U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 2)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 7, 2003
SYNTHETIC TURF CORPORATION OF AMERICA
(Exact name of registrant as specified in its charter)
Nevada
(State or jurisdiction of incorporation or organization)
33-5902
(Commission File Number)
22-2774460
(I.R.S. Employer Identification Number)
7550 24th Avenue South, Suite 168, Minneapolis, Minnesota 55450
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (612) 746-4025
(Former name or former address, if changed since last report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 9, 2002, the Registrant entered into an Agreement
and Plan of Merger ("Agreement"), with ISC Acquisition Inc., a Nevada
corporation and a wholly owned subsidiary of the Registrant,
International Surfacing of Colorado, Inc., a Colorado corporation,
and shareholders of International Surfacing (who together own all of
the issued and outstanding capital shares of that company). Under
the terms of the Agreement, on the closing date, the Registrant will
issue 15,000,000 shares of restricted common stock for all of the
issued and outstanding common stock of International Surfacing
(100,000 shares), which will merge with ISC. On January 7, 2003,
these shares, after being issued, were actually delivered to the
shareholders of International Surfacing and this transaction closed
(as specified under Section 2 of the Agreement).
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Financial Statements.
The Registrant has determined that this acquisition must comply
with Securities and Exchange Commission rules regarding financial
disclosure. Therefore, financial statements are being furnished for
International Surfacing as follows:
(a) audited financial statements for the period from February
22, 2002 (inception) to December 31, 2002;
(b) pro forma financial information.
Exhibits.
Exhibits included are set forth in the Exhibit Index pursuant
to Item 601 of Regulation S-B.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Synthetic Turf Corporation of America
Dated: December 3, 2003 By: /s/ Gary Borglund
Gary Borglund, President
EXHIBIT INDEX
Number Description
2 Agreement and Plan of Merger between the Registrant, ISC
Acquisition Inc., and International Surfacing of Colorado,
Inc. and its shareholders), dated December 9, 2002
(incorporated by reference to Exhibit 2 of the Form 8-K
filed on January 21, 2003).
George Brenner, CPA
A Professional Corporation
10680 W. Pico Boulevard, Suite 260
Los Angeles, California 90064
310/202-6445 - Fax 310/202-6494
INDEPENDENT AUDITOR'S REPORT
Board of Directors
International Surfacing of Colorado, Inc.
Colorado Springs, CO
I have audited the accompanying balance sheet of International
Surfacing of Colorado, Inc., a Colorado corporation, as of December
31, 2002 and the related statements of operations, changes in
shareholders' deficit and cash flows for the period February 22, 2002
(date of inception) through December 31, 2002. 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 audit.
I conducted my audit in accordance with the auditing standards
generally accepted in the United States of America. 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 audit
provides a reasonable basis for my opinion.
In my opinion, such financial statements referred to above present
fairly, in all material respects, the financial condition of the
International Surfacing of Colorado, Inc. as of December 31, 2002 and
the results of operations, shareholders' deficit, and cash flows for
the period February 22, 2002 (date of inception) through December 31,
2002 in conformity with accounting principles generally accepted in
the United States of America.
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 has negative working
capital, negative cash flows from operations and an accumulated
deficit. These factors, 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. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ George Brenner
George Brenner, CPA
Los Angeles, CA
November 10, 2003
INTERNATIONAL SURFACING OF COLORADO, INC.
BALANCE SHEET
DECEMBER 31, 2002
ASSETS
Current assets
Cash in bank $ 0
Property and equipment, at cost
Truck, pledged on note payable 16,000
Other 20,600
36,600
Accumulated depreciation 1,682
Total property and equipment, net 34,918
Total assets $ 34,918
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities
Current portion of note payable 5,400
Bank overdraft 171
Loan payable, including $8,000 accrued interest 48,000
Loans from related parties 20,800
Total current liabilities 74,371
Long-term liabilities
Note payable, net of $5,400 current
portion, secured by truck 9,600
Total liabilities 83,971
Shareholders' deficit
Common stock $0.001 par value; authorized 100,000 shares;
issued and outstanding 100,000 shares 100
Additional paid-in capital 45,568
Accumulated deficit (94,721)
Total shareholders' deficit (49,053)
34,918
See accompanying notes to financial statements
INTERNATIONAL SURFACING OF COLORADO, INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD FEBRUARY 22, 2002 (DATE OF INCEPTION)
THROUGH DECEMBER 31, 2002
Sales $ 178,079
Cost of Sales 147,548
Gross Profit 30,531
General and Administrative Expenses 111,762
Depreciation 1,682
Interest and Bank Charges 11,808
125,252
Net Loss Before Income Taxes (94,721)
Income Tax Expense 0
Net Loss (94,721)
Weighted average number of common shares 100,000
Basic and diluted net loss per common share (0.947)
See accompanying notes to financial statements
INTERNATIONAL SURFACING OF COLORADO, INC.
