SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
<P>
-----------------------
<P>
FORM 8-K
<P>
-----------------------
<P>
CURRENT REPORT
<P>
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
<P>
Date of Report (Date of earliest event reported):
May 11, 2000
<P>
ALLMON MANAGEMENT INC.
<P>
(Exact Name of Registrant as Specified in Its Charter)
<P>
Delaware 000-29897 Not Applicable
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(State or Other Jurisdiction (Commission File Number) (IRS Employer Identification No.)
of Incorporation)
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128 APRIL ROAD, PORT MOODY, BRITISH COLUMBIA, CANADA V3H-3M5
- -------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
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604/469-8901
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(Registrant's Telephone Number, Including Area Code)
<P>
(Former Name or Former Address, if Changed
Since Last Report)
<P>
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
<P>
Pursuant to an Agreement and Plan of Merger (the
"Acquisition Agreement") effective May 11, 2000, Gerald
Ghini and Robert Hainey together representing all of
the shareholders of issued and outstanding common stock of
Allmon Management Inc., a Delaware corporation (the
"Company"), transferred all one hundred percent (100%) of
their outstanding shares of common stock ("Common Stock") of
Allmon Management Inc., to World Am Communications, Inc.
("World Am") for $25,000 and 150,000 shares of $0.0001 par
value common stock of World Am (the "Acquisition").
<P>
The Acquisition was approved by the Board of Directors and a
majority of the shareholders of World Am and the Company on
May 11, 2000. The Acquisition is intended to qualify as a
reorganization within the meaning of Section 368(a)(1)(A) of
the Internal Revenue Code of 1986, as amended ("IRC").
<P>
Upon effectiveness of the Acquisition, pursuant to Rule
12g-3(a) of the General Rules and Regulations of the
Securities and Exchange Commission (the "Commission"), World
Am elected to become the successor issuer to Allmon for
reporting purposes under the Securities Exchange Act of 1934
(the "Act") and elects to report under the Act effective May
11, 2000.
<P>
As of the effective date of the Acquisition Agreement,
Allmon shall assume the name of World Am. As of the
Effective Date, Mr. Gerald Ghini shall have resigned as an
officer and director of Allmon and World Am's officers and
directors will be the officers and directors of Allmon.
<P>
No subsequent changes in the officers, directors and five
percent shareholders of the Company are presently known. The
following table sets forth information regarding the
beneficial ownership of the shares of the Common Stock (the
only class of shares previously issued by the Company) at
May 11, 2000 by (i) each person known by the Company to be
the beneficial owner of more than five percent (5%) of the
Company's outstanding shares of Common Stock, (ii) each
director of the Company, (iii) the executive officers of the
Company, and (iv) by all directors and executive officers of
the Company as a group, prior to and upon completion of this
Offering. Each person named in the table, has sole voting
and investment power with respect to all shares shown as
beneficially owned by such person and can be contacted at
the address of the Company.
<P>
NAME OF SHARES OF
TITLE OF CLASS BENEFICIAL OWNER COMMON STOCK PERCENT OF CLASS
- ---------------------------------------------------------------------------
Common Gerald Ghini 5,000,000 89.29%
<P>
Common Robert Hainey 600,000 10.71%
DIRECTORS AND
OFFICERS AS A
GROUP 5,000,000 89.29%
<P>
<P>
The following is a biographical summary of the directors and
officers of World Am:
<P>
JAMES H. ALEXANDER, 62, has been President and Chief
Executive Officer of World Am since February 18, 2000, the
date that Isotec became a wholly owned subsidiary of World
Am. Mr. Alexander was the founder of Isotec, Inc., a
company engaged in the design, manufacture and installation
of access control portals for the security markets involving
weapons detection and asset protection, personnel and
material, control for federal and state government,
financial institutions, and business/commercial
applications. In 1992, he founded T.D.I., Inc. and has been
its President since that time. Such company is engaged in
sales and marketing of security products, consulting, fund
raising, acquisition and mergers of established and start-up
hi-technology firms. From 1992 through 1997, Mr. Alexander
was General Manager and Chief Operating Officer of Zykronix,
Inc., a company that designs and produces the world's
smallest computers for the industrial and commercial
markets. As Chief Operating Officer of such company from
1995 through 1997, he was responsible for restructure of the
organization and all business activities of the company
including Profit and Loss statements, production, sales and
marketing, contracts, materials, finance and administration.
During 1997 and 1998, Mr. Alexander also was the managing
broker and a consultant to Lafayette Century 21 Agency-Corp.
Relocation and Marketing located in Colorado and from
January 1993 to November 1995 was the director of corporate
relocations for Moore and Company Relators located in
Colorado. Mr. Alexander attended Rollins Colleges where he
took courses leading to BSBA.
<P>
PAUL M. LABARILE, 53, has been Chief Technical Officer for
World Am since February 18, 2000, the date that Isotec
became a wholly owned subsidiary of World Am. Prior to such
time he was the Chief Technical Officer of Isotec, Inc. a
company engaged in the design, manufacture and installation
of access control portals for the security markets involving
weapons detection and asset protection, personnel and
material, control for federal and state government,
financial institutions, and business/commercial
applications. From 1997 through 1998, he was employed by
Sytron Inc. where he assisted Sytron in its transfer upon
acquisition of Campbell Engineering Co. by Sytron. From
1990 through 1997, Mr. Labarile was employed by Campbell
Engineering Co. as the Executive Vice President of
Engineering responsible for design of commercial lines of
Access Control Portals including low cost integrated
interlocking weapons detector portals for financial
institutions. He was also responsible for the design of
hands free automatic sliding door portals with the "one step
walking weight system." His other responsibilities were to
analyze and define, design, develop, and engineer and
implement solutions to security requirements for DOE, DOD,
and Commercial accounts. Mr. Labarile received his A.A.
degree in Electronics from Diablo Valley College located in
Concord, California.
<P>
The Directors named above will serve until the next annual
meeting of the shareholders of the Company in the year 2001.
Directors will be elected for one-year terms at each annual
shareholder's meeting. Officers hold their positions at the
appointment of the Board of Directors.
<P>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
<P>
Pursuant to the Acquisition Agreement, Gerald Ghini and
Robert Hainey, together representing all of the shareholders
of issued and outstanding Common Stock of the Company
transferred one hundred percent (100%) of the issued and
outstanding shares of common stock (Common Stock) of Allmon,
for $25,000 and 150,000 shares of $0.0001 par value common
stock of the Company. In evaluating the Acquisition, Allmon
used criteria such as the value of the Company's business
relationships, goodwill, the Company's ability to compete in
the security and automated passage control industry, the
Company's current and anticipated business operations, and
the background of the Company's officers and directors in
the security industry. No material relationship exists
between the selling shareholders of Allmon or any of its
affiliates, any director or officer, or any associate of any
such director or officer of Allmon and the Company. The
consideration exchanged pursuant to the Acquisition
Agreement was negotiated between Allmon and the Company in
an arm's-length transaction. The consideration paid derived
from the Company's cash on hand and treasury stock.
<P>
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
<P>
No court or governmental agency has assumed jurisdiction
over any substantial part of the Company's business or
assets.
<P>
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
<P>
World Am retains its certifying accountants.
