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 Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 28, 1999
CALDERA CORPORATION
(Exact name of registrant as specified in its charter)
Florida 1-12023
(State or other jurisdiction of incorporation) (Commission File No.)
133 Richmond Street West M5H 2L3
Suite 401 (Zip Code)
Toronto, Ontario
Canada
(Address of principal executive offices)
Registrant's telephone number, including area code: (416) 777-0477
------------------------------
This amendment to the Report on Form 8-K is being filed to file the
required financials statements related to the acquisition reported upon.
Item 7. Financial Statement and Exhibits
(a) Audited financial statements of Level Jump Financial Group,
Inc. for the nine months ended September 30, 1999, the year
ended December 31, 1998, and for the period from inception to
December 31, 1997, together with the executed auditors report
of BDO Dunwoody LLC
(b) Pro forma financial information of Level Jump Financial Group,
Inc. for the nine months ended Septemberr 30, 1999 and the
year ended December 31, 1998
(c) The following documents are filed herewith as exhibits:
2.1* Agreement and Plan of Exchange dated October 20, 1999 (without
exhibits).
4.1* Voting Agreement between ZDG Holdings Inc. and Brice Scheschuk,
dated October 26, 1999 relating to 252,000 (183,272) shares of
Common Stock.
4.2* Voting Agreement between ZDG Holdings Inc. and Glen Akselrod,
dated October 26, 1999 relating to 252,000 (183,272) shares of
Common Stock.
4.3* Voting Agreement between David Roff and Brice Scheschuk, dated
October 26, 1999 relating to 168,000 (122,181) shares of Common
Stock.
4.4* Voting Agreement between David Roff and Glen Akselrod, dated
October 26, 1999 relating to 168,000 (122,181) shares of Common
Stock.
4.5* Option Agreement between ZDG Holdings Inc. and Brice Scheschuk,
dated October 26, 1999 relating to 252,000 (183,272) shares of
Common Stock
4.6* Option Agreement between ZDG Holdings Inc. and Glen Akselrod,
dated October 26, 1999 relating to 252,000 (183,272) shares of
Common Stock
4.7* Option Agreement between David Roff and Brice Scheschuk, dated
October 26, 1999 relating to 168,000 (122,181) shares of Common
Stock
4.8* Option Agreement between David Roff and Glen Akselrod, dated
October 26, 1999 relating to 168,000 (122,181) shares of Common
Stock
4.9* Voting and Exchange Agreement among thestockpage.com inc., Level
Jump and Robert Landau
4.10* Voting and Exchange Agreement among thestockpage.com inc., Level
Jump and David Roff
4.11* Support Agreement between Level Jump and thestockpage.com inc.
10.1* Employment Agreement between Level Jump and Mr. Robert Landau.
10.2* Employment Agreement between Level Jump and Mr. David Roff.
10.3* Performance Equity Plan of Level Jump Financial Group, Inc.
dated May 1, 1999
99.1* Description of Directors, Officers and Principal Stockholders
and Related Matters 99.2* Statement of Risk Factors
* Previously Filed
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Amendment No. 2 to the report to be signed
on its behalf by the undersigned hereunto duly authorized.
CALDERA CORPORATION
/S/ ROBERT LANDAU
------------------
Name: Robert Landau
Title: President
Date: December 17, 1999
Level Jump Financial Group, Inc.
Consolidated Financial Statements For the nine months
ended September 30, 1999, for the twelve months ended
December 31, 1998 and for the period from inception
to December 31, 1997 (in United States dollars)
Level Jump Financial Group,
Inc. Consolidated Financial
Statements For the nine months
ended September 30, 1999, for
the twelve months ended
December 31, 1998 and for the
period from inception to
December 31, 1997 (in United
States dollars)
Contents
Auditors' Report 2
Consolidated Financial Statements
Balance Sheets 3
Statements of Operations 4
Statements of Shareholders' Equity 5
Statements of Cash Flows 7
Summary of Significant Accounting Policies 9
Notes to Financial Statements 13
- --------------------------------------------------------------------------------
Auditors' Report
- --------------------------------------------------------------------------------
To the Shareholders of
Level Jump Financial Group, Inc.
We have audited the consolidated balance sheets of Level Jump Financial Group,
Inc. as at September 30, 1999, December 31, 1998 and 1997 and the consolidated
statements of shareholders' equity, operations and cash flows for the nine
months ended September 30, 1999, twelve months ended December 31, 1998 and for
the period from August 28, 1997 (date of inception) to December 31, 1997. 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
in Canada. Those standards require that we plan and perform an audit to obtain
reasonable assurance 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.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at September 30,
1999, December 31, 1998 and 1997 and the results of its operations and its cash
flows for nine months ended September 30, 1999, for the twelve months ended
December 31, 1998 and for the period from inception to December 31, 1997 in
accordance with generally accepted accounting principles in the United States.
BDO Dunwoody LLP
Chartered Accountants
Toronto, Ontario
October 25, 1999
2
Level Jump Financial Group, Inc.
Consolidated Balance Sheets
(in United States dollars)
Sept. 30, Dec. 31, Dec. 31,
1999 1998 1997
- ------------------------------------------------------------------------------------------------------------
Assets
Current
Cash and cash equivalents $ 50,717 $ 5,658 $ 308
Investments in marketable securities (Note 2) 15,600 254,375 3,918
Accounts receivable, net of allowances of $nil 460,779 19,289 6,298
Prepaid expenses and deposits 4,013 6,119 -
Deferred income taxes (Note 5) - - 3,311
Due from related parties (Note 10) 22,189 780,694 119
----------------------------------------------
553,298 1,066,135 13,954
Investments in marketable securities (Note 2) 716,902 18,263 -
Fixed assets (Note 3) 35,471 26,032 -
Deferred income taxes (Note 5) 817 136 -
----------------------------------------------
$ 1,306,488 $ 1,110,566 $ 13,954
==============================================
Liabilities and Shareholders' Equity
Current
Accounts payable $ 29,319 $ 40,121 $ -
Accrued liabilities (Note 4) 30,336 478,156 1,144
Deferred income taxes (Note 5) - 16,898 -
Deferred revenues 48,253 - -
Due to related parties (Note 10) - 58,030 10,104
Income taxes payable (Note 5) 599,361 134,083 2,557
---------------------------------------------
707,269 727,288 13,805
---------------------------------------------
Shareholders' equity
Share capital
Authorized
4,999,998 Preferred shares, $.001 par value
1 Preferred share, Class A, $.001 par value
1 Preferred share, Class B, $.001 par value
50,000,000 Common shares, $.001 par value
Issued
1 Preferred share, Class A, $.001 par value (Note 6) - - -
1 Preferred share, Class B, $.001 par value (Note 6) - - -
3,700,000 Common shares (Notes 6 and 8) 3,700 - -
100 Common shares - 72 72
Retained earnings (Note 7) 595,519 329,350 2,402
Accumulated other comprehensive income (loss) - 53,856 (2,325)
---------------------------------------------
599,219 383,278 149
---------------------------------------------
$ 1,306,488 $ 1,110,566 $ 13,954
=============================================
The accompanying summary of significant accounting policies and notes are an
integral part of these financial statements.
2
Level Jump Financial Group, Inc.
