UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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): December 9, 2005
IFSA STRONGMAN, INC
(Exact name of registrant as specified in its charter)
Delaware 000-50754 20-0929024
(State or Other Jurisdiction (Commission File (I.R.S. Employer
of Incorporation) Number) Identification Number)
28-32 Wellington Road, London, United Kingdom NW8 9SP
(Address of principal executive offices) (zip code)
44 20 7060 4372
(Registrant's telephone number, including area code)
Copies to:
Gregory Sichenzia, Esq.
Yoel Goldfeder, Esq.
Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas
New York, New York 10018
Phone: (212) 930-9700
Fax: (212) 930-9725
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))
Explanatory Note:
This Form 8-K/A is being filed as an amendment to the Form 8-K that was filed by
IFSA Strongman, Inc. (the "Company"), related to events that occurred on
December 9, 2005. The only portion of such Form 8-K being amended is to modify
Item 9.01 to provide the financial statements of the business acquired required
to be filed thereunder.
Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of business acquired.
Audited Financial Statements of IFSA Strongman Ltd. as of December 31,
2004 and for the period from June 10, 2004 (inception) through December
31, 2004 and unaudited financial statements for the nine month period
ended September 30, 2005.
(b) Pro forma financial information.
Unaudited Condensed Combined Pro Forma Financial Statements December 31,
2004 and September 30, 2005.
(c) Exhibits
Exhibit Number Description
- -------------- ----------------------------------------------------------
10.1 Share Exchange Agreement by and between Synerteck
Incorporated, and IFSA Strongman Ltd. and the shareholders
of IFSA Strongman Ltd.
1
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SYNERTECK INCORPORATED
Dated: February 22, 2006 By: /s/ Jaime Alvarez
---------------------------
Name: Jaime Alvarez
Title: Chief Financial Officer
2
IFSA STRONGMAN LIMITED
Financial Statements from Inception
on June 10, 2004 through December 31, 2004
and Report of Independent Registered
Public Accounting Firm
And Unaudited Financial Statements
For the Nine Months Ended
September 30, 2005
CONTENTS
Report of Independent Registered Public Accounting Firm..................... 2
Balance Sheets.............................................................. 3
Statements of Operations.................................................... 4
Statements of Stockholders' Equity...........................................5
Statements of Cash Flows.................................................... 7
Notes to the Financial Statements........................................... 8
1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
IFSA Strongman Limited
London, England
We have audited the accompanying balance sheet of IFSA Strongman Limited as of
December 31, 2004 and the related statements of operations, stockholders' equity
and cash flows for the period from inception on June 10, 2004 through December
31, 2004. 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 audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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 respects, the financial position of IFSA Strongman Limited as of
December 31, 2004 and the results of their operations and their cash flows for
the period from inception on June 10, 2004 through December 31, 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 9 to the
financial statements, the Company has negative cash flows from operations and
losses from inception which raises substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 9. These financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Bouwhuis, Morrill & Company, LLC
- ------------------------------------
Bouwhuis, Morrill & Company, LLC
Layton, Utah
January 23, 2006
IFSA STRONGMAN LIMITED
Balance Sheets
ASSETS
September 30, December 31,
2005 2004
------------ ------------
CURRENT ASSETS (Unaudited)
Cash and cash equivalents $ 56,198 $ 337,852
Accounts receivable, net 89,633 89,168
Due from related parties 6,337 158,349
Other current assets 97,652 16,576
------------ ------------
Total Current Assets 249,820 601,945
------------ ------------
PROPERTY AND EQUIPMENT - NET 120,714 312
------------ ------------
GOODWILL (Note 3) 1,264,240 1,264,240
------------ ------------
TOTAL ASSETS $ 1,634,774 $ 1,866,497
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 517,975 $ 71,220
------------ ------------
Total Current Liabilities 517,975 71,220
------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock, 0.01 Euro par value; 5,500,000 shares authorized
3,099,727 and 1,517,350 issued and outstanding, respectively 34,559 15,204
Common stock, 0.01 Euro par value; 4,500,000 shares authorized
2,031,658 and 1,586,176 issued and outstanding, respectively 28,264 22,821
Additional paid-in capital 4,324,576 3,502,987
Stock subscriptions receivable -- (659,128)
Accumulated deficit (3,149,851) (1,113,011)
Foreign currency translation adjustment (120,749) 26,404
------------ ------------
Total Stockholders' Equity 1,116,799 1,795,277
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,634,774 $ 1,866,497
============ ============
The accompanying notes are an integral part of these financial statements.
