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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
AMENDMENT NO. 1
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
FOR THE QUARTER PERIOD ENDED JUNE 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-26943
AMERICAN INFLATABLES, INC.
--------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-4702570
-------- ----------
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
947 NEWHALL STREET, COSTA MESA, CA 92627
---------------------------------- -----
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 949-515-1776
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON STOCK, PAR
VALUE $.01 PER SHARE
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No[ ]
As of December 7, 2000, there were 8,475,330 shares of the Registrant's common
stock, $.01 par value per share, issued and outstanding.
- -------------------------------------------------------------------------------
PAGE
PART I FINANCIAL INFORMATION................................. 2
Item 1. Financial Statements (Unaudited)...................... 3
Balance Sheet......................................... 3
Statement of Operations for the Three Months
Ended June 30, 2000 and 1999........................ 4
Statement of Operations for the Six Months
Ended June 30, 2000 and 1999........................ 5
Statement of Cash Flows For the Six Months
Ended June 30, 2000 and 1999........................ 6
Notes to Condensed Financial Statements
as of June 30, 2000 ................................ 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations....... 10
PART II OTHER INFORMATION..................................... 13
Item 1: Legal Proceedings..................................... 13
Item 2: Changes in Securities................................. 13
Item 3: Defaults Upon Senior Securities....................... 14
Item 4: Submission of Matters to a Vote of Security Holders... 14
Item 5: Other Information..................................... 14
Item 6(a): Exhibits.............................................. 14
Item 6(b): Reports on Form 8.K................................... 14
SIGNATURES....................................................... 15
1
PART I - FINANCIAL INFORMATION
NOTE REGARDING FORWARD-LOOKING STATEMENTS.
This Form 10-QSB/A contains forward-looking statements within the meaning of the
"safe harbor" provisions under Section 21E of the Securities Exchange Act of
1934 and the Private Securities Litigation Reform Act of 1995. We use
forward-looking statements in our description of our plans and objectives for
future operations and assumptions underlying these plans and objectives.
Forward-looking terminology includes the words "may," "expects," "believes,"
"anticipates," "intends," "projects," or similar terms, variations of such terms
or the negative of such terms. These forward-looking statements are based on
management's current expectations and are subject to factors and uncertainties,
which could cause actual results to differ materially from those, described in
such forward-looking statements. We expressly disclaim any obligation or
undertaking to release publicly any updates or revisions to any forward-looking
statements contained in this Form 10-QSB/A to reflect any change in our
expectations or any changes in events, conditions or circumstances on which any
forward-looking statement is based. Factors, which could cause such results to
differ materially from those described in the forward-looking statements, and
elsewhere in, or incorporated by reference into this Form 10-QSB/A.
2
ITEM 1 Financial Statements
AMERICAN INFLATABLES, INC.