Consolidated Statements of Operations
(in United States dollars)
For the For the For the
Nine Twelve Period from
Months Months Inception
Ended Ended to
Sep. 30, Dec. 31, Dec. 31,
1999 1998 1997
- ------------------------------------------------------------------------------------------------------------
Revenue $ 2,277,013 $ 1,067,971 $ 45,753
Cost of revenues 435,367 361,530 28,471
---------------------------------------------
Gross profit 1,841,646 706,441 17,282
---------------------------------------------
Operating expenses
Sales and marketing 75,659 26,751 12,500
Product development 10,480 11,364 -
General and administration 550,278 307,497 2,110
Management compensation 333,481 803,614 -
---------------------------------------------
969,898 1,149,226 14,610
---------------------------------------------
Income (loss) from operations 871,748 (442,785) 2,672
Investment income, net 210,400 886,677 517
---------------------------------------------
Income before income taxes 1,082,148 443,892 3,189
Provision for income taxes 451,541 116,944 787
---------------------------------------------
Net income for the period $ 630,607 $ 326,948 $ 2,402
=============================================
Basis earnings per share (Note 9) $ 0.17 $ 0.09 $ 0.00
Diluted earnings per share (Note 9) $ 0.09 $ 0.09 $ 0.00
Shares used in per share
calculation - basic 3,700,000 3,700,000 3,700,000
Shares used in per share
calculation - diluted 6,829,570 3,700,000 3,700,000
==============================================
The accompanying summary of significant accounting policies and notes are an
integral part of these financial statements.
4
Level Jump Financial Group, Inc.
Consolidated Statements of Shareholders' Equity
(in United States dollars)
For the nine months ended September 30, 1999,
for the twelve months ended December 31, 1998
and for the period from inception to December 31, 1997
- --------------------------------------------------------------------------------
Accumulated
Other
Compre-
hensive Compre-
Preferred Shares Common Shares Retained Income hensive
Number Amount Number Amount Earnings (Loss) Total Income
-------------------------------------------------------------------------------------
Issuance of common shares - $ - 100 $ 72 $ - $ - $ 72
Comprehensive income
Net income - - - - 2,402 - 2,402 $ 2,402
Net unrealized loss on securities,
net of reclassification adjustment
(see disclosure) - - - - - (2,325) (2,325) (2,325)
-------
Comprehensive income ------------------------------------------------------------------------------ $ 77
========
Balance at December 31, 1997 - - 100 72 2,402 (2,325) 149
Comprehensive income
Net income - - - - 326,948 - 326,948 $326,948
Net unrealized gains on securities,
net of reclassification adjustment
(see disclosure) - - - - - 56,181 56,181 56,181
--------
Comprehensive income ----------------------------------------------------------------------------- 383,129
========
Balance at December 31, 1998 - - 100 72 329,350 53,856 383,278
Dividends paid - - - - (364,510) - (364,510)
Issuance of preferred share, Class A 1 - - - - - -
Issuance of preferred share, Class B 1 - - - - - -
Issuance of common shares - - 3,700,000 37,000 - - 37,000
Change in par value (Note 6(b)) - - - (33,300) - - (33,300)
Exchange of common shares for
exchangeable preferred shares in
subsidiary - - (100) (72) 72 - -
Comprehensive income
Net income - - - - 630,607 - 630,607 $ 630,607
Net unrealized loss on securities,
net of reclassification adjustment
(see disclosure) - - - - - (53,856) (53,856) (53,856)
---------
Comprehensive income ------------------------------------------------------------------------------- $ 576,751
=========
Balance at September 30, 1999 2 $ - 3,700,000 $ 3,700 $ 595,519 - $ 599,219
=========================================================================================
The accompanying summary of significant accounting policies and notes are an
integral part of these financial statements.
5
Level Jump Financial Group, Inc.
Consolidated Statements of Shareholders' Equity (continued)
(in United States dollars)
For the nine months ended September 30, 1999,
for the twelve months ended December 31, 1998
and for the period from inception to December 31, 1997
- --------------------------------------------------------------------------------
Disclosure of reclassification adjustment:
Unrealized holding loss arising during the five months
ended December 31, 1997 $ (2,196)
Less: Reclassification adjustment for realized capital
gains included in net income 1,583
----------
Unrealized loss on securities (3,779)
Less: Tax recovery 1,454
----------
Net unrealized loss on securities $ (2,325)
==========
Unrealized holding gains arising during the twelve months
ended December 31, 1998 $ 981,767
Less: Reclassification adjustment for realized capital
gains included in net income 890,463
----------
Unrealized gains on securities 91,304
Less: Tax expense (35,123)
----------
Net unrealized gains on securities $ 56,181
==========
Unrealized holding gains arising during the nine months
ended September 30, 1999 $ 126,712
Less: Reclassification adjustment for realized capital gains
included in net income 214,237
----------
Unrealized loss on securities (87,525)
Less: Tax recovery 33,669
----------
Net unrealized loss on securities $ (53,856)
==========
The accompanying summary of significant accounting policies and notes are an
integral part of these financial statements.
6
Level Jump Financial Group, Inc.
Consolidated Statements of Cash Flows
(in United States dollars)
For the For the For the
Nine Twelve Period from
Months Months Inception
Ended Ended to
Sep. 30, Dec. 31, Dec. 31,
1999 1998 1997
---------------------------------------------
Cash flows from operating activities
Net income $ 630,607 $ 326,948 $ 2,402
Adjustments to reconcile net cash from operations
Amortization 10,023 6,748 -
Bad debts 149,000 140,625 -
Release from accrued liabilities (196,750)
Deferred income taxes 16,091 (15,050) (1,857)
Realized capital gains (214,237) (890,463) (1,583)
Fees satisfied by securities (1,401,392) (1,067,971) (28,944)
Consulting and compensation
expenses satisfied by securities 275,597 849,059 -
Changes in assets and liabilities
Accounts receivable, net (441,490) (12,991) (6,298)
Prepaid expenses and deposits 2,106 (6,119) -
Accounts payable 114,198 (116,218) -
Accrued liabilities (447,820) 477,012 1,144
Deferred revenues 48,253 - -
Income taxes 465,278 131,526 2,557
--------------------------------------------
(990,536) (176,894) (32,579)
--------------------------------------------
Cash flows from investing activities
Due from related parties 910,380 (396,339) (119)
Purchases of fixed assets (19,462) (32,780) -
Purchase of marketable securities - (117,544) -
Proceeds from sale marketable securities 563,517 680,981 22,830
--------------------------------------------
1,454,435 134,318 22,711
--------------------------------------------
Cash flows from financing activities
Due to related parities (58,030) 47,926 10,104
Proceeds from issuance of common shares 3,700 - 72
Dividends (364,510) - -
--------------------------------------------
(418,840) 47,926 10,176
--------------------------------------------
Net increase in cash and cash equivalents
during the period 45,059 5,350 308
Cash and cash equivalents, beginning of period 5,658 308 -
--------------------------------------------
Cash and cash equivalents, end of period $ 50,717 $ 5,658 $ 308
============================================
The accompanying summary of significant accounting policies and notes are an
integral part of these financial statements.
7
Level Jump Financial Group, Inc.
Consolidated Statements of Cash Flows (continued)
(in United States dollars)
For the For the For the
Nine Twelve Period from
Months Months Inception
Ended Ended to
Sep. 30, Dec. 31, Dec. 31,
1999 1998 1997
----------------------------------------------
Supplementary schedule of non-cash investing
and financing activities:
Marketable securities loaned to two officers and
directors for employee profit sharing plan $ - $ 360,443 $ -
Marketable securities loaned to two officers and
directors (included in due from related parties) 151,875 384,236 -
Marketable securties received for services not
rendered (included in accounts payable) 125,000 (125,000) -
Loan satisfied by marketable securities (included
in accounts payable) - (31,339) -
Deferred taxes on unrealized gains (losses) of
marketable securities - 33,669 (1,454)
============================================
8
Level Jump Financial Group, Inc.