3
IFSA STRONGMAN LIMITED
Statement of Operations
From Inception
on June 10, 2004
Nine Months Ended through
September 30, December 31,
2005 2004
------------ ------------
(Unaudited)
SALES, net $ 1,118,677 $ 264,523
COST OF SALES 1,199,493 20,878
------------ ------------
GROSS MARGIN (80,816) 243,645
------------ ------------
OPERATING EXPENSES
Salaries and benefits 219,325 214,424
Selling, general and administrative 874,353 125,242
Professional fees 401,846 115,721
Bad debts 446,388 20,340
------------ ------------
Total Operating Expenses 1,941,912 475,727
------------ ------------
LOSS FROM OPERATIONS (2,022,728) (232,082)
------------ ------------
OTHER INCOME (EXPENSES)
Loss on impairment of goodwill (Note 3) -- (1,146,000)
Gain (loss) on foreign currency transactions (10,998) 265,161
Interest expense (3,114) (90)
------------ ------------
Total Other Income (Expenses) (14,112) (880,929)
------------ ------------
LOSS BEFORE INCOME TAXES (2,036,840) (1,113,011)
INCOME TAX EXPENSE -- --
------------ ------------
NET LOSS $ (2,036,840) $ (1,113,011)
============ ============
BASIC AND DILUTED:
Net loss per common share $ (0.57) $ (0.42)
============ ============
Weighted average shares outstanding 3,565,289 2,647,199
============ ============
OTHER COMPREHENSIVE INCOME
NET LOSS $ (2,036,840) $ (1,113,011)
Foreign currency translation adjustment (120,749) 26,404
------------ ------------
COMPREHENSIVE LOSS $ (2,157,589) $ (1,086,607)
============ ============
The accompanying notes are an integral part of these financial statements.
4
IFSA STRONGMAN LIMITED
Statements of Stockholders' Equity
Preferred Stock Common Stock Additional
------------------------------- ------------------------------- Paid-in
Shares Amount Shares Amount Capital
-------------- -------------- -------------- -------------- --------------
Balance at inception, June 10, 2004 -- $ -- -- $ -- $ --
Preferred stock issued to the
incorporators of the Company on
June 10, 2004 608,364 7,332 -- -- 464,312
Common stock issued in the
acquisition of subsidiaries on
June 10, 2004 (Note 3) -- -- 1,999,999 24,102 2,386,138
Preferred stock issued for stock
subscriptions receivable on
December 15, 2004 495,163 6,591 -- -- 652,537
Conversion of common stock into
preferred stock (Note 5) 413,823 1,281 (413,823) (1,281) --
Foreign currency translation -- -- -- -- --
Net loss for the period from inception
to December 31, 2004 -- -- -- -- --
-------------- -------------- -------------- -------------- --------------
Balance, December 31, 2004 1,517,350 $ 15,204 1,586,176 $ 22,821 $ 3,502,987
Proceeds from subscripions receivable -- -- -- -- --
Preferred stock issued for
cash (unaudited) 1,489,288 18,217 -- -- 1,803,481
Common stock issued for
services (unaudited) -- -- 538,571 6,581 651,484
Excess of value of stock issued
over value received (unaudited) -- -- -- -- (1,633,376
Conversion of common stock into
preferred stock (unaudited) 93,089 1,138 (93,089) (1,138) --
Foreign currency translation (unaudited) -- -- -- -- --
Net loss for the nine months ended
September 30, 2005 (unaudited) -- -- -- -- --
-------------- -------------- -------------- -------------- --------------
Balance, September 30, 2005 (unaudited) 3,099,727 $ 34,559 2,031,658 $ 28,264 $ 4,324,576
============== ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements.
