UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 7, 2000
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GoPublicNow.com, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
033-05384 33-0886032
---------------- ------------------------
(Commission File Number) (IRS Employer Identification No.)
5000 Birch Street, West Tower, Suite 4900, Newport Beach, CA 92660
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(949) 752-2797
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Registrant's telephone number, including area code:
DermaRx Corporation
c/o Connolly & Halloran PC
1121 Broadway, Suite 202
Boulder, CO 80302
(303) 440-7676
---------------------------------
(Former name, address and telephone number)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT
(a) Pursuant to an Acquisition Agreement (the "Acquisition Agreement")
dated as of February 24, 2000 among DermaRx Corporation ("DMRX"), shareholders
of DMRX holding a majority of the DMRX shares (the "Shareholders") and
GoPublicNow.com, Inc., a Nevada corporation ("GPN-Nevada"), effective on April
6, 2000, GPN-Nevada was merged with and into DMRX and the separate corporate
existence of GPN-Nevada ceased in a transaction referred to as a "reverse
acquisition." Simultaneously with the merger, the name of DMRX was changed to
GoPublicNow.com ("GPN" or the "Company"), and all the outstanding shares of
common stock of GPN-Nevada were exchanged on a one-for-one basis for shares of
common stock of the Company. Immediately prior to the merger, the common stock
of DMRX was reduced by a one for five reverse stock split.
Notice of the merger and the reverse stock split was sent to all of the
shareholders of DMRX on a Schedule 14C information which was first mailed to
shareholders on or about March 15, 2000.
The Acquisition Agreement was adopted by the unanimous consent of the Board
of Directors of GPN-Nevada and DMRX on February 24, 2000. A written consent of
the shareholders of GPN-Nevada and DMRX was also adopted by the shareholders of
those corporations on February 24, 2000. In accordance with SEC rules, after
mailing the Schedule 14C information statement, the shareholder approval for
DMRX was effective on April 5, 2000.
Prior to the Acquisition Agreement, DMRX had 2,019,900 shares of common
stock outstanding. At the time of the merger and subsequent to the reverse
stock split, DMRX had 750,080 shares outstanding. By virtue of the merger, the
shareholders of GPN-Nevada acquired 10,326,123 shares of the Company and
consequently obtained majority control of the issued and outstanding common
stock of the combined entities. The total issued and outstanding shares of the
combined entities subsequent to the merger was 11,076,203 shares.
The officers of GPN-Nevada continued as officers of GPN subsequent to the
merger. See "Management" below. The officers, directors, and by-laws of GPN
will continue without change.
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(b) The following table sets forth certain information regarding beneficial
ownership of the common stock of GPN as of the date hereof by:
each person or entity known to own beneficially more than 5% of the common
stock;
each of GPN's directors;
each of GPN's named executive officers; and
all executive officers and directors of GPN as a group.
Name and Address of Amount and Nature of Beneficial Percent of
Title of Class . . . . . . . . . . . . . . Beneficial Owner (1) Ownership Class (2)
- ------------------------------------------ ---------------------- -------------------------------- -----------
Common Stock . . . . . . . . . . . . . . . Bruce A. Berman (3) 8,000,000 72.2%
- ------------------------------------------ ---------------------- -------------------------------- -----------
Common Stock . . . . . . . . . . . . . . . Marcus Hurlburt 500,000 4.5%
- ------------------------------------------ ---------------------- -------------------------------- -----------
Common Stock . . . . . . . . . . . . . . . Eric Hopkins (4) 0 0.0%
- ------------------------------------------ ---------------------- -------------------------------- -----------
Common Stock . . . . . . . . . . . . . . . Jeffrey M. Diamond (5) 5,000 *
- ------------------------------------------ ---------------------- -------------------------------- -----------
Common Stock All Officers and Directors as a Group 8,505,000 76.8%
(4 persons)
1. Unless otherwise referenced, the address for each of these shareholders
is c/o GoPublicNow.com, Inc., 5000 Birch Street, West Tower, Suite 4900, Newport
Beach, CA 92660.
2. Based on a total of 11,076,203 shares issued and outstanding.
3. Mr. Berman's shares are held by The Berman Family Trust but owned
beneficially by Mr. Berman.
4. Does not include options to purchase 200,000 shares at $3.75 per share
which are not presently exercisable.
5. Reflects options to purchase 5,000 shares at $3.75 per share. Does not
include options to purchase 50,000 shares at $3.75 per share which are not
presently exercisable.
* Less than 1%
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) The consideration exchanged pursuant to the Acquisition Agreement was
negotiated between the shareholders of DMRX, DMRX and GPN-Nevada.
In evaluating GPN-Nevada as a candidate for the proposed acquisition, DMRX
and its shareholders used criteria such as GPN-Nevada's proposed internet
financial services business (as set forth more fully below under "Business")
and other anticipated operations, and GPN-Nevada's and its principal's business
name and reputation. DMRX and GPN-Nevada determined that the consideration for
the merger was reasonable.
(b) GPN as the combined entity intends to continue its historical
businesses and proposed businesses as set forth more fully immediately below.
The historical business and operations of DMRX shall no longer be continued by
GPN.
BUSINESS
GoPublicNow.com ("GPN"), is a Nevada Corporation headquartered in Newport
Beach, California. The Company was initially formed in December 1999 and began
generating business in April 2000.
INDUSTRY
The number of companies going public and requiring access to capital has
significantly increased in recent years (see Industry Description and Trends
below). There is also significant growth in the use of the Internet for
offering efficient business-to-business commerce. GPN intends to offer a
variety of financial consulting services targeted toward this market.
OPERATIONS OVERVIEW
When fully operational, GPN's operations will consist of three major
components. First is a network of financial service providers that can satisfy
many of the demands of companies desiring to go public or needing access to
capital or GPN's advanced business services. Second is a unique, interactive
web portal site that can serve as the conduit between the clients, the financial
service providers and GPN, allowing benefits for all parties. Third, the
Company effectively becomes an emerging growth company incubator.
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REVENUE
GPN intends to derive revenue from a number of sources. First, client
companies that wish to become members of the site and access premium online
content will pay a membership fee. Second, to the extent permissible under
applicable regulations, the Company will be paid a small percentage (or
finder's fee') for any business services that are placed through our site.
Third, the Company will receive an equity position in companies that become
public in three years that are a member of GPN's site.
The Company's primary website will be www.gopublicnow.com. GPN presently
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owns the following Internet URL's designed to protect the value of its website:
WWW.GOPUBLICNOW.COM
WWW.GOPUBLICNOW.NET
WWW.GOPUBLICNOW.ORG
WWW.2GOPUBLICNOW.COM
WWW.2GOPUBLICNOW.NET
WWW.2GOPUBLICNOW.ORG
WWW.4BUSINESSNOW.COM
WWW.4BUSINESSNOW.NET
WWW.4BUSINESSNOW.ORG
WWW.GOPUBLICNETWORK.COM
WWW.GOPUBLICNETWORK.NET
GPN recognized the importance of protecting its intellectual property. Our
legal counsel is in the process of seeking to register with the US Patent and
Trademark Office for service marks for the following:
Go Public
Go Public Now
Go Public Network
SERVICES OFFERED
GPN intends to offer a single source financing solution to any qualified
business that wants to become public or obtain capital, as well as provide other
related services to existing public companies.
GoPublicNow.com will target companies that are seeking capital and intend
to go public, as well as licensed investment bankers and brokers, etc that are
interested in these types of companies.
Specific web addresses will be targeted toward different audiences,
however, with the exception of the front-end of the site, services will be
equally available to all addresses.
GPN intends to offer the following services:
Free Services
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As a financial Internet portal site, provide free access to timely
financial information in a customizable, easy-to-use format. This information
may include some or all of the following:
- - Stock quotes
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Stock ticker
Market news
Information about Going Public B i.e. IPO's, mergers, shell mergers, etc.,
including strategy, timing and costs.
Information about different types of financial programs - i.e. private
placements, secondary offerings, DPO's, Internet offerings, etc.
The web site will also provide a unique interactive business questionnaire
that will assess whether a candidate company has the potential to Go Public Now.
If the candidate company is qualified through the questionnaire to go public in
accordance with criteria determined by GPN, the site will notify GPN. If a
candidate company does not meet minimum criteria necessary to become a public
company, the site will explain its reasoning to the candidate company and will
offer the candidate company the ability to contact GPN to discuss further
options.
Professional service providers, including accountants, attorneys, PR and IR
firms, web site designers, etc., will be able to utilize the web site's referral
service feature.
ALTHOUGH THESE FEATURES ARE FREE TO THE CLIENT, GPN (IN MOST CASES) WILL RECEIVE
FEES FROM THE SERVICE PROVIDERS. (SEE PRICING STRATEGY).
Premium Services
-----------------
Listing companies and their financing needs for potential investment under
appropriate regulatory guidelines on the website.
Submitting listed companies to investment sources that are registered on
the Company's website whose financial products match the company's
unique profile.
Evaluating businesses and providing them with a strategy to prepare them
for going public.
Potential investment by a proprietary proposed incubator bridge/venture in
select companies.
THE COMPANY INTENDS TO CHARGE FOR THESE PREMIUM SERVICES IN EXCHANGE FOR CASH
AND STOCK. (SEE PRICING STRATEGY).
PRICING STRATEGY
GPN intends to develop a pricing strategy which derives revenues from
member companies as well as from service providers.
MEMBER COMPANIES WILL BE CHARGED THE FOLLOWING:
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$500 client membership fee for access to all premium services.
3% equity interest in client company if client company is a start-up, 2% if
client company is pre-IPO with less than $1 million in annual sales, and 1% if
client company is pre-IPO with over $1 million in annual sales.
Most Investment Bankers charge $25,000 to $50,000 initial fees for due
diligence and expenses without guaranteeing a successful financing. GPN's $500
fee allows companies to access a wide variety of financial services at a
fraction of the cost.
SERVICE PROVIDERS WILL BE CHARGED THE FOLLOWING:
------------------------------------------------------
Up to 10% of fees collected by PR and IR firms.
Up to 10% finder's fee for web design services.
Up to 10% fee from media referrals.
Banner / web advertising fees to be determined under market conditons.
These referral fees are relatively standard in the various industries. By
combining financial services in a "one-stop-shop" format, the Company will
potentially be in the position of being able to receive fees from a broad range
of providers at the same time as well as obtaining favorable pricing for client
companies.