<P>
ITEM 5. OTHER EVENTS
<P>
SUCCESSOR ISSUER ELECTION. Pursuant to Rule 12g-3(a) of the
General Rules and Regulations of the Securities and Exchange
Commission, World Am elected to become the successor
issuer to Allmon Management Inc. for reporting purposes
under the Securities Exchange Act of 1934 and elects to
report under the Act effective May 11, 2000.
<P>
ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
<P>
No directors have resigned due to a disagreement with the
Company since the date of the last annual meeting of
shareholders.
<P>
ITEM 7. FINANCIAL STATEMENTS
<P>
The audited consolidated financial statements for the year
ending June 30, 1999, the year ending June 30, 1998, the
audited consolidated financial statements for the six month
period ending December 31, 1999 and the reviewed financial
statements for the quarter ending March 31, 2000 are filed
herewith. We have also included the unaudited pro forma
combined financial statements for the quarter ending March
31, 2000.
<P>
ITEM 8. CHANGE IN FISCAL YEAR
<P>
There has been no change in the Company's fiscal year.
<P>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
<P>
WORLD-AM COMMUNICATIONS, INC.
<P>
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
<P>
FOR THE PERIOD ENDED MARCH 31, 2000
<P>
PRO FORMA COMBINED CONDENSED FINANCIAL DATA
<P>
To the Board of Directors
World-Am Communications
Brandon, FL
<P>
The Unaudited Pro Forma Combined Statement of Operations
of the Company for the three-month period ended March 31,
2000 (the "Pro Forma Statements of Operations") and the
Unaudited Pro Forma Combined Balance Sheet of the Company
as of March 31, 2000, have been prepared to illustrate
the estimated effect of the Allmon Management, Inc
Transactions. The Pro Forma Financial Statements do not
purport to be indicative of the results of operations or
financial position of the Company that would have
actually been obtained had such transactions been
completed as of the assumed dates and for the period
presented, or which may be obtained in the future. The
pro forma adjustments are described in the accompanying
notes and are based upon available information and
certain assumptions that the Company believes are
reasonable. The Pro Forma Financial Statements should be
read in conjunction with the separate historical
consolidated financial statements of World-Am
Communications and Allmon Management, Inc. and the notes
thereto.
<P>
A preliminary allocation of the purchase price has been
made to major categories of assets and liabilities in the
accompanying Pro Forma Financial Statements based on
available information. The actual allocation of purchase
price and the resulting effect on income from operations
may differ significantly from the pro forma amounts
included herein. These pro forma adjustments represent
the Company's preliminary determination of purchase
accounting adjustments and are based upon available
information and certain assumptions that the Company
believes to be reasonable. Consequently, the amounts
reflected in the Pro Forma Financials Statements are
subject to change, and the final amounts may differ
substantially.
<P>
Denver, Colorado
May 12, 2000
<P>
WORLD AM COMMUNICATIONS, INC.
UNAUDITED PRO FORMA COMBINED
BALANCE SHEET
World-Am Allmon
Communications Management
March 31, March31, Pro Forma Pro Forma
2000 2000 Adjustments Combined
-----------------------------------------------------
ASSETS
<P>
Cash and cash equivalents $18,992 $0 $0 $18,992
Accounts receivable 39,548 0 0 39,548
Inventory 22,012 0 0 22,012
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Total Current assets 80,552 0 0 80,552
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Equipment and furniture, net 4,172 0 0 4,172
Organization costs 10,577 210 (210) 10,577
Acquisition of subsidiary 150 0 150
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TOTAL ASSETS $95,451 $210 $(210) $95,451
=====================================================
LIABILITIES AND STOCKHOLDER'S EQUITY
<P>
Accounts payable - trade $459,747 $0 $0 $459,747
Accrued liabilities 14,771 0 0 14,771
Payroll taxes payable 56,687 0 0 56,687
Notes payable 23,250 0 0 23,250
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Total Current Liabilities 554,455 0 0 554,455
-----------------------------------------------------
Capital stock 61,557 210 (210) 61,557
Stock subscription receivable (15,950) 0 0 (15,950)
Paid-in capital 1,089,984 0 0 1,089,984
Retained earnings (deficit) (1,594,595) 0 0 (1,594,595)
-----------------------------------------------------
Total Stockholders' equity (459,004) 210 (210) (459,004)
<P>
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $95,451 $210 $(210) $95,451
========================================================
<P>
WORLD AM COMMUNICATIONS, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
World-Am Allmon
Communications Management
Three Month Twenty Eight Day
Period Ended Period Ended
March 31, March 31, Pro Forma
2000 2000 Combined
-----------------------------------------------------------
Net Revenue $27,097 $0 $27,097
<P>
Cost of Goods Sold 1,795 0 1,795
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Gross Profit 25,302 0 25,302
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Sales and marketing 3,453 0 3,453
General and administrative 59,095 0 59,095
Amortization of Acquired
Intangible Assets 0 0 0
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Net Income (Loss) From
Operations $(37,246) $0 $(37,246)
===========================================================
<P>
Per share data:
Loss per share $(0.001) $(0.001)
===========================================================
<P>
Weighted average of
shares outstanding 50,557,050 50,607,050
===========================================================
<P>
WORLD-AM COMMUNICATIONS, INC.
<P>
Notes to the Unaudited Pro Forma Combined Statements of
Operations
<P>
On May 11, 2000, World-Am Communications, Inc and Allmon
Management, Inc. agreed upon a plan of reorganization.
The agreement stated that World-Am would exchange 150,000
shares of stock for all of the common stock of Allmon
Management, Inc.
<P>
The Allmon Acquisition was accounted for by the purchase
method of accounting. Under the purchase method of
accounting the total purchase price is allocated to
intangible assets. The adjustments are to eliminate all
intercompany transactions and retained deficit as a
result of the Allmon Acquisition.
<P>
The accompanying pro forma information is presented for
illustrative purposes only and is not necessarily
indicative of the financial position or results of
operations which would actually have been reported had
the acquisition been in effect during the periods
presented, or which may be reported in the future.
<P>
The accompanying Pro Forma Condensed Combined Financial
Statements should be read in conjunction with the
historical financial statements and related notes thereto
for World-Am Communications and Allmon Management, Inc.
<P>
WORLD-AM COMMUNICATIONS, INC.
<P>
FINANCIAL STATEMENTS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2000
<P>
World-Am Communications, Inc.
Index to Financial Statements
<P>
Accountant's Review Report 1
<P>
Balance Sheet 2
<P>
Statement of Operations 3
<P>
Statement of Changes in Stockholders' Equity 4
<P>
Statement of Cash Flows 5
<P>
Notes to Financial Statements 6-9
<P>
MICHAEL JOHNSON & CO., LLC
Certified Public Accountants
9175 East Kenyon Avenue, Suite 100
Denver, Colorado 80237
<P>
ACCOUNTANT'S REVIEW REPORT
<P>
To the Board of Directors
World-Am Communications, Inc.
Brandon, FL
<P>
We have reviewed the accompanying balance sheet of World-Am
Communications, Inc. as of March 31, 2000, and the related
statements of operations, cash flows, and changes in
stockholders' equity for the three month period then ended,
in accordance with Statements on Standards for Accounting
and Review Services issued by the American Institute of
Certified Public Accountants. All information included in
these financial statements is the representation of the
management of World-Am Communications, Inc.