5
Accumulated
Stock Other
Subscriptions Accumulated Comprehensive
Receivable Deficit Income
-------------- -------------- --------------
Balance at inception, June 10, 2004 $ -- $ -- $ --
Preferred stock issued to the
incorporators of the Company on
June 10, 2004 -- -- --
Common stock issued in the
acquisition of subsidiaries on
June 10, 2004 (Note 3) -- -- --
Preferred stock issued for stock
subscriptions receivable on
December 15, 2004 (659,128) -- --
Conversion of common stock into
preferred stock (Note 5) -- -- --
Foreign currency translation -- -- 26,404
Net loss for the period from inception
to December 31, 2004 -- (1,113,011) --
-------------- -------------- --------------
Balance, December 31, 2004 $ (659,128) $ (1,113,011) $ 26,404
Proceeds from subscripions receivable 659,128 -- --
Preferred stock issued for
cash (unaudited) -- -- --
Common stock issued for
services (unaudited) -- -- --
Excess of value of stock issued
over value received (unaudited) -- -- --
Conversion of common stock into
preferred stock (unaudited) -- -- --
Foreign currency translation (unaudited) -- -- (147,153)
Net loss for the nine months ended
September 30, 2005 (unaudited) -- (2,036,840) --
-------------- -------------- --------------
Balance, September 30, 2005 (unaudited) $ -- $ (3,149,851) (120,749)
============== ============== ==============
The accompanying notes are an integral part of these financial statements.
6
IFSA STRONGMAN LIMITED
Statement of Cash Flows
From Inception
on June 10, 2004
Nine Months Ended through
September 30, December 31,
2005 2004
-------------- --------------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (2,036,840) $ (1,113,011)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation expense 9,787 104
Common stock issued for services 658,065 --
Excess of value of stock issued over services (1,633,376) --
Loss on impairment of goodwill -- 1,146,000
Changes in operating assets and liabilities:
Increase in accounts receivable (465) (89,168)
Decrease (Increase) in due from related parties 152,012 (158,349)
Increase in other current assets (81,076) (16,576)
Increase in accounts payable and accrued expenses 446,753 71,220
-------------- --------------
Net Cash Used in Operating Activities (2,485,140) (159,780)
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (130,188) (416)
-------------- --------------
Net Cash Used by Investing Activities (130,188) (416)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance ot subscriptions receivable 659,128 --
Proceeds from issuance of preferred stock 1,821,698 471,644
-------------- --------------
Net Cash Provided by Financing Activities $ 2,480,826 $ 471,644
-------------- --------------
EFFECT OF FOREIGN CURRENCY TRANSLATION ADJUSTMENT (147,152) 26,404
NET INCREASE IN CASH AND CASH EQUIVALENTS $ (281,654) $ 337,852
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 337,852 --
-------------- --------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 56,198 $ 337,852
============== ==============
SUPPLEMENTAL CASH FLOW INFORMATION
Cash Payments For:
Interest $ -- $ --
Income taxes $ -- $ --
Non-Cash Investing and Financing Activities
Preferred stock issued for subscription receivable $ -- $ 659,128
Issuance of common stock for acquisition of subsidiary $ -- $ 2,410,240
Common stock issued for services $ 658,065 $ --
The accompanying notes are an integral part of these financial statements.
7
IFSA STRONGMAN LIMITED
Notes to the Financial Statements
December 31, 2004 and
September 30, 2005 (unaudited)
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
IFSA Strongman Limited (the "Company") was originally organized
under the laws of England and Wales in the United Kingdom on June
1, 2004, under the name of IFSA Holdings Limited. On December 10,
2004 the Company changed its name to IFSA Strongman Limited. The
Company did not authorize or issue any shares of stock until June
10, 2004, which became the effective inception date for accounting
purposes.