QUALITY CONTROL
GPN's Management, based on years of combined investment experience, has
developed a series of multiple choice questions and answers for GPN's
interactive web site questionnaire. The questions are designed to analyze
companies for listing on the GPN web site that meet the criteria generally
necessary to become a public company, and to explain to companies that do not
presently meet the criteria why they are not a candidate to GoPublicNow.com.
GPN's screening process for reliable service providers has been developed from
years of Management's experience providing like services.
MARKETING
GPN intends to create a Web-enabled marketplace that targets companies
seeking capital as well as investors, fund managers and other business services
resources. By combining Management's experience in the corporate finance and
IPO marketplace with the exponential growth of the Internet, GPN may provide a
global network of clients with a comprehensive "one-stop-shop" for finding and
utilizing financial business services. The Company is positioned to provide
market leadership in this rapidly growing industry sector due to the Management
team's background and track record of performance in the financial marketplace.
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GPN's operations will consist of two major components: first, a network of
financial service providers with wide ranging experience in servicing the IPO
marketplace; second, a unique, interactive website that serves as a value-added
conduit between GPN and its clients, thus allowing both parties to communicate,
collaborate and partner.
A key component to the Company's launch strategy is to quickly build brand
awareness for the GoPublicNow.com website through advertising, publicity and
cross-promotional campaigns. GPN hopes to have a competitive advantage due to
the following:
Being early to market and establishing a commanding client base
Maintaining high quality financial service providers
Maintaining a broader range of financial service offerings than other sites
Maintaining marketing to maximize web site awareness and traffic
Utilizing economies of scale to reduce costs, increase margins, and
negotiate preferential agreements
In order to drive users to the Go Public web site, the Company plans to do
the following:
Utilize internet marketing via banner ads, link swapping, co-promotions,
etc.
Utilize traditional marketing programs such as business print ads and
business radio ads.
Attend Investment Banking and Business Development trade shows and
conferences.
Telemarket to investment banking firms and strategic partners.
Telemarket to and/or email follow-up on site visitors through database
management.
Market Assessment & Analysis
As much as $24 billion in fresh funding flowed from Venture Capital firms
to startup companies in 1998, according to The National Association of Venture
Capitalists. According to the Los Angeles Times, investors poured $65 billion
into first time stock offerings in 1999. Twenty First Century Internet Venture
Partners claims they receive approximately 1,600 business plans each year and
are only able to fund no more than four or five of them. Due to GPN's potential
resources, as well as the proposed online screening process, the Company could
theoretically be able to relatively efficiently take those 1,600 or 7,550
business plans and shop them to multiple venture funds.
International Potential
GPN recognizes that one of the greatest advantages of the Internet is to
lower global boundaries and allow direct personal contact between individuals
and businesses around the world. A key advantage of business-to-business
financing over the Internet is that it removes layers of middlemen that
traditionally exist in current international financing operations. GPN will be
well positioned to assist international companies in accessing US capital. In
the future, the Company expects to offer targeted services for international
clients, and expects to have multiple versions of its web site online featuring
foreign languages and personalized content for different countries and cultures.
8
REGULATORY ISSUES
The Company will be subject to state and federal regulation with respect to
securities, as well as rules and regulations with respect to certain of the
services it provides. In order to better resolve some of those regulatory
issues, and to support the wide variety of services GPN plans to offer the
companies, GPN intends to acquire or establish a NASD licensed broker/dealer.
The Company's Management presently has the experience and licenses necessary to
perform some broker/dealer services.
COMPETITION
The market for capital and financing resources for emerging growth
companies is intensely competitive. Additionally, the Company competes in an
industry segment in which numerous competitors exist that have substantially
greater resources than the Company. There are several companies that have a
meaningful presence on the Internet to provide capital to emerging growth
companies, such as Idealabs, Garage.com, and Twenty First Century Internet
Venture Partners. There can be no assurance that existing or potential
competitors of the Company will not develop products equal to or better than
those marketed by the Company. Numerous smaller competitors also exist in this
industry. They tend to be: (i) Specialized (and only offer one type of
financing service); (ii) Traditional (non-Internet, face-to-face operators) or
(iii) Small scale B only able to accommodate a few clients each year. The
Company does not anticipate directly competing with conventional financing
sources. The Company intends to welcome any and all legitimate financing
sources to participate in clients financing needs. The Company will receive a
fee for any financing that comes through the GPN Network.
PROPERTIES
GPN currently subleases 3,460 square feet at 5000 Birch St., West Tower,
Suites 4600 and 4900, Newport Beach, CA 92660 at a cost of $8,650 per month.
EMPLOYEES
GPN presently has 20 employees, of which 8 are in management. GPN believes
its relations with its employees are good.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has funded its capital requirements through
funding from its founder and from private equity financing. As of April 17,
2000, the Company's sources of liquidity included cash of approximately $2.3
million.
9
In December 1999 and January 2000, the Company funded its initial capital
requirements through the sale of securities to private investors in a private
bridge offering generating a total of $1.35 million. The bridge offering sold
541,800 units at $2.50 per unit, with each unit consisting of one share of
common stock, one warrant to purchase one share of common stock at $7.50 per
share and one warrant to purchase one share of common stock at $10.00 per share.
Through April 2000 , the Company raised an additional $2.13 million via a
private placement of approximately 569,000 Units at $3.75 per Unit, with each
Unit consisting of one share of Common Stock, one Warrant to purchase one share
of Common Stock at $7.50 per share, and one Warrant to purchase one share of
Common Stock at $10.00 per share.
The Company believes that proceeds from its bridge financing and private
placement funds will be sufficient to cover working capital requirements for at
least 12 months. Should revenue levels expected by the Company not be achieved,
the Company would require additional financing during such period to support its
operations, continued expansion of its business and acquisition of technologies.
Such sources of financing could include capital infusions from strategic
partners of the Company, additional equity financings or debt offerings. The
Company has made no arrangements or commitments for such financing and there can
be no assurance that the Company will be able to obtain such financing on
satisfactory terms, if at all.
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MARKET FOR GPN SECURITIES
GPN's common stock is presently traded on the OTC Bulletin Board operated by
Nasdaq under the symbol "GNOW". Prior to April 6, 2000, the Company's common
stock traded under the symbol "DMRX". The following table sets forth the high
and low closing prices for shares of GPN common stock for the periods noted, as
reported by the National Daily Quotation Service and the Over-The-Counter
Bulletin Board. Quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions.
CLOSING PRICES
YEAR . .PERIOD HIGH LOW
- ---- ------ ------- ------
2000 First quarter $ 3.75 $ 0.08
Second quarter (through April 18) $ 6.63 $ 0.75
1999 First quarter $ 67.38 $ 1.48
Second quarter $ 24.90 $ 6.25
Third quarter $ 2.25 $ 0.75
Fourth quarter $ 3.12 $ 0.05
1998 Second quarter $ 29.78 $21.48
Third quarter $ 32.72 $20.02
Fourth quarter $ 21.48 $ 0.50
On September 1, 1999, the Company effected a one for five reverse split of
its Common Stock. Effective April 5, 2000, the Company effected an additional
one for five reverse split of its Common Stock. The table above has been
adjusted to reflect the cumulative effect of these splits.
The number of beneficial holders of record of GPN common stock as of the
date of the merger was approximately 300. Many of the shares of GPN's common
stock are held in "street name" and consequently reflect numerous additional
beneficial owners.
In addition to freely tradeable shares, GPN has a minimum of 10,325,123
shares of common stock outstanding which could be sold pursuant to Rule 144
after completion of the appropriate holding period. In general, under Rule
144, subject to the satisfaction of certain other conditions, a person,
including our affiliates, who has beneficially owned restricted shares of common
stock for at least one year would become entitled to sell, in certain brokerage
transactions, within any three-month period, a number of shares that does not
exceed the greater of 1% of the total number of outstanding shares of the same
class, or the average weekly trading volume during the four calendar weeks
immediately preceding the sale. A person who presently is not and who has not
been an affiliate for at least three months immediately preceding the sale and
who has beneficially owned the shares of common stock for at least two years is
entitled to sell such shares under Rule 144 without regard to any of the volume
limitations described above.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names and ages of the current directors
and executive officers of GPN who will remain so with the combined entity, their
principal offices and positions and the date each such person became a director
or executive officer. Our executive officers are elected annually by the Board
of Directors. Our directors serve one year terms until their successors are
elected. The executive officers serve terms of one year or until their death,
resignation or removal by the Board of Directors. There are no family
relationships between any of the directors and executive officers. In addition,
there was no arrangement or understanding between any executive officer and any
other person pursuant to which any person was selected as an executive officer.
Our directors and executive officers are as follows:
The Officers, Directors and Executive Management of the Company are as
follows:
Name Age Positions
---- --- ---------
BRUCE BERMAN 42 Founder, President,
Chief Executive Officer and Chairman
ERIC HOPKINS 45 Chief Financial Officer and
Treasurer
MARCUS HURLBURT 40 Vice President, Broker Relations
JEFFREY M. DIAMOND 34 Chief Technical Officer and
Secretary
BRUCE BERMAN, first worked in the emerging growth finance industry, forming
his first finance company at age 23. After generating substantial success and
arranging a successful buyout of his finance company, Mr. Berman co-founded
a renewable energy company in the mid 1980s. Mr. Berman then went on in 1994
to establish the Michelson Group, Inc., a corporate development firm that has
successfully assisted companies in their quest to become public entities. Mr.
Berman has decided to share and utilize his knowledge, skills and experience
through his current innovation, GoPublicNow.com., which he founded in late 1999.
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ERIC HOPKINS, worked most recently as the Director of Finance for
Unisys-PulsePoint Communications, a NASDAQ manufacturer of telecommunications
products. At Unisys-PulsePoint, Hopkins focused his efforts in stockholder and
lender relations, private equity placements, debt negotiation, and became a
major participant in the company's acquisition by Unisys Corporation. Prior
to his job at Unisys-PulsePoint, Mr. Hopkins served as the Chief Financial
Officer at Tanknology Environmental International, a publicly traded
environmental services company. Hopkins, a CPA, spent several years in public
accounting in both large and small firms. He began his career with Motel 6
L.P., where he worked for more than twelve years in both finance and field
operations. He graduated from Kent State University with a B.A. in accounting
and obtained his MBA from Pepperdine University.
MARCUS HURLBURT, is a Registered Securities Principal with a series 24, 7,
22 and 63 licenses. He has over 10 years of experience as an Investment Banker
assisting emerging growth companies with corporate development and capital
finance. Mr. Hurlburt has been the Executive Vice President and Branch Manager
of the corporate headquarters and Director of Investment Banking for an Irvine
based Broker Dealership in California.