<P>
A review consists principally of inquiries of company
personnel and analytical procedures applied to financial
data. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding
the financial statements taken as a whole. Accordingly, we
do not express such an opinion.
<P>
Based on our review, we are not aware of any material
modifications that should be made to the accompanying
statements of operations, changes in stockholders equity,
and cash flows in order for them to be in conformity with
generally accepted accounting principles.
<P>
Denver, Colorado
May 12, 2000
<P>
WORLD AM COMMUNICATIONS, INC.
Balance Sheet
March 31, 2000
ASSETS:
Current Assets:
Cash $18,992
Accounts receivable 39,548
Inventory 22,012
-----------
Total Current Assets 80,552
-----------
Property and Equipment:
Office equipment 2,887
Computers 1,285
-----------
Property and Equipment, net 4,172
-----------
Other Assets:
Organization costs - net 577
Goodwill 10,000
-----------
10,577
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TOTAL ASSETS $95,301
===========
<P>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):
<P>
Current Liabilities:
Accounts payable $459,747
Taxes payable 56,687
Accrued expenses 14,771
Note payable 23,250
------------
Total Current Liabilities 554,455
------------
Stockholders' Equity (Deficit):
Common stock, $.001 par value, 125,000,000
<P>
shares authorized, 61,557,050, issued and
outstanding 61,557
Share subscription receivable (15,950)
Additional paid-in capital 1,089,834
Retained deficit (1,594,595)
-------------
Total Stockholders' Equity (459,154)
<P>
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $95,301
<P>
WORLD-AM COMMUNICATIONS, INC.
Statement of Operations
For the Three Month Period Ended March 31, 2000
REVENUES: $27,097
<P>
COST OF GOODS SOLD 1,795
<P>
GROSS PROFIT 25,302
<P>
OPERATING EXPENSES:
Sales and Marketing 3,453
General and Administrative 59,095
---------
Total Operating Expenses 62,548
---------
Net Loss from Operations $(37,246)
==========
Weighted average number of
shares outstanding 50,557,050
============
Net Loss Per Share $(0.001)
===========
<P>
<P>
WORLD AM COMMUNICATIONS, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
Additional Stock
Common Stock Paid-In Subscription Accumulated
Shares Amount Capital Receivable Deficit Totals
-----------------------------------------------------------------------
Balance -
June 30, 1998 28,557,050 $28,557 $1,015,884 $0 $(1,276,784) $(232,343)
<P>
Net loss for year 0 0 0 0 (84,229) (84,229)
--------------------------------------------------------------------------
Balance -
June 30, 1999 28,557,050 28,557 1,015,884 0 (1,361,013) (316,572)
--------------------------------------------------------------------------
<P>
Net loss for six
month period
ended 0 0 0 0 (137,696) (137,696)
---------------------------------------------------------------------------
Balance -
December 31,1999 28,557,050 28,557 1,015,884 0 (1,498,709) (454,268)
---------------------------------------------------------------------------
Stock issuance
for subsidiary 30,326,250 30,326 (30,326) 0 (58,640) (58,640)
Stock issuance
for cash 2,673,750 2,674 104,276 (15,950) 0 91,000
Net loss for
three month period 0 0 0 0 (37,246) (37,246)
---------------------------------------------------------------------------
Balance -
March 31, 2000 61,557,050 $61,557 $1,089,834 $(15,950) $(1,594,595) $(459,154)
---------------------------------------------------------------------------
<P>
WORLD AM COMMUNICATIONS, INC.
Statement of Cash Flows
For the Three Month Period Ended march 31, 2000
Indirect Method
Cash Flows From Operating Activities:
Net (Loss) $(37,246)
Adjustments to reconcile net loss
to net cash used in operating activities:
Changes in assets and liabilities:
(Increase) in accounts receivable (12,020)
Decrease in inventory 657
(Decrease) in accounts payable (28,399)
Increase in payroll liabilities 7,206
(Decrease) in accrued expenses (1,967)
------------
(1,967)
------------
Net Cash Used in Operating Activities (71,769)
------------
<P>
Cash Flow From Investing Activities:
Purchase of equipment (587)
------------
Net Cash Provided By Investing Activities (587)
------------
Cash Flow From Financing Activities:
Issuance of common stock 91,000
------------
Net Cash Provided By Financing Activities 91,000
------------
Increase in Cash 18,644
<P>
Cash and Cash Equivalents -
Beginning of period 348
<P>
Cash and Cash Equivalents -
End of period $18,992
============
<P>
Supplemental Cash Flow Information:
Interest paid $0
============
Taxes paid $0
============
<P>
World-Am Communications, Inc.
Notes to Financial Statements
March 31, 2000
<P>
NOTE 1 - ORGANIZATION AND PRESENTATION:
- --------------------------------------
<P>
World-Am Communications, Inc. (the Company) was incorporated
in the state of Florida on July 1, 1994 under the name of
Bedroc's of Brandon, Inc. The
Company changed its name to
World-Am Communications on September 16, 1998. The Company
commenced operations in January 1995 as a family restaurant
in Brandon, Florida. In September 1996, the restaurant
closed for renovations and reopened in August 1997. In
March 1998, the Company discontinued the restaurant
operations (its only business segment) and wrote-off the net
book value of the restaurant property and equipment.
<P>
The Company's fiscal year end is December 31.
<P>
Basis of Accounting:
<P>
These financial statements are presented on the accrual
method of accounting in accordance with generally accepted
accounting principles. Significant principles followed by
the Company and the methods of applying those principles,
which materially affect the determination of financial
position and cash flows, are summarized below:
<P>
Revenue Recognition
<P>
Product Sales are sales of on-line products and specialty
items. Revenue is recognized at the time of sale.
<P>
Cash and Cash Equivalents
<P>
The Company considers all highly liquid debt instruments,
purchased with an original maturity of three months or less,
to be cash equivalents.
<P>
Property and Equipment
Property and equipment is stated at cost. The cost of
ordinary maintenance and repairs is charged to operations
while renewals and replacements are capitalized.
Depreciation is computed on the straight-line method over
the following estimated useful
lives:
<P>
Manufacturing Equipment 5 years
Furniture & Equipment 5 years
<P>
Income Taxes:
<P>
The Company accounts for income taxes under SFAS No. 109,
which requires the asset and liability approach to
accounting for income taxes. Under this method, deferred
tax assets and liabilities are measured based on differences
between financial reporting and tax bases of assets and
liabilities measured using enacted tax rates and laws that
are expected to be in effect when the differences are
expected to reverse.
<P>
Use of Estimates:
<P>
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 the disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could
differ from these estimates.
<P>
World-Am Communications, Inc.
Notes to Financial Statements
March 31, 2000
<P>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued):
- ----------------------------------------------------
<P>
Inventories
<P>
Inventories are stated at cost, which is not in excess of
market determined using the first-in, first-out (FIFO)
method. Inventory consist of raw materials only.
<P>
Net earning (loss) per share
<P>
Net income per share has been computed by dividing the
weighted average number of common shares and equivalents
outstanding.
