UNTIED STATES SECURITIES
AND
EXCHANGE COMMISSION
AMENDMENT NO. 1 TO
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 30, 2002
WAYCOOL3D, INC.
(Exact Name of Registrant as Specified in Its Charter)
New Jersey
(State or Other Jurisdiction of Incorporation)
000-31365 22-3720629
--------- ----------
(Commission File Number) (IRS Employer Identification No.)
306 DEMERS AVENUE, EAST GRAND FORK MINNESOTA 56721
-------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(218)773-3297
(Registrant's Telephone Number, Including Area Code)
SEGWAY VII CORP.
4400 ROUTE 9, 2ND FLOOR
FREEHOLD, NEW JERSEY 07728
(Former Name or Former Address, if Changed Since Last Report)
INFORMATION TO BE INCLUDED IN THE REPORT
Item 1. Changes in Control of Registrant
On April 30, 2002 (the "Effective Date"), pursuant to a Stock Purchase Agreement
and Share Exchange between Waycool3d, Inc., a New Jersey corporation (the
"Company"); Richard I. Anslow ("Anslow") and Gregg Jaclin ("Jaclin"),
(collectively Anslow and Jaclin shall be known as the "Company Shareholders");
WayCool3D.com, Inc., a Nevada Corporation ("WayCool") and the shareholders of
WayCool ("WayCool Shareholders") (collectively WayCool and the shareholders of
WayCool shall be known as the "WayCool Group"), the Company acquired all of the
Waycool shares from the Waycool shareholders. Pursuant to the terms of the
Agreement, the Waycool shareholders and designees received a total of 9,000,000
shares of the Company's common stock from the Company shareholders and Waycool
became a wholly owned subsidiary of the Company.
Pursuant to the terms of the Agreement, Richard Anslow resigned as the sole
director of the Company and the following individuals were appointed to the
Board of Directors: Bradly Kerr, Jon Zavoral and Peter Zavoral. In addition, Mr.
Anslow resigned as President and Chief Executive Officer and the following
individuals were named as officers of the Company:
Bradly Kerr Chairman, President and Director
John Zavoral Secretary and Director
Peter Zavoral Treasurer and Director
The Acquisition was approved by the unanimous consent of the Board of Directors
of the Company and Waycool on April 30, 2002.
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 1, 2002, 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.
NAME OF SHARES OF
TITLE OF CLASS BENEFICIAL OWNER COMMON STOCK PERCENT OF CLASS
- -----------------------------------------------------------------------
Common Stock, Hatch Family Trust 861,057 8.61%
$.0001 Par Value
Common Stock Lani Hatch 1,750,115 17.50%
Common Stock Providence Sierra 795,505 7.96%
Common Stock John Zavoral 1,138,850 11.39%
Common Stock Peter Zavoral 1,137,577 11.38%
Common Stock Richard Anslow 1,000,000 10.00%
Common Stock Westminster Holdings 2,200,000 22.00%
DIRECTORS AND NAMED EXECUTIVE
OFFICERS
Common Stock John Zavoral 1,138,850 11.39%
Common Stock Peter Zavoral 1,137,577 11.38%
All Directors and Officers
as a Group 2,276,427 22.76%
The following is a biographical summary of the directors and officers of the
Company:
Bradly Kerr has been our President and Chairman of the Board since April, 2002.
He has been President of our subsidiary Waycool3D.com, Inc since February, 2002
and prior to that time he was General Manager of Waycool3D.com, Inc. since
August, 2001. Mr. Kerr was Director of Athletics at Jamestown College, Jamestown
North Dakota for several years. During this time he developed goals and
objectives, athletic scholarships, a corporate sponsorship program, enhancement
of the Booster Club, new athletic programs (golf, soccer, women's hockey) and
developed facility expansion (athletic training facility, soccer complex, and a
football stadium). He was a representative for the college to internal and
external constituencies to gain support (Chamber of Commerce, City Planning
Commission, Municipal Airport, Promotion and Tourism, City Council, Public
Schools, North Dakota State Hospital, Parks and Recreation, and Medical Clinic).
Mr. Kerr also fulfilled duties of Budgeting, fund raising, staffing and
Tournament Director (4 National Tournaments, 12 Regional Tournaments, and 12
Conference Tournaments). Prior to Jamestown College, Mr. Kerr taught and coached
for 11 years at the University of North Dakota.
During Mr. Kerr's athletic director/coaching/teaching career, he received the
following distinctions: NDCAC Administrator of the Year, Great Plains Region
Administrator of the Year, Finalist for National Administrator of the Year, NCAA
Rookie Coach of the Year, and NCC Coach of the Year. He received his Bachelor of
Science from the University of North Dakota in 1978 and he received his Master
of Education in 1985 from the University of North Dakota.
John Zavoral has been our Secretary since April, 2002. He has been Secretary of
our subsidiary, Waycool3D.com, Inc. since May 2000. Mr. Zavoral brings 25 years
of business experience to WayCool3D.com, Inc. and has been actively involved in
the major decision-making and hiring of our management team. Since high school,
John has worked as part of the management team at R.J. Zavoral & Sons, Inc.
where he has served as the Secretary and Director of such company. Mr. Zavoral
is part owner and manager of R.J Zavoral and, as such, supervises over 50
employees in their operations to build and grade roads, prepare sites, and
underground construction. The business has grown under his management from 5
employees to over 70 employees with similar growth in income. Some of the
projects that Mr. Zavoral oversees at R.J. Zavoral & Sons, Inc. are state
highways, federal dike projects, emergency services for Army Corp. of Engineers
(flood protection) and Arnold Palmer Golf Course development.
Peter Zavoral has been our Treasurer since April, 2002. He has been Treasurer
of our subsidiary, Waycool3D.com, Inc. since May 2000. He is presently the
President of RJ Zavoral & Sons, Inc. and has been part of their management team
for 23 years. In addition, since 1991 he has been President of Clay Products,
Inc where he supervises 7 employees. Clay Products, Inc. is a clay material and
aggregate supplier.