JEFFREY M. DIAMOND, has worked as an Information Technology (IT)
professional since 1982. He founded a Southern California programming company
that expanded into Local Area Networking (LAN) and Wide Area Networking (WAN)
consulting services. After experiencing success in these endeavors, he left his
firm to become the Director of Client Services for a major Novell Networking
firm in Los Angeles. Continuing his IT career, Mr. Diamond maintained the
positions of IT director for a premier Hilton Hotels Resort property as well as
the position of the IT director for a Los Angeles area business law firm. In
1994, Mr. Diamond formed QuickNet, Inc., an Internet-centric Digital Engineering
firms. In 1999, Jeff successfully negotiated the sale of QuickNet Corporation
and its Intellectual Property holdings. Mr. Diamond, a UCI graduate, holds
undergraduate degrees in both Computer Science and Political Science. He
continued his formal education earning a Juris Doctor in law and is a licensed
California attorney with an emphasis in business law and negotiation.
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EXECUTIVE COMPENSATION
Bruce Berman, the Company's Founder, President and Chief Executive Officer,
receives an annual salary of $120,000. When the Company's market capitalization
reaches $140 million, his salary will be increased to $180,000 annually through
2000. Mr. Hurlburt receives a salary of $95,000 annually. The Company
currently reimburses Management for expenses and costs associated with its
operations and provides auto lease allowances to its officers.
The Company has an employment agreement with Eric Hopkins, its Chief
Financial Officer. Pursuant to that Agreement, Mr. Hopkins receives $100,000
in salary for his first year and $120,000 in salary for his second year. Mr.
Hopkins also received options to purchase 200,000 shares of common stock at
$3.75 per share. These options vest monthly over a two-year period.
Jeffrey M. Diamond, Chief Technical Officer, receives a salary of $100,000
annually. He also received options to acquire 5,000 shares of Common Stock at
$3.75 per share as a signing bonus and options to purchase an additional 50,000
shares of Common Stock at $3.75 per share which will vest on a pro rata monthly
basis over a one-year period.
The Company has not had a bonus, profit sharing or deferred compensation
plan for the benefit of its employees, officers or directors.
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DESCRIPTION OF SECURITIES
COMMON STOCK
The Company's Articles of Incorporation authorize the issuance of
100,000,000 shares of common stock, $0.001 par value per share. The holders of
each share of common stock (i) have equal rights to dividends from funds legally
available therefore, when, as and if declared by the Company's Board of
Directors, (ii) are entitled to share in all assets of the Company available for
distribution, (iii) do not have pre-emptive, subscription or conversion rights
and (iv) are entitled to one non-cumulative vote at all shareholder meetings.
All shares of common stock now outstanding are fully paid for and
non-assessable and all shares of common stock which are the subject of this
Offering, when issued, will be fully paid for and non-assessable.
Stockholders have no cumulative voting rights, which means that
Stockholders owning more than 50% of the outstanding stock can vote to elect all
directors. Accordingly, the remaining Stockholders would not be able to elect
any of the Company's directors.
PREFERRED STOCK
The Company is authorized to issue up to 10,000,000 shares of Preferred
Stock, par value $.001 per share. The preferred stock of the Company can be
issued in one or more series as may be determined from time to time by the Board
of Directors without further stockholder approval. In establishing a series the
Board of Directors shall give to it a distinctive designation so as to
distinguish it from the shares of all other series and classes, shall fix the
number of shares in such series, and the preferences, rights and restrictions
thereof. All shares of any one series shall be alike in every particular. All
series shall be alike except that there may be variation as to the following:
(1) the rate of distribution, (2) the price at and the terms and conditions on
which shares shall be redeemed, (3) the amount payable upon shares for
distributions of any kind, (4) sinking fund provisions for the redemption of
shares, and (5) the terms and conditions on which shares may be converted if the
shares of any series are issued with the privilege of conversion, and (6) voting
rights except as limited by law. There is presently no preferred stock issued
or outstanding.
COMMON STOCK DIVIDENDS
The Company does not presently anticipate that it will pay dividends on its
Common Stock at any time in the foreseeable future. The payment of dividends
will depend, among other things, upon the earnings, assets, general financial
condition, and other factors. In the event that the Company successfully
completes a merger or acquisition as contemplated hereunder, the Management of
the acquired company will, in all likelihood, have sole and exclusive authority
to determine whether Common Stock dividends will be paid thereafter.
15
RISK FACTORS
DEVELOPMENT STAGE COMPANY. The Company is a development stage enterprise,
as defined by generally accepted accounting principles. The Company was
incorporated in December 1999 and has generated nominal revenue to date. Its
primary activities to date have been capital formation, the development of its
web page and marketing research. The Company's success is dependent upon the
successful development and marketing of its financial network through the
internet, as to which there is no assurance. Unanticipated problems, expenses
and delays are frequently encountered in establishing a new business and
developing new products. These include, but are not limited to, lack of
consumer acceptance, competition, product development, and inadequate sales and
marketing. The failure of the Company to meet any of these conditions would
have a materially adverse effect upon the Company and may force the Company to
reduce or curtail operations. No assurance can be given that the Company can or
will ever operate profitably.
FUTURE CAPITAL NEEDS. To date the Company has relied on funding from its
founder, from bridge financing and from the proceeds of a private placement to
fund operations. The Company raised gross proceeds of approximately $3.5
million in its private placements. To date, the Company has generated nominal
revenue and the Company has limited cash liquidity and capital resources. The
Company's future capital requirements will depend on many factors, including the
Company's ability to market its web site successfully, cash flow from
operations, and competing market developments. The Company's business plan
requires additional funding beyond its present resources. Consequently,
although the Company currently has no specific plans or arrangements for
financing, the Company intends to raise additional funds subsequent to this
Offering through private placements, public offerings or other financings. Any
equity financings would result in dilution to the Company's then-existing
stockholders. Sources of debt financing may result in higher interest expense.
Any financing, if available, may be on terms unfavorable to the Company. If
adequate funds are not obtained, the Company may be required to reduce
operations. The Company anticipates that its existing capital resources,
together with the net proceeds of this Offering, will be adequate to satisfy its
operating expenses and capital requirements for twelve months.
REGULATION IN THE SECURITIES AND MERGERS AND ACQUISITIONS INDUSTRY. The
industry in which the Company intends to operate is subject to extensive
regulation on the federal, state and local levels. Among other regulations,
Company securities offerings are subject to rules and regulations of the
Securities and Exchange Commission and State "blue sky" authorities. The
Company believes that it will be required to structure its operations and fee
structures in accordance with applicable state and federal securities laws.
There can be no assurance as to what, if any, future actions such legislative
and regulatory authorities may take or the effect thereof on the industry or the
Company.
16
COMPETITION. The market for capital and financing resources for emerging
growth companies is marked by numerous small, as well as large, competitors.
Additionally, the Company competes in an industry segment in which numerous
competitors exist that have substantially greater resources than the Company.
There are several companies that have a meaningful presence on the Internet to
provide capital to emerging growth companies such as Idealabs, Garage.com, and
Twenty First Century Internet Venture Partners. There can be no assurance that
existing or potential competitors of the Company will not develop products equal
to or better than those marketed by the Company. The Company does not
anticipate directly competing with conventional financing sources. The Company
intends to welcome any and all legitimate financing sources to participate in
its clients financing needs.
INTERNET RELATED RISKS. The Company is subject to federal, state, and
local laws concerning the conduct of business on the Internet. Today, there are
relatively few laws specifically directed towards online services. However, due
to the increasing popularity and use of the Internet and online services, it is
possible that laws and regulations will be adopted with respect to the Internet
or online services. These laws and regulations could cover issues such as
online contracts, user privacy, freedom of expression, pricing, fraud, content
and quality of products and services, taxation, advertising, intellectual
property rights and information security. Applicability to the Internet of
existing laws governing issues such as property ownership, copyrights and other
intellectual property issues, taxation, libel, obscenity and personal privacy is
uncertain. The vast majority of these laws were adopted prior to the advent of
the Internet and related technologies and, as a result, do not contemplate or
address the unique issues of the Internet and related technologies.
DEPENDENCE ON MANAGEMENT. The Company's success depends, to a significant
extent, upon certain key employees and directors, including primarily Bruce A.
Berman. The loss of services of one or more of these employees could have a
material adverse effect on the business of the Company. In addition, the
Company has a substantial need for additional qualified management and marketing
personnel. The Company believes that its future success will also depend in
part upon its ability to attract, retain and motivate qualified personnel.
There can be no assurance that the Company will be successful in attracting and
retaining such personnel. Competition for such personnel is intense. The
Company does not maintain a policy of key man life insurance on any employees.
PROTECTION OF PROPRIETARY INFORMATION. Currently, the Company does not
hold patents or trademarks on any of its names, products or processes under
development. The Company is presently seeking trademark protection of certain
of its names and logos. The Company treats its technical data as confidential
and relies on internal nondisclosure safeguards, as well as on laws protecting
trade secrets, to protect its proprietary information. There can be no
assurance that these measures will adequately protect the confidentiality of the
Company's proprietary information or that others will not independently develop
products or technology that are equivalent or superior to those of the Company.
The Company may receive in the future communications from third parties
asserting that the Company's products infringe the proprietary rights of third
parties. There can be no assurance that any such claims would not result in
protracted and costly litigation, having a materially adverse and negative
effect on the Company and its financial results.
17
DIFFICULTY OF PLANNED EXPANSION; MANAGEMENT OF GROWTH. The Company plans
to expand its level of operations. The Company's operating results will be
adversely affected if net sales do not increase sufficiently to compensate for
the increase in operating expenses caused by this expansion. In addition, the
Company's planned expansion of operations may cause significant strain on the
Company's management, technical, financial and other resources. To manage its
growth effectively, the Company must continue to improve and expand its existing
resources and management information systems and must attract, train and
motivate qualified managers and employees. There can be no assurance, however,
that the Company will successfully be able to achieve these goals. If the
Company is unable to manage growth effectively, its operating results will be
adversely affected.
CONTROL BY OFFICERS AND DIRECTORS. The officers and directors of the
Company beneficially own or control 8,500,000 shares of the Company's
outstanding Common Stock, or 76.8% of the issued and outstanding Common Stock.
As a result, such persons may be able to elect a majority of the Company's Board
of Directors, to dissolve, merge, or sell the assets of the Company, and to
direct and control the Company's operations, policies and business decisions.
See "Principal Stockholders."