<P>
Fair Value of Financial Instruments
<P>
The carrying amount of cash, accounts receivable, accounts
payable and accrued expenses are considered to be
representative of their respective fair values because of
the short-term nature of these financial instruments. The
carrying amount of the notes payable are reasonable
estimates of fair value as the loans bear interest based on
market rates currently available for debt with similar
terms.
<P>
Goodwill
<P>
Goodwill, which represents the excess of the purchase price
over the fair value of net assets acquired, is amortized on
a straight-line basis over the expected periods to be
benefitted. The Company assesses the recoverability of
goodwill periodically by determining whether the
amortization of goodwill balance over its remaining life can
be recovered through projected undiscounted cash flows. The
amount of goodwill impairment, if any, is charged to
operations in the period in which goodwill impairment is
determined by management. There was no amortization of
goodwill for the period ended March 31, 2000.
<P>
NOTE 2 NOTE PAYABLE:
- -----------------------
<P>
Note payable consist of one unsecured note payable of
$23,250 , payable to an individual, due on demand, with
interest at 8%.
<P>
NOTE 3 COMMITMENTS AND CONTINGENCIES:
- --------------------------------------
<P>
Lease Commitments
<P>
As of June 30, 1998, the Company was in default on the
rental operating lease. Amounts accrued through this date
totaled $39,000. Because of this default situation, the
Company has surrendered possession of the premises in
expectation of the landlord lessor terminating the lease.
Moreover, since the Company has ceased restaurant
operations, it is the opinion of management that the
landlord lessor will likely seek an amount due which is not
expected to exceed the accrued
<P>
Tax Contingencies
<P>
The Company has not filed monthly sales tax returns with the
Department of Revenue, State of Florida, and payroll tax
returns for many fiscal periods. Accordingly, interest and
penalties have been accrued. The estimated balance is
$37,044.
<P>
World-Am Communications, Inc.
<P>
Financial Statements
For the Year Ended June 30, 1999
and the Six Month Period Ended December 31, 1999
<P>
World-Am Communications, Inc.
Index to Financial Statements
<P>
Report of Independent Auditor's 1
<P>
Balance Sheet 2
<P>
Statement of Operations 3
<P>
Statement of Changes in Stockholders' Equity 4
<P>
Statement of Cash Flows 5
<P>
Notes to Financial Statements 6-10
<P>
MICHAEL JOHNSON & CO., LLC
Certified Public Accountants
9175 East Kenyon Avenue, Suite 100
Denver, Colorado 80237
<P>
INDEPENDENT AUDITOR'S REPORT
<P>
To the Board of Directors
World-Am Communications, Inc.
Brandon, FL
<P>
We have audited the accompanying balance sheets of World-Am
Communications, Inc.as of December 31, 1999, and June 30,
1999, and the related statements of operations, cash flows,
and changes in stockholders' equity for the year then ended
June 30, 1999 and the six month period then ended December
31, 1999. 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.
<P>
We conducted our audits in accordance with generally
accepted auditing standards. 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 made by management, as well as evaluating the
overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
<P>
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
positions of World-Am Communications, Inc. at December 31,
1999 and June 30, 1999, and the results of its operations
and its cash flows for the year then end June 30, 1999 and
the six month period then ended December 31, 1999, in
conformity with generally accepted accounting principles.
<P>
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern.
As described in Note 4 to the financial statements,
conditions exist which raise substantial doubt about the
Company's ability to continue as a going concern unless it
is able to generate sufficient cash flows to meet its
obligations and sustain its operations. The financial
statements do not include any adjustments that might result
from the outcome of this uncertainty.
<P>
/s/ Michael Johnson & Co., LLC
- ------------------------------
Denver, Colorado
May 10, 2000
<P>
WORLD AM COMMUNICATIONS, INC.
Balance Sheets
December 31, June 30,
1999 1999
-------------------------------------
ASSETS:
Current Assets:
Cash $0 $0
Prepaid expense and deposits 0 0
-------------------------------------
Total Current Assets 0
0
<P>
Other Assets
Organization costs - net 577 1,155
Goodwill 10,000 10,000
--------------------------------------
Total Other Assets 10,577 11,155
--------------------------------------
TOTAL ASSETS $10,577 $11,155
======================================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable $421,301 $284,183
Accrued rent 6,500 6,500
Taxes payable 37,044 37,044
---------------------------------------
Total Current Liabilities 464,845 327,727
---------------------------------------
Stockholders' Deficit:
Common stock, $.0001 par value; 500,000,000
shares authorized, 114,228,200 shares
issued and outstanding, respectively 11,423 11,423
Preferred stock, $.0001 par value, 80,000,000 shares
authorized, none issued and outstanding 0 0
Additional paid-in capital 1,033,018 1,033,018
Accumulated deficit (1,498,709) (1,361,013)
--------------------------------------
Total Stockholders' Deficit (454,268) (316,572)
--------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $10,577 $11,155
======================================
<P>
WORLD AM COMMUNICATIONS, INC.
Statement of Operations
For the
Six Month For the
Period Ended Year Ended
December 31, June 30,
1999 1999
------------------------------------
<P>
REVENUES: $0 $0
<P>
OPERATING EXPENSES:
Sales and marketing 0 0
General and administrative 137,696 84,229
-------------------------------------
Total Operating Expenses 137,696 84,229
-------------------------------------
Net Loss from Operations $(137,696) $(84,229)
=====================================
<P>
Weighted average number of
shares outstanding 114,228,200 114,228,200
=====================================
<P>
Basic and diluted net loss per share $(0.001) $(0.001)
=====================================
<P>
<P>
WORLD AM COMMUNICATIONS, INC.
Statements of Changes in Stockholders' Deficit
Additional
Common Stock Paid-In Accumulated
Shares Amount Capital Deficit Totals
------------------------------------------------------------------------
Balance -
June 30, 1998 114,228,200 $ 11,423 $1,033,018 $(1,276,784) $(232,343)
<P>
Net loss for year 0 0 0 (84,229) (84,229)
------------------------------------------------------------------------
Balance -
June 30, 1999 114,228,200 11,423 1,033,018 (1,361,013) (316,572)
-------------------------------------------------------------------------
Net loss for six month
period ended 0 0 0 (137,696) (137,696)
-------------------------------------------------------------------------
Balance -
December 31,1999 114,228,200 $11,423 $1,033,018 $(1,498,709) $(454,268)
<P>
WORLD AM COMMUNICATIONS, INC.