BALANCE SHEET
JUNE 30, December 31,
2000 1999
------------ ------------
(UNAUDITED)
ASSETS
Current assets:
Cash ............................................$ 25,200 $ 900
Inventory........................................ 87,600 59,600
Prepaid expenses and other current assets........ 162,000 53,300
--------- ---------
Total current assets....................... 274,800 113,800
Fixed assets, net ... . ........................... 99,100 107,900
Deposits........................................... 7,000 7,000
....................................................--------- ---------
Total assets...............................$ 380,900 $ 228,700
========= =========
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Notes payable....................................$ 310,000 $ 323,000
Accounts payable................................. 92,900 113,300
Accrued payroll liabilities...................... 373,200 289,500
Accrued liabilities.............................. 887,800 48,700
--------- ---------
Total current liabilities.................. 1,663,900 774,500
Long term liabilities
Stockholders' equity
Common stock..................................... 54,600 45,400
Additional paid in capital....................... 1,642,140 213,600
Accumulated deficit..............................(2,979,740) (804,800)
--------- ---------
Total stockholders' (deficit) equity.......(1,283,000) (545,800)
--------- ---------
Total liabilities and
stockholders' (deficit) equity $ 380,900 $ 228,700
========= =========
See accompanying notes to financial statements
3
AMERICAN INFLATABLES, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS
JUNE 30, 2000 JUNE 30, 1999
-------------- --------------
(UNAUDITED) (UNAUDITED)
Revenues.........................................$ 402,100 $ 378,000
Cost of goods sold.......................... 268,400 201,000
---------- ----------
Gross profit..................................... 133,700 177,000
---------- ----------
Administrative expenses
Depreciation and amortization............... 8,300 10,800
Professional fees .......................... 1,868,600 19,800
Other administrative expenses............... 86,800 56,500
Salaries and payroll expenses............... 215,500 77,400
Marketing................................... 1,600 3,200
Trade show.................................. 85,400 24,900
Travel & entertainment...................... 47,700 8,400
---------- ----------
Total.................................. 2,313,900 201,000
---------- ----------
Net loss from operations........... (2,180,200) (24,000)
Income tax (benefit)
Income tax expense (benefit)................ (900,000) (9,600)
Valuation allowance (benefit)............... 900,000 9,600
---------- ----------
Total.................................. 0 0
---------- ----------
Net loss $(2,180,200) $ (24,000)
========== ==========
Loss per share..............................$ (0.40) $ (0.01)
========== ==========
Weighted average shares..................... 5,350,000 4,540,000
========== ==========
See accompanying notes to financial statements
4
AMERICAN INFLATABLES, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED
JUNE 30, 2000 JUNE 30, 1999
-------------- --------------
(UNAUDITED) (UNAUDITED)
Revenues.........................................$ 853,200 $ 595,000
Cost of goods sold.......................... 467,000 301,400
---------- ----------
Gross profit..................................... 386,200 293,600
---------- ----------
Administrative expenses
Depreciation and amortization............... 13,600 16,000
Professional fees .......................... 1,882,500 36,800
Other administrative expenses............... 152,400 84,900
Salaries and payroll expenses............... 283,300 118,200
Marketing................................... 12,900 10,800
Trade show.................................. 147,700 45,400
Travel & entertainment...................... 68,700 11,800
---------- ----------
Total.................................. 2,561,140 323,900
---------- ----------
Net loss from operations........... (2,174,940) (30,300)
Income tax (benefit)
Income tax expense (benefit)................ (900,000) (12,100)
Valuation allowance (benefit)............... 900,000 12,100
---------- ----------
Total.................................. 0 0
---------- ----------
Net loss $(2,174,940) $ (30,300)
========== ==========
Loss per share.............................. (0.41) (0.01)
========== ==========
Weighted average shares...................... 5,200,000 4,540,000
========== ==========
See accompanying notes to financial statements
5
AMERICAN INFLATABLES, INC.
STATEMENTS of CASH FLOWS
QUARTER ENDED JUNE 30, 2000
JUNE 30, 2000 JUNE 30, 1999
-------------- --------------
(UNAUDITED) (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)............................... $(2,174,940) $ (30,300)
Adjustments to Reconcile
Net Income (Loss) to Net Cash Provided
By (Used In) Operating Activities
Stock issued for services .. ................... 1,122,700 0
Depreciation and amortization................... 13,600 16,000
(Increase) Decrease in:
Prepaid expense and other assets................ (104,700) (17,200)
Inventory....................................... (28,000) (6,100)
Increase (Decrease) in:
Accounts payable............................... (20,400) 24,700
Accrued expenses............................... 922,800 37,600
----------- -----------
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES........... (268,900) 24,700
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment/leaseholds................ (4,800) (32,100)
Advances to officer............................. (4,000) (42,000)
----------- -----------
NET CASH USED IN INVESTMENT ACTIVITIES.......... (8,800) (74,100)
----------- -----------
CASH FLOW FROM FINANCING ACTIVITIES
Issuance of common stock........................ 315,000 0
Increase (decrease) in long term debt, net...... (13,000) 100,000
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES....... 302,000 100,000
----------- -----------
NET INCREASE (DECREASE) IN CASH................. 24,300 50,600
CASH AT BEGINNING OF PERIOD..................... 900 5,700
----------- -----------
CASH AT END OF PERIOD........................... $ 25,200 $ 56,300
=========== ===========
See accompanying notes to financial statements
6
Notes to Financial Statements (Unaudited)
1. ORGANIZATION AND BASIS OF PRESENTATION
American Inflatables, Inc.,(the "Company")(a Delaware Corporation) which
provides, manufactures and markets alternative advertising products such as,
inflatables, blimps and other custom inflatable products.