LACK OF DIVIDENDS. The Company does not intend to declare or pay any
dividends on its outstanding shares of Common Stock in the foreseeable future.
THE SECURITIES ENFORCEMENT AND PENNY STOCK REFORM ACT OF 1990; RISKS OF
LOW-PRICED STOCKS. The Securities Enforcement and Penny Stock Reform Act of
1990 requires additional disclosure relating to the market for penny stocks in
connection with trades in any stock defined as a penny stock. The Commission
has adopted regulations that generally define a penny stock to be any equity
security that has a market price of less than $5.00 per share, subject to
certain exceptions. Such exceptions include any equity security listed on
Nasdaq and any equity security issued by an issuer that has (i) net tangible
assets of at least $2,000,000, if such issuer has been in continuous operation
for three years, (ii) net tangible assets of at least $5,000,000, if such issuer
has been in continuous operation for less than three years, or (iii) average
annual revenue of at least $6,000,000, if such issuer has been in continuous
operation for less than three years. Unless an exception is available, the
regulations require the delivery, prior to any transaction involving a penny
stock, of a disclosure schedule explaining the penny stock market and the risks
associated therewith.
SHARES ELIGIBLE FOR FUTURE SALE. Approximately 10,326,123 of the Company's
Common Stock are "restricted securities," and under certain circumstances may,
in the future, be sold in compliance with Rule 144 adopted under the Securities
Act. In general, under Rule 144, subject to the satisfaction of certain other
conditions, a person, including an affiliate of the Company, who has
beneficially owned restricted shares of Common Stock for at least one year is
entitled to sell, in certain brokerage transactions, within any three-month
period, a number of shares that does not exceed the greater of 1% of the total
number of outstanding shares of the same class, or if the Common Stock is quoted
on Nasdaq or a stock exchange, the average weekly trading volume during the four
calendar weeks immediately preceding the sale. A person who presently is not
and who has not been an affiliate of the Company for at least three months
immediately preceding the sale and who has beneficially owned the shares of
Common Stock for at least two years is entitled to sell such shares under Rule
144 without regard to any of the volume limitations described above.
18
AUTHORIZATION OF ADDITIONAL SHARES OF COMMON STOCK. The Company's Articles
of Incorporation authorize the issuance of up to 100,000,000 shares of Common
Stock. The Company's Board of Directors has the authority to issue additional
shares of Common Stock and to issue options and warrants to purchase shares of
the Company's Common Stock without shareholder approval. Future issuance of
Common Stock could be at values substantially below the Offering Price in the
Offering and therefore could represent further substantial dilution to investors
in the Offering. In addition, the Board could issue large blocks of voting
stock to fend off unwanted tender offers or hostile takeovers without further
shareholder approval.
AUTHORIZATION OF PREFERRED STOCK. The Company's Articles of Incorporation
authorize the issuance of up to 10,000,000 shares of Preferred Stock in one or
more series. The Company's Board of Directors has the authority to fix the
number of shares and to determine or alter for each such series, such voting
powers, full or limited, or no voting powers, and such designations,
preferences, and relative, participating, optional, or other rights and such
qualifications, limitations, or restrictions thereof, as shall be stated and
expressed in the resolution or resolutions adopted by the Board of Directors
providing for the issue of such shares. The Board of Directors is also
authorized to increase or decrease (but not below the number of shares of such
series then outstanding) the number of shares of any series subsequent to the
issue of shares of that series.
FORWARD LOOKING STATEMENTS AND ASSOCIATED RISKS. This Form 8-K contains
certain forward-looking statements, including among others: (i) the projected
sales growth of the Company's products; (ii) anticipated trends in the Company's
financial condition and results of operations; (iii) the Company's business
strategy and (iv) the Company's ability to distinguish itself from its current
and future competitors. These forward-looking statements are based largely on
the Company's current expectations and are subject to a number of risks and
uncertainties. Actual results could differ materially from these
forward-looking statements. In addition to the other risks described elsewhere
in this "Risk Factors" discussion, important factors to consider in evaluating
such forward-looking statements include: (i) changes to external competitive
market factors or in the Company's internal budgeting process which might impact
trends in the Company's results of operations; (ii) anticipated working capital
or other cash requirements; (ii) changes in the Company's business strategy or
an inability to execute its strategy due to unanticipated changes in the
industry; and (iv) various competitive factors that may prevent the Company from
competing successfully in the marketplace. In light of these risks and
uncertainties, many of which are described in greater detail elsewhere in this
"Risk Factors" discussion, there can be no assurance that the events predicted
in forward-looking statements contained in this Form 8-K will in fact,
transpire.
IN ADDITION TO THE FOREGOING RISKS, BUSINESSES ARE OFTEN SUBJECT TO RISKS THAT
ARE NOT FORESEEN OR FULLY APPRECIATED BY MANAGEMENT. POTENTIAL INVESTORS SHOULD
KEEP IN MIND THAT OTHER IMPORTANT RISKS COULD ARISE.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
19
As of the date of the Merger, Paul C. Roberts, Certified Public
Accountant, the independent accountant previously engaged as the principal
accountant to audit the financial statements of DermaRx Corporation was
terminated. As of the same date, the firm of Miller & McCollom was engaged as
the independent accountant for the DermaRx Corporation for the year ended
February 29, 2000 and the firm of Corbin & Wertz was engaged as the independent
accountant for GoPublicNow.com for the period ended March 31, 2000.
The audit reports of Paul C. Roberts on the financial statements of
DermaRx Corporation did not contain any adverse opinion or disclaimer of
opinion, nor were they qualified or modified as to audit scope or accounting
principles. The decision to change accountants was approved by the board of
directors of the Company. During DermaRx Corporation's two most recent fiscal
years and any subsequent interim period preceding the change, there were no
disagreements with the former accountant on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of the
former accountant, would have caused it to make reference to the subject
matter of the disagreements in connection with its report.
ITEM 5. OTHER EVENTS
Not applicable.
ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
Not applicable.
ITEM 7(a). FINANCIAL STATEMENTS
GOPUBLICNOW.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
WITH
INDEPENDENT AUDITORS' REPORT THEREON
INDEPENDENT AUDITORS' REPORT
----------------------------
Board of Directors
GoPublicNow.com, Inc.
We have audited the accompanying consolidated balance sheet of GoPublicNow.com,
Inc. and subsidiary, (a development stage company) (the "Company") as of March
31, 2000, and the related consolidated statements of operations, stockholders'
equity (deficit) and cash flows for the period from December 2, 1999 (date of
inception) through March 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 audit.
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 audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
March 31, 2000, and the results of their operations and their cash flows for the
period from December 2, 1999 (date of inception) through March 31, 2000 in
conformity with generally accepted accounting principles.
CORBIN & WERTZ
Irvine, California
May 9, 2000
F-1
GOPUBLICNOW.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
ASSETS MARCH 31, 2000
Current assets:
Cash and cash equivalents $2,763,677
Marketable equity securities 271,681
-----------
Total current assets 3,035,358
Property and equipment, net of accumulated depreciation of $1,970 55,528
Capitalized web site development cost 97,736
Other assets 16,499
-----------
$3,205,121
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 80,807
Deferred revenue 259,466
-----------
Total liabilities 340,273
-----------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized;
no shares outstanding -
Common stock, $0.001 par value; 50,000,000 shares authorized;
10,219,472 shares issued and outstanding (including 551,672 shares
committed but not issued) 10,220
Additional paid-in capital 3,198,065
Deferred compensation (17,187)
Accumulated other comprehensive income 17,715
Deficit accumulated during the development stage (343,965)
-----------
Total stockholders' equity 2,864,848
-----------
$3,205,121
===========
See independent auditors' report and
accompanying notes to consolidated financial statements
F-2
GOPUBLICNOW.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF OPERATIONS
DECEMBER 2, 1999
(DATE OF INCEPTION)
THROUGH
MARCH 31, 2000
Net revenues $ -
------------------
Operating expenses:
Employee compensation 126,232
Selling, general and administrative expenses 224,293
------------------
Total operating expenses 350,525
------------------
Operating loss (350,525)
Other income (expense):
Interest income 7,360
------------------
Loss before provision for taxes (343,165)
Provision for taxes 800
------------------
Net loss (343,965)
Other comprehensive income - unrealized gain on marketable
equity securities, net of tax of $0 17,715
------------------
Comprehensive loss $ (326,250)
==================
Basic and diluted net loss per common share $ (0.04)
==================
Basic and diluted weighted average common shares outstanding 9,521,819
==================
See independent auditors' report and
accompanying notes to consolidated financial statements
F-3
GOPUBLICNOW.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM DECEMBER 2, 1999 (DATE OF INCEPTION)
THROUGH MARCH 31, 2000
Deficit
Accumulated Accumulated
Additional Other During The Total
Common Stock Paid-in Deferred Comprehensive Development Stockholders'
Shares Amount Capital Compensation Income Stage Equity
Balance, December 2, 1999 (date
of inception) - $ - $ - $ - $ - $ - $ -
Founders' capital contribution on
December 3, 1999 8,775,000 8,775 (8,275) - - - 500
Estimated fair market value of 201,000
shares of common stock issued to
employees on December 3, 1999 201,000 201 50,049 (17,187) - - 33,063
Sale of 541,800 shares of common stock
at $2.50 per share on December
10, 1999 through January 17, 2000,
net of offering costs of $87,050
(including 150,000 shares
issued to consultants and
finders) 691,800 692 1,266,758 - - - 1,267,450
Sale of 551,672 shares of common stock
at $3.75 per share on January 18,
2000 through March 31, 2000,
net of offering costs of
$187,343 551,672 552 1,880,875 - - - 1,881,427
F-4
GOPUBLICNOW.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM DECEMBER 2, 1999 (DATE OF INCEPTION)
THROUGH MARCH 31, 2000
Estimated fair market value of
warrants granted to consultant - - 8,658 - - - 8,658
Unrealized gain on marketable equity
securities - - - - 17,715 - 17,715
Net loss - - - - - (343,965) (343,965)
---------- ------- ----------- --------- ------- --------- -----------
Balance, March 31, 2000 10,219,472 $10,220 $3,198,065 $(17,187) $17,715 $(343,965) $2,864,848
========== ======= ========== ========= ======= ========== ===========
See independent auditors' report and
accompanying notes to consolidated financial statements
F-5
GOPUBLICNOW.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
DECEMBER 2, 1999
(DATE OF
INCEPTION)
THROUGH
MARCH 31, 2000
Cash flows from operating activities:
Net loss $ (343,965)
Estimated fair market value of vested common stock granted to employees 33,063
Estimated fair market value of warrants granted to consultant
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation 1,970
Write-off of property and equipment 12,000
Changes in operating assets and liabilities:
Other assets (16,499)
Accounts payable and accrued expenses 80,807
Deferred revenue 5,500
----------------
Net cash used in operating activities (218,466)
----------------
Cash flows from investing activities:
Purchases of property and equipment (69,498)
Costs incurred to develop web site (97,736)
----------------
Net cash used in investing activities (167,234)
----------------
Cash flows from financing activities:
Founders' capital contribution 500
Proceeds from the sale of common stock, net of offering
costs of $274,393 3,148,877
----------------
Net cash provided by financing activities 3,149,377
----------------
Net increase in cash 2,763,677
Cash at beginning of period -
----------------
Cash at end of period $ 2,763,677
================
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ -
================
Income taxes $ -
================
Supplemental disclosure of non-cash investing and financing activities:
During the period ended March 31, 2000, the Company received 180,000 shares of restricted common
stock from a public company for services to be rendered, valued at $253,966 (see Note 1).