Summary of Significant Accounting Policies
(in United States dollars)
September 30, 1999 and December 31, 1998 and 1997
- --------------------------------------------------------------------------------
Nature of Business
and Basis of Level Jump Financial Group, Inc. (the "Company") is
Presentation developing an Internet financial portal and market data
Internet delivery service. The Company, through its
wholly-owned Canadian subsidiary thestockpage.com inc.
("thestockpage.com"), offers Internet based investor
relations services to publicly traded or listed companies.
The Company was incorporated on March 29, 1999 in the State
of Colorado.
On June 1, 1999 the Company acquired 100 percent of
thestockpage.com, a company that has been owned and operated
by the shareholders the Company. thestockpage.com was
incorporated in Canada and began operations on August 28,
1997.
The acquisition of thestockpage.com has been accounted for
on a continuity of interest basis (Note 1), therefore the
financial statements reflect the financial position, results
of operations and changes in cash flows of thestockpage.com
to the date of the transaction and the combined financial
position, results of operations and changes in cash flows
from the date of incorporation of the Company.
The year end of the Company is December 31, and the
financial statements present the interim results to
September 30. Results of operations for the interim period
presented may not be indicative of annual results.
These consolidated financial statements have been prepared
by management in accordance with generally accepted
accounting principles in the United States.
The accompanying financial statements are stated in United
States dollars, the "functional currency" because the
majority of operations are conducted in the United States.
The Company and its subsidiaries maintain their books and
records in US dollars.
Principles of The accompanying consolidated financial statements include
Consolidation the accounts of the Company and its wholly owned
subsidiaries, Level Jump Asset Management, Inc. and
thestockpage.com.
Non-Monetary From time to time, the Company enters into transactions that
Transactions involve either the receipt or distribution of common shares
and/or options of public companies.
In instances where the Company receives one of a combination
of cash, common shares and/or options for the services it
provides, the Company values the common shares at the bid
price at the open of trading on the date a contract is
signed, and values the options on common shares using the
Black Scholes option pricing model using assumptions at the
date the contract is signed.
9
Level Jump Financial Group, Inc.
Summary of Significant Accounting Policies (continued)
(in United States dollars)
September 30, 1999 and December 31, 1998 and 1997
- --------------------------------------------------------------------------------
Non-Monetary
Transactions In instances where the Company pays out commissions or
(continued) consulting fees to individuals and investor relations firms
for services performed, the Company will distribute
securities held in other public companies as consideration.
These transactions are valued at the open price of the
securities issued on the earlier of the date the newsletter
is issued or, if a contract exists with the individual or
investor relations firm, the date the contract is signed.
The Company has compensated or loaned to its shareholders
and management one of a combination of cash and securities
held in other public companies. These transactions are
recorded as a loan or as management compensation on the date
the securities are transferred to the shareholders and are
valued at the price on the date of transfer.
Revenue Investor relations consulting revenues are recognized on the
Recognition date the Company issues its investment newsletter with the
client's profile.
Amounts received prior to the issuance of the newsletter are
recorded as deferred revenue.
Internet banner advertising revenues are recognized when
cash is received by the Company from a business partner that
provides market information to thestockpage.com's web site
and co-shares advertising revenues.
Cost of Revenues Cost of revenues include commissions which the Company pays
to individuals or companies that identify a customer that
contracts the Company to provide investor relations services
and are recorded when the related revenue has been
recognized.
Cash and Cash Cash and cash equivalents include cash and all highly liquid
Equivalents financial instruments with purchased maturities of three
months or less.
Investments All highly liquid instruments are classified as
available-for-sale and those with original maturities
greater than three months and current maturities less than
twelve months from the balance sheet date are considered
short term investments.
The Company's investments in common shares are classified as
available-for-sale. Freely tradable common shares are
considered short term investments as the Company intends to
hold them for less than twelve months from the balance sheet
date. Restricted common shares under applicable United
States securities laws are considered long term investments.
The Company's investments in freely tradable common shares
are reported at fair value based on quoted market prices.
Any realized gains or losses and "other than temporary"
declines in value, if any, on available-for-sale securities
are reported in investment income as incurred. Realized
gains and losses on the sales of investments
available-for-sale are determined using the specific
identification method.
10
Level Jump Financial Group, Inc.
Summary of Significant Accounting Policies (continued)
(in United States dollars)
September 30, 1999 and December 31, 1998 and 1997
- --------------------------------------------------------------------------------
Investments The Company's investments in restricted common shares are
(continued) reported at cost. Any "other than temporary" declines in
value, if any, are reported in investment income as
incurred. On the date restricted common shares become
eligible for resale through registration or in accordance
with Rule 144 of the Securities Act of 1933, the Company
considers these securities freely tradable, considers them
short term investments and reports them at fair value based
on quoted market prices.
The options are reported at fair value on the date the
contract is signed based on the Black Scholes option pricing
model. Any "other than temporary" declines in value, if any,
are reported in investment income as incurred.
Fixed Assets Fixed assets are recorded at cost less accumulated
amortization. Amortization is provided for at rates intended
to write off the assets over the estimated useful lives, as
follows:
Computer equipment - 3 years straight line
Furniture and fixtures - 5 years straight line
Income Taxes The Company accounts for income taxes under the asset and
liability method as required by SFAS No. 109, "Accounting
for Income Taxes", issued by the Financial Accounting
Standards Board ("FASB"). Under this method, deferred income
tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the
financial reporting and tax bases of assets and liabilities.
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.
Share Options The Company applies the recognition and measurement
principles of Accounting Principles Board ("APB") Opinion
No. 25, "Accounting for Stock Issued to Employees", and the
disclosure provision of FASB SFAS No. 123, "Accounting for
Stock-Based Compensation", in accounting for stock options
granted to employees. Under APB 25, compensation cost is
recognized over the vesting period based on the difference,
if any, on the date of grant between the fair value of the
Company's stock and the amount an employee must pay to
acquire the stock.
Earnings Per Basic earnings (loss) per share is computed using the
Share weighted average number of common shares that are
outstanding during the period. Diluted earnings (loss) per
share is computed using the weighted average number of
common and common equivalent shares outstanding during the
period. Common equivalent shares consist of the incremental
common shares issuable upon the exercise of stock options
using the treasury stock method and the exchangeable
preferred shares issued and outstanding in thestockpage.com
which in turn can be exchanged into common shares of the
Company.
11
Level Jump Financial Group, Inc.
Summary of Significant Accounting Policies (continued)
(in United States dollars)
September 30, 1999 and December 31, 1998 and 1997
- --------------------------------------------------------------------------------
Impairment Management reviews assets for impairment whenever events or
of Assets changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. Management assesses
impairment by comparing the carrying amount to individual
cash flows. If deemed impaired, measurement and recording of
an impairment loss is based on the fair value of the asset.
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, disclosure of contingent
assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and
expenses during the reported period. Actual results could
differ from those estimates.
Allowance for
Doubtful Management reviews accounts receivable for collectibility on
Accounts an ongoing basis, and records an allowance for uncollectable
accounts. The establishment of the allowance relies on the
judgment of management, on historical precedent and
expectations as to future collections.
Compehensive In June 1997, the FASB issued SFAS No. 130, "Reporting
Income Comprehensive Income", which was adopted by the Company.
SFAS No. 130 establishes standards for reporting and display
of comprehensive income and its components in an entity's
financial statements. Comprehensive income as defined
includes all changes in equity (net assets) during a period
from non-owner sources. Accumulated other comprehensive
income, as presented on the accompanying balance sheets,
consists of the net unrealized gains on available-for-sale
securities, net of the related tax effect.
12
Level Jump Financial Group, Inc.