Prior to December 27, 1999 (the merger date) the Company operated as Can/Am
Marketing Group, LLC. On the merger date, the Company completed a "reverse
merger" transaction and changed its name to American Inflatables, Inc. This
"reverse merger" has been accounted for as an equity transaction. The Company's
historical financial statements are those of Can/Am Marketing Group, LLC.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING: The Company uses the accrual method of accounting and
prepares and presents financial statements that conform to generally accepted
accounting principles. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affects the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and reported amounts of revenues and expenses during
the reporting periods. Actual results could differ from those estimates.
BASIS OF PRESENTATION: The accompanying unaudited condensed financial statements
and related notes have been prepared pursuant to the rules and regulations of
the Securities and Exchange Commission for Form 10-QSB. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments, consisting of a normal recurring nature and
considered necessary for a fair presentation, have been included. It is
suggested that these financial statements are read in conjunction with the
financial statements and notes thereto included in the Company's annual report
on Form 10-KSB for the year ended December 31, 1999. The results of operations
for the three month and six month periods ended June 30, 2000 are not
necessarily indicative of the operating results for the year ended December 31,
2000. For further information, refer to the financial statements and notes
thereto included in the Company's Annual Report on Form 10-KSB/A for the fiscal
year December 31, 1999.
RECLASSIFICATIONS: Certain June 30, 1999 balances have been reclassified to
conform to the June 30, 2000 financial statement presentation.
INVENTORY: Finished goods and raw materials are valued at the lower of cost
(first in first out) or market. Work-in-process, consisting of labor, materials,
and overhead on partially completed projects, are recorded at cost but not in
excess of net realizable value.
7
PROPERTY, PLANT, AND EQUIPMENT: Property, plant, and equipment are stated at
cost. Depreciation is computed using the straight-line method over the estimated
useful lives of the assets, which generally range from three years for computer
software to seven years for equipment. Leasehold improvements and Goodwill are
amortized on a straight-line method over ten years.
REVENUE AND EXPENSE RECOGNITION: Revenue from product sales are generated
primarily from the manufacturing and selling of advertising products, which
consist of inflatable blimps and other custom inflatables. The period of time
from initial order to final shipment of the product typically ranges from seven
to ten days. Revenue is recognized when the Company ships the product to the
client. Expenses are recorded when incurred.
ADVERTISING: The Company follows the policy of charging the costs of advertising
to expense as incurred. The Company's significant advertising expenses are trade
show costs. The Company depreciates the tradeshow blimps over 60 months.
INCOME TAXES: The newly merged Company accounts for income taxes under the
provisions of Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes."
3. INVENTORY
Inventories as of June 30, 2000 by major classification, were as follows:
Finished Goods.......................... $ 24,200
Work-in-Process......................... 23,900
Raw Materials........................... 39,500
--------
$ 87,600
========
Inventory is valued using the first in first out (FIFO) method.
4. NOTES PAYABLE
Notes payable as of June 30, 2000 consisted of:
Short Term Note......................... $ 10,000
Convertible Notes....................... 300,000
--------
$310,000
========
Convertible notes in the amount of $300,000 provide for a term loan and include
interest payable at 12%. Shares owned by an officer of the Company secure these
loans. The Company is required to either make payment for principal and interest
or make payment in the form of common stock of the Company once the Company
becomes a publicly traded company. The lenders have the option to convert the
debt to common shares at $1.00 per share. No conversions have been made as of
June 30, 2000.
