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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Amendment No. 1 to
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 20, 2004
COMMISSION FILE NUMBER 0-27619
IBIZ TECHNOLOGY CORP.
(Exact name of Registrant as specified in its charter)
FLORIDA 86-0933890
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2238 WEST LONE CACTUS, SUITE 200, PHOENIX, ARIZONA 85027
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(Address of principal executive offices)
(623) 492-9200
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(Registrant's telephone number including area code)
N/A
-------------------------------------------------------------
(Former name or former address, if changed since last report)
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This Current Report on Form 8-K/A amends Item 7 of the Current Report on Form
8-K filed with the Securities and Exchange Commission on February 4, 2004.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Synosphere LLC Financial Statements
Report of Farber & Hass LLP, Independent Auditors
Balance Sheet as of December 31, 2003
Statements of Operations for the Years Ended December 31, 2003 and 2002
and for the period May 2, 2001 (Date of Inception) to December 31, 2003
Statements of Members' Deficit for the Years Ended December 31, 2003 and
2002 and for the period May 2, 2001 (Date of Inception)
to December 31, 2003
Statements of Cash Flows for the Years Ended December 31, 2003 and 2002
and for the period May 2, 2001 (Date of Inception) to December 31, 2003
Notes to Financial Statements
(b) Pro Forma Financial Information
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
January 31, 2004
Unaudited Pro Forma Condensed Consolidated Statements of Operations for
the Three Months Ended January 31, 2004
Unaudited Pro Forma Condensed Consolidated Statements of Operations for
the Year Ended October 31, 2003
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
(c) Exhibits
23.1 Consent of Farber & Hass LLP, Independent Auditors.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: April 5, 2004 iBIZ Technolgy Corp.
----------------------------------------
(Registrant)
/s/ Ken W. Schilling
----------------------------------------
Ken W. Schilling
President
3
SYNOSPHERE, LLC
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
SYNOSPHERE, LLC
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
TABLE OF CONTENTS
PAGE NO.
INDEPENDENT AUDITORS' REPORT ........................................... 2
FINANCIAL STATEMENTS
Balance Sheet........................................................... 3
Statements of Operations................................................ 4
Statements of Members' Deficit.......................................... 5
Statements of Cash Flows................................................ 6-7
Notes to Financial Statements........................................... 8 - 11
1
INDEPENDENT AUDITORS' REPORT
To The Board of Directors and Stockholders of Synosphere, LLC
We have audited the accompanying balance sheet at December 31, 2003 and the
related statements of operations, members' (deficit) and cash flows of
Synosphere, LLC (a development stage company) for the years ended December 31,
2003 and 2002. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on the
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respect, the financial position of the Company at December 31, 2003
and the results of its operations and its cash flows for the years ended
December 31, 2003 and 2002, in conformity with accounting principles generally
accepted in the United States of America.
/s/ Farber & Hass LLP
March 31, 2004
Camarillo, California
2
SYNOSPHERE, LLC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 2003
ASSETS
OTHER ASSETS - Patents under development $ 63,130
=========
LIABILITIES AND MEMBERS' (DEFICIT)
CURRENT LIABILITIES:
Bank overdraft $ 21
Accrued expenses 77,991
---------
Total current liabilities 78,012
---------
MEMBERS' DEFICIT:
Contributions 103,807
Deficit accumulated during the development stage (118,689)
---------
Total members' deficit (14,882)
---------
TOTAL LIABILITIES AND MEMBERS' DEFICIT $ 63,130
=========
See accompanying notes.
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3
SYNOSPHERE, LLC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002 AND
FOR THE PERIOD FROM MAY 2, 2001 (DATE OF INCEPTION) TO
DECEMBER 31, 2003
May 2, 2001
Years Ended (Date of
December 31, Inception) to
----------------------- December 31,
2003 2002 2003
--------- --------- ---------
REVENUE $ 0 $ 0 $ 0
--------- --------- ---------
EXPENSES:
Research and development costs 20,586 21,139 79,541
General and administrative 26,477 10,891 39,148
--------- --------- ---------
TOTAL EXPENSES 47,063 32,030 118,689
--------- --------- ---------
NET LOSS FROM DEVELOPMENT
STAGE OPERATIONS $ (47,063) $ (32,030) $(118,689)
========= ========= =========
See accompanying notes.