Notes to Consolidated Financial Statements
(in United States dollars)
September 30, 1999 and December 31, 1998 and 1997
- --------------------------------------------------------------------------------
1. Acquisition of thestockpage.com inc.
On June 1, 1999, thestockpage.com underwent an internal reorganization
whereby the two common shareholders exchanged all 100 common shares for
9,300,000 exchangeable preferred shares. The exchangeable preferred shares
can be exchanged on a one-for-one basis into 9,300,000 common shares of
Level Jump Financial Group, Inc. Immediately after the above transaction,
the Company entered into a Support Agreement and Voting and Exchange
Agreement which gives the exchangeable preferred shares economically
equivalent rights as the common shares of the Company with respect to
dividend payments, liquidation, reorganization, and changes. The Company
then immediately subscribed for and purchased 100 common shares of
thestockpage.com inc. for consideration of $100. In addition, the Company
issued one Class A and one Class B preferred shares to the previous common
shareholders of thestockpage.com. The Class A and B preferred shares give
the holders voting rights as if the holders were common shareholders of the
Company in a number equivalent to the number of exchangeable preferred
shares issued and outstanding.
This acquisition has been accounted for on a continuity of interest basis
since both companies were controlled by the same shareholders. The assets
and liabilities of thestockpage.com have been recorded at their carrrying
amounts. The financial statements present the accounts of thestockpage.com
to June 1, 1999 and the consolidated with Level Jump Financial Group, Inc.
from March 29, 1999, the Company's date of incorporation. The net assets of
thestockpage.com on the date of the acquisition, at their carrying amounts,
were as follows:
Cash and cash equivalents $ 128,856
Accounts receivable 550,000
Other current assets 186,856
Long-term assets 176,731
Current liabilities (585,614)
-----------------
Net assets $ 456,829
=================
- --------------------------------------------------------------------------------
2. Investments in Marketable Securities
The cost and estimated market values of the Company's marketable securities
are as follows:
Gross Gross Estimated
Unrealized Unrealized Market
September 30, 1999 Cost Gains Losses Value
----------------------------------------------------------------------------
Common shares $ 15,600 $ - $ - $ 15,600
===================================================
December 31, 1998
----------------------------------------------------------------------------
Common shares $ 166,850 $143,775 $(56,250) $ 254,375
====================================================
December 31, 1997
----------------------------------------------------------------------------
Common shares $ 7,697 $ - $ (3,779) $ 3,918
====================================================
13
Level Jump Financial Group, Inc.
Notes to Consolidated Financial Statements
(in United States dollars)
September 30, 1999 and December 31, 1998 and 1997
- --------------------------------------------------------------------------------
2. Investments in Marketable Securities (continued)
All investments in freely tradable common shares held by the Company have
been classified as available-for-sale and are being carried at the estimated
market value at September 30, 1999 and December 31, 1998 and 1997. The net
change in the net unrealized holding gain (loss) was a decrease of $53,856,
an increase of $56,181 and a decrease of $2,325 at September 30, 1999 and
December 31, 1998 and 1997.
All investments in common shares that are restricted from resale and in
options to purchase common shares have been classified as long term
investments and are being carried at cost. The estimated market values are
$3,553,557 (1998 - $171,314).
Activity related to the sales and maturities of investment is as follows:
Twelve For the
Nine Months Months Period from
Ended Ended Inception to
Sep. 30, Dec. 31, Dec. 31,
1999 1998 1997
---------------------------------------------------
Purchase of securities $ - $ 117,544 $ -
Fees satisfied by securities 1,401,392 1,067,971 28,944
Proceeds from sales and maturities of
investments 563,517 680,981 22,830
Consulting and compensation expenses
satisfied by securities 275,597 849,059 -
Gross realized gains 304,004 920,355 1,583
Gross realized losses (89,767) (29,892) -
14
Level Jump Financial Group, Inc.
Notes to Consolidated Financial Statements
(in United States dollars)
September 30, 1999 and December 31, 1998 and 1997
- --------------------------------------------------------------------------------
3. Fixed Assets
Fixed assets consisted of the following:
Twelve For the
Nine Months Months Period from
Ended Ended Inception to
Sep. 30, Dec. 31, Dec. 31,
1999 1998 1997
---------------------------------------------------
Furniture and fixtures $ 11,419 $ 10,771 $ -
Computer equipment 40,823 22,009 -
---------------------------------------------------
52,242 32,780 -
Less: Accumulated amortization 16,771 6,748 -
---------------------------------------------------
Net book value $ 35,471 $ 26,032 $ -
===================================================
Amortization expense was $10,023, $6,748 and NIL at September 30, 1999 and
December 31, 1998 and 1997.
4. Accrued Liabilities
Accrued liabilities consisted of the following:
Twelve For the
Nine Months Months Period from
Ended Ended Inception to
Sep. 30, Dec. 31, Dec. 31,
1999 1998 1997
---------------------------------------------------
General and administrative expenses $ 10,002 $ - $ -
Employees profit sharing plan - 360,443 -
Sales tax (17,573) (8,457) 1,144
Payable on share exchange 30,000 - -
Shares received for services not rendered - 125,000 -
Payroll deductions 7,907 1,170 -
---------------------------------------------------
$ 30,336 $ 478,156 $ 1,144
===================================================
15
Level Jump Financial Group, Inc.
Notes to Consolidated Financial Statements
(in United States dollars)
September 30, 1999 and December 31, 1998 and 1997
- --------------------------------------------------------------------------------
5. Income Taxes
The Company's wholly owned subsidiary, thestockpage.com resides in the
Province of Ontario, Canada and is taxable at the federal and provincial
levels within Canada. In 1999, the Company has no taxes payable in any other
jurisdictions. The provision (benefit) for income taxes is composed of the
following:
Twelve For the
Nine Months Months Period from
Ended Ended Inception to
Sep. 30, Dec. 31, Dec. 31,
1999 1998 1997
---------------------------------------------------
Current:
Federal $ - $ - $ -
State - - -
Foreign 435,450 131,994 2,644
---------------------------------------------------
435,450 131,994 2,644
---------------------------------------------------
Deferred:
Federal - - -
State - - -
Foreign 16,091 (15,050) (1,857)
---------------------------------------------------
16,091 (15,050) (1,857)
---------------------------------------------------
$ 451,541 $ 116,944 $ 787
====================================================
The following is a reconciliation of income tax computed at the federal
statutory rate to the provision for taxes:
Twelve For the
Nine Months Months Period from
Ended Ended Inception to
Sep. 30, Dec. 31, Dec. 31,
1999 1998 1997
---------------------------------------------------
Tax expense computed at statutory rate $ 367,930 $ 150,923 $ 478
Increase (reduction) in taxes resulting from:
Tax rate differential on foreign subsidiary 73,567 (33,979) 309
Valuation allowance on deferred tax assets 10,044 - -
---------------------------------------------------
$ 451,541 $ 116,944 $ 787
===================================================
Income taxes payable as at September 30, 1999 includes approximately $14,000 of
interest and penalties.
16
Level Jump Financial Group, Inc.
Notes to Consolidated Financial Statements
(in United States dollars)
September 30, 1999 and December 31, 1998 and 1997
- --------------------------------------------------------------------------------
5. Income Taxes (continued)
In 1998 the Company's effective income tax rate is lower than what would be
expected if the federal statutory rate was applied to income from continuing
operations primarily because the Company was eligible for small business
deduction in Canada and the Company pays tax on only 75 percent of capital
gains in Canada.
