SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT TO CURRENT REPORT ON FORM 8-K FOR REPORT DATED SEPTEMBER 10, 2002
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Bongiovi Entertainment, Inc.
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(Exact name of registrant as specified in its charter)
Nevada
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(State or other jurisdiction of incorporation)
0-23365 33-0840184
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(Commission File Number) (IRS Employer Identification No.)
649 SW Whitmore Drive, Port Saint Luci, Florida 334984
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (772) 879-0578
1
The Registrant has previously filed its Current Report on Form
8-K, dated September 10, 2002, without certain financial information required by
Item 7 of such Form 8-K. The Registrant hereby amends the Current Report on Form
8-K to file such financial information. Item 7, subparagraph (a) of the Report
dated September 10, 2002, is hereby amended to read as follows:
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Balance Sheet as of September 30, 2002 (Unaudited)
Statements of Operations for the nine months ended
September 30, 2002 and 2001 and the Period From
May 8, 2000 (Inception) to September 30, 2002
(unaudited).
Statements of Cash Flows for the nine months ended
September 30, 2002 and 2001 and the Period From
May 8, 2000 (Inception) to September 30, 2002
(unaudited).
Notes to Financial Statements (Unaudited)
Report of Independent Auditors
Balance Sheet as of December 31, 2001
Statements of Operations for the period
from May 8, 2000 (Inception) to December 31, 2000
the Year Ended December 31, 2001 and May 8, 2000
(Inception) to December 31, 2001
Statement of Stockholders' (Deficit) for
the period from May 8, 2000 (inception) to December
31, 2001
Statements of Cash Flows for the period
from May 8, 2000 (Inception) to December 31, 2000
the Year Ended December 31, 2001 and May 8, 2000
(Inception) to December 31, 2001
Notes to Financial Statements.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Dated: February 28, 2003 BONGIOVI ENTERTAINMENT, INC.
By: /S/ Robert E. Simmons
---------------------------------------
Robert E. Simmons
Chief Executive Officer and President
3
BONGIOVI ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
SEPTEMBER 30, 2002
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash $ 7,098
Receivable from officer 22,500
Advance royalties 276,883
----------
Total current assets $ 306,481
==========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITIES
Due to shareholders $ 266,825
Convertible debentures 167,000
Bridge loan 10,000
Accrued expenses - shareholders 11,392
Accounts payable and accrued expenses 54,207
----------
Total current liabilities 509,424
----------
STOCKHOLDERS' (DEFICIT)
Preferred stock, no par value, 1,000,000 shares
authorized --
Common stock, $.001 par value, non-voting
8,000,000 shares authorized, --
Common stock, $.001 par value, voting
8,000,000 shares authorized,
8,000,000 shares issued and outstanding 8,000
Additional paid in capital 450,000
(Deficit) accumulated during the development stage (660,943)
----------
(202,943)
----------
$ 306,481
==========
See the accompanying notes to the financial statements.
F-1
BONGIOVI ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001, AND
THE PERIOD FROM INCEPTION (MAY 8, 2000) TO SEPTEMBER 30, 2002
(UNAUDITED)
Inception to
September 30,
2002 2001 2002
------------ ------------ ------------
REVENUE
Net sales $ -- $ -- $ --
------------ ------------ ------------
OPERATING COSTS AND EXPENSES
General and administrative 291,471 174,608 643,767
------------ ------------ ------------
OTHER EXPENSES:
Interest expense 11,565 3,200 17,176
------------ ------------ ------------
NET (LOSS) $ (303,036) $ (177,808) $ (660,943)
============ ============ ============
PER SHARE INFORMATION (basic and fully diluted)
Weighted average common shares outstanding 8,000,000 8,000,000 8,000,000
============ ============ ============
(Loss) per share $ (0.04) $ (0.02) $ (0.08)
============ ============ ============
See the accompanying notes to the financial statements.
