SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
---------------------
Date of report (Date of earliest event reported):
July 21, 2003
GSV, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
0-23901
(Commission File No.)
13-3979226
(IRS Employer Identification No.)
191 Post Road West
Westport, Connecticut
(Address of Principal Executive Offices)
06880
(Zip Code)
Registrant's telephone number, including area code: (203) 221-2690
N/A
(Former Name or Former Address, if Changed Since Last Report)
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. The following
financial statements are filed herewith:
Independent Auditors' Report F-1
Consolidated Balance Sheet of Century Royalty LLC
as of December 31, 2002 F-2
Consolidated Statement of Operations of Century Royalty
LLC for the year ended December 31, 2002 and 2001 F-3
Consolidated Statement of Cash Flows of Century Royalty LLC
for the year ended December 31, 2002 and 2001 F-4
Notes to Consolidated Financial Statements of Century
Royalty LLC F-5 to F-7
Consolidated Balance Sheet of Century Royalty LLC
for the six months ended June 30, 2003 (Unaudited) F-8
Consolidated Statement of Operations of Century Royalty LLC
for the six months ended June 30, 2003 (Unaudited) F-9
Consolidated Statement of Cash Flows of Century Royalty LLC
for the six months ended June 30, 2003 (Unaudited) F-10
Notes to Consolidated Interim Financial Statement of Century
Royalty LLC (Unaudited) F-11
(b) UNAUDITED PROFORMA FINANCIAL STATEMENTS F-12 to F-13
(c) EXHIBITS
Exhibit 2.1 Term sheet by and between GSV, Inc. and
Polystick U.S. Corp. (previously filed).
Exhibit 2.2 Agreement and Plan of Merger dated as of
July 21, 2003, by and among GSV, Inc. Cybershop L.L.C.,
Polystick Oil & Gas, Inc. and Polystick U.S. Corp.
(previously filed).
Exhibit 4.1 Form of Certificate of Designations, Preferences
and Rights of Series B Convertible Preferred Stock.
(previously filed).
Exhibit 4.2 Stock Redemption Agreement dated as of July 21,
2003, between the Company and Brooks Station Holdings, Inc.
(previously filed).
Exhibit 4.3 Form of promissory note issued to Brooks Station
Holdings, Inc. (previously filed).
Exhibit 4.4 Security Agreement dated as of July 21, 2003, by
and between the Company and Brooks Station Holdings, Inc.
(previously filed).
Exhibit 99.1 Press Release, dated July 21, 2003
(previously filed)
Independent Auditors' Report
To the Board of Directors
GSV, Inc.
Westport, Connecticut
We have audited the accompanying consolidated balance sheet of Century
Royalty LLC ("Century")(a subsidiary of Polystick Oil and Gas, Inc.) at
December 31, 2002, and the related statements of operations and cash flows
for the each of the years ended December 31, 2002 and 2001. These financial
statements are the responsibility of Century's management. Our responsibility
is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statement is 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Century Royalty LLC
and its subsidiary, and the results of its operations and cash flows for each of
the years ended December 31, 2002 and 2001, in conformity with accounting
principles generally accepted in the United States of America.
September 26, 2003
Denver, Colorado
/s/ Comiskey & Company
PROFESSIONAL CORPORATION
F-1
CENTURY ROYALTY LLC
CONSOLIDATED BALANCE SHEET
December 31, 2002
ASSETS
Current Assets:
Cash and cash equivalents $ 40,554
Royalties receivable 210,609
------------
Total current assets 251,163
Investments - oil & gas wells, net 287,340
-----------
Total assets $ 538,503
=========
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Accounts payable $ 95,829
Other accrued payables 147,516
Loan payable - related party 69,044
------------
Total current liabilities 312,389
------------
Total liabilities 312,389
------------
Members' equity 226,114
------------
Total liabilities and members' equity $ 538,503
===========
The accompanying notes are an integral part of the financial statements.
F-2
CENTURY ROYALTY LLC
CONSOLIDATED STATEMENT OF OPERATIONS
For the year ended December 31, 2002 and 2001
2002 2001
Oil and gas income $ 1,163,414 $ 1,297,865
General and administrative 102,054 405,806
Miscellaneous operating costs 350,305 2,125,814
Reimbursements 1,184 -
-------------- ----------
Total operating expenses 453,542 2,531,620
-------------- ----------
Income from operations before other
income and expense 709,872 (1,233,755)
Impairment of oil and gas properties 881,802 --
------------- -----------
Net loss ( 171,930 ) (1,233,755)
Members' equity beginning of the year 398,044 1,631,799
------------- -----------
Members' equity end of year $ 226,114 $ 398,044
============= ===========
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
CENTURY ROYALTY LLC
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended December 31, 2002 and 2001
2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ ( 171,930 ) $ (1,297,865)
Adjustments to reconcile net loss to net cash
flows from operating activities
Impairment loss and depletion of oil and gas wells 881,802 98,103
(Increase) Decrease in royalties receivable 245,846 (218,290)
Increase (Decrease) in accounts payable 410,478 (373,384)
--------- ---------
Net cash flows from operating activities 1,366,196 (1,791,436)
CASH FLOWS FROM INVESTING ACTIVITIES
Investments in full cost pool (21,811) (277,517)
--------- ---------
Net cash flows from investing activities (21,811) (277,517)
CASH FLOWS FROM FINANCING ACTIVITIES
Loans from related party --- 2,347,859
Payments of related party debt (1,372,176) ( 906,638)
---------- ----------
Net cash flows from financing activities (1,372,176) 1,441,221
---------- ----------
Net decrease in cash (27,792) (627,732)
Cash and cash equivalents, beginning of year 68,346 696,078
--------- ----------
Cash and cash equivalents, end of year $ 40,554 $ 68,346
========== ==========
The accompanying notes are an integral part of the financial statements.