Deferred income taxes reflect the tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. The
components of the deferred income tax assets and liabilities are as
follows:
Twelve For the
Nine Months Months Period from
Ended Ended Inception to
Sep. 30, Dec. 31, Dec. 31,
1999 1998 1997
---------------------------------------------------
Current deferred income tax assets:
Short term investments in marketable securities $ - $ - $ 1,454
Net operating loss carryforwards - 16,771 1,857
---------------------------------------------------
- 16,771 3,311
Current deferred income tax liabilities:
Short term investments in marketable securities - 33,669 -
---------------------------------------------------
Gross deferred tax liabilities - 33,669 -
---------------------------------------------------
Net current deferred tax assets (liabilities) $ - $ (16,898) $ 3,311
===================================================
Twelve For the
Nine Months Months Period from
Ended Ended Inception to
Sep. 30, Dec. 31, Dec. 31,
1999 1998 1997
---------------------------------------------------
Non-current deferred income tax assets:
Fixed assets $ 817 $ 136 $ -
Organizational expenses 443 - -
Net operating loss carryforwards 9,601 - -
Valuation allowance (10,044) - -
---------------------------------------------------
Net non-current deferred income tax assets $ 817 $ 136 $ -
===================================================
The net change in the deferred income tax asset valuation allowance was an
increase of $10,044 at September 30, 1999. The Company recorded no valuation
allowance at December 31, 1998 and 1997. At September 30, 1999, the Company
has net operating losses of approximately $64,000 which expire in 2019.
A deferred income tax liability provision has not been booked for the
undistributed earnings of the Company's foreign subsidiary as all
undistributed earnings are expected to be reinvested in the subsidiary.
Determination of the deferred income tax liability that would have resulted
from a distribution of earnings was not practicable.
17
Level Jump Financial Group, Inc.
Notes to Consolidated Financial Statements
(in United States dollars)
September 30, 1999 and December 31, 1998 and 1997
- --------------------------------------------------------------------------------
6. Shareholders' Equity
(a) Preferred Shares
At September 30, 1999, the Company had 4,999,998 authorized preferred
shares, $.001 par value, of which none were issued and outstanding.
The Company had one Class A preferred share, $.001 par value
authorized, issued and outstanding. The Class A preferred share
entitles a previous shareholder of thestockpage.com to voting rights
as if the holder was a common shareholder of the Company in a number
equivalent to the number of exchangeable preferred shares (see below)
of thestockpage.com held by the holder of the Class A preferred share.
There are no other rights attached to the Class A preferred share. At
September 30, 1999, the Class A preferred shareholder had voting
rights on the equivalent of 5,580,000 common shares of the Company.
The Company had one Class B preferred share, $.001 par value
authorized, issued and outstanding. The Class B preferred share
entitles a previous shareholder of thestockpage.com to voting rights
as if the holder was a common shareholder of the Company in a number
equivalent to the number of exchangeable preferred shares (see below)
of thestockpage.com held by the holder of the Class B preferred share.
There are no other rights attached to the Class B preferred share. At
September 30, 1999, the Class B preferred shareholder had voting
rights on the equivalent of 3,720,000 common shares of the Company.
(b) Common Shares
At September 30, 1999, the Company had 50,000,000 authorized common
shares of which 3,700,000 were issued and outstanding. On May 18,
1999, the Company changed the par value of its common shares from $.01
to $.001 per common share resulting in excess share capital of $33,300
which was subsequently distributed to the shareholders.
(c) Exchangeable Preferred Shares of thestockpage.com
As described in Note 1, on June 1, 1999, thestockpage.com underwent an
internal reoganization which resulted in 100 common shares being
exchanged for 9,300,000 exchangeable preferred shares. These can be
exchanged on a one-for-one basis into 9,300,000 common shares of the
Company, Level Jump Financial Group, Inc. The Company then entered
into a Support Agreement and Voting and Exchange Agreement which gives
the exchangeable preferred shares economically equivalent rights as
the common shares of the Company as they are entitled to any dividends
on common shares declared by the Company and any liquidation proceeds
similar to other common shares. The exchangeable preferred shares have
no voting rights in the Company. At September 30, 1999
thestockpage.com had an unlimited number of authorized exchangeable
preferred shares, no par value, of which 9,300,000 were issued and
outstanding, which in turn can be exchanged into 9,300,000 common
shares of the Company.
18
Level Jump Financial Group, Inc.
Notes to Consolidated Financial Statements
(in United States dollars)
September 30, 1999 and December 31, 1998 and 1997
- --------------------------------------------------------------------------------
7. Dividends
On May 25, 1999, prior to the acquisition of thestockpage.com by the
Company, thestockpage.com's board of directors declared and paid a dividend
on thestockpage.com's shares of $264,941 from thestockpage.com's capital
dividend account and a special dividend on thestockpage.com's common shares
of $99,569. The total charge to retained earnings was $364,510.
8. Stock Options
On May 1, 1999, the Company approved the 1999 Performance Equity Plan, a
fixed employee stock-based compensation plan that allows the Company to
grant incentive stock options, non-qualified stock options and stock
purchase rights to employees, officers and directors to purchase a maximum
of 2,000,000 common shares of the Company. Stock options granted under the
plans are for periods not to exceed ten years, and must be issued at prices
not less than 100%, for incentive and non-qualified stock options, of the
fair market value of the stock on the date of grant as determined by the
board of directors. The vesting period to exercise the option to purchase
stock is determined by the board of directors and ranges from one to five
years, subject to a holding period of not less than six months from the
date of grant of an award under this plan.
Activity under the Company's stock options plan is summarized as follows:
Weighted
Average
Available Options Price Per
for Grant Outstanding Share
---------------------------------------------------
Balance at December 31, 1998 - - $ -
Common shares reserved 2,000,000 - -
Options granted, option price equal to
fair market value (150,000) 150,000 0.70
Options granted, option price greater
than fair market value (1,000,000) 1,000,000 1.50
Options cancelled - - -
Options exercised - - -
---------------------------------------------------
Balance at September 30, 1999 850,000 1,150,000 $ 1.3957
---------------------------------------------------
19
Level Jump Financial Group, Inc.
Notes to Consolidated Financial Statements
(in United States dollars)
September 30, 1999 and December 31, 1998 and 1997
- --------------------------------------------------------------------------------
8. Stock Options (continued)
The following table summarizes information concerning outstanding and
exercisable stock options at September 30, 1999.
Options Outstanding Option Exercisable
Weighted Weighted Weighted
Average Average Average
Remaining Exercise Exercise
Number Contractual Price Number Price
Exercise Price Outstanding Life (in Years) Per Share Exercisable Per Share
- ------------------------------------------------------------------------------------------------------------
$0.50 135,000 6.4 $0.50 27,500 $0.50
1.00 200,000 4.6 1.00 200,000 1.00
1.25 200,000 5.6 1.25 - -
1.50 200,000 6.6 1.50 - -
1.75 200,000 7.6 1.75 - -
2.00 200,000 8.6 2.00 - -
2.50 15,000 7.4 2.50 - -
-----------------------------------------------------------------------------------
1,150,000 6.6 $1.3957 227,500 $0.9396
-----------------------------------------------------------------------------------
The Company applies APB Opinion No. 25 in accounting for its fixed employee
stock compensation plan. Accordingly, no compensation expense has been
recognized for the nine months ended September 30, 1999. Had compensation
expense been determined based on the fair value at the grant dates as
prescribed in FASB SFAS No. 123, the Company's results would have been as
follows:
Nine Months
Ended
September 30,
1999
-------------
Net income
As reported $ 630,607
Pro-forma 625,167
The fair value of each stock option grant was determined on the date of
grant using the minimum value method. The weighted average fair market value
of a stock option with an exercise price equal to the estimated market price
of a common share on the date of grant for the nine months ended September
30, 1999 was $0.1296. The weighted average fair market value of a stock
option with an exercise price that exceeds the estimated market price of a
common share on the date of grant for the nine months ended September 30,
1999 was $0.00. The assumptions used to estimate fair value were as follows:
Nine Months
Ended
September 30,
1999
--------------
Dividend yield -
Risk-free interest rate 5.62%
Expected life 3.5 Years
Expected volatility -
Because additional stock options are expected to be granted each year, the
above pro forma disclosure is not representative of pro forma effects on
reported financial results for future years.
