UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) March 23, 2005
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Datigen.com, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
Utah
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(State or Other Jurisdiction of Incorporation)
0-26027 87-0626333
(Commission File Number) (IRS Employer Identification No.)
207 Piaget Avenue
Clifton, NJ 07011
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(Address of Principal Executive Offices)
(Zip Code)
(973) 340-6000
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
-1-
Section 2. Financial Information
Item 2.01 Completion of Acquisition or Disposition of Assets
As previously disclosed, on March 23, 2005, Datigen.com, Inc. (the "Company" or
"we") entered into an Asset Purchase Agreement (the "Asset Purchase Agreement")
with Purisys, Inc., a New Jersey corporation ("Purisys"), and Aharon Y. Levinas.
Pursuant to the Asset Purchase Agreement, the Company purchased all the
intellectual property relating to the Battery Brain product and the goodwill
associated therewith and certain of the equipment relating to the product (the
"Battery Brain Assets"). Reference is made to the description of these
transactions and the Asset Purchase Agreement, which were filed on Current
Report on Form 8-K dated March 28, 2005.
The principal purpose of this amendment is to provide audited financial
statements of Purisys as well as pro forma financial statements reflecting the
acquisition of the Battery Brain Assets, which were not included in the original
filing of this Current Report on Form 8-K. In addition, we are providing herein
certain information reflecting the assets and operations of the Company
following its acquisition of the Battery Brain Assets.
Description of Business
The Company was formed in 1999 as an Utah corporation. Until November, 2004, the
Company had been involved in various activities, including development and
marketing of various internet and internet related products and services,
investment in trust deed notes secured by real property, and providing of
concrete cutting and finishing services to persons seeking to comply with
certain provisions of the American Disability Act of 1991 that require the
removal of "trips hazards" from public sidewalks and ramps.
In November, 2004, a majority of the Company's common stock was purchased by
Amir Uziel and six other non-affiliated individuals, and the Company's then
directors and officers resigned and were replaced by Mr. Uziel. Following such
change in control, the Company ceased operating in the trip hazard removal
service businesses that it had been operating in prior to such change in
control. Instead, the Company focused on negotiating the purchase of the Battery
Brain Assets, so that the Company may engage in the manufacturing, distribution,
and sale of the Battery Brain. On March 23, 2005, the Company acquired the
Battery Brain Assets, and we intend to engage promptly in the manufacturing,
distribution, and sale of the Battery Brain.
-2-
The Battery Brain is a small, box-shaped device, whose size and weight is
comparable to that of a cellular phone. It attaches to the battery of a motor
vehicle and performs two principal functions for the motor vehicle: prevention
of battery failure and protection from theft. If the Battery Brain is attached
to a car battery, and the car's operator leaves the lights on while the car is
turned off, the Battery Brain will prevent the battery from failing, so that the
car can be started again without having to recharge such battery. It works by
preventing a battery from becoming drained below the level necessary for it to
function. The Battery Brain is able to detect when the battery has reached such
point and, upon such detection, it automatically disconnects the power from the
battery so that the battery will not be drained any further. In addition, the
Battery Brain protects the vehicle from being stolen by stopping the battery
from powering the engine while the car is turned off, thereby preventing a
potential thief from "hot wiring" the engine, a procedure commonly used by
thieves to turn on the vehicle's engine without an engine key. The Battery Brain
can be used on all types of motor vehicles, from passenger cars to light trucks
to heavy trucks, buses, tractors, RVs, motorcycles, boats, handicap vehicles or
any other motor vehicles that rely on batteries.
The Company expects to have a competitive advantage over competitors having
products which the market might consider to be similar to the Battery Brain. We
feel that the Battery Brain is differentiated from similar products offered by
such competitors in various important ways. The Battery Brain is the only
product of its kind that will protect vehicles from battery failure due to the
operation of any electrical accessory, including headlights, radios, trunk
lights, interior lights, door lights, or due to unknown shorts in the electrical
system. Similar products offered by competitors protect vehicles from battery
failure due only to the operation of the headlights. The Battery Brain is also
easier to install than other competitive products. Further, In order to reset
the load (the energy source), most other competitive products require the
operator of the vehicle to lift the hood, locate the device, and press a reset
knob located on the device. The Battery Brain can be operated via a remote
control.
The Battery Brain is patented, and its patent does not expire until July 23,
2022. The Company is not dependent upon a small number of suppliers for the raw
materials used in the production of the Battery Brain as it expects to have
alternative sources available and not to encounter any difficulties in obtaining
such raw materials. We will not dependent upon a small number of customers, as
we intend to market the Battery Brain to all users of motor vehicles.
Employees
The Company currently has two full time employees.
-3-
Management's Discussion and Analysis or Plan of Operation
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking information.
Forward-looking information includes statements relating to future actions,
future performance, costs and expenses, interest rates, outcome of
contingencies, financial condition, results of operations, liquidity, business
strategies, cost savings, objectives of management, and other such matters of
the Company. The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for forward-looking information to encourage companies to provide
prospective information about themselves without fear of litigation so long as
that information is identified as forward-looking and is accompanied by
meaningful cautionary statements identifying important factors that could cause
actual results to differ materially from those projected in the information.
Forward-looking information may be included in this Current Report on Form 8-K
or may be incorporated by reference from other documents filed with the
Securities and Exchange Commission (the "SEC") by the Company. You can find many
of these statements by looking for words including, for example, "believes,"
"expects," "anticipates," "estimates" or similar expressions in this Current
Report on Form 8-K or in documents incorporated by reference in this Current
Report on Form 8-K. The Company undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information or
future events.