Mr. Peter Zavoral received his Administrative Arts Degree from Assumption
College in 1973. Peter Zavoral is actively involved in our community. He serves
in the following capacities: Trustee at Sacred Heart Church, East Grand Forks,
MN; Member, Finance Committee at Sacred Heart Church, East Grand Forks, MN;
Altru Health Services Board Member since 1976, Grand Forks, ND; Huntsville
Township Planning & Zoning Board; Board Member, Community Foundation of Grand
Forks, ND; and a Member of the Board of Directors of the Diocese of Crookston,
MN.
In addition to R.J. Zavoral & Sons, Inc. and Clay Products, Inc., John and Peter
Zavoral are involved in these partnerships: Deacons Greens Development
(LLP),Grand Forks ND (this is a housing development with about 128 acres
surrounding an Arnold Palmer signature golf course) and the River City Speedway
(the goal of the speedway is to bring the Nascar(R) image to Grand Forks).
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.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Pursuant to the Agreement, the Company acquired one hundred percent (100%) of
the issued and outstanding shares of common stock (Common Stock) of Waycool from
the Waycool shareholders for a total of 9,000,000 shares of $0.001 par value
common stock of the Company from the shareholders of the Company and Waycool
became a wholly owned subsidiary of the Company.
Waycool is a development stage company, with 5 years of technology development
experience and one patent (for the Video Wall) being brought to us by our
founders. The Video Wall product has international sales and a billion dollar
quarterly revenue potential, through the sales of equipment and Internet/video
services.
Waycool is currently producing video flooring and various video projectors (from
video cubes to walls to the crystal ball and double view kiosks). Because of the
breadth of the potential market for 3D related products, there is an array of
other commercial and consumer 3D products that are currently under development,
such as a line of 3D lighting fixtures, a computer monitor attachment, a credit
card advertising tool and even a jewelry box.
Waycool will manufacture 3Dimensional video image projectors, provide video
advertising content to fit the informational needs of our clients and provide a
major broadcasting hub for the Internet community. This medium is appropriate
for the location-based entertainment industry, for independent businesses, for
the professional training market and home entertainment market. We will also
manufacture and produce unique and innovative products for home and office use.
Waycool will accomplish this by producing high quality hardware, hiring
experienced personnel, and maintaining a determination to create a unique and
enjoyable 3D experience for our customers. Clients will soon discover that
working with us is a unique and professional way to develop new informational
applications that are appropriate for any industry.
Waycool's short term goals include the (1) designing, manufacturing, and
distribution of 3D machines to a broadening user market; (2) establishing
ourself as an innovative company of 3-Dimensional imaging projecting systems and
3D video production; and (3) bringing the unique aesthetic and entertainment
qualities of 3D technology into every home and business through affordable,
unique and practical products (such as lighting fixtures, home decor, 3D video
games and 3D picture frames). One of our long-term goals is to set up the only
transmitting source of 3D programming available on the Internet. We will provide
Internet programming domestically and internationally, with a monthly user fee
generating revenue from worldwide users.
Waycool offers unique products for advertising and novelty use in commercial,
office and home arenas. There are a few other companies with similar 3D video
image projectors throughout the world. Most of the kiosks used at trade and
craft shows, malls and similar locations use video projectors with two-
dimensional formats, so the market is wide open to the introduction of the
unique attention--getting 3D format that we offer. Waycool is developing
lighter, more portable units which will further increase sales appeal. No other
company offers a similar product to our patented 3D Video Wall. The unique
attention--getting qualities of our products are especially evident when
combining the 3D advertising with 2D broadcasting that our 3D Video Wall offers.
The company anticipate that sports arenas and sports bars will be a great niche
for this product.
The potential for growth is tremendous, both for sales of the machines and for a
large volume of video production and Internet business; 3D advertising is eye-
catching and immediately draws attention to the product. Additionally, viewing
broadcasts in 3D is a unique experience, which will attract viewers around the
world.
Distributors to large chain stores are begging for new home consumer products.
The innovative, practical, eye-catching 3D home decor, lighting and
entertainment products are already catching the attention of these distributors.
We already have the distributors/Independent Sales Representatives in the
following states: California, New Mexico, New York, Washington and Wisconsin. We
have also established a distributor in Quebec, Canada and have interested
parties in Australia.
The commercial products market is an ever-growing market. Advertisers, trade
shows and retail establishments are always looking for a new and better way to
grab the attention of consumers. They currently are limited to one- or two-
dimensional viewing venues. Waycool has already found enthusiasm for our 3D
video projectors and video walls. The advertiser and retailers using our 3D
projectors are finding out that when a consumer looks at a product or service
advertised in 3D, they remember it. 3D viewing is an exceptional experience and
advertising is a very competitive market, so Waycool forecasts that the demand
for our 3D machines will grow steadily. And since all of its 3D video projectors
out in the field need to have new videos produced on a monthly, bi-annual or
annual basis, video production will provide Waycool with an on-going source of
income.
The target market for Waycool's 3D projectors, Video Wall and corresponding 3D
video content will be establishments involved with advertising. This includes
advertising agencies who wish to sell advertising bits, trade show participants
who want to increase traffic to their displays, retailers who wish to draw
customers into their establishments or highlight specific products within their
stores, and also entertainment, event and sports entities who wish to promote
their star figures and main events.
The 3D still and video bar tables will be a great new venue for bars, lounges
and restaurants. A still image or specially formatted 3D video are projected out
of the middle of the table for a unique, clean and always present advertising.
This is especially effective for lower-lit atmospheres. The images can easily be
changed with changing promotions.
Waycool's home and office consumer products (3D lighting fixtures, 3D computer
components, 3D picture frames and 3D conference or end/coffee tables and
handheld video games) will draw a wide variety of customers. People of most
ages, genders and income levels can enjoy the novelty of its 3D products.
Waycool will keep the prices affordable for most income groups and since the
content of the 3D image can vary tremendously, Waycool has the ability to come
up with the perfect image for nearly everyone.