Statement of Cash Flows
Indirect Method
For the
Six Month For the
Period Ended Year Ended
December 31, June 30,
1999 1999
--------------------------------------
<P>
Cash Flows From Operating Activities:
Adjustments to reconcile net loss to net cash
used in operating activities:
Net (Loss) $(137,696) $(84,229)
Depreciation and amortization 558 1,154
Changes in assets and liabilities:
Increase in accounts payables and
accrued expenses 137,138 83,075
-------------------------------------
137,696 84,229
------------------------------------
Net Cash Used in Operating Activities 0 0
------------------------------------
Cash Flow From Investing Activities:
Purchase of property and equipment 0 0
------------------------------------
Net Cash Used In Investing Activities 0 0
------------------------------------
Cash Flow From Financing Activities:
Proceeds from the issuance of common shares 0 0
------------------------------------
Net Cash Provided By Financing Activities 0 0
<P>
Increase (Decrease) in Cash 0 0
<P>
Cash and Cash Equivalents - Beginning of period 0 0
-----------------------------------
Cash and Cash Equivalents - End of period $0 $0
====================================
<P>
Supplemental Cash Flow Information:
Cash paid during period for:
Interest paid $0 $0
===================================
Taxes paid $0 $0
<P>
WORLD-AM COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND JUNE 30, 1999
<P>
NOTE 1 - ORGANIZATION AND PRESENTATION:
- ---------------------------------------
<P>
World-Am Communications, Inc. (the Company) was incorporated
in the state of Florida on July 1, 1994 under the name of
Bedroc's of Brandon, Inc. The Company changed its name to
World-Am Communications on September 16, 1998. The Company
commenced operations in January 1995 as a family restaurant
in Brandon, Florida. In September 1996, the restaurant
closed for renovations and reopened in August 1997. In
March 1998, the Company discontinued the restaurant
operations (its only business segment) and wrote-off the net
book value of the restaurant property and equipment.
<P>
The Company's fiscal year end is June 30.
<P>
Basis of Accounting:
<P>
These financial statements are presented on the accrual
method of accounting in accordance with generally accepted
accounting principles. Significant principles followed by
the Company and the methods of applying those principles,
which materially affect the determination of financial
position and cash flows, are summarized below:
<P>
Cash and Cash Equivalents
<P>
The Company considers all highly liquid debt instruments,
purchased with an original maturity of three months or less,
to be cash equivalents.
<P>
Income Taxes:
<P>
The Company accounts for income taxes under SFAS No. 109,
which requires the asset and liability approach to
accounting for income taxes. Under this method, deferred
tax assets and liabilities are measured based on differences
between financial reporting and tax bases of assets and
liabilities measured using enacted tax rates and laws that
are expected to be in effect when the differences are
expected to reverse.
<P>
Use of Estimates:
<P>
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 the disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could
differ from these estimates.
<P>
Goodwill
<P>
Goodwill, which represents the excess of the purchase price
over the fair value of net assets acquired, is amortized on
a straight-line basis over the expected periods to be
benefited. The Company assesses the recoverability of
goodwill periodically by determining whether the
amortization of goodwill balance over its remaining life can
be recovered through projected undiscounted cash flows. The
amount of goodwill impairment, if any, is charged to
operations in the period in which goodwill impairment is
determined by management. There was no amortization of
goodwill for the year end June 30, 1999 or six month period
ended December 31, 1999.
<P>
World-Am Communications, Inc.
Notes to Financial Statements
December 31, 1999 and June 30, 1999
<P>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued):
- ----------------------------------------------------
<P>
Net earning (loss) per share
<P>
Net loss per share is based on the weighted average number
of common shares and common share equivalents outstanding
during the period.
<P>
Revenue Recognition
<P>
Product Sales are sales of on-line products and specialty
items. Revenue is recognized at the time of sale.
<P>
Fair Value of Financial Instruments
<P>
The carrying amount of accounts payable and accrued expenses
are considered to be representative of their respective fair
values because of the short-term nature of these financial
instruments.
<P>
NOTE 2 - INCOME TAXES
- ----------------------
<P>
There has been no provision for U.S. federal, state, or
foreign income taxes for any period because the Company has
incurred losses in all periods and for all jurisdictions.
<P>
Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the
amounts used for income tax purposes. Significant components
of deferred tax assets are as follows:
<P>
Deferred tax assets
Net operating loss carryforwards $1,498,709
Valuation allowance for deferred tax assets (1,498,709)
Net deferred tax assets $ -
============
<P>
Realization of deferred tax assets is dependent upon future
earnings, if any, the timing and amount of which are
uncertain. Accordingly, the net deferred tax assets have
been fully offset by a valuation allowance. As of December
31, 1999, the Company had net operating loss carryforwards
of approximately $1,498,709 for federal income tax purposes.
These carryforwards, if not utilized to offset taxable
income begin to expire in 2009. Utilization of the net
operating loss may be subject to substantial annual
limitation due to the ownership change limitations provided
by the Internal Revenue Code and similar state provisions.
The annual limitation could result in the expiration of the
net operating loss before utilization.
<P>
NOTE 3 COMMITMENTS AND CONTINGENCIES:
- ----------------------------------------
<P>
Lease Commitments
<P>
As of June 30, 1998, the Company was in default on the
rental operating lease. Amounts accrued through this date
totaled $39,000. Because of this default situation, the
Company has surrendered possession of the premises in
expectation of the landlord lessor terminating the lease.
Moreover, since the Company has ceased restaurant
operations, it is the opinion of management that the
landlord lessor will likely seek an amount due which is not
expected to exceed the accrued amount of $39,000 at June 30,
1999 and December 31, 1999.
<P>
World-Am Communications, Inc.
Notes to Financial Statements
December 31, 1999 and June 30, 1999
<P>
NOTE 3 COMMITMENT AND CONTINGENCIES (Continued):
- ---------------------------------------------------
<P>
Tax Contingencies
<P>
The Company has not filed monthly sales tax returns with the
Department of Revenue, State of Florida, and payroll tax
returns for the fiscal periods ended June 30, 1999 and
December 31, 1999. Accordingly, interest and penalties have
been accrued. The estimated balance is $37,044.
<P>
Litigation
<P>
On March 23, 1998, ADP Total Source III filed a writ of
garnishment in the Circuit Court of the State of Florida,
County of Hillsborough against the Company seeking
reimbursement of services in the amount of $66,491, which is
included in the accounts payable amount.
<P>
On June 24, 1998, Prime Source Management Solutions, a
provider of employee leasing services, was awarded $74,882
in the Circuit Court of the State of Florida, County of
Hillsborough, including an amount for trebled damages.
<P>
The Company has received various attorney collection letter
notices from different vendors related to past due amounts.
These amounts are included in the accounts payable totals at
June 30, 1999 and December 31, 1999. Management is in
active negotiations to settle all open accounts with the
respective vendors.
<P>
NOTE 4 -GOING CONCERN:
- ----------------------
<P>
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles,
which contemplates continuation of the Company as a going
concern. The Company has experienced significant losses
from discontinued operations. As shown in the financial
statements, the Company incurred a net loss of $84,229 for
fiscal year ended June 30, 1999 and a loss of $137,696 for
the six-month period ended December 31, 1999.
<P>
The future success of the Company is likely dependent on its
ability to attain additional capital to develop its proposed
products and ultimately, upon its ability to attain future
profitable operations. There can be no assurance that the
Company will be successful in obtaining such financing, or
that it will attain positive cash flow from operations.
<P>
BEDROC'S OF BRANDON, INC.
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
<P>
TABLE OF CONTENTS
Page
Accountants' Report 1
Consolidated Balance Sheet 2
Consolidated Statement of Operations 3
Consolidated Statement of Stockholders' Equity 4
Consolidated Statement of Cash Flows 5
Notes to Consolidated Financial Statements 6 12
<P>
GUIDA & JIMENEZ, PA.
CERTIFIED PUBLIC ACCOUNTANTS
<P>
Report of Independent Auditors
<P>
To the Board of Directors
Bedroc's of Brandon, Inc.