See independent auditors' report and
accompanying notes to consolidated financial statements
F-6
GOPUBLICNOW.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM DECEMBER 2, 1999 (DATE OF INCEPTION)
THROUGH MARCH 31, 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
- -------------------------------------------------------------------------------
Organization and Operations
- -----------------------------
GoPublicNow.com, Inc. (a development stage company) ("GPN" or the "Company"),
was incorporated on December 2, 1999 according to the laws of Nevada. The
Company has been in the development stage since its inception. During the
development stage, the Company is primarily engaged in raising capital,
obtaining financing, developing its web site, advertising and marketing the
Company, and administrative functions. The Company intends to provide a web
site dedicated to helping their customers grow and obtain financing for their
business ventures.
Principles of Consolidation
- -----------------------------
The consolidated financial statements include the accounts of the Company and
GoBizNow.com, a majority owned and a non-operating subsidiary in the development
stage. All significant intercompany balances and transactions have been
eliminated in consolidation.
Risks and Uncertainties
- -------------------------
The Company is a start-up company subject to the substantial business risks and
uncertainties inherent to such an entity, including the potential risk of
business failure.
The Company has a loss of $343,965 for the period from December 2, 1999 (date of
inception) through March 31, 2000 and an accumulated deficit of $343,965 as of
March 31, 2000. Management believes that its positive cash balance of
$2,763,677 and revenues generated from new contracts subsequent to March 31,
2000 will be sufficient to funds its operations, capital expenditures, working
capital requirements and web site development costs for the next twelve months.
There is no assurance the Company will be able to generate sufficient revenues
or obtain sufficient funds when needed, or that such funds, if available, will
be obtained on terms satisfactory to the Company.
Use of Estimates
- ------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements, as
well as the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
F-7
GOPUBLICNOW.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM DECEMBER 2, 1999 (DATE OF INCEPTION)
THROUGH MARCH 31, 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES,
- --------------------------------------------------------------------------------
CONTINUED
- ---------
Organizational Costs
- ---------------------
The Company adopted Statement of Position No. 98-5 ("SOP 98-5"), "Reporting the
Costs of Start-Up Activities." SOP 98-5 requires that all non-governmental
entities expense the cost of start-up activities, including organizational costs
as those costs are incurred. The effect of this pronouncement is reflected in
the accompanying consolidated financial statements.
Fair Value of Financial Instruments
- ---------------------------------------
Financial Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standards No. 107 ("SFAS 107"), "Disclosures About Fair Value of
Financial Instruments." SFAS 107 requires disclosure of fair value information
about financial instruments when it is practicable to estimate that value. The
carrying amount of the Company's cash and cash equivalents, marketable
securities, trade payables and accrued expenses approximates their estimated
fair values due to the short-term maturities of those financial instruments.
Customer Concentration
- -----------------------
The Company will not be dependent on any single customer or group of customers
for a significant portion of its annual sales. The Company's customer base will
change on a continuous basis as new customers are added or removed.
Cash and Cash Equivalents
- ----------------------------
For purposes of the statement of cash flows, cash and cash equivalents consist
of demand deposits in banks with an initial maturity of 90 days or less.
Marketable Securities
- ----------------------
Marketable securities consist of equity securities and are stated at fair market
value. During the period from December 2, 1999 (date of inception) through March
31, 2000, the Company recorded marketable securities valued at $253,966 in
consideration for future services from an unrelated party. Pursuant to the
Statements of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," available for sale investments are
to be recorded at their fair market value, with any unrealized gain or loss to
be reported as other comprehensive income (loss) for the period ended. As of
March 31, 2000, the Company determined the fair market value of the underlying
marketable securities to be $271,681 and accordingly, reported an unrealized
gain of $17,715 as other comprehensive income and cumulative unrealized gain for
the period then ended.
F-8
GOPUBLICNOW.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM DECEMBER 2, 1999 (DATE OF INCEPTION)
THROUGH MARCH 31, 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES,
- --------------------------------------------------------------------------------
CONTINUED
- ---------
Property and Equipment
- ------------------------
Property and equipment is stated at cost. Depreciation is computed using the
straight-line method over the useful life of three and seven years.
Depreciation expense for the period ended March 31, 2000 was $1,970.
Betterments, renewals, and extraordinary repairs that extend the lives of the
assets are capitalized; other repairs and maintenance charges are expensed as
incurred. The cost and related accumulated depreciation applicable to assets
retired are removed from the accounts, and the gain or loss on disposition is
recognized in current operations.
The telephone system originally purchased and installed during the period, was
replaced shortly after March 31, 2000. Due to the fact that the original
telephone system has no alternative use for the Company, and no salvage value,
management has written-off the total cost of this telephone system of $12,000.
This expense is reflected in the accompanying statement of operations as a
selling, general and administrative expense.
Capitalized Web Site Development
- -----------------------------------
In March 2000, the Emerging Issues Task Force reached a consensus on Issue No.
00-2, "Accounting for Web Site Development Costs" ("EITF 00-2"). Pursuant to
EITF 00-2, the Company has capitalized approximately $98,000 of web site
development costs as of March 31, 2000. No amortization expense has been
incurred as the web site was not operational at March 31, 2000.
Long-Lived Assets
- ------------------
During 1995, the FASB issued Statement of Financial Accounting Standards No. 121
("SFAS 121"), "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets To Be Disposed Of," which requires that long-lived assets and
certain identifiable intangibles to be held and used by an entity be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. In accordance with the
provisions of SFAS 121, the Company regularly reviews long-lived assets and
intangible assets for impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets may not be recoverable. Based
on its analysis, the Company believes that no impairment of the carrying value
on its long-lived assets exists at March 31, 2000. There can be no assurance
however, that market conditions will not change or demands for the Company's
services will continue which could result in impairment on long-lived assets in
the future.
F-9
GOPUBLICNOW.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM DECEMBER 2, 1999 (DATE OF INCEPTION)
THROUGH MARCH 31, 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES,
- --------------------------------------------------------------------------------
CONTINUED
- ---------
Income Taxes
- -------------
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes." Under SFAS 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. A valuation allowance is
provided for significant deferred tax assets when it is more likely than not
that such assets will not be recovered.
Stock-Based Compensation
- -------------------------
The FASB issued Statement of Financial Accounting Standards No. 123 ("SFAS
123"), "Accounting for Stock-Based Compensation," which defines a fair value
based method of accounting for stock-based compensation. However, SFAS 123
allows an entity to continue to measure compensation cost related to stock and
stock options issued to employees using the intrinsic method of accounting
prescribed by Accounting Principles Board Opinion No. 25 ("APB 25"), "Accounting
for Stock Issued to Employees." Entities electing to remain with the accounting
method of APB 25 must make pro forma disclosures of net income (loss), as if the
fair value method of accounting defined in SFAS 123 had been applied. The
Company has elected to account for its stock-based compensation to employees
under APB 25.
Revenue Recognition
- --------------------
The Company will recognize revenue during the month in which services are
provided and on a straight-line basis over the life of the membership dues
received. On certain agreements, the Company will take an equity position in
the client rather than a cash position, which the Company will record pursuant
to SFAS 115 and record deferred revenue and recognize the revenue over the
contract life, as defined. In addition, the agreements may contain a return of
equity clause which specifies that if the Company does not satisfy the
requirements of the agreement, as defined, the Company must return all equity
instruments to its clients.
Advertising
- -----------
Advertising costs are expensed as incurred. For the period from December 2,
1999 (date of inception) through March 31, 2000, no advertising costs have been
incurred.
F-10
GOPUBLICNOW.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM DECEMBER 2, 1999 (DATE OF INCEPTION)
THROUGH MARCH 31, 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES,
- --------------------------------------------------------------------------------
CONTINUED
- ---------
Earnings Per Share
- --------------------
The Company has adopted Statement of Financial Accounting Standards No. 128
("SFAS 128"), "Earnings Per Share." Under SFAS 128, basic earnings per share is
computed by dividing income available to common shareholders by the
weighted-average number of common shares assumed to be outstanding during the
period of computation. Diluted earnings per share is computed similar to basic
earnings per share except that the denominator is increased to include the
number of additional common shares that would have been outstanding if the
potential common shares had been issued and if the additional common shares were
dilutive. Because the Company has incurred net losses, basic and diluted loss
per share are the same as additional potential common shares would be
anti-dilutive.
Comprehensive Income
- ---------------------
The Company has adopted Statement of Financial Accounting Standards No. 130
("SFAS 130"), "Reporting Comprehensive Income." SFAS 130 establishes standards
for reporting and display of comprehensive income and its components in a full
set of general-purpose financial statements. The effect of SFAS 130 is reflected
in the accompanying consolidated financial statements.
Segments of Business
- ----------------------
The Company has adopted Statement of Financial Accounting Standards No. 131
("SFAS 131"), "Disclosures about Segments of an Enterprise and Related
Information" was issued. SFAS 131 changes the way public companies report
information about segments of their business in their annual financial
statements and requires them to report selected segment information in their
quarterly reports issued to shareholders. It also requires entity-wide
disclosures about the products and services an entity provides, the material
countries in which it holds assets and reports revenues and its major customers.
The Company currently operates in one segment, as disclosed in the accompanying
statement of operations.