Office buildings will be able to use the lighting to create a desired atmosphere
or to use it to draw attention to certain areas or advertise their logo,
products
or services. Since its 3D lighting products can be used with basic lighting
fixtures, businesses can easily and affordably enjoy the special atmosphere of
3D lighting. Its 3D Conference Table is perfect for displaying still or moving
images to boost company morale and to spark product interest in customers.
Products and Services
Waycool is currently producing a series of 3D video image projection products.
These products are revolutionizing the way consumers watch video productions by
allowing the dynamic dimension of 3D viewing. Its current customers of our 3D
Video Image Projectors use them for advertising and attracting customers.
Waycool supplies the video projectors and also creates, shoots, edits, and
animates videos to meet the specific needs of these clients. This video is
delivered in DVD format or broadcast directly to the customer via the Internet.
Waycool is are also well on its way to break into the home and office decor
industries with our unique 3D lighting, table and decorative products. It has a
3D table which can be adapted for coffee or end tables for the living room or
for conference rooms. Its 3D lighting products are available for use outdoors,
indoors, commercially or at home. The lighting fixtures can be stand alone,
wall-mounted or ceiling-mounted. It is also developing a line of 3D computer
monitors, computers and video games for home consumers. Waycool's goal is to
provide a new 3D viewing experience (without the aid of special eyewear) with a
software package that allows end-consumers to create their own 3D images.
The current market already produces some videos whose 3D effect requires the use
of special optical wear. There are also some novelty items that are called 3D,
but WayCool is the virtually the one of the few, if not the only, company
producing equipment that actually projects has actual projected 3D images 6--8
inches in front of the projector, giving a 3D effect that is are visible with
the naked eye. There are few other products on the market today that compare to
our 3D table video image projectors or lighting fixtures. And likewise, Waycool
currently creates the special videos that are displayed with our projectors.
Images are specially formatted by its video & imaging department. Images in most
products can be still or moving video with sound. Still image units are designed
for consumers to easily change the video images. Holiday & Seasonal images will
be sold as sets for some of the units. Changing the specially formatted video in
the units with DVD's is as simple as changing the DVD. Businesses can order new
videos as their advertising needs change.
Patents and Trademarks
Waycool has one patent granted for the video wall and are in the process of
filing for a patent on our 3D Video Monitor Attachment, 3D golf unit, 3D crystal
ball kiosk, and 3D double view kiosk. It has patent pending status for the 3D
casino games. It will continue to apply for patents and file additional design
and utility patent applications as we develop and market our new products to
maintain and protect our market opportunities. We have applied to register
WAYCOOL3D.COM/WAYCOOL3D as our trademark.
Manufacturing and Production Plan
WayCool3D has secured a building for manufacturing in East Grand Forks,
Minnesota, which gives it ample space to expand as our production grows. At
present, it does not require any special machinery and the highest noise level
that we will produce is that of an air compressor. There will be no toxic smells
or environmental issues associated with the production of our 3D products.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired
Financial statements of the Company are filed herewith after the signature
page.
(b) Pro forma financial information
Pro forma financial information are filed herewith after the signature
page.
(c) Exhibits
Number Exhibit
10 * Stock Purchase Agreement and Share Exchange dated as of April
30, 2002 between Waycool3d, Inc.; Richard I. Anslow and Gregg
Jaclin; WayCool3D.com, Inc., and the shareholders of WayCool.
* Filed with the original Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
WAYCOOL3D, INC.
By: /s/ Bradley Kerr
--------------------------------
Bradly Kerr
President
July 15, 2002
WAYCOOL3D.COM, INC
A DEVELOPMENT STAGE COMPANY
EAST GRAND FORKS, MINNESOTA
FINANCIAL STATEMENTS
MARCH 31, 2002
TOGETHER WITH ACCOUNTANT'S REVIEW REPORT
WAYCOOL3D.COM, INC.
A DEVELOPMENT STAGE COMPANY
EAST GRAND FORKS, MINNESOTA
TABLE OF CONTENTS
Page
ACCOUNTANT'S REVIEW REPORT 1
BALANCE SHEET 2
STATEMENT OF OPERATIONS 3
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY 4
STATEMENT OF CASH FLOWS 5
NOTES TO FINANCIAL STATEMENTS 6-8
* * * * * * * * * * * * * * *
ACCOUNTANT'S REVIEW REPORT
To the Board of Directors
WayCool3D.com, Inc.
East Grand Forks, Minnesota
We have reviewed the accompanying balance sheet of WayCool3D.com, Inc. (A
Development Stage Company) as of March 31, 2002, and the related statements of
income, stockholder's equity, and cash flows for the three months then ended and
for the cumulative total from Inception to March 31, 2002, 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
WayCool3D.com, Inc.
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 auditing standards generally accepted in the United
States of America, 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.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with accounting principles generally accepted in the United States of
America.
/s/ Brady Martz
BRADY, MARTZ & ASSOCIATES, P.C.
June 12, 2002
BRADY, MARTZ & ASSOCIATES, P.C.
401 Demers Avenue Suite 300, P.O. Box 14296
Grand Forks, ND 58208-4296 (701) 775-4685 Fax (701) 795-7498
OTHER OFFICES: Minot and Bismarck, ND
Thief River Falls, MN
-1-
WAYCOOL3D.COM, INC.
A DEVELOPMENT STAGE COMPANY
BALANCE SHEET
March 31, 2002
2002
----
ASSETS
CURRENT
Cash and Cash Equivalents $ 1,883
Inventory 14,500
Accounts Receivable 7,412
Employee Receivable 400
Prepaid Expenses 3,712
---------
Total $ 27,907
---------
PROPERTY AND EQUIPMENT
Equipment $ 87,396
Less: Accumulated Depreciation (7,813)
---------
Total $ 79,583
---------
OTHER
Patent and Trademark, Net $ 9,174
---------
TOTAL ASSETS $ 116,664
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts Payable $ 69,369
Current Portion of Long-Term Debt 37,732
Accrued Wages 8,122
Accrued Taxes and Expenses 9,359
---------
Total $ 124,582
---------
OTHER
Related Party Notes Payable $ 300,000
---------
LONG-TERM DEBT
Notes Payable $ 136,034
---------
Total Liabilities $ 560,616
---------
STOCKHOLDERS' EQUITY
Common Stock, $.001 par value
50,000,000 shares authorized
31,740,000 shares issued $ 31,740
Paid in Excess of Par 41,862
Deficit Accumulated in Development Stage (517,554)
---------
Total Stockholders' Equity (Deficit) $(443,952)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 116,664
=========
See Accountant's Review Report and Notes to Financial Statements
-2-
WAYCOOL3D.COM, INC.