The Company is in the business of organizing, promoting, and
regulating sporting events related to the strongman sports and
strength athletes worldwide. The Company is an integrated media,
entertainment, and athlete representation company, principally
engaged in the development, production, and marketing of
television programming, pay-per-view programming, live events, and
the licensing and sale of branded consumer products featuring both
the Company's brand and the brands of the athletes it represents.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of the Company is
presented to assist in understanding the Company's financial
statements. The financial statements and notes are representations
of the Company's management who are responsible for their
integrity and objectivity. These accounting policies conform to
accounting principles generally accepted in the United States of
America and have been consistently applied in the preparation of
the financial statements. The following policies are considered to
be significant:
a. Accounting Method
The Company recognizes income and expenses based on the accrual
method of accounting. Accordingly, revenues are recognized when
earned and expenses are recognized when incurred. The Company has
elected a December 31 year-end.
b. Cash and Cash Equivalents
Cash equivalents are generally comprised of certain highly liquid
investments with original maturities of less than three months.
c. Use of Estimates in the Preparation of Financial Statements
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.
d. Revenue Recognition Policy
Revenue is recognized when contracts are signed and related
contract activities have commenced, where the fee is fixed or
determinable, and collectibility is reasonably assured. Revenue is
not recognized until persuasive evidence of an arrangement exists.
Advance payments are recorded as deferred revenue until such time
as they are recognized.
8
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
e. Allowance for Doubtful Accounts
Accounts receivable are recorded net of the allowance for doubtful
accounts. The Company generally offers 30-day credit terms on
sales to its customers and requires no collateral. The Company
maintains an allowance for doubtful accounts which is determined
based on a number of factors, including each customer's financial
condition, general economic trends and management judgment. As of
December 31, 2004 and September 30, 2005, the allowance for
doubtful accounts was $9,229. Bad debt expense was $20,340 and
$446,388 for the periods ended December 31, 2004 and September 30,
2005, respectively.
f. Property and Equipment
Property and equipment are stated at cost less accumulated
depreciation. Depreciation is calculated using the straight-line
method over the estimated useful lives of the assets. When assets
are disposed of, the cost and accumulated depreciation (net book
value of the assets) are eliminated and any resultant gain or loss
reflected accordingly. Betterments and improvements are
capitalized over their estimated useful lives whereas repairs and
maintenance expenditures on the assets are charged to expense as
incurred.
Nine Months
Ended Year Ended
September 30, December, 31
Life 2005, 2004
--------- ------------------ -----------------
(unaudited)
Furniture and Fixtures 3-5 Years $ 130,605 $ 416
Less - Accumulated Depreciation (9,891) (104)
----------------- ------------------
Net Property and Equipment $ 120,714 $ 312
================= ==================
Depreciation expense for the year ended December 31, 2004 and the
nine months ended September 30, 2005 was $104 and $9,787,
respectively.
g. Basic Net Loss per Share of Common Stock
In accordance with Financial Accounting Standards No. 128,
"Earnings per Share," basic net loss per common share is based on
the weighted average number of common shares and common share
equivalents outstanding during the periods presented. Diluted
earnings per share is computed using weighted average number of
common shares plus dilutive common share equivalents outstanding
during the period.
September 30, December 31,
2005 2004
----------------- ----------------
(Unaudited)
Net loss (numerator) $ (2,036,840) $ (1,113,011)
Weighted average shares outstanding (denominator) 3,565,289 2,647,199
---------------- -----------------
Net loss per share amount $ (0.57) $ (0.42)
================= =================
9
IFSA STRONGMAN LIMITED
Notes to the Financial Statements
December 31, 2004 and
September 30, 2005 (unaudited)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
h. Recent Accounting Pronouncements
In December 2002, the Financial Accounting Standards Board issued
SFAS No. 148, "Accounting for Stock Based Compensation-Transition
and Disclosure-an amendment of FASB Statement No. 123" which is
effective for financial statements issued for fiscal years ending
after December 15, 2002. This Statement amends SFAS 123,
Accounting for 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 123 to require prominent disclosures in both annual and
interim financial statements about the method of accounting for
stock-based compensation and the effect of the method used on
reported results. The adoption of SFAS No. 148 did not have a
material effect on the financial statements of the Company.