Recent Accounting Pronouncements
- ----------------------------------
In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133 ("SFAS 133"), "Accounting for Derivative Instruments and Hedging
Activities." SFAS 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities on the balance sheet
at their fair value. This statement, as amended by SFAS 137, is effective for
financial statements for all fiscal quarters to all fiscal years beginning after
June 15, 2000. The Company does not expect the adoption of this standard to
have a material impact on its results of operations, financial position or cash
flows as it currently does not engage in any derivative or hedging activities.
F-11
GOPUBLICNOW.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM DECEMBER 2, 1999 (DATE OF INCEPTION)
THROUGH MARCH 31, 2000
NOTE 2 - PROPERTY AND EQUIPMENT
- ------------------------------------
Property and equipment consist of the following as of March 31, 2000:
Automobiles $ 26,375
Computers and equipment 18,731
Furniture 12,392
------
57,498
Less accumulated depreciation (1,970)
------
$ 55,528
======
NOTE 3 - STOCKHOLDERS' EQUITY
- ---------------------------------
Preferred Stock
- ----------------
The Company's articles of incorporation authorize up to 10,000,000 shares of
$0.001 par value preferred stock. Shares of preferred stock may be issued in
one or more classes or series at such time the Board of Directors determine.
All shares of any series shall be equal in rank and identical in all respects.
As of March 31, 2000, no preferred shares have been designated or issued.
Common Stock
- -------------
From the Company's date of inception to the period ended March 31, 2000, the
Company had issued an aggregate of 8,775,000 shares of common stock to the
founders for $500.
On December 3, 1999, the Company issued 201,000 shares of the Company's
restricted common stock (valued at $50,250 based on the estimated fair value on
date of grant) to employees. The shares are contingent upon employment and vest
on various dates through December 2001. As of March 31, 2000, a total of
132,250 shares vested resulting in compensation expense of $33,063 being
recognized for the period ended March 31, 2000.
On December 3, 1999, the Company issued 150,000 shares of the Company's
restricted common stock to a third party for services rendered in connection
with raising funds pursuant to PPM 1999.
On December 7, 1999, the Company executed a private placement memorandum ("PPM
1999") for the issuance of 541,800 shares for $1,354,500 ($2.50 per share), net
of applicable commissions and offering costs (estimated at 6.5% of gross
proceeds). As of March 31, 2000, 541,800 shares have been issued under this PPM
1999 at $2.50 per share for $1,267,450 (net of commissions and offering costs of
$87,050). In addition, the Company issued warrants to purchase 541,800 shares
of common stock at $7.50 per share and warrants to purchase 541,800 shares of
common stock at $10 per share, which are exercisable for three years from the
date of grant. The warrants were valued at $0 (based on Black-Scholes
computation under SFAS 123).
F-12
GOPUBLICNOW.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM DECEMBER 2, 1999 (DATE OF INCEPTION)
THROUGH MARCH 31, 2000
NOTE 3 - STOCKHOLDERS' EQUITY, CONTINUED
- ---------------------------------------------
On January 18, 2000, the Company commenced a private placement memorandum ("PPM
2000") for a maximum offering of $2,250,000. Pursuant to PPM 2000, the Company
may sell up to a maximum of 600,000 units at $3.75 per unit, where each unit
consists of one share of the Company's common stock, one warrant to purchase one
share of common stock at $7.50 per share and one warrant to purchase one share
of common stock at $10 per share and are exercisable for three years from the
date of grant. As of March 31, 2000, the Company sold but has not yet issued
551,672 shares of common stock for $1,881,427 (net of commissions and offering
costs of $187,343) and warrants to purchase 1,103,344 shares of common stock
which were valued at $0 (based on Black-Scholes computation under SFAS 123).
Stock Options
- --------------
From time to time, the Company may issue non-plan stock options pursuant to
various agreements with other compensatory arrangements. Under the terms of
various employment agreements with employees, the Company issued options to
purchase 341,250 shares of the Company's common stock at exercise prices ranging
from $0.25 per share to $3.75 per share (the estimated fair market value on the
date of grant by the Company was $0.25 per share). The options vest over a
two-year period from the date of grant and are exercisable through March 2010.
The following is a status of the stock options outstanding at March 31, 2000 and
the changes during the period ended March 31, 2000.
WEIGHTED
AVERAGE EXERCISE
OPTIONS PRICE
-------------- ------------------
Balance, December 2, 1999 - $ -
Granted 341,250 3.30
-------- ---------------
Balance, March 31, 2000 341,250 $ 3.30
======== =================
Exercisable, March 31, 2000 17,320 $ 2.59
============ =================
Weighted average fair value of options granted $ 0.76
=================
F-13
GOPUBLICNOW.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM DECEMBER 2, 1999 (DATE OF INCEPTION)
THROUGH MARCH 31, 2000
NOTE 3 - STOCKHOLDERS' EQUITY, CONTINUED
- ---------------------------------------------
76,250 of the options outstanding at March 31, 2000 have exercise prices ranging
from $0.25 to $2.50 per share, a weighted average exercise price of $1.73 and a
weighted average remaining contractual life of 9.8 years. 8,320 of these
options are exercisable at March 31, 2000. 265,000 of these options outstanding
have an exercise price of $3.75 per share, a weighted average exercise price of
$3.75 and a weighted average remaining contractual life of 9.9 years. 9,000 of
these options are exercisable at March 31, 2000.
SFAS 123 Pro Forma Information
- ----------------------------------
Pro forma information regarding net income (loss) is required by SFAS 123, and
has been determined as if the Company had accounted for its employee stock
options under the fair value method of SFAS 123. The fair value for these
options was estimated at the date of grant using the Black Scholes option
pricing model with the following assumptions for the period ended March 31,
2000: risk free interest rate of 8.5%; dividend yield of 0%; expected life of
the options of three years; and volatility factor of the expected market price
of the Company's common stock of 0%.
For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the option vesting period. Adjustments are made
for options forfeited prior to vesting. The effect on compensation expense and
net loss had compensation cost for the Company's stock option issuances been
determined based on fair value on the date of grant consistent with the
provisions of SFAS 123 is as follows:
AS REPORTED PRO FORMA
----------- ---------
Net loss $ (343,965) $ (354,272)
======== ========
Basic and diluted loss per share $ (0.04) $ (0.04)
===== =====
Warrants
- --------
From time to time, the Company issues warrants pursuant to various agreements
and other compensatory arrangements. Under the terms of various agreements with
consultants, the Company issued warrants to purchase 20,125 shares of the
Company's common stock at exercise prices ranging from $0.25 per share to $3.75
per share. The warrants vest in three months from the date of grant and are
exercisable through February 2010. Under SFAS 123, $12,990 of consulting
expense is to be recognized, of which $8,658 has been recognized as of March 31,
2000. In addition, the Company issued 2,186,944 warrants to various investors
as part of various private placement memorandums (see Note 3).
The fair value of each warrant granted during the period ended March 31, 2000 is
estimated using the Black-Scholes pricing model on the date of grant using the
following assumptions: (i) risk free interest rate of 8.5%; (ii) dividend yield
of 0%; (iii) expected life of the warrants of three years; and (iv) volatility
of 0%.
F-14
GOPUBLICNOW.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM DECEMBER 2, 1999 (DATE OF INCEPTION)
THROUGH MARCH 31, 2000
NOTE 3 - STOCKHOLDERS' EQUITY, CONTINUED
- ---------------------------------------------
The following represents a summary of warrants outstanding for the period ended
March 31, 2000:
AS REPORTED PRO FORMA
----------- ---------
Balance, December 2, 1999 $ - $ -
Granted 2,207,069 8.72
--------- ----
Balance, March 31, 2000 $ 2,207,069 $ 8.72
========= ====
Exercisable, March 31, 2000 2,202,069 8.72
========= ====
Weighted average fair value of warrants granted $ 0.006
=====
20,125 of the warrants outstanding at March 31, 2000 have exercise prices
between $0.25 per share to $3.75 per share, with a weighted average exercise
price of $2.86 and a weighted average remaining contractual life of 9.9 years.
15,125 of these warrants are exercisable at March 31, 2000. The remaining
warrants have exercise prices between $7.50 per share and $10.00 per share, with
a weighted average exercise price of $8.75 and a weighted average remaining
contractual life of 2.95 years. All of these warrants are exercisable at March
31, 2000.
NOTE 4 - INCOME TAXES
- -------------------------
The tax effects of temporary differences that give rise to deferred taxes at
March 31, 2000 are as follows:
Deferred tax asset:
Net operating loss carryforward $ 113,000
Expenses recognized for granting of
options and warrants 3,400
-------------
Total gross deferred tax asset 116,400
Less valuation allowance (116,400)
--------------
Net deferred tax asset $ -
==============
The valuation allowance increased by approximately $116,400 during the period
ended March 31, 2000. No current provision for income taxes for the period
ended March 31, 2000 is required, except for minimum state taxes, since the
Company incurred losses during the period.
F-15
GOPUBLICNOW.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM DECEMBER 2, 1999 (DATE OF INCEPTION)
THROUGH MARCH 31, 2000
NOTE 4 - INCOME TAXES, CONTINUED
- -------------------------------------
The provision for income taxes for the period ended March 31, 2000 differs from
the amount computed by applying the U.S. Federal income tax rate of 34% to loss
before income taxes as a result of the following:
Computed tax benefit at federal statutory rate $ (90,000)
State income tax benefit, net of federal effect (17,000)
Increase in valuation allowance 116,400
Other, net (8,600)
--------------
$ 800
==============
As of March 31, 2000, the Company had net operating loss carryforwards of
approximately $90,000 and $23,000 for federal and state income tax reporting
purposes, which expire in 2015 and 2005, respectively.
NOTE 5 - RELATED PARTY TRANSACTIONS
- ----------------------------------------
The Company subleases its corporate and operations offices under a verbal
agreement from a company under control of the majority stockholder. The amount
of rent expense is passed through at cost to the Company. Rent expense was
$25,113 for the period ended March 31, 2000.