A DEVELOPMENT STAGE COMPANY
STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 2002
Cumulative
Total from
Three Months Inception to
Ended 3/31/02 03/31/2002
---------------- -----------------
SALES REVENUE $ 20,288 $ 20,538
--------- ---------
OPERATING EXPENSES
Advertising $ 9,140 $ 16,405
Consulting and Professional 32,707 242,851
Contract Labor 150 14,866
Depreciation/Amortization 4,479 7,993
Dues and Subscriptions 633 2,037
Insurance (256) 3,624
Interest Expense 4,682 7,754
Miscellaneous 79 664
Office Supplies 972 4,247
Parts and Materials 24,438 24,438
Payroll Taxes 7,524 11,666
Postage and Printing 2,437 13,611
Rent 11,658 25,810
Repairs and Maintenance 157 2,958
Research and Development 511 800
Salaries 42,159 105,919
Sales/Use Tax -- 591
Shipping 2,250 2,428
Shop/Production Supplies 2,126 4,452
Telephone 6,100 13,915
Travel and Entertainment 6,197 29,259
Utilities 1,359 2,313
--------- ---------
Total Operating Expenses $ 159,502 $ 538,601
--------- ---------
INTEREST INCOME $ 509
---------
NET LOSS $(139,214) $(517,554)
========= =========
See Accountant's Review Report and Notes to Financial Statements
-3-
WAYCOOL3D.COM, INC.
A DEVELOPMENT STAGE COMPANY
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Three Months Ended March 31, 2002
Deficit
Accumulated in
Common Capital Development
Stock Surplus Stage Total
----- ------- ----- -----
Balance, December 31, 2001 $ 26,240 $ 41,862 $(378,340) $(310,238)
Issuance of Common Stock for Services 5,500 5,500
Net Loss -- -- (139,214) (139,214)
--------- --------- --------- ---------
Balance, March 31, 2002 $ 31,740 $ 41,862 $(517,554) $(443,952)
========= ========= ========= =========
See Accountant's Review Report and Notes to Financial Statements
-4-
WAYCOOL3D.COM, INC.
A DEVELOPMENT STAGE COMPANY
STATEMENT OF CASH FLOWS
For the Three Months Ended March 31, 2002
Cumulative
Total from
Three Months Inception to
Ended 3/31/02 03/31/2002
---------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(139,214) (517,554)
Adjustments to Reconcile Net Loss to Net
Cash Provided by Operating Activities:
Depreciation and Amortization 4,479 7,993
Expenses Satisfied by Stock Issuances 5,500 64,003
Effects on Operating Cash Flows Due to Changes In:
Accounts Receivable (7,412) (7,412)
Employee Receivable (200) (400)
Prepaid Assets (804) (3,712)
Inventory 10,418 (14,500)
Accounts Payable 33,254 69,369
Accrued Liabilities 2,559 17,481
--------- ---------
NET CASH USED BY OPERATING ACTIVITIES $ (91,420) $(384,732)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Plant and Equipment Purchases $ (35,017) (87,396)
Additions to Intangibles (6,355) (8,355)
--------- ---------
NET CASH USED BY INVESTING ACTIVITIES $ (41,372) $ (95,751)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Common Stock $ 8,600
Proceeds from Notes Payable $ 120,000 475,000
Principal Payment of Long-Term Debt (1,234) (1,234)
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES $ 118,766 $ 482,366
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS $ (14,026) $ 1,883
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 15,909 --
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,883 $ 1,883
========= =========
See Accountant's Review Report and Notes to Financial Statements
-5-
NOTES TO FINANCIAL STATEMENTS
As of March 31, 2002
NOTE 1 Summary of Significant Accounting Policies
- --------------------------------------------------
The Corporation is a development stage company and has not yet begun full
operations. When fully implemented the company will operate as a product
manufacturer and wholesaler in East Grand Forks, Minnesota. The operations will
consist primarily of manufacturing numerous types of products which project a 3D
image.
Cash and cash equivalents include deposits in local banks.
Inventories are valued at the lower of cost (first-in first-out method) or
market value. Inventory includes raw material, work in process, and finished
goods. Inventory at March 31, 2002 is comprised primarily of raw materials.
Property and equipment are capitalized at cost, while maintenance and repairs,
which do not enhance the value or increase the basic productive capacity of the
property, are charged to expense as incurred. Depreciation is computed using the
straight-line method, over estimated useful lives of three to seven years.
The patents and trademarks, are stated at cost less accumulated amortization.
Amortization is computed using the straight-line method over 15 and 40 year
periods, respectively. Current quarter amortization was $117, and accumulated
amortization was $181 at March 31, 2002.
Advertising costs are expensed as incurred.
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 reported amounts of assets and
liabilities at March 31, 2002 and revenues and expenses during the period then
ended. The actual outcome of the estimates could differ from the estimates made
in the preparation of the financial statements.
NOTE 2 Related Party Transactions
- ----------------------------------
The corporation has an unsecured line of credit with a shareholder in the amount
of $200,000. It expires on May 2, 2002, and has an interest rate at 5.75%. As of
March 31, 2002 the outstanding balance was $200,000.
The corporation also has a note payable to John Zavoral, who is a director,
officer and shareholder, in the amount of $100,000. There is no stated interest
rate on this note, it guarantees a 30% return upon WayCool receiving funding.
The corporation also has entered into noncash transactions by issuing stock
during 2002 for services and fees incurred during start up, which total $5,500.