The Company has based the forward-looking statements relating to the Company's
operations on management's current expectations, estimates and projections about
the Company and the industry in which it operates. These statements are not
guarantees of future performance and involve risks, uncertainties and
assumptions that we cannot predict. In particular, we have based many of these
forward-looking statements on assumptions about future events that may prove to
be inaccurate. Accordingly, the Company's actual results may differ materially
from those contemplated by these forward-looking statements. Any differences
could result from a variety of factors, including, but not limited to the risk
factors beginning on page 5 of this Current Report on Form 8-K and the
following:
o the Company's ability to manufacture, market, and price the Battery
Brain product;
o the Company's ability to hire and maintain the personnel necessary
to run the operations of the Company;
o the level of consumer spending for the Company's product;
o the success of the Company's marketing and promotion programs in
obtaining market acceptance for its product;
o market conditions affecting the prices of the Company's product; and
o responsiveness of both the trade and consumers to the Company's new
product and marketing and promotion programs.
-4-
Plan of Operation.
As of the date of this Current Report on Form 8-K, the Company had no revenues.
Over the next twelve months, the Company intends to engage in the manufacture,
distribution and sale of the Battery Brain. The Company is expanding
engineering, manufacturing and warehouse capabilities, building a global
distribution network, developing processes procedures and controls for
contracting, inventory management and distribution agreements.
The Company intends to finance its operations by proceeds received from an
ongoing private of units for $0.20 per unit, each unit consisting of one share
of common stock, one Class A warrant giving the holder the right to purchase 1
share of stock at $0.45, which is exercisable for 1 year from the date of
issuance, and one Class B warrant giving the holder the right to purchase 1
share of stock for $0.75, which is exercisable for 3 years. As of June 27, 2005,
the Company has received an aggregate of $1,272,031.90 in net proceeds in
connection with such private placement and the sale of an additional 866,666
shares which were sold in a private placement of common shares for $0.15 per
share.
The Company believes that the proceeds received from the private placements will
be sufficient to satisfy the Company's cash requirements for the next twelve
(12) months.
Financial Condition and Results of Operation.
For the three months ended March 31, 2005, the Company had minimal business
operations. The Battery Brain Assets produced $2,222 in sales in the last week
of March.
The Company's operating expenses consist primarily of consulting costs. The
Company used consulting resources to help develop strategy, screen and recruit
key executives, fill interim management positions and complete the acquisitions
of the Battery Brain Assets. The Company's operating expenses for the three
months ended March 31, 2005 were $399,281 as compared with $66,528 for the three
months ended March 31, 2004. Such increase in operating expenses was primarily
attributable to the transformation of the business from an inactive shell to an
operating business. The new expenses include consulting fees of $374,680 which
were paid to help the Company begin sales of the Battery Brain product.
Off Balance Sheet Arrangements.
None
Risks Related to Our Business
We are an early stage company. Our limited operating history makes it difficult
to evaluate our future prospects.
We only began offering our product in March of 2005. We have entered into the
majority of our contracts and significant relationships only within the last
four months. Our extremely limited operating history makes it difficult to
evaluate our future prospects. Our prospects are subject to risks and
uncertainties frequently encountered by start-up companies in new and rapidly
evolving markets such as the automotive aftermarket. Many of these risks are
unknown, but include the lack of widespread acceptance of the Internet as a
means of purchasing products and services and managing our growth. Our failure
to identify the challenges and risks in this new market and successfully address
these risks would harm our business.
-5-
We have a history of losses and anticipate continued losses, and we may be
unable to achieve profitability.
We have never been profitable as a public company and expect to continue to
incur operating losses on both a quarterly and annual basis for at least the end
of the fiscal year ending December 31, 2005. We may be unable to achieve
profitability in the future. As of May 31, 2005, we had an accumulated deficit
of $1,559,562. We expect to continue to make significant expenditures for sales
and marketing, programming and development and general and administrative
functions. As a result, we will need to generate significant revenues to achieve
profitability. We cannot assure you that revenues will grow in the future or
that we will achieve sufficient revenues for profitability. If revenues grow
more slowly than we anticipate, or if operating expenses exceed our
expectations, our business would be severely harmed.
The revenue and profit potential of our business model is unproven. Our success
is dependent on our ability to expand our distribution network.
Our business model is to generate revenues from sales of Battery Brain to major
distribution channels. Our business model is new and our ability to generate
revenue or profits is unproven. There is little or no evidence to date that our
potential customers will drive the level of demand required for our Company to
become profitable. Our success is also dependent on our ability to develop and
then expand our base through international distributors. We cannot assure you
that we will be successful in doing this.
We depend on sales and marketing strategic relationships for growth. These
relationships may not contribute to increased use of our product, help us add
new retail outlets, or achieve any revenue. We may not be able to enter into new
or maintain our existing relationships.
We have used and plan to continue to establish sales and marketing strategic
relationships with large organizations as part of our growth strategy. These
arrangements may not generate any new retail outlets or revenue. We may not be
able to enter into new relationships or renew existing relationships on
favorable terms, if at all. We may not be able to recover our costs and expenses
associated with these efforts which could severely harm our business.
We face intense competition in the automotive aftermarket arena and we cannot
assure you that we will be able to compete successfully.
The automotive aftermarket arena is a well established, rapidly evolving and
intensely competitive, and we expect competition to intensify in the future.
Barriers to entry are minimal, and competitors may develop and offer similar
services in the future. Our business could be severely harmed if we are not able
to compete successfully against current or future competitors. Although we
believe that there may be opportunities for several providers of products and
services similar to ours, a single provider may dominate the market. We believe
there is no current dominant provider in our market. We expect that additional
companies will offer competing solutions in the future.