F-2
BONGIOVI ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001, AND
THE PERIOD FROM INCEPTION (MAY 8, 2000) TO SEPTEMBER 30, 2002
(UNAUDITED)
Inception to
September 30,
2002 2001 2002
---------- ---------- ----------
Cash flow from operating activities:
Net cash (used in) operating activities $(185,847) $(100,023) $(217,704)
---------- ---------- ----------
Cash flows from investing activities:
Net cash provided by investing activities -- -- --
---------- ---------- ----------
Cash flows from financing activities:
Net cash provided by financing activities 192,802 105,200 224,802
---------- ---------- ----------
Increase in cash 6,955 5,177 7,098
Cash - beginning of period 143 -- --
---------- ---------- ----------
Cash - end of period $ 7,098 $ 5,177 $ 7,098
========== ========== ==========
Supplemental Cash Flow Disclosures:
Cash paid for:
Interest $ -- $ -- $ --
========== ========== ==========
Income taxes $ -- $ -- $ --
========== ========== ==========
See the accompanying notes to the financial statements.
F-3
Bongiovi Entertainment, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 2002
(Unaudited)
(1) Basis Of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
("GAAP") for interim financial information. They do not include all of the
information and footnotes required by GAAP for complete financial statements. In
the opinion of management, all adjustments (consisting only of normal recurring
adjustments) considered necessary for a fair presentation have been included.
The results of operations for the periods presented are not necessarily
indicative of the results to be expected for the full year. For further
information refer to the financial statements of Bongiovi Entertainment, Inc. as
of December 31, 2001.
(2) Acquisitions
During September 2002 Interruption Television, Inc. (ITV) issued 16,000,000
shares of its common stock to the shareholders of the Bongiovi Entertainment,
Inc. (Bongiovi) in exchange for all of the issued and outstanding common shares
of Bongiovi pursuant to an Agreement and Plan of Reorganization. In addition,
ITV issued 73,411 shares of common stock for services related to the
reorganization. Concurrent with the exchange of shares, ITV changed its name to
Bongiovi Entertainment, Inc.
This acquisition of Bongiovi, the accounting acquirer, by ITV a non-operating
entity, is considered in substance a capital transaction by the issuance of
3,926,589 shares of common stock by Bongiovi for all of the issued and
outstanding common shares of ITV, and will be accounted for as a reverse
acquisition, and no goodwill or other intangible assets will be recorded. On
this basis, the historical financial statements as of and prior to the
acquisition date will represent the operations of Bongiovi.
(3) Earnings Per Share
The Company calculates net income (loss) per share as required by SFAS No. 128,
"Earnings per Share." Basic earnings (loss) per share is calculated by dividing
net income (loss) by the weighted average number of common shares outstanding
for the period. Diluted earnings (loss) per share is calculated by dividing net
income (loss) by the weighted average number of common shares and dilutive
common stock equivalents outstanding. During the periods presented common stock
equivalents were not considered, as their effect would be anti dilutive.
(3) Related Parties
Through September 2002 shareholders of the Company advanced the Company an
aggregate of $266,825. These advances bear interest at 6% per annum and are due
on demand.
F-4
(4) Notes Payable
During September 2002 the Company borrowed $10,000 pursuant to a 90-day note
with interest at 18% per annum.
(5) Convertible Debentures
Through September 2002 the Company borrowed an aggregate of $167,000 pursuant to
the issuance of convertible debentures. The debentures bear interest at a rate
of 8% per annum and are due 1 year from the date of issuance. An aggregate of
$32,000 of the debentures are in default and are convertible into 12,800 shares
of the Company's common stock at the option of the holder and an aggregate of
$135,000 of the debentures are due between April 2003 and August 2003 and are
convertible into 27,000 shares of the Company's common stock at the option of
the holder.
(6) Stockholders' (Deficit)
During the period ended September 30, 2002 and from inception to September 30,
2002 officers of the Company contributed an aggregate of $150,000 and $450,000
in unpaid salaries to the capital of the Company.
(7) Going Concern
The Company's financial statements are presented on a going concern basis, which
contemplates the realization of assets and satisfaction of liabilities in the
normal course of business.