In April 2003, the Financial Accounting Standards Board issued
SFAS No. 149, Amendment of Statement 133 on Derivative Instruments
and Hedging Activities" which is effective for contracts entered
into or modified after June 30, 2003 and for hedging relationships
designated after June 30, 2003. This statement amends and
clarifies financial accounting for derivative instruments embedded
in other contracts (collectively referred to as derivatives) and
hedging activities under SFAS 133. The adoption of SFAS No. 149
did not have a material effect on the financial statements of the
Company.
In May 2003, the Financial Accounting Standards Board issued SFAS
No. 150, "Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity" which is effective
for 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. This Statement
establishes standards for how an issuer classifies and measures in
its statement of financial position certain financial instruments
with characteristics of both liabilities and equity. It requires
that an issuer classify a financial instrument that is within its
scope as a liability (or an asset in some circumstances) because
that financial instrument embodies an obligation of the issuer.
The adoption of SFAS No. 150 did not have a material effect on the
financial statements of the Company.
In January 2003, the Financial Accounting Standards Board issued
FASB Interpretation No. 46 "Consolidation of Variable Interest
Entities." FIN 46 provides guidance on the identification of
entities for which control is achieved through means other than
through voting rights, variable interest entities, and how to
determine when and which business enterprises should consolidate
variable interest entities. This interpretation applies
immediately to variable interest entities created after January
31, 2003. It applies in the first fiscal year or interim period
beginning after June 15, 2003, to variable interest entities in
which an enterprise holds a variable interest that it acquired
before February 1, 2003. The adoption of FIN 46 did not have a
material effect on the financial statements of the Company.
10
IFSA STRONGMAN LIMITED
Notes to the Financial Statements
December 31, 2004 and
September 30, 2005 (unaudited)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
i. Income Taxes
The Company accounts for income taxes in accordance with Statement
of Financial Accounting Standards Board (SFAS) No. 109,
"Accounting for Income Taxes." Under this method, deferred income
taxes are determined based on the difference between the financial
statement and tax bases of assets and liabilities using enacted
tax rates in effect for the year in which differences are expected
to reverse. In accordance with the provisions of SFAS No. 109, a
valuation allowance would be established to reduce deferred tax
assets if it were more likely than not that all or some portion of
such deferred tax assets would not be realized. A full allowance
against deferred tax assets was provided as of December 31, 2004
and September 30, 2005.
NOTE 3 - GOODWILL
Goodwill represents the excess of cost over the fair value of net
assets acquired through acquisitions. On June 10, 2004, the
Company acquired the business and assets of three companies; IFSA
Projects Limited, Scandinavian IFSA Ltd., and IFSA Europe through
the issuance of 1,999,999 shares of its common stock valued at
$2,410,240, or $1.21 per share. The acquisitions were done to
facilitate the consolidation of the strongman sports under one
umbrella. The three acquired companies had no tangible assets and
no liabilities and were acquired specifically for the inherent
value of the contacts, associations, relationships, and
recognition that had been built within the sport. Immediately upon
acquisition the Company dissolved the three acquired companies
and, therefore, has no subsidiaries. In the acquisition of these
companies, this excess of cost over net assets acquired amounted
to $2,410,240. In accordance with the provisions of Statements of
Financial Accounting Standards Nos. 141 and 142, management of the
Company has evaluated the resulting goodwill and has determined
that the carrying amount is impaired. Therefore, the Company has
recorded a loss on the impairment of goodwill in the amount of
$1,146,000. The amount of goodwill being carried as an asset at
December 31, 2004 and September 30, 2005 is $1,264,240.
NOTE 4 - RELATED PARTY TRANSACTIONS
The Company has been dependent upon certain individuals, officers,
stockholders and other related parties to provide capital,
management services, assistance in finding new sources for debt
and equity financing, and guidance in the development of the
Company's business. The related parties have generally provided
services and incurred expenses on behalf of the Company or have
provided the necessary operating capital to continue pursuing its
business. At December 31, 2004 and September 30, 2005, the Company
had related party receivables of $158,349 and $6,337,
respectively. These amounts include $155,049 and $6,337 receivable
from a major investor, respectively.
