,878) 57,364
Other income (expense):
Interest expense (7,123) (4,734) (11,754) (9,438)
Interest and other income -- 99 1 143
--------- --------- --------- ---------
(7,123) (4,635) (11,753) (9,295)
--------- --------- --------- ---------
Net earnings (loss) before income taxes (20,338) 57,306 (36,631) 48,069
Income tax expense (benefit) (6,915) 19,484 (12,455) 16,343
--------- --------- --------- ---------
Net earnings (loss) $ (13,423) $ 37,822 $ (24,176) $ 31,726
========= ========= ========= =========
Net earnings (loss) per share $ (0.000) $ 0.001 $ (0.000) $ 0.000
========= ========= ========= =========
Weighted average shares outstanding, in millions 87.2 75.0 87.1 75.0
========= ========= ========= =========
See accompanying notes to consolidated financial statements.
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GOLDONLINE INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(UNAUDITED)
COMMON STOCK PAID-IN RETAINED
SHARES PAR VALUE CAPITAL EARNINGS TOTAL
------ --------- ------- -------- -----
BALANCE, August 1, 1999 86,996,408 $ 8,700 $217,420 $ 92,163 $318,283
Exercise of common stock options 50,000 50 1,650 1,700
Exercise of common stock warrants 570,000 570 284,430 285,000
Net earnings (loss) (24,176) (24,176)
------------------------------------------------------------------------
BALANCE, January 31, 2000 87,616,408 $ 9,320 $503,500 $ 67,987 $580,807
========================================================================
See accompanying notes to consolidated financial statements.
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GOLDONLINE INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JANUARY 31, 2000 AND 1999
(UNAUDITED)
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) $ (24,176) 31,726
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 21,623 4,348
Deferred income taxes (12,455) --
Changes in assets and liabilities:
Accounts receivable (52,520) --
Inventory (136,956) (9,654)
Other assets -- (4,812)
Accounts payable and accrued expenses 71,310 27,883
Bank overdraft 37,380 --
--------- ---------
Net cash provided by operating activities (95,794) 49,491
--------- ---------
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES
Capital expenditures (14,225) (7,519)
--------- ---------
Net cash provided by investing activities (14,225) (7,519)
--------- ---------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
Proceeds from sales of common stock 286,700 --
Loan proceeds 50,000 --
Repayment of notes payable and long-term debt (57,518) (41,438)
Increase (decrease) in amount due stockholder (4,352) --
--------- ---------
Net cash provided by financing activities 274,830 (41,438)
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 164,811 534
CASH AND CASH EQUIVALENTS, beginning of period 34,426 1,668
--------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 199,237 $ 2,202
========= =========
See accompanying notes to consolidated financial statements.
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GOLDONLINE INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS, CONTINUED
SIX MONTHS ENDED JANUARY 31, 2000 AND 1999
(UNAUDITED)
2000 1999
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid $11,754 $ 9,438
======= =======
Income taxes paid $ 5,384 $ --
======= =======
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Acquisition of transportation equipment for long-term debt $19,462
See accompanying notes to consolidated financial statements.
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GOLDONLINE INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of
Goldonline International, Inc. (formerly Transun International
Airways, Inc.) ("GDOL") and its wholly owned subsidiaries
Con-Tex Silver Imports, Inc. ("Con-Tex") and Gold Online.com,
Inc. ("GO.com") (collectively referred to as the "Company").
All material intercompany accounts and transactions have been
eliminated.
(b) ORGANIZATION
GDOL was incorporated May 22, 1996 in Delaware and until June
1999 was a development stage company with plans to establish
itself as an air transport company providing non-scheduled air
service (charter flights) for tour operators, charter brokers,
cruise line casinos, theme parks and theme attractions.
Con-Tex was incorporated September 12, 1994 in Texas. GO.com
was incorporated on February 3, 1999 in Delaware.
On June 10, 1999, GDOL acquired all of the issued and
outstanding common stock of Con-Tex and GO.com. For accounting
purposes, the acquisitions have been treated as the
acquisition of Con-Tex and GO.com by GDOL with Con-Tex as the
acquiror (reverse acquisition). The historical financial
statements prior to June 10, 1999 are those of Con-Tex.
(c) NATURE OF BUSINESS
GDOL is now a holding company principally engaged in acquiring
and developing businesses. Con-Tex is a company involved in
both the wholesale and retail jewelry business. GO.com is
establishing an Internet jewelry business.
(d) CASH EQUIVALENTS
The Company considers all liquid investments with original
maturities of three months or less to be cash equivalents. At
January 31, 2000, cash equivalents consist of money market
accounts and business checking accounts.
(e) INVENTORIES
Inventories consist primarily of silver jewelry and are
carried at the lower of average cost or market.
(f) MACHINERY AND EQUIPMENT
Owned machinery and equipment are stated at cost and
depreciated using the straight-line method over the estimated
useful lives of the respective assets.
(g) GOODWILL
Costs in excess of the fair value of net assets acquired are
amortized over a fifteen-year period on a straight-line basis.
The carrying value of goodwill is reviewed if the facts and
circumstances suggest that it may be impaired. If this review
indicates that goodwill will not be recoverable, the Company's
carrying value of the goodwill would be reduced.
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(h) INCOME TAXES
Deferred income taxes are recognized for income and expense
items that are reported for financial purposes in different
years than for income tax purposes.
(i) REVENUE AND COST RECOGNITION
Sales revenues are recognized when the product is shipped.
Cost of sales, which is recognized simultaneously with the
recognition of sales, is comprised of the cost of materials
and indirect costs incurred during the manufacturing process.