The Company has experienced a significant loss from operations as a result of
its investment necessary to achieve its operating plan, which is long-range in
nature. For the period ended September 30, 2002 and from inception, the Company
incurred net losses of $303,036 and $660,943 and has working capital and
stockholder deficits of $202,943 at September 30, 2002.
The Company's ability to continue as a going concern is contingent upon its
ability to attain profitable operations and secure financing. In addition, the
Company's ability to continue as a going concern must be considered in light of
the problems, expenses and complications frequently encountered by entrance into
established markets and the competitive environment in which the Company
operates.
The Company is pursuing equity financing for its operations. Failure to secure
such financing or to raise additional capital or borrow additional funds may
result in the Company depleting its available funds and not being able pay its
obligations.
The financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
the Company to continue as a going concern.
F-5
REPORT OF INDEPENDENT AUDITORS
Stockholders and Board of Directors
Bongiovi Entertainment, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheet of Bongiovi Entertainment, Inc.
(A Development Stage Company) as of December 31, 2001, and the related
statements of operations, stockholders' (deficit) and cash flows for the period
from inception (May 8, 2000) to December 31, 2000, the year ended December 31,
2001 and the period from inception (May 8, 2000) to December 31, 2001. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits 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 by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide 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 Bongiovi Entertainment, Inc. (A
Development Stage Company) as of December 31, 2001, and results of its
operations and its cash flows for the period from inception (May 8, 2000) to
December 31, 2000, the year ended December 31, 2001 and the period from
inception (May 8, 2000) to December 31, 2001, in conformity with accounting
principles generally accepted in the United States of America.
Stark Winter Schenkein & Co., LLP
/s/Stark Winter Schenkein & Co., LLP
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Denver, Colorado
February 4, 2003
F-6
BONGIOVI ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 2001
Assets
Current assets:
Cash $ 143
----------
Other assets:
Due from shareholder 7,000
Artist advance royalties 161,330
----------
168,330
----------
$ 168,473
==========
Liabilities and stockholders' (deficit)
Current liabilities:
Due to shareholders $ 167,810
Accrued expenses - shareholders 4,625
Accounts payable and accrued expenses 13,945
Convertible notes payable 32,000
----------
Total current liabilities 218,380
----------
Stockholders' (deficit):
Preferred stock, no par value, 1,000,000 shares
authorized --
Common stock, $.001 par value, non-voting
8,000,000 shares authorized, --
Common stock, $.001 par value, voting
8,000,000 shares authorized,
8,000,000 shares issued and outstanding 8,000
Additional paid in capital 300,000
(Deficit) accumulated during the development stage (357,907)
----------
(49,907)
----------
$ 168,473
==========
See the accompanying notes to the financial statements.
F-7
BONGIOVI ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
PERIOD FROM INCEPTION (MAY 8, 2000) TO DECEMBER 31, 2000,
THE YEAR ENDED DECEMBER 31, 2001 AND
THE PERIOD FROM INCEPTION (MAY 8, 2000) TO DECEMBER 31, 2001
Inception to Year Ended Inception to
December 31, December 31, December 31,
2000 2001 2001
------------ ------------ ------------
Revenue $ -- $ -- $ --
------------ ------------ ------------
Operating expenses:
Selling, general and administrative expenses 110,605 241,731 352,336
------------ ------------ ------------
110,605 241,731 352,336
------------ ------------ ------------
(Loss) from operations (110,605) (241,731) (352,336)
Other expense:
Interest -- 5,571 5,571
------------ ------------ ------------
Net (loss) $ (110,605) $ (247,302) $ (357,907)
============ ============ ============
Per share information - basic and fully diluted:
Weighted average shares outstanding 8,000,000 8,000,000 8,000,000
============ ============ ============
Net (loss) per share $ (0.01) $ (0.03) $ (0.04)
============ ============ ============
See the accompanying notes to the financial statements.