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4
SYNOSPHERE, LLC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF MEMBERS' (DEFICIT)
FOR THE PERIOD FROM MAY 2, 2001 (DATE OF INCEPTION) TO
DECEMBER 31, 2003
MAY 2, 2001, (Date of Inception) $ 0
MEMBERS' CONTRIBUTIONS - Cash 39,689
NET LOSS (39,596)
--------
BALANCE, DECEMBER 31, 2001 93
MEMBERS' CONTRIBUTIONS:
Cash 41,909
Services 800
Patents under development 10,000
NET LOSS (32,030)
--------
BALANCE, DECEMBER 31, 2002 20,772
MEMBERS' CONTRIBUTIONS-Cash 11,409
NET LOSS (47,063)
--------
BALANCE, DECEMBER 31, 2003 $(14,882)
========
See accompanying notes.
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5
SYNOSPHERE, LLC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002 AND
FOR THE PERIOD FROM MAY 2, 2001 (DATE OF INCEPTION) TO
DECEMBER 31, 2003
May 2, 2001
Years Ended (Date of
December 31, Inception) to
---------------------- December 31,
2003 2002 2003
--------- --------- ---------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $ (47,063) $ (32,030) $(118,689)
Interests given for services 800 800
Changes in operating assets
and liabilities:
Accrued expenses 67,598 10,393 77,991
--------- --------- ---------
Net cash provided (used) by
operating activities 20,535 (20,837) (39,898)
--------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES - Patents under
development (32,379) (20,751) (53,130)
--------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Bank overdraft 21 0 21
Proceeds from members' contributions 11,409 41,909 93,007
--------- --------- ---------
Net cash provided by financing
activities 11,430 41,909 93,028
--------- --------- ---------
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS (414) 321 0
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 414 93 0
--------- --------- ---------
CAH AND CASH EQUIVALENTS
END OF PERIOD $ 0 $ 414 $ 0
========= ========= =========
(CONTINUED)
6
SYNOSPHERE, LLC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS - CONTINUED
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002 AND
FOR THE PERIOD FROM MAY 2, 2001 (DATE OF INCEPTION) TO
DECEMBER 31, 2003
May 2, 2001
Years Ended (Date of
December 31, Inception) to
--------------- December 31,
2003 2002 2003
---- ---- ----
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid for interest $0 $0 $0
Cash paid for taxes $0 $0 $0
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION:
During 2002, membership interests were issued in exchange for services valued at
$800 and patent development valued at $10,000.
See accompanying notes.
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7
SYNOSPHERE, LLC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS AND HISTORY OF COMPANY - Synosphere, LLC was organized
on May 2, 2001 under the laws of the state of Texas. The Company is based
in Plano, Texas and specializes in the development of innovative handheld
computer technologies that expand and enhance the mobile computing
experience.
CASH AND CASH EQUIVALENTS - For purposes of the statement of cash flows,
the Company considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents.
PATENTS UNDER DEVELOPMENT - Patents under development represents the costs
of developing patents that are pending approval by the U.S. government.
The Company will amortize the asset over the estimated useful life of the
patents once the patents are approved and the products are developed and
ready for sale.
ACCOUNTING ESTIMATES - Management uses estimates and assumptions in
preparing financial statements in accordance with accounting principles
generally accepted in the United States. Those estimates and assumptions
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities, and the reported revenues and expenses.
Actual results could vary from the estimates that were used.
INCOME TAXES - The Company has elected to be classified as an association
taxable as a corporation. Provisions for income taxes are based on taxes
payable or refundable for the current year and deferred taxes on temporary
differences between the amount of taxable income and pretax financial
income and between the tax bases of assets and liabilities and their
reported amounts in the financial statements. Deferred tax assets and
liabilities are included in the financial statements at currently enacted
income tax rates applicable to the period in which the deferred tax assets
and liabilities are expected to be realized or settled as prescribed in
FASB Statement No. 109, "Accounting for Income Taxes". As changes in tax
laws or rate are enacted, deferred tax assets and liabilities are adjusted
through the provision for income taxes.
8
DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS - The Company
estimates that the fair value of all financial instruments at December 31,
2003, as defined in FASB 107, does not differ materially from the
aggregate carrying values of its financial instruments recorded in the
accompanying balance sheet. The estimated fair value amounts have been
determined by the Company using available market information and
appropriate valuation methodologies. Considerable judgment is required in
interpreting market data to develop the estimates of fair value, and
accordingly, the estimates are not necessarily indicative of the amounts
that the Company could realize in a current market exchange.