20
Level Jump Financial Group, Inc.
Notes to Consolidated Financial Statements
(in United States dollars)
September 30, 1999 and December 31, 1998 and 1997
- --------------------------------------------------------------------------------
9. Earnings Per Share
The computation of basic and diluted earnings per share were as follows:
Twelve For the
Nine Months Months Period from
Ended Ended Inception to
Sep. 30, Dec. 31, Dec. 31,
1999 1998 1997
---------------------------------------------------
Basic:
Net income attributable to common shares $ 630,607 $ 326,948 $ 2,402
---------------------------------------------------
Weighed average common shares
outstanding 3,700,000 3,700,000 3,700,000
---------------------------------------------------
Basic earnings per share $ 0.17 $ 0.09 $ 0.00
---------------------------------------------------
Diluted:
Adjusted income attributable to common
shares $ 630,607 $ 326,948 $ 2,402
---------------------------------------------------
Weighted average common shares
outstanding 6,800,000 3,700,000 3,700,000
---------------------------------------------------
Assumed exercise of stock options,
net of common shares assumed
repurchased with the proceeds 29,570 - -
---------------------------------------------------
Adjusted weighted average common
shares outstanding 6,829,570 3,700,000 3,700,000
---------------------------------------------------
Diluted earnings per share $ 0.09 $ 0.09 $ 0.00
---------------------------------------------------
The weighted average common shares outstanding during the year as used in
the computation of basic earnings per share is represented by 3,700,000
common shares issued.
The weighted average common shares outstanding during the year as used in
the computation of diluted earnings per share is represented by 3,700,000
for the period of inception to December 31, 1997, and for the twelve months
ended December 31, 1998. For the nine months ended September 30, 1999, it is
represented by the sum of 3,700,000 common shares issued and the weighted
average of 9,300,000 exchangeable preferred shares issued and outstanding in
thestockpage.com since June 1, 1999, which in turn can be exchanged into
9,300,000 common shares of the Company.
21
Level Jump Financial Group, Inc.
Notes to Consolidated Financial Statements
(in United States dollars)
September 30, 1999 and December 31, 1998 and 1997
- --------------------------------------------------------------------------------
10. Related Party Transactions
Included in amounts due from related parties at September 30, 1999 are
loan receivables of $21,800 from one officer and shareholder with no
interest rate and a maturity date of December 31, 1999. At December 31,
1998, the Company had loan receivables of $555,423 and $225,271
respectively from two officers and shareholders with no interest rate and
a maturity date of September 15, 1999.
Included in amounts due to related parties at December 31, 1998 is a loan
in the amount of $53,836 made to a subsidiary of the Company, by Rolling
Capital Corporation, a corporation owned by the shareholders of the
Company with no interest and a maturity date of September 15, 1999. The
amount was paid in 1999.
Included in amounts due to related parties at December 31, 1997 are loan
payables of $10,104 to a related party of an officer and shareholder with
no interest rate and no maturity date of which $4,194 and $Nil were unpaid
at December 31, 1998 and September 30, 1999 respectively.
All of the above amounts were recorded at the exchange value.
- --------------------------------------------------------------------------------
11. Concentrations of Credit Risk and Business Concentration
Financial instruments that potentially subject the Company to significant
concentration of credit risk consist primarily of cash and cash
equivalents, short and long term investments and accounts receivable.
At any point in time, the Company holds investments in very few issuers
and is subject to significant credit risk concentrations. The common
shares held by the Company are thinly traded and subject to significant
price fluctuations. Common shares that are restricted as to resale and
options to purchase common shares cannot be sold for time periods that can
be as long as two years.
Accounts receivable are unsecured and are derived from revenues earned
from customers primarily located in the United States. At any point in
time, substantially all of the accounts receivable balance may be
comprised of one customer. This exposes the Company to significant credit
risk concentrations. The Company performs evaluations of its customers and
maintains allowances for potential credit losses. The Company wrote off
$149,000, $140,625 and $Nil to bad debt expense at September 30, 1999 and
December 31, 1998 and 1997.
At September 30, 1999, the Company had short and long term investments of
$732,502 and accounts receivable of $459,787 in 5 companies, with
individual issuer/customer balances of $439,789, $424,300, $230,000,
$82,600, and $15,600. At December 31, 1998, the Company had short and long
term investments of $272,638 and accounts receivable of $19,289 in 3
companies, with individual issuer/customer balances of, $203,888, $68,750
and $19,289. At December 31, 1997, the Company had short and long term
investments of $3,918 and accounts receivable of $6,298 in 2 companies,
with individual issuer/customer balances of $6,298, and $3,918.
21
Level Jump Financial Group, Inc.
Notes to Consolidated Financial Statements
(in United States dollars)
September 30, 1999 and December 31, 1998 and 1997
- --------------------------------------------------------------------------------
12. Fair Value of Financial Instruments
Estimated fair value of the Company's financial instruments were as
follows:
Nine Months Twelve Months For the Period
Ended Ended from Inception to
Sept. 30, 1999 Dec. 31, 1998 Dec. 31, 1997
Carrying Fair Carrying Fair Carrying Fair
Amount Value Amount Value Amount Value
-------------------------------------------------------------------------
Financial assets:
Cash and cash
equivalents $ 50,717 $ 50,717 $ 5,658 $ 5,658 $ 308 $ 308
Short term investments
in marketable securities 15,600 15,600 254,375 254,375 3,918 3,918
Accounts receivable 460,779 460,392 19,289 19,289 6,298 6,298
Due from related parties 22,189 22,189 780,694 780,694 119 119
Long term investments 716,902 3,553,557 18,263 171,314 - -
Financial liabilities:
Accounts payable $ 29,317 $ 29,317 $ 40,121 $ 40,121 $ - $ -
Accrued liabilities 30,336 177,210 478,156 421,906 1,144 1,144
Due to related parties - - 58,030 58,030 10,104 10,104
The carrying amount approximates fair value of cash and cash equivalents,
accounts payable and due from/to related parties. Short term investments
are carried at fair value. Accounts receivable at September 30, 1999
includes receivables of common shares and options to purchase common
shares. The fair value of the receivable was determined using the closing
market price of the common shares to be received and the Black Scholes
option pricing model. The fair value of long term investments in common
shares restricted as to resale was determined using the closing market
prices of the equivalent freely tradable common shares. The fair value of
long term investments in options to purchase common shares was determined
using the Black Scholes option pricing model. Accrued liabilities at
September 30, 1999 include a payable for share exchange that is to be
satisfied by delivering common shares that the Company owns and that are
included in long term investments. Accrued liabilities at December 31,
1998 include a payable for shares received for services not rendered that
was satisfied by delivering common shares that the Company owns and that
are included in short-term investments in marketable securities. The fair
value of the payable for share exchange and the payable for shares
received for services not rendered was determined using the closing market
price of the common shares to be delivered.
- --------------------------------------------------------------------------------
13. Employees Profit Sharing Plan
In 1998, a subsidiary of the Company set up an employee profit sharing
plan to compensate its key employees. Contributions to the plan were made
at the discretion of management and the subsidiary of the Company had no
ongoing obligations to fund the plan. Distributions from the plan to key
employees were made at the discretion of the plan trustees who are also
management of the subsidiary of the Company. At September 30, 1999, the
subsidiary of the Company had no balance owing for plan compensation. In
January 1999, the subsidiary of the Company paid $360,443 to the plan for
expenses accrued in 1998. The subsidiary of the Company does not intend to
continue the plan.