F-4
Century Royalty LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2002 and 2001
1. Business and Organization
Century Royalty LLC was formed in 1999 to pursue the acquisition, development,
production and exploration of oil and natural gas properties in the United
States.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary, HLM Energy, LLC. All significant intercompany
accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Oil and Gas Properties
The Company follows the full cost method of accounting for its oil and gas
properties. All costs associated with property acquisition, exploration, and
development activities are capitalized in a single, United States cost center.
Internal costs directly identified with the acquisition, exploration and
development activities of the Company are also capitalized. Capitalized costs
are amortized on the unit-of-production basis using proved oil and gas reserves.
Capitalized costs are limited to the present value of estimated future net
revenues less estimated future expenditures using a discount factor of ten
percent. Sales and abandonments of oil and gas properties are treated as
reductions of the capitalized cost pool. At December 31, 2002, there were no
costs of unproved properties or major development projects included in the
capitalized cost pool.
Income Taxes
The Company is a limited liability company with three partners. The taxable
income from the operations of the Company is taxed on the individual partners'
tax returns.
F-5
Century Royalty LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2002 and 2001
2. Summary of Significant Accounting Policies (continued)
Statement of Cash Flows
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with an original maturity of three months or
less to be cash equivalents.
Impairment
In accordance with Statement of Financial Accounting Standards No. 121 ("SFAS
121") - Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets
to be Disposed Of, as amended by FASB 146, the Company assesses the need
for an impairment of capitalized costs of oil and gas properties on a
combined basis, with separate consideration given to unproved properties and
major development projects, of which there were none at December 31, 2002. If
impairment is indicated based upon undiscounted future cash flows, then an
impairment is recognized to the extent that net capitalized costs exceed
discounted expected future cash flows. For the year ended December 31, 2002,
the Company recorded an impairment of its oil and gas reserves of $881,802.
3. Acquisition Agreement
On April 7, 1999, the Company's partners entered into an Acquisition Agreement
whereby the parties agree to pursue the acquisition of oil and gas properties
within an LLC resulting in equal 1/3 ownership interests for each partner.
Revenues and profits of acquired prospects funded solely by Polystick U.S.
Corp., a partner in the Company ("Polystick") are to be credited and apportioned
between the members of the LLC in accordance with a payout schedule which
provides for a before payout percentage of 100% to Polystick and an after payout
percentage of 75% to Polystick and 25% to the remaining partners.
4. Oil and Gas Properties
During the year ended December 31, 2002, the Company received the majority of
its revenue from two wells in Louisiana in which it owns a non-operated working
interest. Century also holds working interests in 4 wells located in Texas for
which there is no current production.
Pursuant to an agreement dated October 17, 2000, the Company traded 50% of its
then working interest in its Louisiana properties in consideration of an
agreement by the transferee to fund Century's share of the drilling and other
development of the properties.
Effective June 2002, Century sold 1/3 of its remaining working interest in the
properties to GSV, Inc. for $550,000 in cash and 850,000 shares of common stock
of GSV.
For the year ended December 31, 2002, Century assessed the recoverability of its
oil and gas investments, and recorded an impairment loss equal to $881,802.
F-6
Century Royalty LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2002 and 2001
5. Related party transactions
As of and during the years ended December 31, 2002 and 2001, a Century Royalty
LLC partner has advanced funds to the Company which were repaid as follows:
Balance at January 1, 2001 totaled $0, $2,347,859 was loaned, $906,638 was
Repaid and the balance at December 31, 2001 was $1,441,220. During 2002,
additional advances totaled $0, repayments totaled $1,372,176, and the balance
at December 31, 2002 was $69,044.
Also during 2001, a partner advanced $35,468 to HLM which was repaid in 2002.
6. Subsequent Event
On July 21, 2003, pursuant to an agreement between Polystick, GSV, Inc.,
and Polystick Oil & Gas, Inc. ("POGI"), a Delaware Corporation, the interest of
Polystick was transferred to POGI for the purpose of effecting a merger of POGI
into Cybershop L.L.C., a subsidiary of GSV, Inc. The effect of the transaction
is the sale of Polystick's interest in Century to GSV, Inc. for common and
preferred shares of GSV.