NOTE 5 - PREFERRED STOCK
The Company has two classes of stock; common and preferred. The
holders of preferred stock have preference over the holders of
common stock in the event of liquidation, dissolution, or
winding-up where the preferred shareholders, at a minimum, are
entitled to receive an amount equal to all capital contributions,
including premiums. After the preference has been paid any
remaining funds and assets of the Company become equally and
ratably available for distribution to the holders of common and
preferred shares as if the shares were all one class. Each class
of shares has equal voting rights and all are deemed common stock
equivalents.
Transfer of Shares
Upon the properly made transfer of any common share, in any
transaction, to the holder of preferred shares, each transferred
common share is immediately deemed to be converted into a
preferred share along with all the rights and preferences
associated with preferred shares. During 2004 and the nine months
ended September 30, 2005, 413,823 and 93,089 common shares,
respectively, were converted into preferred shares through this
mechanism.
11
IFSA STRONGMAN LIMITED
Notes to the Financial Statements
December 31, 2004 and
September 30, 2005 (unaudited)
NOTE 6 - EQUITY TRANSACTIONS
During the year ended December 31, 2004, the Company issued
608,364 shares of preferred stock to the incorporators for cash of
$471,644, or $0.78 per share.
During the year ended December 31, 2004, the Company issued
1,999,999 shares of common stock in exchange for the business and
assets of companies in a similar business. The shares were valued
at the market price on the date of acquisition of $1.21 per share,
or $2,410,240. The net assets of the acquired company on the date
of acquisition was $-0-. See Note 3 - Goodwill.
During the year ended December 31, 2004, the Company issued
495,163 shares of preferred stock in exchange for a stock
subscription receivable of $659,128, or $1.33 per share.
During the nine months ended September 30, 2005, the Company
issued 1,489,288 shares of preferred stock for cash of $1,821,698
or $1.22 per share.
During the nine months ended September 30, 2005, the Company
issued 538,571 shares of common stock for services rendered. The
value of the shares was determined to be $658,065 or $1.22 per
share. The excess of the value of the shares issued over the value
of the services has been recorded as a reduction of additional
paid-in capital.
NOTE 7 - FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107 (SFAS 107),
"Disclosures about Fair Value of Financial Instruments" requires
disclosure of the fair value of financial instruments held by the
Company. SFAS 107 defines the fair value of a financial instrument
as the amount at which the instrument could be exchanged in a
current transaction between willing parties. The following methods
and assumptions were used to estimate fair value:
The carrying amount of cash equivalents, accounts receivable and
accounts payable approximate fair value due to their short-term
nature.
NOTE 8 - CONCENTRATIONS OF RISK
Foreign Operations
The Company intends to conduct activities in multiple foreign
markets including countries with developing economies. Some of
these countries may have experienced recently, or are experiencing
currently, economic or political instability. Hyperinflation,
volatile exchange rates and rapid political and legal change,
often accompanied by military insurrection, have been common in
these and certain other emerging markets in which the Company may
conduct business. The Company may be materially adversely affected
by possible political or economic instability in these countries.
The risks include, but are not limited to terrorism, military
repression, expropriation, changing fiscal regimes, extreme
fluctuations in currency exchange rates, high rates of inflation
and the absence of industrial and economic infrastructure. Changes
in investment policies or shifts in the prevailing political
climates in which the Company conducts business activities could
adversely affect the Company's business. Operations may be
affected in varying degrees by government regulations with respect
to production restrictions, price controls, export controls,
income and other taxes, expropriation of property, maintenance of
claims, environmental legislation, labor, welfare benefit
policies, land use, land claims of local residents, water use and
mine safety. The effect of these factors cannot be accurately
predicted and, therefore, no adjustments have been made to the
accompanying financial statements.
12
IFSA STRONGMAN LIMITED
Notes to the Financial Statements
December 31, 2004 and
September 30, 2005 (unaudited)
NOTE 9 - GOING CONCERN CONSIDERATIONS
The accompanying financial statements have been prepared using
generally accepted accounting principles applicable to a going
concern which contemplates the realization of assets and
liquidation of liabilities in the normal course of business. As
reported in the financial statements, the Company has incurred
losses of approximately $1,100,000 from inception of the Company
through December 31, 2004, has negative cash flows from
operations, and has a limited operating history. These factors
combined, raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans to address and
alleviate these concerns are as follows:
The Company's management continues to develop a strategy of
exploring all options available to it so that it can develop
successful operations and have sufficient funds to be able to
operate over the next twelve months. As a part of this plan,
management is currently in negotiations with their target
industries' key players to develop additional business
opportunities. In addition, management is exploring options in
order to raise additional operating capital through debt and/or
equity financing. No assurance can be given that funds will be
available, or, if available, that it will be on terms deemed
satisfactory to management.