F-8
BONGIOVI ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' (DEFICIT)
PERIOD FROM INCEPTION (MAY 8, 2000) TO DECEMBER 31, 2001
(Deficit)
Accumulated
Common Stock Additional During the
------------------------- Paid in Development
Shares Amount Capital Stage Total
---------- ---------- ---------- ---------- ----------
Beginning balance -- $ -- $ -- $ -- $ --
Common shares issued for services at $.001 per share
during May 2000 8,000,000 8,000 -- -- 8,000
Contribution of officers' salaries to capital -- -- 100,000 -- 100,000
Net (loss) for the period -- -- -- (110,605) (110,605)
---------- ---------- ---------- ---------- ----------
Balance December 31, 2000 8,000,000 8,000 100,000 (110,605) (2,605)
Contribution of officers' salaries to capital -- -- 200,000 -- 200,000
Net (loss) for the year -- -- -- (247,302) (247,302)
---------- ---------- ---------- ---------- ----------
Balance at December 31, 2001 8,000,000 $ 8,000 $ 300,000 $(357,907) $ (49,907)
========== ========== ========== ========== ==========
See the accompanying notes to the financial statements.
F-9
BONGIOVI ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
PERIOD FROM INCEPTION (MAY 8, 2000) TO DECEMBER 31, 2000,
THE YEAR ENDED DECEMBER 31, 2001 AND
THE PERIOD FROM INCEPTION (MAY 8, 2000) TO DECEMBER 31, 2001
Inception to Year Ended Inception to
December 31, December 31, December 31,
2000 2001 2001
---------- ---------- ----------
Net (loss) $(110,605) $(247,302) $(357,907)
Adjustments to reconcile net (loss) to net cash (used in)
operating activities:
Common shares issued for non cash consideration 8,000 -- 8,000
Contribution of salaries by officers 100,000 200,000 300,000
Increase in artist advance royalties (49,139) (112,191) (161,330)
Increase in due from shareholder (2,000) (5,000) (7,000)
Increase in accounts payable and accrued expenses - shareholders 53,744 118,691 172,435
Increase in accounts payable and accrued expenses -- 13,945 13,945
---------- ---------- ----------
Net cash (used in) operating activities -- (31,857) (31,857)
---------- ---------- ----------
Cash flows from investing activities:
Net cash (used in) investing activities -- -- --
---------- ---------- ----------
Cash flows from financing activities:
Proceeds from convertible notes -- 32,000 32,000
---------- ---------- ----------
Net cash provided by financing activities -- 32,000 32,000
---------- ---------- ----------
Net increase in cash -- 143 143
Beginning - cash balance -- -- --
---------- ---------- ----------
Ending - cash balance $ -- $ 143 $ 143
========== ========== ==========
Supplemental cash flow information:
Cash paid for income taxes $ -- $ -- $ --
========== ========== ==========
Cash paid for interest $ -- $ -- $ --
========== ========== ==========
See the accompanying notes to the financial statements.
F-10
Bongiovi Entertainment, Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2001
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Bongiovi Entertainment, Inc. (the Company) was incorporated May 8, 2000 under
the laws of the State of Florida. The Company is an entertainment content
provider and independent record label and intends to conduct operations in the
music industry. The Company has chosen December 31 as a year-end and is in the
development stage.
Revenue Recognition
The Company recognizes revenue when services are provided or products are
shipped and is presented net of returns.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents.
Financial Instruments
Fair value estimates discussed herein are based upon certain market assumptions
and pertinent information available to management as of December 31, 2001. The
respective carrying value of certain on-balance-sheet financial instruments
approximated their fair values. These financial instruments include cash,
accounts payable and convertible notes payable. Fair values were assumed to
approximate carrying values for these financial instruments because they are
short term in nature and their carrying amounts approximate fair values.
Long Lived Assets
The carrying value of long-lived assets is reviewed on a regular basis for the
existence of facts and circumstances that suggest impairment. To date, no such
impairment has been indicated. Should there be an impairment, in the future, the
Company will measure the amount of the impairment based on the amount that the
carrying value of the impaired assets exceed the undiscounted cash flows
expected to result from the use and eventual disposal of the from the impaired
assets.