Tampa, Florida
<P>
We have audited the accompanying balance sheet of Bedroc's
of Brandon, Inc. as of June 30, 1998 and the related
statement of operations, stockholders' equity and cash flows
for the year then ended. 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 audit.
<P>
We conducted our audit in accordance with generally accepted
auditing standards. 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 audits provide
a reasonable basis for our opinion.
<P>
Going concern.
<P>
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of Bedroc's of Brandon, Inc., and the results of
operations and its cash flow for the year then ended, in
conformity with generally accepted accounting principles.
<P>
/s/ Guida & Jimenez
- ---------------------
Guida & Jimenez
Tampa, Florida
August 18, 1998
<P>
MEMBER: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
FLORIDA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AICPA
DIVISION OF FIRMS
<P>
1308 WEST SLIGH AVENUE
TAMPA. FLORIDA 33604
TELEPHONE (813) 933-.2336
FACSIMILE (813) 935-8721
<P>
BEDROC'S OF BRANDON, INC.
CONSOLIDATED BALANCE SHEET
June 30, 1998
ASSETS
CURRENT ASSETS:
Cash -
Inventory -
Other current assets -
------------
Total Current Assets -
------------
<P>
PROPERTY AND EQUIPMENT
<P>
OTHER ASSETS:
Security deposits -
Organization costs, net $2,309
Goodwill 10,000
--------------
Total other assets 12,309
<P>
TOTAL ASSETS $12,309
==============
<P>
LIABILITIES AND STOCKHOLDERS' EQUITY
<P>
CURRENT LIABILITIES:
Accounts payable $201,053
Accrued rent 6,500
Taxes payable 37,044
Other current liabilities 55
--------------
Total current liabilities 244,652
<P>
LONG-TERM LIABILITIES -
--------------
STOCKHOLDERS' EQUITY
Common stock, $.0001 par value; authorized 500,000,000
shares; issued and outstanding 114,228,200 11,423
Preferred stock, $.0001 par value; authorized 80,000,000;
issued and outstanding 0
Additional paid-in-capital 1,033,018
Accumulated deficit (1,276,784)
--------------
Total stockholders' equity (232,343)
--------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $12,309
==============
<P>
See accompanying notes to these financial statements.
<P>
BEDROC'S OF BRANDON, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
For The Year Ended June 30, 1998
DISCONTINUED OPERATIONS:
Loss from restaurant operations, net of -0- income taxes $(181,925)
Loss on disposal of restaurant properly and equipment,
net of -0- income taxes (289,899)
----------------
NET LOSS ON DISCONTINUED OPERATIONS $ (471,824)
================
<P>
BASIC EARNINGS PER SHARE:
Loss from discontinued restaurant operations, net of tax $(0.005)
Loss on disposal of discontinued operations, net of tax (0.009)
----------------
Net Loss $(0.014)
================
<P>
See accompanying notes to these financial statements.
<P>
BEDROC'S OF BRNADON, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
June 30, 1998
Additional
Common Stock Paid-In Accumulated
Shares Amount Capital Deficit Totals
------------------------------------------------------------------------
Balance -
June 30, 1996 1,500 $ 1,500 $ - $ ( 502,205) $(500,705)
<P>
Issuance of
common stock 4,209,100 2,711 411,289 414,000
Net loss 0 0 0 (302,755) (302,755)
------------------------------------------------------------------------
Balance -
June 30, 1997 4,210,600 4,211 411,289 ( 804,960) (389,460)
-------------------------------------------------------------------------
Adjustment to par value
from $.001 to
$.0001 0 (3,790) 3,790 0 0
<P>
Issuance of
common stock 110,017,600 11,002 96,581 0 107,583
<P>
Reclassification of
debt to equity 0 0 521,358 0 521,358
<P>
Net Loss 0 0 0 (471,824) (471,824)
-------------------------------------------------------------------------
Balance -
June 30,1998 114,228,200 $11,423 $1,033,018 $(1,276,784) $(232,343)
BEDROC'S OF BRANDON, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
For The Year Ended June 30, 1998
CASH FLOWS USED IN DISCONTINUED OPERATING ACTIVITIES:
Loss $(471,824)
Adjustments to reconcile loss to net cash provided by
discontinued operating activities:
Depreciation and amortization 54,058
Loss on disposal of restaurant property and equipment 289,899
Changes in assets and liabilities:
Decrease in inventory 1,606
Decrease in other current assets and security deposits 26,859
Increase in accounts payable 140,025
Decrease in accrued interest - shareholder (117,935)
Decrease in accrued rent (83,849)
Increase in taxes payable 37,044
Decrease in other current liabilities (1,068)
----------------
NET CASH PROVIDED BY DISCONTINUED OPERATIONS (125,185)
<P>
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment -
---------------
NET CASH USED IN INVESTING ACTIVITIES -
---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payback on advances from shareholder (7,340)
Proceeds from the issuance of common stock 34,000
---------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 26,660
---------------
NET INCREASE (DECREASE) IN CASH (98,525)
<p>
CASH, BEGINNING OF PERIOD 98,525
---------------
CASH, END OF PERIOD $ -
===============
See accompanying notes to these Financial statements.
<P>
BEDROC'S OF BRANDON, INC
NOTES TO FINANCIAL STATEMENTS
For The Year Ended June 30, 1998
<P>
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
<P>
This summary of significant accounting policies of Bedroc's
of Brandon, Inc.(the Company) is presented to assist in
understanding the Company's financial statements. The
financial statements and notes are the representation of the
Company's management who is responsible for their integrity
and objectivity. These accounting policies conform to
generally accepted accounting principles and have been
consistently applied in the preparation of the financial
statements.
<P>
Business Activity
<P>
Bedroc's of Brandon, Inc. (the Company), a Florida
corporation, was incorporated on July 1, 1994. The Company
operated a family restaurant in Brandon, Florida commencing
operations in January 1995. On September 3, 1996, the
restaurant closed for major renovations related to the
changing of the theme of the restaurant. The Company
completed renovations in July 1997 and reopened in August
1997 as the Garden Grille. In March 1998, the Company
discontinued the restaurant operations (its only business
segment) and proceeded to write-off the net book value of
the restaurant property and equipment.
<P>
The amounts of current liabilities, as of June 30, 1998,
relate to the discontinued operations. The founding
officer/director resigned from the Company in March 1998 and
a new chief executive officer assumed responsibilities of
the Company. Also, see Note 11 regarding subsequent events.
<P>
Estimates
<P>
The preparation of financial statements in conformity with
generally accepted accounting principles requires the use of
management estimates.
<P>
Inventory
<P>
Inventory is stated at the lower of cost or market,
determined by the first-in, first-out method.
<P>
Property and Equipment
<P>
Property and equipment are stated at cost. Depreciation of
property and equipment is provided using the straight-line
method at rates based on the estimated useful life of the
assets. Furniture and equipment are depreciated over a five
to seven year period. Leasehold improvements are amortized
over the life of the lease. Organization costs are being
amortized by the straight-line method over 5 years.
Depreciation and amortization expense for the year ended
June 30, 1998 amounted to $54,058.