22
Level Jump Financial Group, Inc.
Notes to Consolidated Financial Statements
(in United States dollars)
September 30, 1999 and December 31, 1998 and 1997
- --------------------------------------------------------------------------------
14. Commitments and Contingencies
(a) Operating Leases
During 1998, a subsidiary of the Company entered into an operating
lease agreement that provides the Company with office space in
Toronto, Ontario, Canada. The lease is for a period of two years with
an option to renew for an additional two year period. During 1999, a
subsidiary of the Company entered into a month-to-month sublease that
provides the Company with additional office space in Toronto. In
addition, a subsidiary of the Company entered into two vehicle leases
as part of a compensation package for two officers of the subsidiary
of the Company in their roles as management. A subsidiary of the
Company also leases certain office equipment. The rent expense
totalled $ 17,160 and $ 10,131 at September 30, 1999 and December 31,
1998. Future minimum lease payments:
Sept. 30,
1999
1999 $ 6,300
2000 13,800
2001 2,100
(b) Contingent Liabilities
(i) A subsidiary of the Company and its management are involved in a
dispute with a third party regarding failed negotiations between
the subsidiary of the Company and its management to sell an
interest in the subsidiary of the Company to the third party.
Claims and counterclaims have been filed by the subsidiary of
the Company and the third party respectively. Management
believes the claims are without merit, and does not believe that
the Company's potential exposure related to this matter would
have a material adverse effect on the Company's financial
position, results of operations and cash flows.
(ii) Management is not currently aware of any other legal proceeds or
claims that the Company believes will have, individually or in
the aggregate, a material adverse effect on the Company's
financial position, results of operations and cash flows.
23
Level Jump Financial Group, Inc.
Notes to Consolidated Financial Statements
(in United States dollars)
September 30, 1999 and December 31, 1998 and 1997
- --------------------------------------------------------------------------------
15. Segment Information
The Company is engaged in one business segment - Internet financial portal
and investor relations services.
The following table presents information related to the Company by
geographic area:
United
Canada States
----------------------------------
For the nine months ended September 30, 1999
--------------------------------------------
Revenue $ - $ 2,277,013
Operating income - 871,748
Assets 1,306,488 -
For the twelve months ended December 31, 1998
---------------------------------------------
Revenue $ - $ 1,067,971
Operating loss - (442,785)
Assets 1,110,566 -
For the period from inception to December 31, 1997
--------------------------------------------------
Revenue $ - $ 45,753
Operating income - 2,672
Assets 13,954 -
- --------------------------------------------------------------------------------
16. Uncertainty Due to the Year 2000 Issue
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in errors
when information using year 2000 dates is processed. In addition, similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. The effects of the Year 2000 Issue
may be experienced before, on, or after January 1, 2000.
If the Year 2000 Issue is not addressed by the Company and its major
customers, suppliers and other third party business associates, the impact
on the Company's operations and financial reporting may range from minor
errors to significant systems failure which could affect the Company's
ability to conduct normal business operations. It is not possible to be
certain that all aspects of the Year 2000 Issue affecting the Company,
including those related to the efforts customers, of suppliers, or other
third parties, will be fully resolved.
24
Level Jump Financial Group, Inc.
Notes to Consolidated Financial Statements
(in United States dollars)
September 30, 1999 and December 31, 1998 and 1997
- --------------------------------------------------------------------------------
17. Subsequent Events
(a) Loan Commitment
On October 19,1999, a subsidiary of the Company obtained a $500,000
demand bank loan from a Canadian financial institution. The loan
provides for a variable interest rate equal to the bank's U.S. base
rate (similar to U.S. prime rate) plus 2.0%. Interest on the loan is
to be paid monthly. A balloon principal payment of $200,000 is to be
made on February 28, 2000 and principal payments of $5,556 per month
thereafter are to be made through to maturity on September 30, 2004.
The bank loan is specifically collateralized by long term investments
with a book value of $300,000 at September 30, 1999. The bank loan is
secured by a general security agreement providing a first charge over
accounts receivable, inventory and equipment. The bank loan agreement
allows the bank to sell collateralized investments to retire the bank
loan when the investments become eligible for resale if the stock
price of the collateralized investments falls below $5.00 per share.
(b) Caldera Corporation
On October 28, 1999, the Company exchanged all 3,700,000 shares of
common stock issued and outstanding for 5,087,500 shares of common
stock of Caldera Corporation ("Caldera"), a Florida incorporated
company that is an SEC registrant and that trades on the
Over-the-Counter Bulletin Board ("OTC-BB"). At the time of exchange
of shares, the existing board of directors of Caldera resigned and
the directors of the Company were appointed to the board of Caldera.
Prior to the exchange of shares, thestockpage.com underwent an
internal reorganization whereby the two exchangeable preferred
shareholders exchanged 5,000,000 of their exchangeable preferred
shares into 5,000,000 redeemable preferred shares. These can be
redeemed at the option of thestockpage.com for Canadian $0.265
(U.S.$0.1715) per share. The redeemable preferred shares are entitled
to non-cumulative dividends at a rate per annum of 12 percent of the
redemption amount.
At the time of the merger, the number of exchangeable preferred
shares issued by thestockpage.com increased from 4,300,000 to
5,912,500 which is in proportion to the number of common shares of
Caldera exchanged per common share of Level Jump. Caldera will assume
Level Jump's obligations with respect to the 5,912,500 exchangeable
preferred shares issued by thestockpage.com. The board of directors
of Caldera will reserve 5,912,500 shares of common stock to meet its
obligations to thestockpage.com.
25
Level Jump Financial Group, Inc.
Pro Forma Consolidated
Financial Statements
For the nine months ended September 30, 1999
and for the year ended December 31, 1998
(in United States dollars)
(Unaudited)
Level Jump Financial Group, Inc.
Pro Forma Consolidated Balance Sheet
(in United States dollars)
(Unaudited)
Level Jump Adjusting/
Caldera Financial Eliminating
September 30, 1999 Corporation Group, Inc. Entries Pro Forma
- -------------------------------------------------------------------------------------------------------------
(Unaudited)
Assets
Current
Cash and cash equivalents $ 341 $ 50,717 $ - $ 51,058
Investments in marketable
securities - 15,600 - 15,600
Accounts receivable, net of
allowance of $nil - 460,779 - 460,779
Prepaid expenses and deposits - 4,013 - 4,013
Due from related parties - 22,189 - 22,189
--------------------------------------------------------------------
341 553,298 - 553,639
--------------------------------------------------------------------
Investments in marketable
securities - 716,902 - 716,902
Fixed assets - 35,471 - 35,471
Deferred income taxes - 817 - 817
--------------------------------------------------------------------
$ 341 $ 1,306,488 $ - $ 1,306,829
====================================================================
Liabilities and Shareholders' Equity
Current
Accounts payable $ 1,200 $ 29,319 $ - $ 30,519
Accrued liabilities - 30,336 - 30,336
Income taxes payable - 599,361 - 599,361
Deferred revenue - 48,253 - 48,253
--------------------------------------------------------------------
1,200 707,269 - 708,469
--------------------------------------------------------------------
Shareholders' equity
Common shares, par value $.0025 6,941 3,700 9,018 (a) 19,659
Additional paid in capital 95,935 - (112,753) (a) (16,818)
Retained earnings (deficit) (103,735) 595,519 103,735 (a) 595,519
--------------------------------------------------------------------
(859) 599,219 - 598,360
--------------------------------------------------------------------
$ 341 $ 1,306,488 $ - $ 1,306,829
====================================================================
Level Jump Financial Group, Inc.