-6-
Our competitors may be able to devote significantly greater resources to
marketing and promotional campaigns, may adopt more aggressive pricing policies
or may try to attract users by offering instillation services for free and may
devote substantially more resources to product development.
Our quarterly results are subject to significant fluctuations.
We expect that our quarterly operating results will fluctuate significantly due
to many factors, many of which are outside our control, including:
o demand for and market acceptance of our products and services;
o inconsistent growth, if any, from our distributor base;
o loss of key customers or strategic partners;
o variations in the dollar volume of transactions effected through our
distribution network;
o intense and increased competition;
o introductions of new services or enhancements, or changes in pricing
policies, by us and our competitors;
o our ability to control costs; and
o interruption of our manufacturing facilities in China
We believe that quarterly revenues, expenses and operating results are likely to
vary significantly in the future, that period-to-period comparisons of results
of operations are not necessarily meaningful and that, as a result, such
comparisons should not be relied upon as indications of future performance.
We depend upon our key personnel and they would be difficult to replace.
We believe that our success will depend on the continued employment of our
senior management team and key sales and technical personnel. If one or more
members of our senior management team were unable or unwilling to continue in
their present positions, our business would suffer.
We plan to expand our employee base to manage our anticipated growth. Most
importantly, we plan to hire additional members of senior management.
Competition for personnel, particularly for senior management personnel and
employees with technical and sales expertise, is intense. The success of our
business is dependent upon hiring and retaining suitable personnel.
If our intellectual property protection is inadequate, competitors may gain
access to our technology and undermine our competitive position.
We regard our current and future copyrights, service marks, trademarks, patents,
trade secrets and similar intellectual property as important to our success, and
rely on trademark and copyright law, trade secret protection and confidentiality
and/or license agreements with our employees, customers and business partners to
protect our proprietary rights. Despite our precautions, unauthorized third
parties may copy certain portions of our services or reverse engineer or obtain
and use information that we regard as proprietary. We have been granted one
patent in the United States and we may seek additional patents in the future. We
do not know if any future patent application will be issued with the scope of
the claims we seek, if at all, or whether any patents we receive will be
challenged or invalidated. In addition, the laws of some foreign countries do
not protect proprietary rights to the same extent as do the laws of the United
States. Our means of protecting our proprietary rights in the United States or
abroad may not be adequate and competitors may independently develop similar
technology..
-7-
Our management will have broad discretion over the use of the net proceeds
raised from our private placements. Failure to use the net proceeds in an
effective and beneficial manner could impede our ability to expand our sales and
marketing activities and make strategic investments.
We have no current specific plans for the use of the net proceeds from our
ongoing private placements. We intend generally to use the net proceeds from
such private placements for general corporate purposes, including working
capital. We have not yet determined the actual expected expenditures and thus
cannot estimate the amounts to be used for each specified purpose. The actual
amounts and timing of these expenditures will vary significantly depending on a
number of factors, including, but not limited to, the amount of cash generated
by our operations and the market response to the introduction of any new service
offerings. Depending on future developments and circumstances, we may use some
of the proceeds for uses other than those described above. Our management will
therefore have significant flexibility in applying the net proceeds of this
investment. Our success and growth depends on the beneficial use of the net
proceeds.
Risks Related to this Investment
You will experience immediate dilution with respect to your shares, since we are
raising additional capital. We are currently raising capital through the offer
and sale of units for $0.20 per unit. Each unit consists of one share of common
stock, one Class A warrant giving the holder the right to purchase 1 share of
stock at $0.45, which is exercisable one year from the date of issuance, and one
Class B warrant giving the holder the right to purchase 1 share of stock for
$0.75, which is exercisable for 3 years from the date of issuance. As a result,
there will be outstanding additional shares and warrants exercisable for
additional shares and you will be diluted.
Our manufacturing capabilities are outsourced to China and subject to off shore
assembly, manufacturing and USA's custom delays.
The Company purchases components, devices and subassemblies from a supplier in
China. The Company's inventory policy is being developed to maintain a
substantial finish inventory in order to lessen its lead time due to offshore
third party contractors and USA's custom requirements. This does not ensure that
tariffs, manufacturing delay and conditions effecting timely delivery can be
prevented.
-8-
Section 9-Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits
(a) Financial Statements of business acquired.
(1) Report of Independent Registered Accounting Firm
(2) Balance Sheets dated as of January 31, 2005 and January 31, 2004
(3) Statements of Operations for the fiscal years ended January 31, 2005
and January 31, 2004
(4) Statements of Stockholders' Equity (Deficit) for the periods from
January 31, 2002 through January 31, 2005
(5) Statements of Cash Flows for the fiscal years ended January 31, 2005
and January 31, 2004
(6) Notes to the Financial Statements
(b) Pro forma financial information.
(1) Pro Forma Balance Sheet
(2) Pro Form Statement of Operations
(c) Exhibits: Not applicable
-9-
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 hereunto duly authorized.
DATIGEN.COM, INC.
By: /s/ Edward Braniff
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Name: Edward Braniff
Title: Chief Financial Officer
Date: June 30, 2005
-10-
PURISYS, INC.
FINANCIAL STATEMENTS
January 31, 2005 and 2004
TABLE OF CONTENTS
Report of Independent Registered Public Accounting Firm........................3
Balance Sheets.................................................................4
Statements of Operations.......................................................5
Statements of Stockholders' Equity (Deficit)...................................6
Statements of Cash Flows ......................................................7
Notes to the Financial Statements..............................................8
2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors
Purisys, Inc.