STATEMENT OF SHAREHOLDERS' (DEFICIT)
FOR THE PERIOD FEBRUARY 22, 2002 (DATE OF INCEPTION)
THROUGH DECEMBER 31, 2002
<CAPTION
Additional
Common Stock Paid -In Accumulated
Shares Amount Capital (Deficit) Total
Balance at February 22,
2002, date of incorporation 0 $ 0 $ 0 $ 0 $ 0
Issuance of common stock 100,000 100 45,568 0 5,668
Net Loss for year (94,721) (94,721)
Balance at 12/31/02 100,000 $ 100 $ 45,568 $ (94,721) $(49,053)
See accompanying notes to financial statements.
INTERNATIONAL SURFACING OF COLORADO, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIOD FEBRUARY 22, 2002 (DATE OF INCEPTION)
THROUGH DECEMBER 31, 2002
Operating activities
Net loss $ (94,721)
Adjustments to reconcile net loss
to net cash required by operating activities
Depreciation 1,682
Changes in operating assets and liabilities
Bank overdraft 171
Loans from related parties 20,800
Total adjustments 20,971
Cash used in operating activities (72,068)
Investing activities
Purchase of property and equipment (36,600)
Cash used in investing activities (36,000)
Financing activities
Loan payable 48,000
Note payable 15,000
Issuance of common stock 45,668
Cash provided by financing activities 108,668
Increase (decrease) in cash and cash equivalents 0
Cash and cash equivalents
Beginning of year 0
End of year 0
See accompanying notes to financial statements.
INTERNATIONAL SURFACING OF COLORADO, INC.
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2002
NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
International Surfacing of Colorado, Inc., a Colorado corporation
("Company"), is a reseller and installer of artificial turf primarily
in childcare, residential and athletic fields. The Company was
incorporated in Colorado on February 22, 2002. The accompanying
financial statements include the period from February 22, 2002
(inception) through December 31, 2002.
NOTE 2. CONTINUED EXISTENCE
The Company has negative working capital $74,371, negative cash
generated from operating activities of $72,068, and a shareholders'
deficit of $49,053. These conditions raise substantial doubt about
the Company's ability to continue as a going concern. The financial
statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or
the amounts and classification of liabilities that may result from
the outcome of this uncertainty.
The Company as set forth in Note 8 "Subsequent Event" has been
acquired by a small public company. Its ability to raise sufficient
working capital to fund operations and become profitable is dependent
on what support the parent company can provide. There can be no
assurance that the Company will be successful in its new organization
structure.
NOTE 3. SIGNIFICANT ACCOUNTING POLICIES
A. Revenue
The accompanying Statement of Operations records all revenue on a
completed contract basis. However, should the Company have a long-
term contract (in excess of one month) the revenue will be recorded
on a percentage of completed basis.
B. 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 and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
C. Property and Equipment
Depreciation is recorded by the straight-line method and lives of 5
to 8 years.
NOTE 4. LOAN PAYABLE
The loan payable is a ninety-day promissory note. The note was paid
off on September 29, 2003 by the issuance of 1,600,000 common stock
shares of the acquiring company (Synthetic Turf Corporation of
America - "STCA") at a value of $.025 per share or an aggregate of $40,000.
STCA has agreed to cover the lender for any deficit resulting from
the lender's sale of the shares for less than $40,000, and the lender
has agreed to return to STCA any shares remaining after the lender
has recouped the 48,000 owed on the Company's indebtedness.
NOTE 5. NOTE PAYABLE
The note payable was executed in connection with the purchase of a
truck from an individual. The note is payable in installments of
$450 per month including interest and is secured by the truck.
NOTE 6. NEW ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission ("SEC")
issued Staff Accounting Bulletin ("SAB") No. 101 ("SAB 101"),
"Revenue Recognition in Financial Statements". SAB 101 provides
guidance on the recognition, presentation, and disclosure of revenues
in financial statements of all public registrants. In October 2000,
the SEC issued a Frequently Asked Questions document related to SAB
101 that provides interpretive guidance.
In June 2001, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 141,
"Business Combinations". SFAS No. 141 addresses the initial
recognition and measurement of goodwill and other intangible assets
acquired in a business combination. SFAS No. 141 is applicable to
business combinations beginning July 1, 2001.
In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets". SFAS No. 142 addresses the recognition and
measurement of goodwill and other intangible assets subsequent to
their acquisition. SFAS No. 142 also addresses the initial
recognition and measurement of intangible assets acquired outside of
a business combination whether acquired individually or with a group
of other assets. This statement provides that intangible assets with
finite useful lives be amortized and that intangible assets with
indefinite lives and goodwill will not be amortized, but will rather
be tested at least annually for impairment.
NOTE 7. RELATED PARTIES
On December 16, 2002 STCA advanced to the Company $15,800. In
addition, one of the directors of the Company advanced to it $5,000.
STCA advanced the funds in anticipation of the closing of the
acquisition, which was completed on January 7, 2003, as part of the
on going funding of the Company by STCA. The funds advanced by the
director were a non-interest loan of which the Company repaid the
principal on September 9, 2003.
NOTE 8. SUBSEQUENT EVENT
The Company was acquired by STCA on January 7, 2003. The Company's
two officers each received 7,500,000 shares of STCA's restricted
common stock, valued at $0.01 per share. Employment agreements were
executed and one of the Company's officers became an officer of STCA.