NOTE 6 - EARNINGS PER SHARE
- --------------------------------
The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per share computations for the period ended March 31,
2000:
Numerator for basic and diluted earnings per share:
Net loss charged to common stockholders $ (343,965)
Denominator for basic and diluted earnings
per share:
Weighted average shares 9,521,819
-------------
Basic and diluted earnings per share $ (0.04)
==============
F-16
GOPUBLICNOW.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM DECEMBER 2, 1999 (DATE OF INCEPTION)
THROUGH MARCH 31, 2000
NOTE 7 - SUBSEQUENT EVENTS
- ------------------------------
Merger
- ------
Pursuant to an acquisition agreement (the "Acquisition Agreement") Effective
April 6, 2000, the Company ("GPN - Nevada") completed a transaction whereby it
was merged with and into DermaRX Corporation ("DMRX") and the separate corporate
existence of GPN-Nevada ceased. The transaction was recorded as a "reverse
acquisition" (the "Merger") where GPN-Nevada was considered to be the accounting
acquiror as it retained control of DMRX after the merger. Simultaneously with
the Merger, the name DMRX was changed to GoPublicNow.com ("GPN"), and all the
outstanding shares of common stock of GPN - Nevada were exchanged on a
one-for-one basis for shares of common stock of GPN. Immediately prior to the
merger, the common stock of DMRX was reduced by a one for five reverse split.
At the time of the merger DMRX had 766,117 shares outstanding. By virtue of the
merger, the shareholders of GPN - Nevada acquired 10,100,123 shares of DMRX.
The total issued, outstanding, and committed shares of the combined entities
subsequent to the merger was 10,866,240 shares. Since DMRX's operations from
December 2, 1999 through the date of acquisition were insignificant, a pro forma
consolidated balance sheet and consolidated statement of operations as of and
for the period ended March 31, 2000 are not presented here.
Equity Transactions
- --------------------
In April 2000, the Company completed its PPM 2000 by selling 17,650 shares of
its common stock for $66,187.
In May 2000, the Company purchased 200,000 shares of its free trading common
stock for $300,000 in a privately negotiated transaction.
Subsidiaries
- ------------
In April 2000, the Company provided its initial funding of $200,000 for its
majority-owned subsidiary GoBizNow.com. The Company commenced a private
placement memorandum selling a maximum of 300,000 shares of common stock at
$1.75. As of June 16, 2000, GoBizNow.com sold approximately 60,000 shares of
common stock for $105,000.
In May 2000, the Company incorporated its subsidiary GPN Securities, Inc. The
Company intends to operate GPN Securities, Inc. as a broker dealer in order to
provide funding and other financial services to its customers.
F-17
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors
DermaRx Corporation
We have audited the accompanying balance sheet of DermaRx Corporation as of
February 29, 2000, and the related statements of operations, changes in
stockholders' (deficit), 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 audits.
We conducted our audits 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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of DermaRx Corporation as of
February 29, 2000, and the results of its operations, its changes in
stockholders' (deficit) and its cash flows for the year then ended in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
accompanying financial statements, the Company has suffered recurring losses
from operations and has a net capital deficiency. These conditions raise
substantial doubt about the ability of the Company to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Miller and McCollom
Miller and McCollom
Certified Public Accountants
7400 West 14th Avenue, Suite 10
Lakewood, CO 80215
April 21, 2000
F-18
Paul C. Roberts
Certified Public Accountant
800 Bedford Road
Pleasantville, NY 10570
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders
DermaRx, Inc.
I have audited the accompanying balance sheet of DermaRx, Inc. at February 28,
1999, and the related statements of operations, changes in common stockholders'
equity and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. My responsibility is to express
an opinion on these financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing standards.
Those standards require that I 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.
I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of DermaRx, Inc. at February 28, 1999,
and the results of its operations and its cash flows for them ended in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company's past default on certain loan agreements,
recurring losses, and past deficiencies in working capital raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 2 to the financial
statements. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Paul C. Roberts
Paul C. Roberts
Certified Public Accountants
Pleasantville, New York
June 14, 1999
F-19
DERMARX CORPORATION
BALANCE SHEETS
ASSETS
February 29, 2000 February 28, 1999
------------------- -------------------
Current assets:
Cash and cash equivalents $ 1,408 $ 22
Accounts receivable - trade 565 5,459
Inventory - finished goods (Note 10) 8,673 39,899
Other receivables (less allowance for doubtful
accounts, $25,000 in 2000 and $0 in 1999 - 31,520
----------------- -----------------
Total current assets 10,646 76,900
Property and equipment:
Equipment, net of accumulated depreciation of
$18,542 in 2000 and $17,357 in 1999 1,762 2,948
Other assets:
Patents, net of accumulated amortization of
$66,461 in 2000 and $57,598 in 1999 84,230 93,093
---------------- ----------------
Total assets $ 96,638 $ 172,941
================== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 190,950 $ 175,950
Notes payable - related party 25,000 50,000
Accrued interest - notes payable 40,625 17,601
Accrued interest - notes payable, related party 3,125 14,301
Accounts payable and accrued expenses 31,601 28,464
Accrued compensation 143,333 143,333
License agreement deposit 22,500 -
Other loans payable 17,500 -
---------------- ----------------
Total current liabilities 474,634 429,649
---------------- ----------------
Commitments and contingent liabilities (Note 8)
Redeemable Preferred Stock Note
Preferred Stock $.10 par value 800 shares authorized
None issued in 1999 or 2000
Common stockholders' (deficit): (Notes 6, 11 and 12)
Common stock, $.05 par value: 12,000,000
shares authorized; 399,961 shares issued
and outstanding in 1999 and 419,961
shares in 2000 20,998 19,998
Additional paid-in capital 4,608,610 4,604,980
Accumulated (deficit) (5,007,604) (4,881,686)
---------------- ---------------
Total stockholders' (deficit) (377,996) (256,708)
Total liabilities and stockholders' (deficit) $ 96,638 $ 172,941
================= ===============
See accompanying auditors' reports and notes to financial statements.
F-20
DERMARX CORPORATION
STATEMENTS OF OPERATIONS
YEAR ENDED
February 29, 2000 February 28, 1999
------------------- -------------------
Revenues
Sales, net discounts $ 18,048 $ 121,262
Cost of goods sold (4,420) (18,252)
------------------- -------------------
Gross profit 13,628 103,010
------------------- -------------------
Expenses
General and administrative 97,101 279,428
Write-down of inventory ( Note 10) 30,957 98,465
Research and development - 30,000
----------------- -------------------
128,058 407,893
----------------- ------------------
(Loss) from operations (114,430) (304,883)
Other income (expense)
Interest income 360 48
Interest expense (11,848) (25,605)
------------------ ------------------
Net (loss) $ (125,918) $ (330,440)
=================== ===================
Net (loss) per common share $ (0.31) $ (0.86)
------------------- -------------------
Weighted average shares outstanding 401,627 383,134
=================== ===================
See accompanying auditors' reports and notes to financial statements.
F-21
DERMARX CORPORATION
STATEMENTS OF COMMON STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED FEBRUARY 28, 1999 AND FEBRUARY 29, 2000
COMMON STOCK
Par Additional Paid- Accumulated
Shares Value in Capital Deficit Total
------- ----------- ----------- ------------ --------
Balance
February 28, 1998 347,048 $ 17,352 $ 4,474,030 $(4,551,246) $ (59,864)
Shares issued in private placements 24,720 1,236 60,564 - 61,800
Shares issued in connection with
conversion of notes payable 7,466 373 18,293 - 18,666
Shares issued for services and -
accrued expenses 20,727 1,036 51,723 52,759
Net (loss) - - - (330,440) (330,440)
------- ----------- ----------- ------------ ----------
Balance
February 28, 1999 399,961 $ 19,998 $ 4,604,610 $(4,881,686) $(257,078)
Shares issued for legal fees 20,000 1,000 4,000 5,000
- -
Net (loss) - - - (125,918) (125,918)
------- ----------- ----------- ------------ ----------
Balance
February 29, 2000 419,961 $ 20,998 $ 4,608,610 $(5,007,604) $(377,996)
____________ _______ __________ __________ __________ ============
See accompanying auditors' reports and notes to financial statements.
F-22
DERMARX CORPORATION
STATEMENTS OF CASH FLOWS
YEARS ENDED FEBRUARY 29, 2000, AND FEBRUARY 28, 1999
2000 1999
-------------------- ------------------------------
Cash flows from operating activities:
Net (loss) $ (125,918) $ (330,440)
Adjustments to reconcile net (loss) to net cash (used)
by operating activities:
Expenses paid by issuance of stock 5,000 52,759
Discount on notes amortized 0 13,095
Depreciation 1,185 4,831
Amortization of patents 8,863 8,863
Changes in assets and liabilities:
Decrease in accounts receivable 5,164 11,341
Decrease in other receivables 31,250 0
Decrease in inventory including inventory write-off 31,226 89,217
Decrease in prepaid expenses 0 1,487
(Increase) decrease in other assets 0 (28,000)
Increase in accounts payable, accrued interest
and accrued expenses 14,616 44,925
Increase in license agreement deposit 22,500
---------- ---------------
Net cash (used) by operating activities: (6,114) (131,922)
------------ --------------
Cash flow from investing activities: 0 0
Proceeds from issuance of common stock 0 62,000
Proceeds from debt obligations 50,000 10,000
Repayment of debt obligations (50,000) (11,000)
Proceeds from other loans 7,500 0
------------
Net cash provided by financing activities: 7,130 61,000
------------ -------------
- -
Net increase (decrease) in cash and cash equivalents 1,386 (70,900)
Cash and cash equivalents, beginning of year 22 70,922
------------- ---------------
Cash and cash equivalents, end of year $ 1,408 $ 22
--------------- ----------------
Interest paid $ 11,848 $ 22,605
=============== ================
Income Taxes paid $ 0 $ 0
================ =================
See accompanying auditors' reports and notes to financial statements.
F-23
DERMARX CORPORATION
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
The Company was organized on June 4, 1985, under the name Vocaltech, Inc. On
December 11, 1992, the Company changed its name to Innotek, Inc. and on January
24, 1995, again changed its name to DermaRx, Inc (Company). The Company is
engaged in the development and sale of proprietary, non-prescription wound and
skin care products to retailers, hospitals, nursing homes and home health care.
A wholly-owned subsidiary, Dermedics, Inc. was inoperative during the years
ended February 29, 2000, and February 28, 1999.
REVENUE RECOGNITION
The Company recognizes sales and the related costs of sales upon shipment of
goods.
DEPRECIATION AND AMORTIZATION
Property and equipment are reflected at cost.
Property and equipment are being depreciated over estimated useful lives of five
years, principally using the straight-line method for both book and tax
reporting purposes. Patents are being amortized using the straight-line method
over a period of ten to seventeen years. Depreciation expense on property and
equipment for 2000 and 1999 respectively were $ 1,185 and $4,831.
(LOSS) PER SHARE
(Loss) per share is computed on the basis of the weighted-average number of
common shares outstanding during the periods. The weighted-average number of
shares of common stock does not include common equivalent shares for the assumed
exercise of the common stock options and warrants, as the effect would be
antidilutive.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all highly
liquid investments purchased with an original maturity of three months or less
to be cash equivalents.