(j) NET EARNINGS (LOSS) PER SHARE
Net earnings (loss) per share amounts are computed using the
weighted average number of shares outstanding during the
period. Fully diluted earnings (loss) per share is presented
if the assumed conversion of common stock equivalents results
in material dilution.
(k) USE OF ESTIMATES
The process of preparing consolidated financial statements in
conformity with generally accepted accounting principles
requires the use of estimates and assumptions regarding
certain types of assets, liabilities, revenues and expenses.
Such estimates primarily relate to unsettled transactions and
events as of the date of the consolidated financial
statements. Accordingly, upon settlement, actual results may
differ from estimated amounts.
(l) FAIR VALUE DETERMINATION
Financial instruments consist of cash, accounts receivable,
accounts payable, accrued liabilities, notes payable and
long-term debt. The carrying amount of these financial
instruments approximates fair value due to their short-term
nature or the current rates which the Company could borrow
funds with similar remaining maturities.
2. ACQUISITION
On June 10, 1999, GDOL issued 75,000,000 of its common shares to
acquire all of the common shares of Con-Tex. Con-Tex is both a
wholesale and retail marketer of jewelry, primarily silver. For
accounting purposes, the acquisition has been treated as the
acquisition of Con-Tex by GDOL with Con-Tex as the acquiror (reverse
acquisition). Simultaneously, GDOL issued 10,000,000 of its common
shares to acquire all of the common shares of GO.com. GO.com is a new
Internet Company and it has the domain name Gold Online.com. A value of
$25,000 was recorded for this acquisition. Pro forma information has
not been presented as GDOL had no prior continuing operations and
GO.com had only recently commenced operations.
3. RELATED PARTY TRANSACTIONS
Con-Tex leases its corporate headquarters from the principal
shareholder of the Company at the rate of $1,596.78 per month. This
amounted to $9,581 during each of the six months periods ended January
31, 2000 and 1999.
The Company had received loans from its principal shareholder. The
balance owed was $3,659 at January 31, 2000 and $8,012 at July 31,
1999.
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4. PROPERTY AND EQUIPMENT
Property and equipment consist of the following at January 31, 2000 and
July 31, 1999:
January 31, July 31,
2000 1999
Equipment and store furnishings $ 46,322 $ 46,322
Transportation equipment 156,125 133,663
Web site 37,225 26,000
Leasehold improvements 1,035 1,035
--------- ---------
240,707 207,020
Less accumulated depreciation (70,710) (52,423)
--------- ---------
$ 169,997 $ 154,597
========= =========
5. LONG-TERM DEBT AND NOTES PAYABLE
Notes payable consists of the following:
Note payable to bank with interest at 10% payable on $136,400
demand or January 1, 2000 if no demand is made; accrued
interest payable monthly; collateralized by all assets of
Con-Tex and guaranteed by the principal shareholder of the
Company
Note payable to the brother of the principal shareholder of
the Company due on July 23, 2000 with interest at 8%,
unsecured, convertible into common stock of the Company at
$.01 per share 50,000
Notes payable to company in monthly installments
aggregating $2,534, including interest at 9.8% to 11.6%;
collateralized by transportation equipment 104,365
--------
290,765
Current installments of long-term debt and notes payable 222,193
--------
Long-term debt less current installments $ 68,572
========
6. INCOME TAXES
Federal income tax expense (benefit) for the three and six months ended
January 31, 2000 consists of deferred tax benefit in the amounts of
$6,915 and $12,455, respectively. Federal income tax expense for the
three and six month periods ended January 31, 1999 amounted to $19,484
and $16,343, respectively.
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Actual income tax expense (benefit) applicable to earnings (loss)
before income taxes is the same as the "normally expected" federal
income tax expense (benefit).
The deferred income tax assets and liabilities at January 31, 2000 are
comprised of the following:
CURRENT NONCURRENT
Expenses deferred for tax purposes $ 25,243 -
Net operating loss carryforwards 18,860 -
-------- --------
44,103 -
Less valuation allowance ( -) -
-------- --------
Deferred income tax asset 44,103 -
Deferred income tax liability - asset basis - (10,004)
-------- --------
Net deferred income tax assets (liabilities) $ 44,103 ($10,004)
======== ========
7. CAPITAL STOCK
The Company sold 200,000 units (The "Units") at $1.00 per Unit. Each
Unit consisted of 4 shares of common stock, par value $.001, and 1
warrant. Each warrant entitled the holder to purchase eight shares of
the common stock of the Company at a purchase price of $.50 per share.
Under the terms of the initial offering, the warrants were scheduled to
expire on September 30, 1999. The exercise period for the warrants was
extended until February 29, 2000.
At January 31, 2000, warrants for the purchase of 1,600,000 shares of
the Company's common stock at $.50 per share had been issued and
warrants for the purchase of 570,000 shares had been exercised.
On September 1, 1999, the Company established a stock option plan,
which reserved 10,000,000 shares of the Company's common stock for
issue to certain employees, directors and consultants. The Plan
provides that options may be granted for no less than fair market value
at the date of the option grant. As of January 31, 2000, one option to
acquire 50,000 shares had been granted and exercised at a price of
$.034 per share.
8. SUBSEQUENT EVENTS
During February 2000, the remaining warrants to purchase 1,030,000
shares of common stock of the Company were exercised at an exercise
price of $.50 per share.
On April 20, 2000, pursuant to an agreement and plan of reorganization
dated April 11, 2000, DGOL acquired 100% of the issued and outstanding
common stock of Benton Ventures, Inc. ("Benton or Registrant"), a
Delaware corporation, in exchange for 1,2000,000 newly issued common
shares of GDOL. On April 25, 2000, the Board of Directors of GDOL
elected to merge Benton, Registrant, into GDOL pursuant to Section 253
of Delaware's General Corporate Laws. As a result of the merger, GDOL
will be the surviving company.
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