F-7
CENTURY ROYALTY LLC
BALANCE SHEET
June 30, 2003
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 94,225
Royalties receivable and other 116,559
------------
Total current assets 210,784
Investments - oil & gas wells, net 219,420
-----------
Total assets $ 430,204
=========
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Accounts payable $ 135,943
Loan payable - related party 69,044
------------
Total current liabilities 204,987
------------
Total liabilities 204,987
------------
Members' equity 225,217
------------
Total liabilities and members' equity $ 430,204
===========
The accompanying notes are an integral part of the financial statements.
F-8
CENTURY ROYALTY LLC
STATEMENT OF OPERATIONS
For the six months ended June 30, 2003
(unaudited)
Oil and gas income $ 116,028
General and administrative 38,934
Miscellaneous operating costs 77,991
-------------
Total operating expenses 116,925
-------------
Net loss (897)
Members' equity beginning of the year 226,114
------------
Members' equity end of year $ 225,217
============
The accompanying notes are an integral part of the consolidated financial
statements.
F-9
CENTURY ROYALTY LLC
STATEMENT OF CASH FLOWS
For the six months ended June 30, 2003
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (897)
Adjustments to reconcile net loss to net cash
flows from operating activities
Depletion 48,767
Decrease in royalties receivable 113,203
Decrease in accounts payable and other liabilities (107,402)
---------
Net cash flows from operating activities 53,671
CASH FLOWS FROM INVESTING ACTIVITIES --
CASH FLOWS FROM FINANCING ACTIVITIES --
Net increase in cash 53,671
Cash and cash equivalents, beginning of year 40,554
--------
Cash and cash equivalents, end of year $ 94,225
=========
The accompanying notes are an integral part of the financial statements.
F-10
CENTURY ROYALTY LLC
NOTES TO FINANCIAL STATEMENTS
June 30, 2003
(unaudited)
1. Management's representation of interim financial information
------------------------------------------------------------
The accompanying financial statements have been prepared by Century Royalty
LLC without audit pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted as allowed by such rules
and regulations, and management believes that the disclosures are adequate to
make the information presented not misleading. These financial statements
include all of the adjustments which, in the opinion of management, are
necessary to a fair presentation of financial position and results of
operations. All such adjustments are of a normal and recurring nature. These
financial statements should be read in conjunction with the audited financial
statements at December 31, 2002 contained elsewhere herein.
F-11
Unaudited Proforma Financial Statements
The following condensed financial information portrays the effects of the
acquisition by GSV, Inc. of POGI as if the transaction occurred effective
January 1, 2002, which is the beginning of the earliest period presented.
The condensed financial information for the period ended December 31, 2002
has been derived from the audited financial statements of GSV, Inc. included
in its Form 10-KSB, and for the company acquired as contained in this Form
8-K. The condensed financial information for the six month periods ended
June 30, 2003 were derived from unaudited financial statements for the
respective periods. No adjustment has been made for the tax effect of
proforma net income, if any, since cumulative tax loss carryforwards exist
in excess of the proforma amount.
<table>
<s> <c> <c> <c> <c> <c>
GSV, Inc. Century (POGI)
12 months 12 months
ended ended Proforma
December 31, December 31, December 31,
2002 2002 Adjustments 2002
___________ ____________ ___________ ____________
Current assets $ 671,035 $ 251,163 $(263,801) 2 $ 658,397
Total assets $ 1,179,636 $ 538,503 $2,226,955 1,2 $ 3,945,094
Current liabilities $ 192,572 $ 312,389 $ 136,199 2 $ 641,160
Stockholders' equity $ 987,064 $ 226,114 $1,826,855 1,2 $ 3,040,133
Revenues $ 334,400 $ 1,163,413 $ --- $ 1,497,813
Net income (loss) $ (831,275) $ (171,933) $ --- $ (1,003,208)
Net loss per share $ (0.38) $ --- $ --- $ (0.44)
</table>
1 Purchase of POGI - $ 1,125,000 value of common stock and $1,500,000 value of
preferred stock
2 Redemption of Series A Preferred Stock and payment of cumulative dividend -
$263,801 in cash and $200,000 note payable
<table>
<s> <c> <c> <c> <c> <c>
GSV, Inc. Century (POGI)
6 months 6 months
ended ended Proforma
June 30, June 30, June 30,
2003 2003 Adjustments 2003
___________ ____________ ___________ ____________
Current assets $ 496,984 $ 210,784 $ (263,801) 2 $ 443,967
Total assets $ 943,798 $ 430,204 $2,226,955 1,2 $ 3,600,957
Current liabilities $ 236,707 $ 204,987 $ 136,199 2 $ 577,893
Stockholders' equity $ 707,091 $ 225,217 $1,826,855 1,2 $ 2,759,163
Revenues $ 145,081 $ 116,028 $ --- $ 263,109
Net income (loss) $ (251,184) $ (898) $ --- $ (252,082)
Net loss per share $ (0.10) $ --- $ --- $ (0.10)
</table>
1 Purchase of POGI - $ 1,125,000 value of common stock and $1,500,000 value of
preferred stock
2 Redemption of Series A Preferred Stock and payment of cumulative dividend -
$263,801 in cash and $200,000 note payable
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Date: October 3, 2003 GSV, INC.
By: /s/Gilad Gat
Gilad Gat, Chief Executive Officer