The ability of the Company to continue as a going concern is
dependent upon its ability to successfully accomplish the plans
described in the preceding paragraph and eventually attain
profitable operations. The accompanying financial statements do
not include any adjustments relating to the recoverability and
classification of asset carrying amounts or the amount and
classification of liabilities that might result from the outcome
of these uncertainties.
NOTE 10 - SUBSEQUENT EVENTS
On December 9, 2005, the Company effected a merger with Synerteck
Incorporated (Synerteck), a publicly traded company. Pursuant to
the terms of the share exchange agreement Synerteck issued
20,000,000 shares of its common stock for all of the issued and
outstanding shares of the Company as of the date of the merger. As
part of the merger agreement Synerteck will change its name to
IFSA Strongman, Inc.
13
IFSA STRONGMAN, INC. AND SUBSIDIARY
(Formerly Synerteck Incorporated)
Unaudited Condensed Combined
Pro Forma Financial Statements
December 31, 2004 and
September 30, 2005
CONTENTS
Unaudited Condensed Combined Pro Forma Balance Sheet,
September 30, 2005......................................................... 2
Unaudited Condensed Combined Pro Forma Statement of Operations,
September 30, 2005......................................................... 3
Unaudited Condensed Combined Pro Forma Statement of Operations,
December 31, 2004.......................................................... 4
Notes to the Unaudited Condensed Combined Pro Forma Financial
Statements................................................................. 5
1
IFSA STRONGMAN, INC. AND SUBSIDIARY
(Formerly Synerteck Incorporated)
Condensed Combined Pro Forma Balance Sheet
September 30, 2005
ASSETS
IFSA
Strongman, Inc. Pro Forma
(Formerly IFSA Adjustments
Synerteck Strongman Increase Pro Forma
Incorporated) Limited (Decrease) Combined
-------------- -------------- -------------- --------------
CURRENT ASSETS (Unaudited) (Unaudited) (Unaudited)
Cash and cash equivalents $ 48,650 $ 56,198 $ -- $ 104,848
Accounts receivable, net 13,240 89,633 -- 102,873
Due from related parties -- 6,337 -- 6,337
Other current assets 1,571 97,652 -- 99,223
-------------- -------------- -------------- --------------
Total Current Assets 63,461 249,820 -- 313,281
-------------- -------------- -------------- --------------
PROPERTY AND EQUIPMENT, NET 14,783 120,714 -- 135,497
-------------- -------------- -------------- --------------
GOODWILL -- 1,264,240 -- 1,264,240
-------------- -------------- -------------- --------------
TOTAL ASSETS $ 78,244 $ 1,634,774 $ -- $ 1,713,018
============== ============== ============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 32,388 $ 517,975 $ -- $ 550,363
-------------- -------------- -------------- --------------
Total Current Liabilities 32,388 517,975 -- 550,363
-------------- -------------- -------------- --------------
STOCKHOLDERS' EQUITY
Preferred stock 50 34,559 (34,559) 2 50
Common stock 3,000 28,264 20,000 1 23,000
(28,264) 2
Additional paid-in capital 181,231 4,324,576 (20,000) 1 1,278,030
62,823 2
(3,149,851) 3
(120,749) 4
Accumulated deficit (138,425) (3,149,851) 3,149,851 3 (138,425)
Foreign currency translation adjustment -- (120,749) 120,749 4 --
-------------- -------------- -------------- --------------
Total Stockholders' Equity 45,856 1,116,799 -- 1,162,655
-------------- -------------- -------------- --------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 78,244 $ 1,634,774 $ -- $ 1,713,018
============== ============== ============== ==============
See Accompanying Notes to Unaudited Condensed Combined Pro Forma Financial
Statements.