8
5. GOING CONCERN
The Company's financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. Prior to the merger, the Company sustained significant losses and has
a negative working capital. Without the realization of additional capital, it
may be unlikely for the Company to continue as a going concern.
6. LEASES
The Company leases a combination of offices and production facility in Costa
Mesa, California totaling 10,000 square feet. The lease is accounted for as an
operating lease, under the terms of a one-year lease with ten one-year
consecutive renewal options.
7. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative
Instruments and Hedging Activities." This statement establishes accounting and
reporting standards for derivative instruments, including some derivative
instruments embedded in other contracts (collectively referred to as
derivatives), and for other hedging activities. The Company will adopt SFAS 133
in Fiscal 2001, in accordance with SFAS 137, which deferred the effective date
of SFAS 133. The adoption of this standard in Fiscal 2001 is not expected to
have a material impact on the Company's consolidated financial statements.
In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation--an interpretation of APB Opinion No. 25" ("FIN 44"). FIN 44
clarifies the application of APB No. 25 to certain issues including: the
definition of an employee for purposes of applying APB Opinion No. 25; the
criteria for determining whether a plan qualifies as a noncompensatory plan; the
accounting consequence of various modifications to the terms of previously fixed
stock options or awards; and the accounting for the exchange of stock
compensation awards in a business combination. FIN 44 is effective July 1, 2000,
but certain conclusions in FIN 44 are applicable retroactively to specific
events occurring after either December 15, 1998 or January 12, 2000. The Company
does not expect the application of FIN 44 to have a material impact on the
Company's financial position or results of operations.
9
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULT OF OPERATIONS
The Company has authorized 20,000,000 shares of $0.01 par value common stock. As
of August 15, 2000 there were 5,959,421 shares issued and outstanding.
THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED JUNE 30, 1999
RESULTS OF OPERATIONS. Net sales were $402,100 for the three months ended June
30, 2000, an increase of $24,100 or 6.4% compared to net sales of $378,000 for
the three months ended June 30, 1999. The increase in sales is due to the
Company increasing its customer base. Sales for the Company continues to grow at
an increasing rate not just from repeat customers but from new customers. The
Company continues to increase its presence and exposure in the advertising
markets through increased attendance at trade shows and other advertising
mediums that provide greater exposure. The Company is currently on aggressive
growth strategy that may include entering new lines and products, and through
the acquisition of complimentary businesses. The Company has identified various
businesses that would compliment the Company's core business.
Gross margin for the three months ended June 30, 2000 was 35.7%, compared to
46.8% for the three months ended June 30, 1999. The Company earned $143,700 in
gross profit for the three months ended June 30, 2000 compared to $177,600 for
the three months ended June 30, 1999. The increase in net sales and production
efficiencies, still contribute to the gross margin as a percentage of sales. The
Company through its use of higher quality materials for production, which it
believes decreases replacements and warranty coverage and provide a stronger and
more durable product for sale to the customer and consumer. During fiscal 1999
and the first quarter of fiscal 2000 the Company ramped up and increased
production and manufacturing staff, in order to increase sales, enabling the
Company to fully utilize its production staff to increase gross margins. This is
evident by the Company's continuing ability to increase its sales and maintain a
production facility that keeps up with this growth. The Company has begun to
allocate a larger portion of its staffing to the production and has incurred a
positive learning curve on the productiveness of staff utilization.
The Company's selling expense (which consists of sales expense, marketing costs
and tradeshow expense) totaled $87,000 for the three months ended June 30, 2000
compared to $28,100 for the three months ended June 30, 1999, an increase of
$58,900 or 209.6%. The Company during fiscal 1999 increased its trade show
presence 700% fold from fiscal 1998 and continues to increase its trade show
presence into 2000. Management believes that the additional tradeshow costs
associated with this presence will be realized in increased sales over the next
year as evidenced by the Company's six months of sales for fiscal 2000.