Pro Forma Consolidated Statement of Operations
(in United States dollars)
(Unaudited)
Level Jump Adjusting/
For the nine months ended Caldera Financial Eliminating
September 30, 1999 Corporation Group, Inc. Entries Pro Forma
- ------------------------------------------------------------------------------------------------------------
(Unaudited)
Revenue $ - $ 2,277,013 $ - $ 2,277,013
Cost of revenues - 435,367 - 435,367
-------------------------------------------------------------------
Gross profit - 1,841,646 - 1,841,646
-------------------------------------------------------------------
Operating expenses
Sales and marketing - 75,659 - 75,659
Product development - 10,480 - 10,480
General and administration 26,679 550,278 - 576,957
Management compensation - 333,481 - 333,481
-------------------------------------------------------------------
26,679 969,898 - 996,577
-------------------------------------------------------------------
Income (loss) from operations (26,679) 871,748 - 845,069
Investment income, net - 210,400 - 210,400
-------------------------------------------------------------------
Income (loss) before income taxes (26,679) 1,082,148 - 1,055,469
Provision for income taxes - 451,541 - 451,541
-------------------------------------------------------------------
Net income (loss) for the period $ (26,679) $ 630,607 $ - $ 603,928
===================================================================
Basic earnings (loss) per share $ (0.01) $ 0.08
Diluted earnings (loss) per share $ (0.01) $ 0.06
Shares used in per share
calculation - basic 1,997,683 7,863,500
Shares used in per share
calculation - diluted 1,997,683 9,834,333
===================================================================
Level Jump Financial Group, Inc.
Pro Forma Consolidated Statement of Operations
(in United States dollars)
(Unaudited)
Level Jump Adjusting/
For the year ended Caldera Financial Eliminating
December 31, 1998 Corporation Group, Inc. Entries Pro Forma
- ------------------------------------------------------------------------------------------------------------
(Unaudited)
Revenue $ - $ 1,067,971 $ - $ 1,067,971
Cost of revenues - 361,530 - 361,530
-------------------------------------------------------------------
Gross profit - 706,441 - 706,441
-------------------------------------------------------------------
Operating expenses
Sales and marketing - 26,751 - 26,751
Product development - 11,364 - 11,364
General and administration 16,491 307,497 - 323,988
Management compensation - 803,614 - 803,614
-------------------------------------------------------------------
16,491 1,149,226 - 1,165,717
-------------------------------------------------------------------
Loss from operations (16,491) (442,785) - (459,276)
Investment income, net - 886,677 - 886,677
-------------------------------------------------------------------
Income (loss) before income taxes (16,491) 443,892 - 427,401
Provision for income taxes - 116,944 - 116,944
-------------------------------------------------------------------
Net income (loss) for the period $ (16,491) $ 326,948 $ - $ 310,457
===================================================================
Basic earnings (loss) per share $ (0.10) $ 0.04
Diluted earnings (loss) per share $ (0.02) $ 0.04
Shares used in per share
calculation - basic 166,250 7,863,500
Shares used in per share
calculation - diluted 666,250 7,863,500
===================================================================
Level Jump Financial Group, Inc.
Pro Forma Consolidated Financial Statements
(in United States dollars)
(Unaudited)
- -------------------------------------------------------------------------------
Under a share exchange agreement which became effective October 28, 1999,
Caldera Corporation ("Caldera") acquired all of the issued and outstanding
common shares of Level Jump Financial Group, Inc. ("Level Jump") and agreed to
assume certain obligations with respect to issuing additional common shares
under exchangeable share agreements and a performance equity plan and issuing
preferred shares under a voting agreement. In exchange for the 3,700,000 issued
and outstanding common shares of Level Jump, the shareholders of Level Jump were
issued common shares of Caldera in a number that gave the shareholders of Level
Jump control of Caldera (5,087,500 shares). The shares were exchanged at an
exchange ratio of 1.375. In addition, at the time of the transaction, the board
of directors of Caldera resigned and the officers and directors of Level Jump
were appointed to the board of directors of Caldera.
Prior to the acquisition, Caldera had no significant operations. This
transaction was equivalent to the issuance of stock by Caldera for the net
assets of Level Jump, accompanied by a recapitalization. Level Jump's assets
were recorded at carryover basis and no goodwill was recorded from the
transaction. Level Jump's historical financial statements become those of
Caldera. This accounting treatment results in the following:
(a) The pro forma financial statements are issued under the name Level Jump
Financial Group, Inc. as a continuation of the financial statements of
Level Jump.
(b) The number and class of outstanding shares reported are those of Caldera
after giving effect to the transaction while the dollar amounts of share
capital and retained earnings are those of Level Jump.
(c) The results of operations of Caldera are included from January 1, 1998 in
these pro forma consolidated financial statements.
The accompanying pro forma financial statements illustrate the effect of the
acquisition on Level Jump's financial position and results of operations. The
pro forma consolidated balance sheet as of September 30, 1999 is based on the
historical balance sheets of Level Jump and Caldera as of that date and assumes
the acquisition took place on that date. The pro forma consolidated statements
of operations for the year ended December 31, 1998 and the nine months ended
September 30, 1999 are based on the historical statements of operations of
Level Jump and Caldera for those periods. The pro forma statements of
operations assume the acquisition took place on January 1, 1998.
The pro forma consolidated financial statements may not be indicative of the
actual results of the acquisition. The accompanying consolidated pro forma
financial statements should be read in connection with the historical financial
statements of Level Jump and Caldera.
Level Jump Financial Group, Inc.
Pro Forma Consolidated Financial Statements
(in United States dollars)
(Unaudited)
September 30, 1999 and December 31, 1998
- --------------------------------------------------------------------------------
1. Pro Forma Transactions and Adjustments
(a) The reverse acquisition as reflected on the pro forma consolidated
balance sheet gives effect to the following treatment of equity as if
it occurred on September 30, 1999:
Equity Section:
Common Paid in Retained
Shares Amount Capital Earnings Total
Level Jump prior to reverse
acquisition (1) 3,700,000 $ 3,700 $ - $ 595,519 $ 599,219
Additional shares issued
by Caldera upon reverse
acquisition (2) 1,387,500 9,018 (9,018) - -
Caldera prior to reverse
acquisition 2,776,000 6,941 (7,800) - (859)
------------------------------------------------------------------
Total 7,863,500 $ 19,659 $ (16,818) $ 595,519 $ 598,360
=================================================================
(1) Based on Level Jump's September 30, 1999 audited financial
statements
(2) Based on Caldera's financial statements prior to the date of the
reverse acquisition.
Common shares 6,941
Additional paid in capital $ 95,935
Deficit (103,735)
---------------
Deficiency $ (859)
===============
(3) The weighted average common shares outstanding at September 30,
1999 as used in the computation of basic earnings per share is
represented by 7,863,500 as shown above. The weighted average
common shares outstanding at September 30, 1999 as used in the
computation of fully diluted earnings per share is represented by
the sum of the 7,863,500 as above and the weighted average number
of shares of 1,970,833 which is discussed in 1(b)(ii) below.
(b) The pro forma consolidated statements of operatons give effect to the
following transactions as if they occurred on January 1, 1998.
(i) Shares issued by Caldera between January 1, 1998 and September
30, 1999 are assumed to all have been made on January 1, 1998.
Caldera's issuance of 5,087,500 shares to the shareholders of
Level Jump as consideration for the acquisition is assumed to
have been made on January 1, 1998.
(ii) Caldera's assumption of the obligation to issue an additional
5,912,500 under exchangeable share agreements occurred on June 1,
1999 and as such has been reflected in the fully diluted earnings
per share calculation at September 30, 1999 at 1,970,833.