Net Income (Loss) Per Common Share
The Company calculates net income (loss) per share as required by Statement of
Financial Accounting Standards (SFAS) 128, "Earnings per Share." Basic earnings
(loss) per share is calculated by dividing net income (loss) by the weighted
average number of common shares outstanding for the period. Diluted earnings
(loss) per share is calculated by dividing net income (loss) by the weighted
average number of common shares and dilutive common stock equivalents
outstanding. During periods in which the Company incurs losses common stock
equivalents, if any, are not considered, as their effect would be anti-dilutive.
F-11
Bongiovi Entertainment, Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2001
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Advertising Costs
Advertising costs are charged to expense as incurred. Advertising costs charged
to expense included in selling, general and administrative expenses, amounted to
$6,500, $0 and $6,500 during the period from inception to December 31, 2000 and
the year ended December 31, 2001 and the period from inception to December 31,
2001.
Segment Information
The Company follows SFAS 131, Disclosures about "Segments of an Enterprise and
Related Information." Certain information is disclosed, per SFAS 131, based on
the way management organizes financial information for making operating
decisions and assessing performance. The Company currently operates in a single
segment and will evaluate additional segment disclosure requirements as it
expands its operations.
Income Taxes
The Company follows SFAS 109 "Accounting for Income Taxes" for recording the
provision for income taxes. Deferred tax assets and liabilities are computed
based upon the difference between the financial statement and income tax basis
of assets and liabilities using the enacted marginal tax rate applicable when
the related asset or liability is expected to be realized or settled. Deferred
income tax expenses or benefits are based on the changes in the asset or
liability each period. If available evidence suggests that it is more likely
than not that some portion or all of the deferred tax assets will not be
realized, a valuation allowance is required to reduce the deferred tax assets to
the amount that is more likely than not to be realized. Future changes in such
valuation allowance are included in the provision for deferred income taxes in
the period of change.
Stock-Based Compensation
The Company accounts for equity instruments issued to employees for services
based on the fair value of the equity instruments issued and accounts for equity
instruments issued to other than employees based on the fair value of the
consideration received or the fair value of the equity instruments, whichever is
more reliably measurable.
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 Accounting Principles
Board 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.
F-12
Bongiovi Entertainment, Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2001
Recent Pronouncements
In December 2002, the Financial Accounting Standards Board (FASB) issued SFAS
148 "Accounting for Stock-Based Compensation--Transition and Disclosure--an
amendment of SFAS 123." SFAS 148 provides alternative methods of transition for
a voluntary change to the fair value based method of accounting for stock-based
employee compensation from the intrinsic value-based method of accounting
prescribed by APB 25. As allowed by SFAS 123, the Company has elected to
continue to apply the intrinsic value-based method of accounting, and has
adopted the disclosure requirements of SFAS 123. The Company currently does not
anticipate adopting the provisions of SFAS 148.
In July 2002, the FASB issued SFAS 146, "Accounting for Costs Associated with
Exit or Disposal Activities." SFAS 146 provides new guidance on the recognition
of costs associated with exit or disposal activities. The standard requires
companies to recognize costs associated with exit or disposal activities when
they are incurred rather than at the date of commitment to an exit or disposal
plan. SFAS 146 supercedes previous accounting guidance provided by the EITF
Issue No. 94-3 "Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." EITF Issue No. 94-3 required recognition of costs at the date
of commitment to an exit or disposal plan. SFAS 146 is to be applied
prospectively to exit or disposal activities initiated after December 31, 2002.
Early application is permitted. The adoption of SFAS 146 by the Company is not
expected to have a material impact on the Company's financial position, results
of operations, or cash flows.
In April 2002, the FASB issued SFAS 145, "Rescission of FASB Statements No. 4,
44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections."