10
The Company's total general and administrative expenses (less selling expense)
increased by over $2,000,000, for the three months ended June 30, 2000. These
costs were primarily due to the Company entering into various consulting
agreements to pursue merger and acquisition candidates and other representative
functions. The Company believes these expenses of this size and magnitude to be
one time occurrences and charges to net income. The Company entered into various
consulting agreements as evidenced the Form S-8's filed during the second
quarter of fiscal year 2000. The Company continues to add management to its
staff.
SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999
RESULTS OF OPERATIONS. Net sales were $853,200 for the six months ended June 30,
2000, an increase of $258,200 or 43.4% compared to net sales of $595,000 for the
six months ended June 30, 1999. The increase in sales is due to the Company
increasing its customer base and new products. Sales for the Company still
continues to grow at an increasing rate not just from repeat customers but from
new customers. The Company continues to increase its presence and exposure in
the advertising markets through increased attendance at trade shows and other
advertising mediums that provide greater exposure. The Company is currently
pursuing an aggressive growth strategy that may include entering new lines and
products, and through the acquisition of complimentary businesses. The Company
has identified various businesses that would compliment the Company's core
business.
Gross margin for the six months ended June 30, 2000 was 45.3%, compared to 49.3%
for the six months ended June 30, 1999. The Company earned $386,200 in gross
profit for the six months ended June 30, 2000 compared to $293,600 for the six
months ended June 30, 1999. The increase in net sales and production
efficiencies, still contribute to the gross margin as a percentage of sales. The
Company through its use of higher quality materials for production, which it
believes decreases replacements and warranty coverage and provide a stronger and
more durable product for sale to the customer and consumer. During fiscal 1999
and the first quarter of fiscal 2000 the Company ramped up and increased
production and manufacturing staff, in order to increase sales, enabling the
Company to fully utilize its production staff to increase gross margins. This is
evident by the Company's continuing ability to increase its sales and maintain a
production facility that keeps up with this growth. The Company has begun to
allocate a larger portion of its staffing to the production and has incurred a
positive learning curve on the productiveness of staff utilization.
The Company's selling expense (which consists of sales expense, marketing costs
and tradeshow expense) totaled $160,600 for the six months ended June 30, 2000
compared to $56,200 for the six months ended June 30, 1999, an increase of
$104,400 or 185.8%. The Company during fiscal 1999 increased its trade show
presence 700% fold from fiscal 1998 and continues to increase its trade show
presence into 2000. Management believes that the additional tradeshow costs
associated with this presence will be realized in increased sales over the next
year as evidenced by the Company's six months of sales for fiscal 2000.
11
The Company's total general and administrative expenses (less selling expense)
increased by over $2,000,000, for the six months ended June 30, 2000. These
costs were primarily due to the Company entering into various consulting
agreements to pursue merger and acquisition candidates and other representative
functions. The Company believes these expenses of this size and magnitude to be
one time occurrences and charges to net income. The Company entered into various
consulting agreements as evidenced the Form S-8's filed during the second
quarter of fiscal year 2000. The Company continues to add management to its
staff.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2000, the Company had cash and cash equivalents of $25,000, a
increase of $24,300 from $900 at December 31, 1999.
Cash used in operating activities was $268,900 during the six-month period ended
June 30, 2000. Use of cash in operating activities consisted mainly of the net
loss for the six-month period of $2,276,700, the offsetting effects of
depreciation and amortization of $55,100, a non-cash issuance of stock for
services of $1,122,700, and fluctuations in certain assets and liabilities.
The Company used $8,800 in investing activities during the first six months of
Fiscal 2000, principally for the purchase of property and equipment of $4,800
(primarily computer equipment), and the loaning of monies to an officer of the
Company of $4,000.
Net cash provided by financing activities for the six-month period ended June
30, 2000 was $302,000 consisting principally of the proceeds from the issuance
of common stock of $300,000 and the offsetting effects of payments on notes
payable of $13,000.