<P>
Goodwill
<P>
Goodwill, which represents the excess of the purchase price
over the fair value of net assets acquired, is amortized on
a straight-line basis over the expected periods to be
benefited. The Company assesses the recoverability of
goodwill periodically by determining whether the
amortization of goodwill balance over its remaining life can
be recovered through projected undiscounted cash flows. The
amount of goodwill impairment, if any, is charged to
operations in the period in which goodwill impairment is
determined by management. There was no amortization of
goodwill for the years ended June 30, 1998.
<P>
BEDROC'S OF BRANDON, INC
NOTES TO FINANCIAL STATEMENTS
For The Year Ended June 30, 1998
<P>
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
- -----------------------------------------------------------
<P>
Income Taxes
<P>
The Company provides for income taxes in accordance with
Statement of Financial Accounting Standards No. 109 (SFAS
No. 109), Accounting for Income Taxes. SFAS No. 109
provides that deferred income taxes are recognized for the
tax consequences of temporary differences between the
financial reporting basis and the tax basis of the Company's
assets and liabilities. The Company incurred a loss for the
year ended June 30, 1998. Accordingly, no provision for
federal income tax has been reflected in the financial
statements. The loss carryforward can be carried forward
and applied against taxable income until the loss is used
up, or for maximum of fifteen years.
Per Share Information
<P>
Basic earnings per share information is based on the
weighted average number of common shares outstanding during
the year. The weighted average number of common shares as
of June 30, 1998 was 33,852,867.
<P>
NOTE 2: ABILITY TO CONTINUE AS A GOING CONCERN
- -------------------------------------------------
<P>
The Company's losses from discontinued operations of
$471,824 for the year ended June 30, 1998, and its negative
working capital at June 30, 1998 of $244,652, raise
substantial doubt about its ability to continue as a going
concern for a reasonable period of time. Also refer to Note
11 regarding subsequent events.
<P>
NOTE 3: PROPERTY AND EQUIPMENT
- ------------------------------
<P>
The Company discontinued restaurant operations (its only
business segment) in March 1998 and proceeded to write-off
property and equipment with a net book value of
approximately $290,000. Additionally, as part of the
discontinuation of operations, security deposits were
forfeited in the amount of $20,600.
<P>
NOTE 4: LOAN PAYABLE TO STOCKHOLDER
- -----------------------------------
<P>
At June 30, 1997, the loan payable to the founding
director/stockholder consisted of non-interest bearing
advances received by the Company. - Interest was imputed at
9% per annum for financial statement purposes. At June 30,
1998, the outstanding balance of approximately $521,000 was
reclassified as additional paid-in-capital per agreement
between the founding director/stockholder and the Company.
At June 30, 1997, accrued interest in the amount of
approximately $117,000 was forgiven by the founding
director/stockholder. This write-off is reflected in the
current year's discontinued restaurant operations.
<P>
BEDROC'S OF BRANDON, INC .
NOTES TO FINANCIAL STATEMENTS
For The Year Ended June 30, 1998
<P>
NOTE 5: COMMITMENTS AND CONTINGENCIES
- --------------------------------------
<P>
Rent Commitments
<P>
The Company rented its restaurant under an operating lease
with an original expiration date of December 31, 2001. The
lease provided for a minimum monthly rent of $6,500 with an
additional percentage rent equal to 5% of the annual gross
sales in excess of $1,300,000. The lease required the
Company to pay for any increase in real estate taxes
subsequent to the base year 1994, and provided for four five
year renewal options with a 5% increase in the base rent in
each five year period. The lease also provided an option
for the Company to purchase the premises if the owner
obtained a firm offer from a purchaser. The Company could
then have elected to purchase the premises at the same price
and on the same terms of such offer. For the year ended
June 30, 1998 the future annual minimum lease payments are:
<P>
Year Amount
------ --------
1999 $ 78,000
2000 78,000
2001 78,000
2002 39,000
Thereafter None
----------
$ 273,000
-----------
<P>
Rent expense on discontinued operations for the years ended
June 30, 1998 amounted to $78,000.
<P>
As of June 30, 1998, the Company is in default on the rental
operating lease. Amounts accrued through this date total
$39,000, which reflects rental expense for the period
January 1, 1998 through June 30, 1998. Because of this
default situation, the Company has surrendered possession of
the premises in expectation of the landlord lessor
terminating the lease. Moreover, since the Company has
ceased restaurant operations, it is the opinion of
management that the landlord lessor will likely seek an
amount due which is not expected to exceed the accrued
amount of $39,000 at June 30, 1998.
<P>
Sales Tax Contingencies
<P>
Regarding State of Florida sales tax, the Company has not
filed monthly returns with the Department of Revenue for the
fiscal year ended June 30, 1998. Accordingly, interest and
penalties have been accrued in the amount of $12,544 for the
year ended June 30, 1998
<P>
NOTE 6: LITIGATION
- ------------------
<P>
ADP Total Source I//, Inc.
<P>
On March 23, 1998, ADP Total Source 111, Inc. filed a writ
of garnishment in the Circuit Court of the State of Florida,
County of Hillsborough against the Company seeking
reimbursement of services in the amount of $66,491, which is
included in the accounts payable amount at June 30, 1998.
Management believes this amount to be owed to ADP Total
Source III Inc.
<P>
BEDROC'S OF BRANDON, INC.
NOTES TO FINANCIAL STATEMENT
For The Year Ended June 30, 1998
<P>
NOTE 6: LITIGATION (Continued)
- -----------------------------
<P>
Prime Source Management Solutions, Inc.
<P>
On June 24, 1998, Prime Source Management Solutions, Inc., a
provider of employee leasing services, was awarded $74,882
in the Circuit Court of the State of Florida, County of
Hillsborough, including an amount for trebled damages. Of
this amount, the Company has accrued in accounts payable
$19,596 for the year ended June 30, 1998. Because the
Company has discontinued restaurant operations (its only
business segment), it is the opinion of management that
Prime Source Management Solutions, Inc. will likely settle
for a lesser amount that does not include the trebled
damages.
<P>
Open Accounts
<P>
As of June 30, 1998, the Company has received various
attorney collection letter notices from different vendors
related to past due amounts totaling approximately $43,000.
This amount is included in accounts payable at June
30,.1998. Management is in active negotiations to settle all
open accounts with the respective vendors.
<P>
NOTE 7: STOCKHOLDERS' EQUITY
- ----------------------------
<P>
Change in Par Value
<P>
In. July 1997, the Board of Directors approved a decrease in
the par value of common stock from $.001 to $.0001.
<P>
Private Placement
<P>
Pursuant to a private stock offering memorandum dated
February 1997, the Company issued 17,600 shares of common
stock during the year ended June 30, 1998.
<P>
Common Stock Issued in Acquisition
<P>
On March 20, 1998, the Company acquired WC Entertainment,
Inc. a start-up entertainment booking company. In
connection with the acquisition, the Company issued
100,000,000 shares of its common stock. The acquisition was
accounted for using the purchase method. Accordingly, for
financial reporting purposes, the 100,000,000 shares will be
considered outstanding as of the date of the acquisition.
The purchase price was $10,000; since WC Entertainment had
not begun operations, no assets existed on the acquisition
date hence, the $10,000 was allocated to the Company's
goodwill. Also see Note 9 regarding related party
transactions.