Clifton, NJ
We have audited the accompanying balance sheets of Purisys, Inc. as of January
31, 2005 and 2004 and the related statements of operations, stockholders' equity
(deficit) and cash flows for the years ended January 31, 2005 and 2004. These
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 standards of the Public Company
Oversight Board (United States). Those standards require that we plan and
perform the audits 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. And audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Purisys, Inc. as of January 31,
2005 and 2004 and the results of its operations and its cash flows for the years
ended January 31, 2005 and 2004 in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 6 to the
financial statements, the Company has suffered recurring losses and has a net
working capital deficiency. These conditions raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 6. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ Chisholm, Bierwolf & Nilson, LLC
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Chisholm, Bierwolf & Nilson, LLC
Bountiful, Utah
June 24, 2005
3
PURISYS, INC.
Balance Sheets
ASSETS
January 31,
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2005 2004
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CURRENT ASSETS
Cash $ -- $ 7,541
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Total Current Assets -- 7,541
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FIXED ASSETS, (Net of Accumulated Depreciation of
$1,113 and $371, respectively) (Note 2) 1,113 1,855
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TOTAL ASSETS $ 1,113 $ 9,396
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Bank overdraft $ 531 $ --
Accounts payable and accrued expenses 10,546 5,404
Note payable - related party 63,991 64,546
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Total Current Liabilities 75,068 69,950
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COMMITMENTS AND CONTINGENCIES (Note 5) -- --
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, no par value, 1,000 shares
authorized, 1,000 shares issued and outstanding 1,000 1,000
Accumulated Deficit (74,955) (61,555)
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Total Stockholders' Equity (Deficit) (73,955) (60,555)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 1,113 $ 9,395
======== ========
The footnotes contained herein are an integral part of these financial
statements.
4
PURISYS, INC.
Statements of Operations
For the years ended January 31,
--------------------------------
2005 2004
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REVENUES $ 206,249 $ 179,124
COST OF GOODS SOLD 98,794 61,809
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GROSS PROFIT 107,455 117,315
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EXPENSES
General and administrative 114,963 96,167
Depreciation 742 371
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Total Expenses 115,705 96,538
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LOSS FROM OPERATIONS (8,250) 20,777
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OTHER INCOME (EXPENSES)
Interest expense (5,150) (5,439)
Loss on disposal of fixed assets -- (7,263)
--------- ---------
Total Other Income (Expenses) (5,150) (12,702)
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NET INCOME (LOSS) $ (13,400) $ 8,075
========= =========
BASIC INCOME (LOSS) PER SHARE $ (13.40) $ 8.08
========= =========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 1,000 1,000
========= =========
The footnotes contained herein are an integral part of these financial
statements.
5
PURISYS, INC.
Statements of Stockhoders' Equity (Deficit)
Common Stock Additional
----------------------------- Paid-In Accumulated
Shares Amount Capital Deficit
------------ ------------ ------------ ------------
Balance, January 31, 2002 1,000 $ 1,000 $ -- $ (162,585)
Net income for the year ended Decem ber 31, 2003 -- -- -- 92,956
------------ ------------ ------------ ------------
Balance, January 31, 2003 1,000 1,000 -- (69,630)
Net income for the year ended January 31, 2004 -- -- -- 8,075
------------ ------------ ------------ ------------
Balance, January 31, 2004 1,000 1,000 -- (61,555)
Net loss for the year ended January 31, 2005 -- -- -- (13,400)
------------ ------------ ------------ ------------
Balance, January 31, 2005 1,000 $ 1,000 $ -- $ (74,955)
===============================================================
The footnotes contained herein are an integral part of these financial
statements.
6
PURISYS, INC.
Statements of Cash Flows
For the years ended January 31,
-------------------------------
2005 2004
------------ ------------
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income (loss) $ (13,400) $ 8,075
Adjustments to reconcile net loss to net cash used by
operating activities:
Loss on disposal of fixed assets -- 7,263
Depreciation 742 371
Change in accounts receivable -- --
Change in accounts payable and accrued expenses 5,141 (2,064)
------------ ------------
Net Cash Used in Operating Activities (7,517) 13,645
------------ ------------
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of fixed assets -- (2,226)
------------ ------------
Net Cash Used by Investing Activities -- (2,226)
------------ ------------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from note payable - related party 120,000 25,000
Payments on note payable - related party (120,555) (31,011)
Increase in bank overdraft 531 --
------------ ------------
Net Cash Provided (Used) By Financing Activities (24) (6,011)
------------ ------------
DECREASE IN CASH $ (7,541) $ 5,408
CASH AT BEGINNING OF YEAR $ 7,541 $ 2,133
------------ ------------
CASH AT END OF YEAR $ -- $ 7,541
============ ============
SUPPLIMENTAL SCHEDULE OF CASH FLOW ACTIVITIES:
Cash Paid For:
Income taxes $ -- $ --
Interest $ -- $ --
The footnotes contained herein are an integral part of these financial
statements.
7
PURISYS, INC.
Notes to the Financial Statements
January 31, 2005 and 2004
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The financial statements include the results of operations of Purisys,
Inc. ("the Company"), a New Jersey entity incorporated on February 26,
1996. In recent years, the Company has been primarily engaged in the
distribution and sales of its "Battery Brain" products, designed to
protect motor vehicle batteries from failure and theft.
b. Accounting Method
The Company's financial statements are prepared using the accrual method
of accounting. The Company has elected an January 31 year-end.
c. Recognition of Revenues
Revenue is recognized when the sales amount is determined, shipment of
goods to the customer has occurred and collection is reasonably assured.
d. Newly Issued Accounting Pronouncements
In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary
Assets--an amendment of APB Opinion No. 29", based on the principle that
exchanges of nonmonetary assets should be measured based on the fair value
of the assets exchanged. The guidance in that opinion, however, included
certain exceptions to that principle. This statement amends Opinion 29 to
eliminate the exception for nonmonetary exchanges of similar productive
assets and replaces it with a general exception for exchanges of
nonmonetary assets that do not have commercial substance. This statement
is effective during fiscal periods beginning after June 15, 2005.The
adoption of SFAS 153 is not expected to have a material impact on the
Company's financial statements.