RECENT ACCOUNTING PRONOUNCEMENTS - In April 2002, the FASB issued 145
"Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections." This Statement rescinds SFAS
4, "Reporting Gains and Losses from Extinguishment of Debt" and an
amendment of that Statement, SFAS 64, "Extinguishments of Debt Made to
Satisfy Sinking-Fund Requirements". The rescission of these Statements
alters the financial reporting requirements from gains and losses
resulting from the extinguishments of debt. These gains or losses should
now be reported before extraordinary items, unless the two requirements
for extraordinary items are met. This Statement also rescinds SFAS 44,
"Accounting for Intangible Assets of Motor Carriers" and amends SFAS 13,
"Accounting for Leases", to eliminate an inconsistency between the
required accounting for sale-leaseback transactions and the required
accounting for certain lease modifications that have economic effects that
are similar to sale-leaseback transactions. This Statement also amends
other existing authoritative pronouncements to make various technical
corrections, clarify meanings, or describe their applicability under
changed conditions. The provisions of this Statement related to the
rescission of Statement 4 shall be applied in fiscal years beginning after
May 15, 2002. Any gain or loss on extinguishments of debt that was
classified as an extraordinary item in prior periods presented that does
not meet the criteria in Opinion 30 for classification as an extraordinary
shall be reclassified. The provision of this Statement related to
Statement 13 shall be effective for transactions occurring after May 15,
2002.
In June of 2002, the FASB issued SFAS 146, "Accounting for Costs
Associated with Exit or Disposal Activities," which nullifies EITF Issue
94-3. SFAS 146 is effective for exit and disposal activities that are
initiated after December 31, 2002 and requires that a liability for a cost
associated with an exit or disposal activity be recognized when the
liability is incurred, in contrast to the date of an entity's commitment
to an exit plan, as required by EITF Issue 94-3. The Company adopted the
provisions of SFAS 146 effective January 1, 2003.
9
In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure". This Statement
amends SFAS No. 123, "Stock-Based Compensation", to provide alternative
methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. In addition,
this Statement amends the disclosure requirements of SFAS No. 123 to
require prominent disclosures in both annual and interim financial
statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. The
alternative methods of transition of SFAS 148 are effective for fiscal
years ending after December 15, 2002. The Company follows APB 25 in
accounting for its employee stock options. The disclosure provision of
SFAS 148 is effective for years ending after December 15, 2002 and has
been incorporated into these financial statements and accompanying
footnotes.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and
Equity". This Statement establishes standards for how an issuer of debt
classifies and measures certain financial instruments with characteristics
of both liabilities and equity. It requires that an issuer classify
certain financial instruments as a liability (or an asset in some
circumstances) instead of equity. The Statement is effective for financial
instruments entered into or modified after May 31, 2003, and otherwise is
effective at the beginning of the first interim period beginning after
June 15, 2003. The Company adopted this Statement on July 1, 2003.
The Company does not believe that any of these recent accounting
pronouncements will have a material impact on their financial position or
results of operations.
2. DEVELOPMENT STAGE OPERATIONS
As of December 31, 2003, the Company was in the development stage of
operations. According to Statement of Financial Accounting Standard No. 7,
a development stage company is defined as a company that devotes most of
its activities to establishing a new business activity. In addition,
planned principal activities have not commenced, or have commenced and
have not yet produced significant revenue.
10
3. INCOME TAXES
Significant components of the Company's deferred tax asset are as follows:
December 31,
--------------------
2003 2002
-------- --------
DEFERRED TAX ASSET:
Net operating loss carryforward $ 23,500 $ 14,200
Less valuation allowance (23,500) (14,200)
-------- --------
Net deferred tax asset $ 0 $ 0
======== ========
A reconciliation of the valuation allowance is as follows:
Balance, beginning of year $ 14,200 $ 7,900
Addition for the year 9,300 6,300
-------- --------
Balance, end of year $ 23,500 $ 14,200
======== ========
4. NET OPERATING LOSS CARRYFORWARDS
The Company has the following net operating loss carryforwards:
Tax Year Amount Expiration Date
-------- ------ ---------------
December 31, 2001 $ 39,596 2021
December 31, 2002 31,230 2022
December 31, 2003 47,063 2023
--------
$117,889
Future changes in ownership may limit the ability of the Company to
utilize these net operating loss carryforwards prior to their expiration.
5. SUBSEQUENT EVENTS
Acquisition by iBIZ Technology Corp.:
On January 20, 2004, iBIZ Technology Corp. acquired 100% of the member
interests of the Company, in exchange for 30,000,000 shares of common
stock. iBIZ Technology Corp. is a leading manufacturer and distributor of
accessories for personal digital assistant (PDA) and hand-held devices.