INTANGIBLES
Intangibles are stated at amortized costs. Amortization is computed using the
straight-line method over the estimated useful lives of the assets.
ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of cash, trading accounts receivable, accounts payable,
accrued liabilities and amounts due related parties reflected in the financial
statement approximates fair value due to the short-term maturity of the
instruments.
F-25
DERMARX CORPORATION
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the reporting period. Actual
results could differ from those estimates.
INVENTORY
Inventory is valued at the lower of cost or market, with cost determined by the
first in, first out (FIFO) method.
COMPREHENSIVE INCOME
The Company adopted Statement of Financial Accounting Standards ("FAS") No. 130,
"Reporting Comprehensive Income" FAS No. 130 requires that the components and
total amounts of comprehensive income be displayed in the financial statements
beginning in 1998. Comprehensive income includes net income and all changes in
equity during a period that arise from nonowner sources, such as foreign
currency items and unrealized gains and losses on certain investments in equity
securities. The Company does not have any components of comprehensive income
other than net income.
NOTE 2 - OPERATING RESULTS AND MANAGEMENT'S PLANS
The Company has had recurring operating losses of $ 125,918 in 2000 and $
330,440 in 1999 , has been in default of certain debt agreements and has had
deficiencies in working capital of $463,988 in 2000 and $352,749 in 1999 which
raise doubt about the Company's ability to continue as a going concern.
During the year ended February 29, 2000, the Company attempted to raise capital
and entered into an acquisition agreement described in Notes 12 and 13.
F-26
DERMARX CORPORATION
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2000
NOTE 3 - SEGMENT INFORMATION
On December 31, 1998, the Company adopted Statement of Financial Accounting
Standards No. 131 "Disclosures about Segments of an Enterprise and Related
Information: ("SFAS 131"). The new rules revise established standards for
public companies relating to the reporting of financial and descriptive
information about their business segments and their enterprise-wide operations.
The Company operates in one segment, and one geographic area.
NOTE 4 - LONG TERM DEBT
During the year ended February 28, 1995, the Company raised $315,500 in a
private placement by issuance of three year notes which bear interest at a rate
of 6% per annum. In connection with the issuance of the notes, the Company
issued 25,240 shares of its common stock to the noteholders. During the year
ended February 28, 1996, holders of $230,500 of the notes plus interest accrued
thereon converted to common stock of the Company. Of this amount $140,500 was
converted by officers and directors of the Company. During the year ended
February 28, 1999, holders of $10,000 of the notes, plus accrued interest
thereon, converted into 7,467 shares of common stock of the Company. Aggregate
maturities of past due notes payable at February 29, 2000, are as follows:
Fiscal Year Amount
- ------------------------ ----------
2000 $ 215,950
Less: Current Portion (215,950)
----------
$ -
==========
NOTE 5 - INCOME TAXES
The Company has changed its method of accounting for income taxes to comply with
the provisions of SFAS No. 109, Accounting for Income Taxes. This accounting
change had no significant impact on the Company's financial statements.
As of February 28, 2000, the Company has net operating loss carry forwards of
approximately $4,675,000 for both financial statement and income tax purposes
which expire in the years 2001 through 2015, and unused research and development
credits of $21,000 which expire in 2001. The Company has provided a full
valuation reserve against the benefit of the net operating loss and unused R&D
Credits due to uncertainty regarding its ability to use them. A change in
ownership of more than 50% of the Company could reduce or eliminate the
Companies ability to utilize those loss carryovers.
Deferred Tax Assets $ 1,850,000
Loss Valuation Allowance 1,850,000
-------------
Net Deferred Tax Assets $ -
=============
F-27
DERMARX CORPORATION
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2000
NOTE 6 - REDEEMABLE CONVERTIBLE PREFERRED STOCK
The Company has authorized 800 shares of $.10 par value Series A 14% convertible
preferred stock. The holders of the Series A preferred stock are entitled to 15
votes per share on all matters submitted to a vote of the common shareholders
and are entitled in liquidation to share price plus all accrued and unpaid
dividends. No preferred stock shares were outstanding as of February 29, 2000,
or February 28, 1999.
NOTE 7 - COMMON STOCK
During October 1999, the Company had a 5 to 1 reverse stock split of its $.05
par value stock. On March 6, 2000, the Company had a second 5 for 1 reverse
stock split. In accordance with SAB 83, the financial statements and footnote
disclosure reflect the reverse stock split for all reporting periods.
During the year ended February 28, 1999, the Company issued 24,720 shares of
common stock for net proceeds of $62,000.
During the year ended February 28, 1999, the Company issued 20,725 shares of
common stock for services and conversion of accrued expenses.
During the year ended February 29, 2000, the Company issued 20,000 shares of
common stock for legal services.
NOTE 8 - STOCK WARRANTS
In July 1990, the Company issued warrants to purchase 19,048 shares of common
stock of the Company at $3.15 per share that expired August 1, 1994. These
warrants were issued along with convertible debentures. During the fiscal year
ended February 28, 1992, the debentures were in default. As consideration to
waive the default, the Company extended the date of expiration for five years to
August 1, 1999. None of the warrants were exercised before expiration and all
had expired prior to February 29, 2000.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
In April 1, 1999, The Company filed a lawsuit against a former officer and
director and against a former business manager. Although the Company believes
its claims to be meritorious, however, the ultimate outcome of the suit cannot
be determined.
The Company does not have any outstanding lease obligations.
The Company has commitments and contingencies in connection with the Shell
Acquisition Agreement described in Note 11.
F-28
DERMARX CORPORATION
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2000
NOTE10 - MAJOR CUSTOMERS
For the years ended February 29, 2000, and February 28, 1999, there were three
customers, who accounted for more than ten percent of the Company's sales of its
non-prescription products. The Company has suspended its direct sales efforts
after February 29, 2000. See licensing agreement in Note 13.
NOTE 11 - WRITE-DOWN OF INVENTORY
During the years ended February 29, 2000, and February 28, 1999, the Company
wrote down its inventory reflecting decline in value by $30,957 in 2000 and
$98,465 in 1999.
NOTE 12 - SHELL ACQUISITION AGREEMENT
As of February 29, 2000, the Company entered into an agreement whereby
shareholders owning or representing not less than 51% of the Company's shares
agreed to sell their shares to the acquiring party. The agreement's terms,
among others, provided that the existing business of the Company be transferred
to a subsidiary of the Company with a subsequent spin-off of such subsidiary to
the company's existing shareholders prior to the acquisition.
Other requirements directly related to the Company, its officers and directors,
and to its shareholders were included in the agreement.
NOTE 13 - SUBSEQUENT EVENTS
On March 6, 2000, the Board of Directors approved and later approved by
shareholders, an amendment to the Company's Certificate of Incorporation to
change the name of the Company from DermaRx Corporation to GoPublicNow.com,
Inc. The Company also authorized an increase in the capital stock to
110,000,000 shares from 12,000,000 shares and to change its par value from $.05
per share to $.001 per share. An added class of 10,000,000 shares of preferred
stock, par value $.001, was also authorized.
Subsequent to the above-mentioned stock split, the Company registered the
issuance of 346,100 shares of the new par value stock under a salary
reimbursement plan and legal services agreement.
F-29
DERMARX CORPORATION
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2000
NOTE 13 - SUBSEQUENT EVENTS, CONTINUED
In connection with arrangements resulting under the acquisition agreement, a
substantial portion of liabilities existing at February 29, 2000, have been paid
or settled.
NOTE 14 - LICENSING AGREEMENT
Effective March 1, 2000, the Company entered into a licensing agreement for the
selling of its skin care products. A fee deposit of $22,500 was received during
February, 2000. The balance of a $50,000 total non-refundable fee was received
subsequent to February 29, 2000. The agreement provides for the amounts
received by the Company to be paid for legal fees including the lawsuit
described in Note 9. The license is for an initial term of three years with
annual renewals so long as the licensee complies with the agreement. The annual
licensing fee is to be 5% of net profits before taxes for the sale of designated
skin products with a minimum of $20,000 annual fee after three years for
renewing the license.
F-30
Pro Forma Financial Information
- ----------------------------------
On April 6, 2000, DermaRx Corporation, a Delaware corporation, acquired all of
the outstanding common stock of GoPublicNow.com, Inc., a Nevada corporation, in
a businses combination described as a "reverse acquisition." For accounting
purposes, the acquisition has been treated as the acquisition of DermRx by
GoPublicNow.com.
Immediately prior to the acquisition, DermaRx had 750,080 shares of common stock
outstanding. As part of DermaRx's reorganization with GoPublicNow.com, DermaRx
issued 10,326,123 shares of its common stock to the shareholders of
GoPublicNow.com in exchange for 10,326,123 shares of GoPublicNow.com common
stock. Immediately folowing the merger, DermaRx changed its name to
GoPublicNow.com, Inc.
The operations of DermaRx had substantially ceased before the time of the
acquisition and DermaRx had nominal assets and liabilities. The operations of
DermaRx will not be continued by the surviving entity. GoPublicNow (Nevada) was
incorporated in December 1999, and at the time of the acquisition had no
revenue. In light of these facts and circumstances, disclosure of prior
financial information in pro forma presentation is not deemed to be material to
an understanding of future operations and accordingly no pro forma financial
information is presented here. For an understanding of the prior financial
information of GoPublicNow.com (Nevada) and DermaRx, please see the separate
audited financial statements attached as exhibits to this Form 8-K/A. For an
understanding of management's plans for the surviving entity, please see Form
8-K filed April 6, 2000.
F-31
ITEM 8. CHANGE IN FISCAL YEAR
GPN as the successor issuer has a fiscal year end of December 31.
DMRX's fiscal year was February 28. GPN will retain its December 31 fiscal year
end.
EXHIBITS
*3.1 Articles of Incorporation of the Company, as amended
*3.2 Bylaws of the Company
*3.3 Articles and Agreement of Merger of GoPublicNow.com, Inc. into
DermaRx Corporation
*3.4 Certificate of Merger of GoPublicNow.com, Inc. into
DermaRx Corporation
10.1 Shell Acquisition Agreement dated February 24, 2000
- -----
*Previously filed
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report on Form 8-K/A to be signed on its behalf
by the undersigned hereunto duly authorized.
GOPUBLICNOW.COM, INC.
/s/ Bruce A. Berman
----------------------------------
President and Chief Executive
Officer
Date: JUNE 19, 2000