In December 2004, the FASB issued SFAS No. 152, "Accounting for Real
Estate Time-Sharing Transactions--an amendment of FASB Statements No. 66
and 67", to reference the financial accounting and reporting guidance for
real estate time-sharing transactions that is provided in AICPA Statement
of Position (SOP) 04-2, "Accounting for Real Estate Time-Sharing
Transactions". This Statement also amends FASB Statement No. 67,
"Accounting for Costs and Initial Rental Operations of Real Estate
Projects", to state that the guidance for (a) incidental operations and
(b) costs incurred to sell real estate projects does not apply to real
estate time-sharing transactions. The accounting for those operations and
costs is subject to the guidance in SOP 04-2. This statement is effective
during fiscal years beginning after June 15, 2005. The adoption of SFAS
152 is not expected to have a material impact on the Company's financial
statements.
8
PURISYS, INC.
Notes to the Financial Statements
January 31, 2005 and 2004
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
d. Newly Issued Accounting Pronouncements (Continued)
In November 2004, the FASB issued SFAS No. 151, "Inventory Costs", an
amendment of ARB No. 43, Chapter 4 (SFAS 151), to clarify that abnormal
amounts of idle facility expense, freight, handling costs, and wasted
material (spoilage) should be recognized as current period charges, and
that fixed production overheads should be allocated to inventory based on
normal capacity of production facilities. This statement is effective for
inventory costs incurred during fiscal years beginning after June 15,
2005. The adoption of SFAS 151 is not expected to have a material impact
on the Company's financial statements.
In January 2003, the Emerging Issues Task Force ("EITF") issued EITF Issue
No. 00-21, "Accounting for Revenue Arrangements with Multiple
Deliverables". This consensus addresses certain aspects of accounting by a
vendor for arrangements under which it will perform multiple
revenue-generating activities, specifically, how to determine whether an
arrangement involving multiple deliverables contains more than one unit of
accounting. EITF Issue No. 00-21 is effective for revenue arrangements
entered into in fiscal periods beginning after June 15, 2003, or entities
may elect to report the change in accounting as a cumulative-effect
adjustment. The adoption of EITF Issue No. 00-21 did not have a material
impact on the Company's financial statements.
In January 2003, the FASB issued Interpretation ("FIN") No. 46,
"Consolidation of Variable Interest Entities". Until this interpretation,
a company generally included another entity in its consolidated financial
statements only if it controlled the entity through voting interests. FIN
No. 46 requires a variable interest entity, as defined, to be consolidated
by a company if that company is subject to a majority of the risk of loss
from the variable interest entity's activities or entitled to receive a
majority of the entity's residual returns. FIN No. 46 is effective for
reporting periods ending after December 15, 2003. The adoption of FIN No.
46 did not have an impact on the Company's financial statements.
In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133
on Derivative Instruments and Hedging Activities", which amends and
clarifies accounting for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging
activities under SFAS No. 133. SFAS No. 149 is effective for contracts
entered into or modified after September 30, 2003 and for hedging
relationships designated after September 30, 2003. The adoption of SFAS
No. 149 will not have an impact on the Company's financial statements.
9
PURISYS, INC.
Notes to the Financial Statements
January 31, 2005 and 2004
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
d. Newly Issued Accounting Pronouncements (Continued)
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and
Equity". SFAS No. 150 changes the accounting guidance for certain
financial instruments that, under previous guidance, could be classified
as equity or "mezzanine" equity by now requiring those instruments to be
reported as liabilities. SFAS No. 150 also requires disclosure relating to
the terms of those instruments and settlement alternatives. SFAS No. 150
is generally effective for all financial instruments entered into or
modified after May 31, 2003, and is otherwise effective at the beginning
of the first interim period beginning after June 15, 2003. The adoption of
SFAS No. 150 did not have an impact on the Company's financial statements.
In December 2003, the SEC issued SAB No. 104. SAB No. 104 revises or
rescinds portions of the interpretative guidance included in Topic 13 of
the codification of staff accounting bulletins in order to make this
interpretive guidance consistent with current authoritative accounting and
auditing guidance and SEC rules and regulations. It also rescinds the
Revenue Recognition in Financial Statements Frequently Asked Questions and
Answers document issued in conjunction with Topic 13. Selected portions of
that document have been incorporated into Topic 13. The adoption of SAB
No. 104 in December 2003 did not have an impact on the Company's financial
position, results of operations or cash flows.
In December 2004, the FASB issued SFAS No. 123(R), "Share-Based Payment".
This Statement revises SFAS No. 123, "Accounting for Stock-Based
Compensation" and supersedes APB Opinion No. 25, "Accounting for Stock
Issued to Employees" SFAS No. 123(R) focuses primarily on the accounting
for transactions in which an entity obtains employee services in
share-based payment transactions. SFAS No. 123(R) requires companies to
recognize in the statement of operations the cost of employee services
received in exchange for awards of equity instruments based on the
grant-date fair value of those awards. This Statement is effective as of
the first reporting period that begins after June 15, 2005. The Company is
currently evaluating the provisions of SFAS 123(R) and the impact that it
will have on its share based employee compensation programs.
e. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
f. Depreciation
Depreciation of fixed assets is computed by the straight-line method over
the estimated useful lives of the assets ranging from three to five years.
10
PURISYS, INC.