<P>
Common Stock Issued Upon Default of Note Payable
<P>
The Company had a short-term 9% note payable dated February
2, 1998 that was due on May 2, 1998, in the amount of
$60,000. For purposes of this loan, 10,000,000 shares of
common stock were used as collateral. Upon the Company
defaulting on this short-term note payable in May 1998, the
1 0,000,000 shares were issued to the lender in satisfaction
of the debt.
<P>
BEDROC'S OF BRANDON, INC
NOTES TO FINANCIAL STATEMENTS
For The Year Ended June 30, 1998
<P>
NOTE 7: STOCKHOLDERS' EQUITY (Continued)
- ----------------------------------------
<P>
Conversion of Loan Payable-Shareholder to Equity
At June 30, 1998, the outstanding balance of approximately
$521,000 due the founding director/shareholder was
reclassified as additional paid-in-capital per an
understanding between the founding director/shareholder and
the Company. See also Note 4 Loan Payable to Stockholder
and Note 9 Related Party Transactions.
<P>
NOTE 8: STATEMENT OF CASH FLOWS
- --------------------------------
<P>
For the year ended June 30, 1998, non-cash investing and
financing activities included the following:
<P>
-issuance of 1 00,000,000 shares of common stock to
acquire a start-up entertainment booking company, which
generated goodwill in the amount of $10,000, also see Note 7
Stockholders' Equity
<P>
-Disposal of property and equipment due to discontinued
restaurant operations with a net book value of approximately
$290,000, also see Note 3 Property and Equipment
<P>
-issuance of 10,000,000 shares of common stock as
collateral used to satisfy a default on a 60,000 short-term
note payable, also see Note 7 Stockholders' Equity
<P>
-Reclassification of loan payable-shareholder in the
amount of $521,340 to additional paid-in-capital, also see
Note 4 Loan Payable Stockholder and Note 7 Stockholders'
Equity
<P>
For the years ended June 30, 1998 interest expense paid
amounted to $5,000.
<P>
NOTE 9: RELATED PARTY TRANSACTIONS
- -----------------------------------
<P>
In March 1998, Vicki Carapella, the founding director,
resigned the position of President, a non-salaried position
in the Company. In April 1998, this founding director sold
approximately 3,942,000 shares of common stock leaving her
57,000 shares of common stock. Also see Note 4 Loan Payable
to Stockholder.
<P>
The new President of the Organization., Robert Esposito,
assumed managerial responsibilities in March 1998 when his
solely owned entertainment booking company was acquired by
the Company in a noncash transaction involving the issuance
of 100,000,000 shares of the Company's common stock. Also,
see Note 7 Stockholders' Equity.
<P>
During the year ended June 30, 1997, 45,000 shares of common
stock were issued to Richard Anslow, an attorney, in payment
for services. As of June 30, 1998, this shareholder was
owed approximately $10,000 for additional services rendered.
<P>
BEDROC'S OF BRANDON, INC
NOTES TO FINANCIAL STATEMENTS
For The Year Ended June 30, 1998
<P>
NOTE 10: FOURTH QUARTER ADJUSTMENTS
- -----------------------------------
<P>
During the three months ended June 30, 1998, the Company
recorded the following significant fourth quarter
adjustments:
<P>
Write-off of property and equipment, net of accumulated
depreciation $289,899
Write-off of security deposits forfeited 20,624
Write-down of accrued interest 117,935
------------
$428,458
------------
<P>
NOTE 11: SUBSEQUENT EVENTS
- --------------------------
<P>
Business Combination
<P>
In August of 1998 World Am Acquisition, a wholly owned
subsidiary of Bedroc's, Inc., agreed to acquire Florida
Wireless, Inc. (Florida Wireless), a Florida Corporation
doing business in the telecommunications industry. In the
transaction, accounted for under the
purchase method, the Company will purchase all the assets of
Florida Wireless by issuing 12,692,022 shares of Bedroc's'
common stock valued at $6,346,011 and assuming Florida
Wireless liabilities of $1,096,000. The excess purchase
price over the estimated fair value of the assets is
$7,142,785 and will be amortized using the straight-line
method
over 20 years. The following unaudited pro forma financial
statements are included in order to illustrate the effect of
this transaction on the Company's June 30, 1998
financial statements.
<P>
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
June 30, 1998
(in thousands)
Proforma
Adjustments
Company for Florida Company
as Wireless Pro Forma
Reported Transaction Combined
--------------------------------------
Assets
Current assets $ - $220,617 $220,617
Property and equipment, net - 76,708 76,708
Other assets, net 12,309 7,144,730 7,157,039
---------------------------------------
Total assets $12,309 $ 7,442,055 $7,454,364
=======================================
Liabilities
Current liabilities $244,652 $739,218 $983,870
Other liabilities - 356,826 356,826
---------------------------------------
Total liabilities 244,652 1,096,044 1,340,696
Stockholders' Equity
Common stock 11,423 1,269 12,692
Additional paid in capital 1,033,018 6,344,742 7,377,760
Retained deficit (1,276,784) (1,276,784)
----------------------------------------
Total stockholders' equity (232,343) 6,346,011 6,113,668
Total liabilities and
stockholders' equity $12,309 $7,442,055 $ 7,454,364
========================================
<P>
BEDROC'S OF BRANDON, INC
NOTES TO FINANCIAL STATEMENTS
For The Year Ended June 30, 1998
<P>
NOTE ll: SUBSEQUENT EVENTS (Continued)
- --------------------------------------
<P>
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
June 30,1998
(in thousands)
Proforma
Adjustments
Company for Florida Company
as Wireless Pro Forma
Reported Transaction Combined
--------------------------------------
Gross revenues $ - $582,844 $582,844
Cost of sales - 369,713 369,713
---------------------------------------
Gross profit - 213,131 213,131
General and administrative
expenses - 290,393 290,393
Depreciation and amortization - 8,472 8,472
--------------------------------------
Net loss before discontinued
operations - (85,734) (85,734)
Loss from restaurant operations (181,925) - (181,925)
Loss on disposal of restaurant property and
equipment (289,899) - (289,899)
---------------------------------------
Loss on discontinued operations (471,824) - (471,824)
---------------------------------------
Net income (471,824) $(85,734) $(557,558)
========================================
<P>
Purchase of Marketable Securities
<P>
In order to secure additional capital for the financing of
the telecommunication acquisition, the Company purchased all
of the capital stock in a company whose major asset is
marketable securities in an exchange of Bedroc's stock
valued at $5,000,000.
<P>
Index to Exhibits
<P>
2.1 Agreement and Plan of Merger by and among World Am
Communications, Inc. and Allmon Management, Inc.
dated May 11, 2000.
<P>
3.1 Articles of Incorporation of Allmon Management Inc.
*
<P>
3.2 By-Laws of Allmon Management Inc. *
<P>
17.1 Resignation Letter of Gerald Ghini.
<P>
27.1. Financial Data Schedule.
<P>
* Filed with Allmon Management Inc.'s Form 10-SB on
March 9, 2000 (SEC File 000-29897)
<P>
SIGNATURES
<P>
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.
<P>
Allmon Management Inc. ,
a Delaware corporation
<P>
By: /s/ Gerald Ghini
----------------------------
Gerald Ghini, President
<P>
DATED: November 16, 2000
<P>