Among other things, this statement rescinds FASB Statement No. 4, "Reporting
Gains and Losses from Extinguishment of Debt" which required all gains and
losses from extinguishment of debt to be aggregated and, if material, classified
as an extraordinary item, net of related income tax effect. As a result, the
criteria in APB Opinion No. 30, "Reporting the Results of Operations --
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions," will now be used to
classify those gains and losses. The provisions of SFAS 145 related to the
classification of debt extinguishment are effective for years beginning after
May 15, 2002. The adoption of SFAS 145 by the Company is not expected to have a
material impact on the Company's financial position, results of operations, or
cash flows.
In November 2001, the EITF of the FASB issued EITF 01-9 "Accounting for
Consideration Given by a Vendor to a Subscriber (Including a Reseller of the
Vendor's Products)." EITF 01-9 provides guidance on when a sales incentive or
other consideration given should be a reduction of revenue or an expense and the
timing of such recognition. The guidance provided in EITF 01-9 is effective for
financial statements for interim or annual periods beginning after December 15,
2001. The adoption of EITF 01-9 by the Company is not expected to have a
material impact on the Company's financial statements.
In August 2001, the FASB issued SFAS 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." SFAS 144 provides new guidance on the
recognition of impairment losses on long-lived assets with definite lives to be
held and used or to be disposed of and also issued the definition of what
constitutes a discontinued operation and how the results of a discontinued
operation are to be measured and presented. SFAS 144 is effective for fiscal
years beginning after December 15, 2001. The adoption of SFAS 144 is not
expected to have a material impact on the Company's financial position, results
of operations, or cash flows.
F-13
Bongiovi Entertainment, Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2001
In June 2001, the FASB issued SFAS 143, "Accounting for Asset Retirement
Obligations." SFAS 143 requires the fair value of a liability for an asset
retirement obligation to be recognized in the period that it is incurred if a
reasonable estimate of fair value can be made. The associated asset retirement
costs are capitalized as part of the carrying amount of the long-lived asset.
SFAS 143 is effective for fiscal years beginning after June 15, 2002. The
adoption of SFAS 143 is not expected to have a material impact on the Company's
financial position, results of operations or cash flows.
In June 2001, the FASB issued SFAS 142, "Goodwill and Other Intangible Assets,"
which provides for non-amortization of goodwill and intangible assets that have
indefinite useful lives, annual tests of impairments of those assets and interim
tests of impairment when an event occurs that more likely than not has reduced
the fair value of such assets. The statement also provides specific guidance
about how to determine and measure goodwill impairments, and requires additional
disclosure of information about goodwill and other intangible assets. The
provisions of this statement are required to be applied starting with fiscal
years beginning after December 15, 2001, and applied to all goodwill and other
intangible assets recognized in the financial statements at that date. Goodwill
and intangible assets acquired after June 30, 2001 will be subject to the
non-amortization provisions of the statement. Early application is permitted for
entities with fiscal years beginning after March 15, 2001, provided that the
first interim financial statements had not been issued previously. The Company's
adoption of the provisions of SFAS 142 are not expected to have a material
impact on the Company's financial position, results of operations or cash flows.
In June 2001, the FASB issued SFAS 141, "Business Combinations," which is
effective for all business combinations initiated after June 30, 2001. SFAS 141
requires companies to account for all business combinations using the purchase
method of accounting, recognize intangible assets if certain criteria are met,
as well as provide additional disclosures regarding business combinations and
allocation of purchase price. The adoption of SFAS 141 did not have a material
impact on the Company's financial position, results of operations or cash flows.
NOTE 2. RELATED PARTY TRANSACTIONS
During the period from inception to December 31, 2000, the year ended December
31, 2001 and the period from inception to December 31, 2001 the Company utilized
a recording studio owned by its shareholders and incurred charges aggregating
$21,437, $29,210 and $50,647. At December 31, 2001 $39,560 of these amounts
remains unpaid.