Notes to the Financial Statements
January 31, 2005 and 2004
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
g. Basic Loss Per Share
For the Year Ended
January 31, 2005
------------------------------------------------
Loss Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
$(13,400) 1,000 $ (13.40)
======== ======== ========
For the Year Ended
January 31, 2004
------------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
$ 8,013 1,000 $ 8.01
======== ======== ========
The computations of basic loss per share of common stock are based on the
weighted average number of shares outstanding at the date of the financial
statements.
h. Provision for Taxes
Deferred taxes are provided on a liability method whereby deferred tax
assets are recognized for deductible temporary differences and operating
loss and tax credit carryforwards and deferred tax liabilities are
recognized for taxable temporary differences. Temporary differences are
the differences between the reported amounts of assets and liabilities and
their tax bases. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely that not that some
portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax
laws and rates on the date of enactment.
Net deferred tax assets consist of the following components as of January
31, 2005 and 2004:
2005 2004
-------- --------
Deferred tax assets
NOL Carryover $ 25,500 $ 20,700
Deferred tax liabilities: -- --
Valuation allowance (25,500) (20,700)
-------- --------
Net deferred tax asset $ -- $ --
======== ========
11
PURISYS, INC.
Notes to the Financial Statements
January 31, 2005 and 2004
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
h. Provision for Taxes (Continued)
The income tax provision differs from the amount of income tax determined
by applying the U.S. federal income tax rate of 39% to pretax income from
continuing operations for the years ended January 31, 2005 and 2004 due to
the following:
2005 2004
------- -------
Book loss $(4,800) $ 2,700
Related Party -- --
Beneficial services -- --
Depreciation -- --
Stock for services/options expense -- --
Valuation allowance 4,800 (2,700)
------- -------
$ -- $ --
======= =======
At January 31, 2005, the Company had net operating loss carryforwards of
approximately $75,000 that may be offset against future taxable income
from the year 2005 through 2025. No tax benefit has been reported in the
January 31, 2005 financial statements since the potential tax benefit is
offset by a valuation allowance of the same amount. Due to the change in
ownership provisions of the Tax Reform Act of 1986, net operating loss
carryforwards for Federal income tax reporting purposes are subject to
annual limitations. Should a change in ownership occur, net operating loss
carryforwards may be limited as to use in the future.
i. Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity
of three months or less when purchased to be cash equivalents.
j. Fair Value of Financial Instruments
The fair value of the Company's cash and cash equivalents, receivables,
accounts payable, accrued liabilities, and notes payable approximate
carrying value on their effective interest rates compared to current
market prices.
12
PURISYS, INC.
Notes to the Financial Statements
January 31, 2005 and 2004
NOTE 2 -FIXED ASSETS
Fixed assets are recorded as cost. Major additions and improvements are
capitalized. Minor replacements, maintenance and repairs that do not
extend the useful life of the assets are expensed as incurred.
Depreciation of property and equipment is determined using the
straight-line method over their respective useful lives, primarily three
years. At January 31, 2005 and 2004, property and equipment consisted of
the following:
March 31,
-------------------
2005 2004
------- -------
Computer equipment $ 2,226 $ 2,226
Accumulated depreciation (1,175) (433)
------- -------
Net book value $ 1,051 $ 1,793
======= =======
Depreciation expense from continuing operations for the years ended
January 31, 2005 and 2004 was $742 and $433, respectively.
NOTE 3 - RELATED PARTY TRANSACTIONS
For the past several years, the Company has engaged in an ongoing
transaction with one of its officers, whereby the Company has borrowed
cash in order to meet short-term financing requirements. The Company has
made several good-faith payments to the officer on this note when it has
had the financial wherewithal to do so. As of January 31, 2005 and 2004,
the outstanding balance on this officer loan totaled $63,991 and $64,546,
respectively. During the 2005 and 2004 fiscal years, the Company received
$120,000 and $25,000, respectively, from the related party, and made
payments to the related party of $120,555 and $31,011, respectively. The
Company has accrued interest on this note at a rate of 8.0% per annum.
Total accrued interest on this note amounted to $10,545 and $5,404 at
January 31, 2005 and 2004, respectively.
NOTE 4 - SUBSEQUENT EVENT
Battery Brain Asset Purchase
On December 15, 2004, the Company entered into a binding Letter of Intent
with Datigen.com, Inc., ("Datigen") which provided, among other things,
for the Company's sale to Datigen of all of the Company's assets
constituting the "Battery Brain" product. In connection with the Letter of
Intent, the Company was advanced $120,000 towards payment of the purchase
price in December, 2004. Datigen completed the acquisition of the Battery
Brain product from the Company in March 2005.
On February 28, 2005, the Company and Datigen amended the Letter of Intent
to provide that the Datigen would advance an additional $170,000 to the
Company to 1) cover day-to-day operations; 2) finalize the purchase of
5,000 retail package units; and 3) commence the purchase of 5,000
wholesale package units. These units and all rights associated with these
units, including without limitation, revenues from the sales of these
units, will be part of the assets to be purchased by the Company.
13
PURISYS, INC.
Notes to the Financial Statements
January 31, 2005 and 2004
NOTE 4 - SUBSEQUENT EVENT (Continued)
Battery Brain Asset Purchase (Continued)
On March 23, 2005, the Company, Datigen, and Aharon Y. Levinas ("Levinas")
executed an Asset Purchase Agreement (the "Agreement") pursuant to which
the Company purchased all the intellectual property relating to the
Battery Brain product and the goodwill associated therewith and certain of
the equipment relating to the product. The consideration paid for the
assets was the issuance to Levinas, the Company's sole shareholder, of the
number of shares of common stock, no par value, of the Company's common
stock which will constitute, when there has been an aggregate of
$1,000,000 invested in Datigen, (or such earlier date as agreed upon
between the Company and Levinas) twenty (20%) percent of all issued and
outstanding common stock and $100,000, which was previously paid pursuant
to the Letter of Intent. Mr. Levinas has the right to an additional 20% of
the issued and outstanding share capital of Datigen if, prior to June 23,
2005, $400,000 is not invested in the development of the Company's Battery
Brain product. If less than $400,000 is invested, said 20% shall be pro
rated based on the actual amount invested.