To date, the Company has not invested in derivative securities or any other
financial instruments that involve a high level of complexity or risk. Cash has
been, and the Company contemplates that it will continue to be, used for general
operating purposes.
From time to time, the Company may evaluate potential acquisitions of products,
businesses and technologies that may complement or expand the Company's
business. Any such transactions consummated may use a portion of the Company's
working capital and/or require the issuance of equity or debt.
The Company believes that its current cash and cash equivalent balance along
with the additional financing is insufficient to meet its working capital
expenditures through the near term and will require the Company in seeking
additional capital and or equity. The Company is currently exploring various
financing and credit facilities and continues to conduct a private placement of
its securities.
12
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative
Instruments and Hedging Activities." This statement establishes accounting and
reporting standards for derivative instruments, including some derivative
instruments embedded in other contracts (collectively referred to as
derivatives), and for other hedging activities. The Company will adopt SFAS 133
in Fiscal 2001, in accordance with SFAS 137, which deferred the effective date
of SFAS 133. The adoption of this standard in Fiscal 2001 is not expected to
have a material impact on the Company's consolidated financial statements.
In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation--an interpretation of APB Opinion No. 25" ("FIN 44"). FIN 44
clarifies the application of APB No. 25 to certain issues including: the
definition of an employee for purposes of applying APB Opinion No. 25; the
criteria for determining whether a plan qualifies as a noncompensatory plan; the
accounting consequence of various modifications to the terms of previously fixed
stock options or awards; and the accounting for the exchange of stock
compensation awards in a business combination. FIN 44 is effective July 1, 2000,
but certain conclusions in FIN 44 are applicable retroactively to specific
events occurring after either December 15, 1998 or January 12, 2000. The Company
does not expect the application of FIN 44 to have a material impact on the
Company's financial position or results of operations.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
There are no material legal proceedings to which the Company is currently a
party or to which the property of the Company is subject.
Item 2. CHANGES IN SECURITIES
On June 30, 2000, the Registrant completed a private placement of 312,500 shares
of common stock pursuant to exemptions from prospectus requirements of
applicable securities laws in the United States, at a price of $1.00 per share
of common stock, resulting in gross proceeds to the Registrant of $312,500 from
a total of nine investors.
The offering in United States was made under the exemption from the registration
requirements under the exemption under Rule 506 of Regulation D. These offerings
were made only to sophisticated investors; that is, the investor either alone or
with his purchaser representative(s) has such knowledge and experience in
financial and business matters that he is capable of evaluating the merits and
risks of the prospective investment, or the issuer reasonably believes
immediately prior to making any sale that such purchaser comes within this
description
13
During the period ended June 30, 2000, the Registrant issued a total of 415,000
shares, of which (a) 400,000 shares registered pursuant to a Form S-8 were
issued to an outside third party for services for a total value of $950,000, net
proceeds to the Company of $0, and (b) 15,000 shares registered pursuant to a
Form S-8 were issued to a consultant for services to the Company for a total
value of $18,750, net proceeds of $0. All proceeds were used for working capital
purposes.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
None
Item 6. EXHIBIT AND REPORTS ON FORM 8-K
a) Exhibits
27 Amended Financial Data Schedule
b) Reports on Form 8-K
Current Report on Form 8-K/A dated April 10, 2000.
14
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: December 13, 2000 By: /s/ Gregg Mulholland
---------------------------
Gregg Mulholland
Chief Executive Officer
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
Date: December 13, 2000 By: /s/ Gregg Mulholland
---------------------------
Gregg Mulholland
Chairman of the Board
Chief Executive Officer
Date: December 13, 2000 By: /s/ Jeffrey Jacobsen
---------------------------
Jeffrey Jacobsen
Chief Operating Officer
Director
Date: December 13, 2000 By: /s/ David Ariss
---------------------------
David Ariss
Director
15