During the period from inception to December 31, 2000, the year ended December
31, 2001 and the period from inception to December 31, 2001 the shareholders of
the Company paid expenses on behalf of the Company aggregating $32,306, $96,122
and $128,250. At December 31, 2001 $128,250 of these amounts remain unpaid. In
addition the Company has accrued $4,625 in interest related to these advances
through December 31, 2001.
Through December 31, 2001 the Company made cash advances to an officer
aggregating $7,000.
NOTE 3. CONVERTIBLE NOTES PAYABLE
Through December 31, 2001 the Company borrowed an aggregate of $32,000 pursuant
to the issuance of convertible notes payable. The notes bear interest at a rate
of 8% per annum. These notes are in default and are convertible into 12,800
shares of the Company's common stock at the option of the holder.
F-14
Bongiovi Entertainment, Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2001
NOTE 4. INCOME TAXES
The Company accounts for income taxes under SFAS 109, which requires use of the
liability method. SFAS 109 provides that deferred tax assets and liabilities are
recorded based on the differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes,
referred to as temporary differences. Deferred tax assets and liabilities at the
end of each period are determined using the currently enacted tax rates applied
to taxable income in the periods in which the deferred tax assets and
liabilities are expected to be settled or realized.
The provision for income taxes differs from the amount computed by applying the
statutory federal income tax rate to income before provision for income taxes.
The sources and tax effects of the differences are as follows:
Income tax provision at
the federal statutory rate 34 %
Effect of operating losses (34)%
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As of December 31, 2001, the Company has a net operating loss carryforward of
approximately $45,000. This loss will be available to offset future taxable
income. If not used, this carryforward will expire through 2016. The deferred
tax asset of approximately $15,000 relating to the operating loss carryforward
has been fully reserved at December 31, 2001. The significant difference between
the net operating loss recorded on the Company's books and the loss reported for
income tax purposes results from the contribution of salaries by officers
aggregating $300,000 to the Company's capital.
NOTE 5. STOCKHOLDERS' (DEFICIT)
Common stock
At inception the Company issued 8,000,000 shares of common stock to officers for
services valued at their approximate fair market value of $8,000.
During the period from inception to December 31, 2000, the year ended December
31, 2001 and the period from inception to December 31, 2001 officers of the
contributed salaries aggregating $100,000, $200,000 and $300,000 to the
Company's capital.
NOTE 6. SUBSEQUENT EVENTS
Acquisition
During September 2002 Interruption Television, Inc. (ITV) issued 16,000,000
shares of its common stock to the shareholders of the Bongiovi Entertainment,
Inc. (Bongiovi) in exchange for all of the issued and outstanding common shares
of Bongiovi pursuant to an Agreement and Plan of Reorganization. In addition,
ITV issued 73,411 shares of common stock for services related to the
reorganization. Concurrent with the exchange of shares, ITV changed its name to
Bongiovi Entertainment, Inc.
F-15
Bongiovi Entertainment, Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2001
This acquisition of Bongiovi, the accounting acquirer, by ITV a non-operating
entity, is considered in substance a capital transaction by the issuance of
3,926,589 shares of common stock by Bongiovi for all of the issued and
outstanding common shares of ITV, and will be accounted for as a reverse
acquisition, and no goodwill or other intangible assets will be recorded. On
this basis, the historical financial statements as of and prior to the
acquisition date will represent the operations of Bongiovi.
Related Parties
From January to September 2002 certain shareholders of the Company advanced the
Company an aggregate of $99,015. These advances bear interest at 6% per annum
and are due on demand.
From January through September 2002 the Company made cash advances to an officer
aggregating $15,500.
Notes Payable
During September 2002 the Company borrowed $10,000 pursuant to a 90-day note
with interest at 18% per annum. This note is in default at December 31, 2001.
Convertible Debentures
From January through September 2002 the Company borrowed an aggregate of
$135,000 pursuant to the issuance of convertible debentures. The debentures bear
interest at a rate of 8% per annum and are due between April 2003 and August
2003 and are convertible into 27,000 shares of the Company's common stock at the
option of the holder.
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