- --------------------------------------------------------------------------------
11
IBIZ TECHNOLOGIES CORP. & SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
JANUARY 31, 2004
iBIZ
Technology
Corp. and Synosphere,
Subsidiaries LLC Adjustments Proforma
------------ --- ----------- --------
ASSETS
CURRENT ASSETS:
Cash $ 242,670 $ 20,000 $ 262,670
Cash, pledged for
letter of credit 10,000 10,000
Accounts receivable,
net 48,995 48,995
Inventories 62,228 62,228
Prepaid expenses 129,128 129,128
Advances,
Synosphere, LLC 20,000 $ (20,000)(1) 0
Investment in
Synosphere, LLC 1,200,000 (1,200,000)(1) 0
----------- ---------- -----------
Total current assets 1,713,021 20,000 513,021
----------- ---------- -----------
PROPERTY, PLANT
AND EQUIPMENT,
Net of accumulated
depreciation 59,851 59,851
----------- ---------- -----------
OTHER ASSETS:
Patents under
development 63,130 63,130
Technology and
patents 1,200,000(1) 1,200,000
Intellectual
property rights, net 55,455 55,455
Note receivable, officer 373,159 373,159
Less allowance for
doubtful collection (373,159) (373,159)
Deposits 2,500 2,500
----------- ---------- -----------
Total other assets 57,955 63,130 1,321,085
----------- ---------- -----------
TOTAL ASSETS $ 1,830,827 $ 83,130 $ 1,893,957
=========== ========== ===========
(Continued)
12
IBIZ TECHNOLOGIES CORP. & SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(CONTINUED)
JANUARY 31, 2004
iBIZ
Technology
Corp. and Synosphere,
Subsidiaries LLC Adjustments Proforma
------------ --- ----------- --------
LIABILITIES AND
STOCKHOLDERS'
DEFICIT
CURRENT LIABILITIES:
Bank overdraft $ 21 $ 21
Accounts payable and
accrued expenses $ 668,052 77,991 746,043
Advances due to iBIZ
Technology Corp. 20,000 $(20,000)(1) 0
Loan payable,
Enterprise Capital AG 99,990 99,990
Accrued wages 403,363 403,363
Accrued interest 685,195 685,195
Taxes payable 218,900 218,900
Deferred income 3,113 3,113
Convertible debentures,
current portion 2,152,297 2,152,297
--------- -------- ----------
Total current
liabilities 4,230,910 98,012 4,308,922
--------- -------- ----------
LONG-TERM
LIABILITIES -
Convertible
debentures payable,
net of current
portion 467,000 467,000
--------- -------- ----------
(Continued)
13
IBIZ TECHNOLOGIES CORP. & SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(CONTINUED)
JANUARY 31, 2004
iBIZ
Technology
Corp. and Synosphere,
Subsidiaries LLC Adjustments Proforma
--------------- --------------- ----------- ---------------
STOCKHOLDERS' DEFICIT:
Preferred stock -
authorized,
50,000,000 shares,
par value $.001 per
share; issued and
outstanding -0- 0 0
Common stock -
authorized
5,000,000,000
shares, par value
$.001 per share;
issued and
outstanding
2,273,572,909
shares; reserved
for issuance of
options,
23,050,000 shares 2,273,573 2,273,573
Common stock to be
issued for
Synosphere, LLC,
30,000,000 shares 1,200,000 1,200,000
Additional paid-in
capital 23,580,291 23,580,291
Accumulated deficit (29,920,947) (29,920,947)
Members' deficit (14,882) (14,882)
--------------- --------------- ---------------
Total stockholders'
deficit (2,867,083) (14,882) (2,881,965)
--------------- --------------- ---------------
TOTAL LIABILITIES
AND STOCKHOLERS'
DEFICIT $ 1,830,827 $ 83,130 $ 1,893,957
=============== =============== ===============
See notes to proforma consolidated financial statements (unaudited).