In addition, within the next two years Datigen agreed to use its best
efforts to (a) consummate an equity raising of not less than $1,500,000
dollars at a post-money valuation of not less than $12,000,000; provided,
that all equity raises within 120 days after March 23, 2005 which are
based on a post-money valuation which is $10,500,000 or greater, shall be
counted toward the $1,500,000; or (b) generate revenue for the Battery
Brain product in the aggregate amount of $2,000,000. If Datigen does not
achieve either (a) or (b) at any time on or prior to March 23, 2007, then
Levinas shall be entitled to receive additional shares of common stock
which equals 20% of the outstanding share capital on a fully-diluted basis
(calculated as of said date).
NOTE 5 - COMMITMENTS AND CONTINGENCIES
Office Lease
As of January 31, 2005, the Company maintained a corporate office in
Clifton, New Jersey. The Company had a month-to-month lease on this office
space, paying $3,000 per month. In June, 2005, the Company's successor
entity, Datigen, Inc., signed a one-year lease on this same office space
requiring the Company to pay $3,000 per month. The lease expires on June
30, 2006.
NOTE 6 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. However, at January 31, 2005,
the Company had a cash overdraft of $531, its current liabilities of
$75,067 exceeded its current assets by $74,016, and the Company had an
accumulated deficit of $1,051. These matters raise substantial doubt about
the Company's ability to continue as a going concern.
14
PURISYS, INC.
Notes to the Financial Statements
January 31, 2005 and 2004
NOTE 6 - GOING CONCERN (Continued)
Subsequent to January 31, 2005, the Company consummated an Asset Purchase
Agreement with Datigen, Inc. ("Datigen"), whereby the Company sold all
rights and title to its "Battery Brain" assets to Datigen. This
transaction essentially left the Company without assets, or a source of
future revenue.
Datigen, Inc. is currently in the process of raising equity capital in
order to invest in and bolster the "Battery Brain" marketing and sales
functions. Datigen's ability to continue operating as a going concern is
dependent on its success in securing such equity financing, and increasing
sales revenues relating to the "Battery Brain" product. The Company can
provide no assurances that Datigen's efforts in these areas will be
successful. In addition, to the extent that Datigen's future financing is
equity-based, this may result in dilution to existing shareholders.
The financial statements presented herein do not include any adjustments
that might result from the outcome of this uncertainty.
15
Datigen.com, Inc.
PROFORMA
FINANCIAL STATEMENTS
December 31, 2004
Datigen.com
Proforma Balance Sheet
Datigen.com Proforma
12/31/04 Purisys, Inc. Proforma Adjustments December 31,
(Registrant) 1/31/05 DR CR 2004
------------ ------------- ----------- ----------- ------------
(audited) (audited) (unaudited)
Assets
Current Assets
Cash $ 58,132 $ -- $ 58,132
Advance on Asset Purchase 120,000 -- 120,000{a} --
----------- ----------- -----------
Total Current Assets 178,132 -- 58,132
----------- ----------- -----------
Equipment, Net -- 1,113 1,113
----------- ----------- -----------
Other Assets
Intellectual Property -- -- 2,799,393 2,799,393
----------- ----------- -----------
Total Other Assets
Total Assets $ 178,132 $ 1,113 $ 2,858,638
=========== =========== ===========
Liabilities and Stockholders' Equity
Current Liabilities
Bank Overdraft $ -- $ 531 $ 531
Accounts Payable and Accrued Expenses 1,525 10,546 12,071
Note Payable - Related Party -- 63,991 63,991
----------- ----------- -----------
Total Current Liabilities 1,525 75,068 76,593
----------- ----------- -----------
Stockholders' Equity
Common Stock, Authorized 1,000 Shares,
No Par Value, 1,000 Shares issued and Outstanding -- 1,000 1,000 {a} --
Common Stock, Authorized 50,000,000 Shares,
No Par Value, 46,939,606 Shares
Issued and Outstanding 1,092,782 -- 2,605,438{a} 3,698,220
Additional Paid in Capital -- -- --
Accumulated Deficit (916,175) (74,955) 74,955{a} (916,175)
----------- ----------- -----------
Total Stockholders' Equity 176,607 (73,955) 2,782,045
----------- ----------- -----------
Total Liabilities and Stockholders' Equity $ 178,132 $ 1,113 $ 2,858,638
=========== =========== ===========
{a} The adustments to the financial statements is a result of the asset
acquisition by Datigen.com (Registrant) of the assets of Purisys, Inc. The
following journal entries reflect this asset acquisition:
Battery Brain Technology 2,799,393
Common Stock - Purisys 1,000
Advance on Asset Purchase 120,000
Accumulated Deficit 74,955
Common Stock - issued to Levinas 2,605,438
Pursuant to the "Asset Purchase Agreement" filed by the Registrant on form
8K on March 28, 2005, the Company agreed to pay to Purisys, Inc./Levinas
cash of $120,000 and the Company's common stock equivalent to 20% of the
outstanding shares as of the date of the agreement. This issuance equated
to 10,421,750 shares valued at $.25 per share or $2,605,438.
Also, as part of the agreement, the Company assumes all warranties and
service the Battery Brain Products which have been sold prior to the
purchase date. In addition, the Company assumes the allegation made by
Danny Greenberg claiming he was involved in the initial design of the
Battery Brain Product.