NOTE 3 Depreciation
- --------------------
Depreciation expense included in operating expenses for the three months ended
March 31, 2002 is $4,362.
-6-
NOTE 4 Notes Payable
- ---------------------
Notes payable at March 31, 2002 consists of the following:
Interest
Rate Amount Collateral
---- ------ ----------
City of East Grand Fork 4.00% $ 148,766 Inventory, fixtures &
equipment
Maurice Horn 25,000 Unsecured
Total $173,766
Current Portion (37,732)
---------
$136,034
=========
The required principal payments for the next five years and thereafter are as
follows:
2003 $ 37,732
2004 13,251
2005 13,791
2006 14,353
2007 14,938
Thereafter 79,701
--------
$173,766
========
The note payable to Maurice Horn guarantees a 30% return, upon the corporation
receiving funding.
NOTE 5 Operating Leases
- ------------------------
WayCool3D.com, Inc. leases office space, workshop space, and a copier for its
operation. These leases are operating leases and have the following minimum
lease payments for the next five years:
2003 $ 38,190
2004 38,190
2005 38,190
2006 37,425
2007 33,600
--------
$185,595
========
The leases for the office space and the workshop space are on a monthly basis
and are cancelable at anytime.
-7-
NOTE 6 Income Taxes
- --------------------
The corporation has net operating loss carryforwards of $454,368 which expire
between 2020 and 2021. Income tax benefit realization is dependent on the
corporation generating sufficient tax income prior to the expiration of the loss
carryforward. Deferred tax assets of $68,155 are completely offset by a
valuation reserve due to the lack of earnings history for the corporation.
NOTE 7 Subsequent Event
- ------------------------
On May 1, 2002, the Company conducted a reverse stock split of 1 for 3 shares.
The shareholders of the Company following this split exchanged their shares of
WayCool3D.com, Inc. for 9,000,000 shares of WayCool3D, Inc., a New Jersey
Corporation.
The number of shares at March 31, 2002, has not been restated for the effect of
the reverse split on May 1, 2002.
-8-
* * * * * * * * * * * *
WAYCOOL3D.COM, INC
A DEVELOPMENT STAGE COMPANY
EAST GRAND FORKS, MINNESOTA
FINANCIAL STATEMENTS
DECEMBER 31, 2001
TOGETHER WITH INDEPENDENT AUDITOR'S REPORT
WAYCOOL3D.COM, INC.
A DEVELOPMENT STAGE COMPANY
EAST GRAND FORKS, MINNESOTA
TABLE OF CONTENTS
Page
INDEPENDENT AUDITOR'S REPORT 1
BALANCE SHEET 2
STATEMENT OF OPERATIONS 3
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY 4
STATEMENT OF CASH FLOWS 5
NOTES TO FINANCIAL STATEMENTS 6-8
* * * * * * * * * * * * * * *
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
WayCool3D.com, Inc.
East Grand Forks, Minnesota
We have audited the balance sheet of WayCool3D.com, Inc. (A Development Stage
Company) as of December 31, 2001 and 2000, and the related statements of
operations, changes in shareholders' equity, and cash flows for the year ended
December 31, 2001 and the period from May 20, 2000 (the date of inception) to
December 31, 2000. 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 made 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 WayCool3D.com, Inc. as of
December 31, 2001 and 2000, and the results of its operations, changes in
shareholders' equity, and its cash flows for the periods then ended in
conformity with accounting principles generally accepted in the United States of
America.
/s/ Brady Martz
BRADY, MARTZ & ASSOCIATES, P.C.
February 4, 2002
BRADY, MARTZ & ASSOCIATES, P.C.
401 Demers Avenue Suite 300, P.O. Box 14296
Grand Forks, ND 58208-4296 (701) 775-4685 Fax (701) 795-7498
OTHER OFFICES: Minot and Bismarck, ND
Thief River Falls, MN
-1-
WAYCOOL3D.COM, INC.
A DEVELOPMENT STAGE COMPANY
BALANCE SHEET
December 31, 2001 and 2000
ASSETS 2001 2000
--------- ---------
CURRENT
Cash and Cash equivalents $ 15,909 $ 564
Inventory 24,918
Employee Receivable 200
Prepaid Expenses 2,908
---------
Total $ 43,935 $ 564
--------- ---------
PROPERTY AND EQUIPMENT
Equipment $ 52,378 $ 1,000
Less: Accumulated Depreciation (3,451) (36)
--------- ---------
Total $ 48,927 $ 964
--------- ---------
OTHER
Patent and Trademark, Net $ 2,937 $ 1,000
--------- ---------
TOTAL ASSETS $ 95,799 $ 2,258
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts Payable $ 36,115
Accrued Payroll 9,547
Interest Payable 2,377
Current Notes Payable 35,736
Accrued Taxes and Expenses 2,998
---------
Total $ 86,773
---------
OTHER
Related Party Notes Payable $ 180,000
---------
LONG-TERM DEBT
Notes Payable $ 139,264
---------
Total Liabilities $ 406,037
---------
STOCKHOLDERS' EQUITY
Common Stock, $.001 par value
50,000,000 shares authorized
2001-26,240,000 shares issued
2000-2,100,000 shares issued $ 26,240 $ 2,100
Paid in Excess of Par 41,862 35,944
Deficit Accumulated in Development Stage (378,340) (35,516)
--------- ---------
Total Stockholders' Equity (Deficit) $(310,238) $ 2,528
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 95,799 $ 2,528
========= =========
See Accompanying Notes to Financial Statements
-2-
WAYCOOL3D.COM, INC.