SYNTHETIC TURF CORPORATION OF AMERICA
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The Unaudited Pro Forma Financial Information reflects financial
information, which gives effect to the purchase of the assets and
assumption of liabilities of International Surfacing of Colorado,
Inc., a Colorado corporation ("IS"), in exchange for 15,000,000
shares of common stock of Synthetic Turf Corporation of America, a
Nevada corporation ("STCA"), valued at $0.01 per share, or $150,000.
The acquisition was effected through STCA's wholly owned subsidiary
ISC Acquisition, Inc., a Nevada corporation. The acquisition of the
net assets of IS closed on January 7, 2003 and was accounted for
under the purchase method of accounting. Such financial information
has been prepared from and should be read in conjunction with the
historical financial statements of STCA and IS.
The Pro Forma Balance Sheet gives effect to the transaction as if it
has occurred on December 31, 2002. The Pro Forma Statement of
Operations gives effect to the transaction as if it had occurred at
the beginning of the year (ignoring the short period January 1
through January 7, 2003) combining the results of operations for the
nine months ended September 30, 2003 for both STCA and IS.
SYNTHETIC TURF CORPORATION OF AMERICA
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 2002
ASSETS
Synthetic Turf International
Corporation Surfacing of Pro Forma Unaudited
Of America Colorado, Inc. Adjustments Pro Forma
Current assets:
Cash and cash equivalents $ - $ - $ - $ -
Due to (from) affiliate 15,800 (15,800) - -
Other receivable 15,000 - - 15,000
Total current assets 30,800 (15,800) - 15,000
Property and equipment, net - 34,918 27,676 62,594
Deposit - Acquisition of IS 150,000 - (150,000) -
Employment Agreements - - 100,000 100,000
Goodwill - - 71,377 71,377
Total Non-Current Assets 150,000 34,918 49,053 233,971
Total Assets 180,800 19,118 49,053 248,971
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current portion-note pay - 5,400 - 5,400
Bank overdraft 3,871 171 - 4,042
Accounts payable and accrued liabilities 155,646 - - 155,646
Due to related parties 86,000 5,000 - 91,000
Notes payable, including Interest of $8,000 403,666 48,000 - 451,666
8% convertible debenture 292,899 - - 292,899
Total Current Liabilities 942,082 58,571 - 1,000,653
Note payable, secured less current portion-$5,400 - 9,600 - 9,600
Total Liabilities 942,082 68,171 - 1,010,253
Stockholders' deficit
Common stock, $0.001 par value 120,166 100 (100) 120,166
Additional paid-in capital 7,756,910 (45,568) (45,568) 7,756,910
Accumulated deficit (8,638,358) (94,721) 94,721 (8,638,358)
Total stockholders' deficit (761,282) (49,053) 49,053 (761,282)
Total Liabilities and Stockholders' Deficit 180,800 19,118 49,053 248,971
See Accompanying Notes to Pro Forma Statements
SYNTHETIC TURF CORPORATION OF AMERICA
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
Synthetic Turf International
Corporation Surfacing of Pro Forma Unaudited
Of America Colorado, Inc. Adjustments Pro Forma
Sales $ 9,257 $ 325,928 $ - $ 335,185
Cost of sales 8,278 267,686 - 275,964
Gross Profit 979 58,242 - 59,221
Expenses
Selling, general and administrative expenses 351,715 184,157 - 535,872
Operating Loss (350,736) (125,915) - (476,651)
Other income (expense) Amortization of
employment contracts - - (24,750) (24,750)
Interest expense (45,416) - - (45,416)
Net loss before income taxes (396,152) (125,915) (24,750) (546,817)
Income tax expense - - - -
Net loss from continuing operations (396,152) (125,915) (24,750) (546,817)
Extraordinary item
Gain on extinguishment of debt 250,148 - - 250,148
Net income (loss) (146,004) (125,915) (24,750) (296,669)
Basic and diluted loss per common share
Loss from continuing operations $(0.003)
Income from extraordinary items 0.002
Net loss $(0.001)
Weighted average number of common stock
used to compute net loss per
weighted average shares 159,429,183
See Accompanying Notes to Pro Forma Financial Statements
SYNTHETIC TURF CORPORATION OF AMERICA
NOTES TO PRO FORMA FINANCIAL STATEMENTS
NOTE 1 - BALANCE SHEET PRO FORMA ADJUSTMENT
To record purchase price of IS's net assets, a negative amount of
$49,053 plus $150,000 common stock value for 15,000,000 common shares
or an aggregate value of $199,053. The latter amount is then
allocated to employment agreements $100,000, revaluation of the
property and equipment $27,676, and the remainder $71,377 to
goodwill.
NOTE 2 - STATEMENT OF OPERATIONS PRO FORM ADJUSTMENT
To record the amortization of employment contracts, the amount of
$100,000 over three years was calculated for the nine-month period.
NOTE 3 - EMPLOYMENT AGREEMENTS
Simultaneously, with the acquisition of the net assets of IS, the
parent company (STCA) entered into three year employment contracts
with the President and Vice President of IS. Basis salaries consist
of cash plus common stock.