Datigen.com
Proforma Statement of Operations
Datigen.com Proforma
12/31/2004 Purisys, Inc. Proforma Adjustments December 31,
(Registrant) 01/31/05 DR CR 2004
------------ ------------- --------- --------- ------------
Revenues $ -- $ 206,249 $ 206,249
Cost of Sales -- 98,794 98,794
--------- --------- ---------
Gross Profit (Loss) -- 107,455 107,455
--------- --------- ---------
Operating Expenses
Depreciation Expense -- 742 742
Salaries & Wages -- --
Professional Fees -- --
General & Administrative 2,977 114,963 117,940
--------- --------- ---------
Total Operating Expenses (2,977) (115,705) 118,682
--------- --------- ---------
Income (Loss) from Operations (2,977) (8,250) (11,227)
Income from Discontinued Operations 111,160 111,160
Other Income (Expense) (5,150) (5,150)
--------- --------- ---------
Income (Loss) Before Income Taxes 108,183 (13,400) 94,783
Income Tax Expense -- -- --
--------- --------- ---------
Net Income (Loss) $ 108,183 $ (13,400) $ 94,783
========= ========= =========
Datigen.com, Inc.
Notes to Pro Forma Consolidated Financial Statements
December 31, 2004
NOTE 1 - Summary of Transaction
On December 15, 2004, the Company entered into a binding Letter of Intent
with Purisys, Inc., which provided, among other things, for the sale to the
Company of all of the assets constituting the "Battery Brain" product owned by
Purisys. In connection with the Letter of Intent, the Company advanced $120,000
towards payment of the purchase price in December, 2004. The Company completed
the acquisition of the Battery Brain product from Purisys in March 2005.
On February 28, 2005, the Company and Purisys amended the Letter of Intent to
provide that the Company would advance an additional $170,000 to Purisys to
cover day-to-day operations, finalize the purchase of 5,000 retail package units
and commence the purchase of 5,000 wholesale package units. These units and all
rights associated with these units, including without limitation, revenues from
the sales of these units, will be part of the assets to be purchased by the
Company.
On March 23, 2005, the Company , Purisys and Aharon Y. Levinas ("Levinas")
executed an Asset Purchase Agreement (the "Agreement") pursuant to which the
Company purchased all the intellectual property relating to the Battery Brain
product and the goodwill associated therewith and certain equipment relating to
the product. The consideration paid for the assets was the issuance to Levinas,
the sole shareholder of Purisys, of the number of shares of common stock, no par
value, of the Company's common stock which will constitute, when there has been
an aggregate of $1,000,000 invested in the Company, (or such earlier date as
agreed upon between the Company and Levinas) twenty (20%) percent of all issued
and outstanding common stock and $100,000, which was previously paid pursuant to
the Letter of Intent. Mr. Levinas has the right to an additional 20% of the
issued and outstanding share capital of the Company if, prior to June 23, 2005,
$400,000 is not invested in the development of the Company's Battery Brain
product. If less than $400,000 is invested, said 20% shall be pro rated based on
the actual amount invested.
In addition, within the next two years the Company agreed to use its best
efforts to (a) consummate an equity raise of not less than $1,500,000 dollars at
a post-money valuation of not less than $12,000,000; provided, that all equity
raises within 120 days after March 23, 2005 which are based on a post-money
valuation which is $10,500,000 or greater, shall be counted toward the
$1,500,000; or (b) generate revenue for the Battery Brain product in the
aggregate amount of $2,000,000. If the Company does not achieve either (a) or
(b) at any time on or prior to March 23, 2007, then Levinas shall be entitled to
receive additional shares of common stock which equals 20% of the outstanding
share capital on a fully-diluted basis (calculated as of said date).
Datigen.com, Inc. Notes to Pro Forma Consolidated Financial Statements December
31, 2004
Datigen.com, Inc.
Notes to Pro Forma Consolidated Financial Statements
December 31, 2004
NOTE 1 - Summary of Transaction - continued
The purchased assets did not initially include the inventory which existed as of
March 23, 2005 or the molds for the Battery Brain (which are currently in Italy
and China). On March 31, 2005, the agreement was amended and the Company
purchased the molds for $66,487 and the inventory for $68,827.
The only liabilities assumed by the Company in the transaction are (i) the
warranties and service of any Battery Brain products sold prior to the execution
and delivery of the Agreement, (ii) any potential claims made by a person who
alleges that he assisted in developing the Battery Brain product and (iii) any
taxes incurred as a result of the Agreement.
In April 2005, the Company determined that 10,421,750 shares of its common stock
were due to Aharon Levinas under the terms of the purchase agreement for
Purisys. The shares are shown as outstanding in the accompanying financial
statements. The shares were valued at $0.25 per share and the value was recorded
as Goodwill.
Also in April 2005, the Company certificated 1,500,000 shares of its common
stock for which the proceeds were received in the first quarter of 2005, which
are shown as outstanding in the accompanying financial statements. The Company
also issued another 1,175,000 shares for cash of $230,000 received subsequent to
March 31, 2005.
NOTE 2 - Management Assumptions
The pro forma balance sheet and statements of operations assumes that the
entities were together at the beginning of the period ended December 31, 2004.
The pro forma balance sheet assumes that through the issuance of
10,421,750 shares of common stock and a cash payment of $120,000, the Company
acquires all intellectual property of Purisys, Inc..
The proforma statement of operations assumes that the assets acquired
generated the revenues and expenses of Purisys, Inc.; therefore, the Company's
revenues and expenses have been combined with Purisys, Inc.'s at the beginning
of the period ended December 31, 2004.