A DEVELOPMENT STAGE COMPANY
STATEMENT OF OPERATIONS
For the Periods Ended December 31, 2001 and 2000
Cumulative
Total from
Inception to
2001 2000 12/31/01
--------- --------- ---------
SALES REVENUE $ 250 $ 0 $ 250
--------- --------- ---------
OPERATING EXPENSES
Advertising $ 7,265 $ 7,265
Consulting and Professional 175,250 $ 34,894 210,144
Contract Labor 14,716 14,716
Depreciation/Amortization 3,478 36 3,514
Dues and Subscriptions 1,404 1,404
Insurance 3,880 3,880
Interest Expense 3,072 3,072
Miscellaneous 525 60 585
Office Supplies 3,229 46 3,275
Payroll Taxes 4,142 4,142
Postage and Printing 11,174 11,174
Rent 14,152 14,152
Repairs and Maintenance 2,801 2,801
Research and Development 289 289
Salaries 63,710 50 63,760
Sales/Use Tax 591 591
Shipping 178 178
Shop/Production Supplies 2,326 2,326
Telephone 7,385 430 7,815
Travel and Entertainment 23,062 23,062
Utilities 954 954
--------- --------- ---------
Total Operating Expenses $ 343,583 $ 35,516 $ 379,099
--------- --------- ---------
INTEREST INCOME $ 509 $ 509
--------- --------- ---------
NET LOSS $(342,824) $ (35,516) $(378,340)
========= ========= =========
See Accompanying Notes to Financial Statements
-3-
WAYCOOL3D.COM, INC.
A DEVELOPMENT STAGE COMPANY
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the Periods Ended December 31, 2001 and 2000
Deficit
Accumulated in
Common Capital Development
Stock Surplus Stage Total
--------- -------- --------------- --------
2000
- ----
Balance, May 20, 2000 $ 0 $ 0 $ 0 $ 0
Issuance of Common Stock for Cash 106 5,994 6,100
Issuance of Common Stock for Services 1,994 29,950 31,944
Net Loss (35,516) (35,516)
--------- -------- ---------- --------
Balance, December 31, 2000 $ 2,100 $ 35,944 $ (35,516) $ 2,528
2001
- ----
Issuance of Common Stock for Cash 2,500 2,500
Issuance of Common Stock for Services 21,640 5,918 27,558
Net Loss (342,824) (342,824)
--------- -------- ---------- --------
Balance, December 31, 2001 $ 26,240 $ 41,862 $ (378,340) $(310,238)
========= ======== ========== ========
See Accompanying Notes to Financial Statements
-4-
WAYCOOL3D.COM, INC.
A DEVELOPMENT STAGE COMPANY
STATEMENT OF CASH FLOWS
For the Periods Ended December 31, 2001 and 2000
Cumulative
Total from
Inception to
2001 2000 12/31/01
------- ------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(342,824) $(35,516) $(378,340)
Adjustments to Reconcile Net Loss to Net
Cash Provided by Operating Activities:
Depreciation and Amortization 3,478 36 3,514
Expenses Satisfied by Stock Issuances 27,558 30,944 58,502
Increase in Accounts Receivable (200) (200)
Increase in Prepaid Assets (2,908) (2,908)
Increase in Inventory (24,918) (24,918)
Increase in Accounts Payable 36,114 36,114
Increase in Accrued Liabilities 14,923 24,923
---------- --------- --------------
NET CASH USED BY OPERATING ACTIVITIES $(288,777) $ (4,536) $(293,313)
----------- --------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Plant and Equipment Purchases $ (51,378) $ (1,000) $ (52,378)
Additions to Intangibles (2,000) (2,000)
----------- --------- --------------
NET CASH USED BY INVESTING ACTIVITIES $ (53,378) $ (1,000) $ (54,378)
----------- --------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Common Stock $ 2,500 $ 6,100 $ 8,600
Proceeds from Notes Payable 355,000 355,000
----------- --------- --------------
NET CASH PROVIDED BY FINANCING ACTIVITIES $ 357,500 $ 6,100 $ 363,600
----------- --------- --------------
NET INCREASE IN CASH AND CASH EQUIVALENTS $ 15,345 $ 564 $ 15,909
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 564
--------- ---------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 15,909 $ 564 $ 15,909
========= ========== =============
See Accompanying Notes to Consolidated Financial Statement
-5-
NOTES TO FINANCIAL STATEMENTS
As of December 31, 2001
NOTE 1 Summary of Significant Accounting Policies
- --------------------------------------------------
The Corporation is a development stage company and has not yet begun full
operations. When fully implemented the company will operate as a product
manufacturer and wholesaler in East Grand Forks, Minnesota. The operations will
consist primarily of manufacturing numerous types of products which project a 3D
image.
Cash and cash equivalents include deposits in local banks.
Inventories are valued at the lower of cost (first-in first-out method) or
market value. Inventory includes raw materials, work in process, and finished
goods. Inventory at December 31, 2001 is comprised entirely of raw materials.
Property and equipment are capitalized at cost, while maintenance and repairs,
which do not enhance the value or increase the basic productive capacity of the
property, are charged to expense as incurred. Depreciation is computed using the
straight-line method, over estimated useful lives of three to seven years.
The patents and trademarks, are stated at cost less accumulated amortization.
Amortization is computed using the straight-line method over 15 and 40 year
periods, respectively. Current year and accumulated amortization was $63 for
2001, there was no amortization taken in 2000.
Advertising costs are expensed as incurred.
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 reported amounts of assets and
liabilities at December 31, 2001 and revenues and expenses during the period
then ended. The actual outcome of the estimates could differ from the estimates
made in the preparation of the financial statements.
NOTE 2 Related Party Transactions
- ----------------------------------
The corporation has an unsecured line of credit with a shareholder in the amount
of $100,000. It expires on February 2, 2002, and has an interest rate at 5.75%.
As of December 31, 2001 the outstanding balance was $80,000.
The corporation also has a note payable to Lani Hatch, who is a shareholder, in
the amount of $100,000. There is no stated interest rate on this note, it
guarantees a 30% return upon WayCool receiving funding.
The corporation also has entered into numerous noncash transactions by issuing
stock during 2001 and 2000 for services and fees incurred during start up, which
total $27,558 and $30,944, respectively.
NOTE 3 Depreciation
- --------------------
Depreciation expense included in operating expenses for the years end December
31, 2001 and 2000 is $3,415 and $36, respectively.