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14
IBIZ TECHNOLOGIES CORP. & SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED OCTOBER 31, 2003
iBIZ
Technology
Corp. and Synosphere,
Subsidiaries LLC Adjustments Proforma
--------------- --------------- ----------- ---------------
REVENUES:
Product sales $ 453,797 $ 453,797
Maintenance
agreements 31,585 31,585
----------- -------- -----------
Total revenues 485,382 485,382
----------- -------- -----------
COST OF REVENUES:
Product sales 497,275 497,275
Maintenance
agreements 21,728 21,728
----------- -------- -----------
Total cost of
revenues 519,003 519,003
----------- -------- -----------
GROSS LOSS (33,621) (33,621)
----------- -------- -----------
EXPENSES:
Research,
development costs
and consulting
fees $ 4,591 $257,000(2) 261,591
Selling, general
and administrative 2,784,542 18,065 500,000(3) 3,302,607
----------- -------- -----------
Total expenses 2,784,542 22,656 3,564,198
----------- -------- -----------
OPERATING LOSS (2,818,163) (22,656) (3,597,819)
----------- -------- -----------
(Continued)
15
IBIZ TECHNOLOGIES CORP. & SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(CONTINUED)
FOR THE YEAR ENDED OCTOBER 31, 2003
iBIZ
Technology
Corp. and Synosphere,
Subsidiaries LLC Adjustments Proforma
------------- ------------- -------------- -------------
OTHER INCOME
(EXPENSE):
Cancellation of debt 85,733 85,733
Interest expense (353,516) (353,516)
Interest expense -
convertible
debentures -
beneficial
conversion feature (1,379,077) (1,379,077)
Other income 2,891 2,891
------------- ------------- -------------
Other expense, net (1,643,969) (1,643,969)
------------- ------------- -------------
LOSS BEFORE INCOME
TAXES (4,462,132) (22,656) (5,241,788)
INCOME TAXES 50 0 50
------------- ------------- -------------
NET LOSS $ (4,462,182) $ (22,656) $ (5,241,838)
============= ============= =============
NET LOSS PER COMMON
SHARE $ (0.02) $ (0.02)
============= =============
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING 231,553,359 93,457,408(4) 325,010,767
============= =============
See notes to proforma consolidated financial statements (unaudited).
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16
IBIZ TECHNOLOGIES CORP. & SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
On January 20, 2004, iBIZ Technology Corp., (the "Company"), acquired
Synosphere, LLC, ("Synosphere") in exchange for 30,000,000 shares of
common stock. The issuance of 30,000,000 shares of common stock was based
on the aggregate purchase price of $1,200,000 and the market value of the
stock at the date of acquisition ($0.04). The purchase price was allocated
to technology and patents as Synosphere did not own any tangible assets
and its only intangible assets were pending patents and technology.
The acquisition will be accounted for as a purchase, with the assets
acquired and liabilities assumed recorded at fair values, and the results
of Synosphere's operations included in the Company's consolidated
financial statements from the date of acquisition.
The unaudited pro forma condensed consolidated balance sheet gives effect
to the financial position at January 31, 2004 as if the acquisition
occurred at January 31, 2004. Such consolidated financial position of the
Company is not necessarily indicative of the consolidated financial
position as it may be in the future, or as it might have been had these
events been effective at January 31, 2004. The unaudited pro forma
condensed consolidated statement of operations for the year ended October
31, 2003 gives effect to the consolidated results of operations as if the
acquisition occurred at November 1, 2002. The unaudited pro forma
condensed consolidated statement of operations for the three months ended
January 31, 2004 gives effect to the consolidated results of operations as
if the merger occurred at November 1, 2003. These results are not
necessarily indicative of the consolidated results of operations of the
Company as they may be in the future, or as they might have been had these
events been effective at November 1, 2002 and 2003, respectively. The
unaudited pro forma condensed consolidated financial information should be
read in conjunction with the historical financial statements of the
Company and Synosphere, LLC and the related notes thereto.
PRO FORMA ADJUSTMENTS FOR THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET AT JANUARY 31, 2004:
(1) Reflects preliminary purchase price allocation for the acquisition of
Synosphere, LLC consisting of intangible assets and liabilities in
exchange for 30 million shares of iBIZ Technology Corp. common stock and
elimination of inter-company advances.
17
PRO FORMA ADJUSTMENTS FOR THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED OCTOBER 31, 2003 AND THE THREE
MONTHS ENDED JANUARY 31, 2004:
(2) Gives effect to the contracted salaries and benefits as if the merger
had occurred at November 1 for each of the periods presented.
(3) Gives effect to contracted bonuses of $125,000 per quarter payable in
common stock.
(4) Reflects issuance of common stock for the acquisition of Synosphere,
LLC and the contractual issuance of common stock for bonuses. The number
of shares to be issued for the acquisition was based on the closing price
on November 1 for each period. The number of shares to be issued for the
quarterly bonuses was based on the average price for the quarter in each
period.
NOTE: The Company is still in the process of evaluating the fair value of
the assets acquired and the liabilities assumed in order to make a final
determination of the excess purchase price, including allocation to the
intangibles other than goodwill. Accordingly, the purchase accounting
information is preliminary and has been made solely for the purpose of
developing such pro forma condensed consolidated financial information.
Based on current information, the preliminary determination of the cost in
excess of the net assets acquired and the allocation to intangible assets
should not materially differ from the final determination.
18
INDEX TO EXHIBITS
Exhibit
Number Description of Document
23.1 Consent of Farber & Hass LLP, Independent Auditors
19