-6-
NOTE 4 Notes Payable
- ---------------------
Notes payable at December 31, 2001 consists of the following:
Interest 2001
Rate Amount Collateral
---- ------ ----------
City of East Grand Fork 4.00% $150,000 Inventory, fixtures &
equipment
Maurice Horn 25,000 Unsecured
--------
Total $175,000
Current Position 35,736
--------
$139,264
========
The required principal payments for the next five years and thereafter are as
follows:
2002 $35,736
2003 13,120
2004 13,654
2005 14,210
2006 14,789
-------
Total $175,000
========
The note payable to Maurice Horn guarantees a 30% return, upon the corporation
receiving funding.
NOTE 5 Operating Leases
- ------------------------
WayCool3D.com, Inc. leases office space, workshop space, and a copier for its
operation. These leases are operating leases and have the following minimum
lease payments for the next two years:
2002 $38,190
2003 38,190
-------
$76,380
=======
The leases for the office space and the workshop space are on a monthly basis
and are cancelable at anytime.
NOTE 6 Income Taxes
- --------------------
The corporation has net operating loss carryforwards of $383,523 which expire
between 2020 and 2021. Income tax benefit realization is dependent on the
corporation generating sufficient tax income prior to the expiration of the loss
carryforward. Deferred tax assets of $57,528 are completely offset by a
valuation reserve due to the lack of earnings history for the corporation.
-7-
NOTE 7 Consulting Fees
- -----------------------
Consulting and professional fees incurred during the first two years of
operations were paid in connection with receiving professional advice about
formation and funding, technical expertise, and sales consulting.
************************
-8-
WAYCOOL3D, INC
A DEVELOPMENT STAGE COMPANY
EAST GRAND FORKS, MINNESOTA
PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002
TOGETHER WITH ACCOUNTANT'S REVIEW REPORT
WAYCOOL3D, INC.
A DEVELOPMENT STAGE COMPANY
EAST GRAND FORKS, MINNESOTA
TABLE OF CONTENTS
Page
ACCOUNTANT'S REVIEW REPORT 1
PROFORMA CONSOLIDATED BALANCE SHEET 2
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS 3
PROFORMA CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY 4
PROFORMA CONSOLIDATED STATEMENT OF CASH FLOWS 5
NOTES TO PROFORMA CONSOLIDATED FINANCIAL STATEMENTS 6-8
* * * * * * * * * * * * * * *
ACCOUNTANT'S REVIEW REPORT
To the Board of Directors
WayCool3D, Inc.
East Grand Forks, Minnesota
We have reviewed the accompanying proforma consolidated balance sheet of
WayCool3D, Inc. (A Development Stage Company) as of March 31, 2002, and the
related proforma consolidated statements of income, stockholder's equity, and
cash flows for the three months then ended and the cumulative total from
Inception to March 31, 2002, 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 proforma consolidated
financial statements is the representation of the management of WayCool3D, Inc.
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 auditing standards generally accepted in the United
States of America, the objective of which is the expression of an opinion
regarding the proforma consolidated financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying proforma consolidated financial statements in order
for them to be in conformity with accounting principles generally accepted in
the United States of America.
/s/ Brady, Martz & Associates, P.C.
BRADY, MARTZ & ASSOCIATES, P.C.
June 12, 2002
BRADY, MARTZ & ASSOCIATES, P.C.
401 Demers Avenue Suite 300, P.O. Box 14296
Grand Forks, ND 58208-4296 (701) 775-4685 Fax (701) 795-7498
OTHER OFFICES: Minot and Bismarck, ND
Thief River Falls, MN
-1-
WAYCOOL3D, INC.
A DEVELOPMENT STAGE COMPANY
PROFORMA CONSOLIDATED BALANCE SHEET
March 31, 2002
ASSETS
CURRENT
Cash and Cash Equivalents $ 1,895
Inventory 14,500
Accounts Receivable 7,412
Employee Receivable 400
Prepaid Expenses 3,712
---------
Total $ 27,919
---------
PROPERTY AND EQUIPMENT
Equipment $ 87,396
Less: Accumulated Depreciation (7,813)
---------
Total $ 79,583
---------
OTHER
Patent and Trademark, Net $ 9,174
---------
TOTAL ASSETS $ 116,676
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts Payable $ 69,369
Current Portion of Long-Term Debt 37,732
Accrued Wages 8,122
Accrued Taxes and Expenses 10,384
---------
Total $ 125,607
---------
OTHER
Related Party Notes Payable $ 300,000
---------
LONG-TERM DEBT
Notes Payable $ 136,034
---------
Total Liabilities $ 561,641
---------
STOCKHOLDERS' EQUITY
Common Stock, $.0001 par value
200,000,000 shares authorized
19,000,000 shares issued and outstanding $ 1,400
Additional paid in capital (444,477)
Deficit Accumulated in Development Stage (1,888)
---------
Total Stockholders' Equity (Deficit) $(444,965)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 116,676
=========
See Accountant's Review Report and Notes to
Consolidated Proforma Financial Statements
-2-
WAYCOOL3D, INC.
A DEVELOPMENT STAGE COMPANY
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS For the Three
Months Ended March 31, 2002
Cumulative
Three Months Total from
Ended Inception to
03/31/2002 03/31/2002
-------------------- ------------------
SALES REVENUE $ - $ -
OPERATING EXPENSES
General & Adminstrative Expenses 148 1,888
-------------------- ------------------
NET LOSS $ (148) $ (1,888)
==================== ==================
See Accountant's Review Report and Notes to
Consolidated Proforma Financial Statements
-3-
WAYCOOL3D, INC.
A DEVELOPMENT STAGE COMPANY
PROFORMA CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY For the Three Months Ended
March 31, 2002
Common Additional Accumulated
Stock Paid-In Capital Deficit Total
----- --------------- ------- -----
Balance, December 31, 2001 $ 500 $ 325 $ (1,740) $ (915)
Acquistion of WayCool3D.com, Inc. 900 (444,852) (443,952)
Contributed Capital
by Shareholders 50 50
Net Loss - - (148) (148)
-- -- ----- -----
Balance, March 31, 2002 $ 1,400 $ (444,477) $ (1,888) $ (444,965)
======== =========== ========= ===========
See Accountant's Review Report and Notes to
Consolidated Proforma Financial Statements
-4-
WAYCOOL3D, INC.
A DEVELOPMENT STAGE COMPANY
PROFORMA CONSOLIDATED STATEMENT OF CASH FLOWS For the Three
Months Ended March 31, 2002
Cumulative
Three Months Total from
Ended Inception to
03/31/2002 03/31/2002
-------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (148) $(1,888)
Effects on Operating Cash Flows Due to Changes In: --
Accrued Liabilities 100 1,025
------- -------
NET CASH USED BY OPERATING ACTIVITIES $ (48) $ (863)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Issuance of Common Stock $ 625
Proceeds from Capital Contributions $ 50 250
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES $ 50 $ 875
------- -------
NET INCREASE IN CASH AND CASH EQUIVALENTS $ 2 $ 12
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 10 --
ENDING CASH BALANCE OF NEWLY CONSOLIDATED
SUBSIDIARY 1,883 1,883
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,895 $ 1,895
======= =======
See Accountant's Review Report and Notes to
Consolidated Proforma Financial Statements
-5-
NOTES TO CONSOLIDATED PROFORMA FINANCIAL STATEMENTS
As of March 31, 2002
NOTE 1 Summary of Significant Accounting Policies
- --------------------------------------------------
The Corporation is a development stage company and has not yet begun full
operations. WayCool3D, Inc., a company incorporated in the state of New Jersey,
is the parent company of WayCool 3D.com, Inc., of which it owns 100% of the
outstanding common stock. WayCool3D.com, Inc, a company incorporated in the
state of Nevada, is a product manufacturer and wholesaler in East Grand Forks,
Minnesota. The operations will consist primarily of manufacturing numerous types
of products, which project a 3D image.
Cash and cash equivalents include deposits in local banks.
Inventories are valued at the lower of cost (first-in first-out method) or
market value. Inventory includes raw material, work in process, and finished
goods. Inventory at March 31, 2002 is comprised primarily of raw materials.
Property and equipment are capitalized at cost, while maintenance and repairs,
which do not enhance the value or increase the basic productive capacity of the
property, are charged to expense as incurred. Depreciation is computed using the
straight-line method, over estimated useful lives of three to seven years.
The patents and trademarks, are stated at cost less accumulated amortization.
Amortization is computed using the straight-line method over 15 and 40 year
periods, respectively. Current quarter amortization was $117, and accumulated
amortization was $181 at March 31, 2002.
Advertising costs are expensed as incurred.
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 reported amounts of assets and
liabilities at March 31, 2002 and revenues and expenses during the period then
ended. The actual outcome of the estimates could differ from the estimates made
in the preparation of the financial statements.
NOTE 2 Proforma Adjustments
- ----------------------------
The financial statements have been adjusted to show the effects of the following
transactions, as if they took place March 31, 2002.
On April 5, 2002, the Company undertook a 2-1 forward split of its outstanding
common shares increasing the amount of shares of common stock outstanding in the
company to 10,000,000. On April 23, 2002, the Company filed a Certificate of
Amendment in the State of New Jersey changing its name to WayCool3D, Inc. On
April 30, 2002, the Company entered into a Stock Purchase Agreement and Share
Exchange ("Agreement") with WayCool3D.com, Inc. ("WayCool"), pursuant to which
the principal shareholders of the Company transferred a total of 9,000,000
shares to the WayCool shareholders and the Company acquired all of the
outstanding shares of capital stock of WayCool. Upon the effective date of the
Agreement, WayCool became the wholly owned subsidiary of the Company and the
current shareholders of WayCool own approximately 90% of the Company's shares of
common stock outstanding.
-6-
NOTE 3 Shareholder's Equity
- ----------------------------
Common stock includes 200,000,000 shares authorized at par value of $.0001, of
which 19,000,000 have been issued. The Company has also authorized 20,000,000
shares of preferred stock at par value of $.0001, none of which have been
issued.
NOTE 4 Related Party Transactions
- ----------------------------------
The corporation has an unsecured line of credit with a shareholder in the amount
of $200,000. It expires on May 2, 2002, and has an interest rate at 5.75%. As of
March 31, 2002 the outstanding balance was $200,000.
The corporation also has a note payable to John Zavoral, who is a director,
officer and shareholder, in the amount of $100,000. There is no stated interest
rate on this note, it guarantees a 30% return upon WayCool receiving funding.
The corporation also has entered into noncash transactions by issuing stock
during 2002 for services and fees incurred during start up, which total $5,500.
NOTE 5 Notes Payable
- ---------------------
Notes payable at March 31, 2002 consists of the following:
Interest
Rate Amount Collateral
---- ------ ----------
City of East Grand Fork 4.00% $ 148,766 Inventory, fixtures &
equipment
Maurice Horn 25,000 Unsecured
Total $173,766
Current Portion (37,732)
---------
$136,034
=========
The required principal payments for the next five years and thereafter are as
follows:
2003 $ 37,732
2004 13,251
2005 13,791
2006 14,353
2007 14,938
Thereafter 79,701
--------
$173,766
========
The note payable to Maurice Horn guarantees a 30% return, upon the corporation
receiving funding.
-7-
NOTE 6 Operating Leases
- ------------------------
WayCool3D, Inc. leases office space, workshop space, and a copier for its
operation. These leases are operating leases and have the following minimum
lease payments for the next five years:
2003 $ 38,190
2004 38,190
2005 38,190
2006 37,425
2007 33,600
--------
$185,595
========
The leases for the office space and the workshop space are on a monthly basis
and are cancelable at anytime.
NOTE 7 Income Taxes
- --------------------
The corporation has net operating loss carryforwards of $456,256, which expire
between 2020 and 2021. Income tax benefit realization is dependent on the
corporation generating sufficient tax income prior to the expiration of the loss
carryforward. Deferred tax assets of $68,438 are completely offset by a
valuation reserve due to the lack of earnings history for the corporation.
* * * * * * * * * * * *
-8-