2
IFSA STRONGMAN, INC. AND SUBSIDIARY
(Formerly Synerteck Incorporated)
Condensed Combined Pro Forma Statement of Operations
For the Nine Months Ended September 30, 2005
IFSA
Strongman, Inc. Pro Forma
(Formerly IFSA Adjustments
Synerteck Strongman Increase Pro Forma
Incorporated) Limited (Decrease) Combined
-------------- -------------- -------------- --------------
(unaudited) (unaudited) (unaudited)
NET REVENUES $ 123,163 $ 1,118,677 $ -- $ 1,241,840
-------------- -------------- -------------- --------------
OPERATING EXPENSES
Bad debts -- 446,388 -- 446,388
Cost of sales 29,345 1,199,493 -- 1,228,838
Salaries and benefits 71,074 219,325 -- 290,399
Selling, general and administrative 106,228 874,353 -- 980,581
Professional fees 25,253 401,846 -- 427,099
Research and development 5,822 -- -- 5,822
-------------- -------------- -------------- --------------
Total Operating Expenses 237,722 3,141,405 -- 3,379,127
-------------- -------------- -------------- --------------
LOSS FROM OPERATIONS (114,559) (2,022,728) -- (2,137,287)
-------------- -------------- -------------- --------------
OTHER INCOME (EXPENSES)
Other income 2,096 -- -- 2,096
Loss on foreign currency transactions -- (10,998) -- (10,998)
Interest expense -- (3,114) -- (3,114)
Realized gain on marketable securities 29,238 -- -- 29,238
-------------- -------------- -------------- --------------
Total Other Expenses 31,334 (14,112) -- 17,222
-------------- -------------- -------------- --------------
NET LOSS BEFORE INCOME TAXES (83,225) (2,036,840) -- (2,120,065)
PROVISION FOR INCOME TAXES -- -- -- --
-------------- -------------- -------------- --------------
NET LOSS $ (83,225) $ (2,036,840) $ -- $ (2,120,065)
============== ============== ============== ==============
See Accompanying Notes to Unaudited Condensed Combined Pro Forma Financial
Statements.
3
IFSA STRONGMAN, INC. AND SUBSIDIARY
(Formerly Synerteck Incorporated)
Unaudited Condensed Combined Pro Forma Statement of Operations
For the Year Ended December 31, 2004
IFSA
Strongman, Inc. Pro Forma
(Formerly IFSA Adjustments
Synerteck Strongman Increase Pro Forma
Incorporated) Limited (Decrease) Combined
-------------- -------------- -------------- --------------
NET REVENUES $ 207,080 $ 264,523 $ -- $ 471,603
-------------- -------------- -------------- --------------
OPERATING EXPENSES
Bad debts 80,707 20,340 -- 101,047
Cost of sales 41,831 20,878 -- 62,709
Salaries and benefits 26,589 214,424 -- 241,013
Selling, general and administrative 70,121 125,242 -- 195,363
Professional fees 27,977 115,721 -- 143,698
Research and development 20,132 -- -- 20,132
-------------- -------------- -------------- --------------
Total Operating Expenses 267,357 496,605 -- 763,962
-------------- -------------- -------------- --------------
LOSS FROM OPERATIONS (60,277) (232,082) -- (292,359)
-------------- -------------- -------------- --------------
OTHER INCOME (EXPENSES)
Other income (expense) (3,494) (90) -- (3,584)
Gain on foreign currency transactions -- 265,161 -- 265,161
Loss on impairment of goodwill -- (1,146,000) -- (1,146,000)
-------------- -------------- -------------- --------------
Total Other Expenses (3,494) (880,929) -- (884,423)
-------------- -------------- -------------- --------------
NET LOSS BEFORE INCOME TAXES (63,771) (1,113,011) -- (1,176,782)
PROVISION FOR INCOME TAXES -- -- -- --
-------------- -------------- -------------- --------------
NET LOSS $ (63,771) $ (1,113,011) $ -- $ (1,176,782)
============== ============== ============== ==============
4
IFSA STRONGMAN, INC. AND SUBSIDIARY
(Formerly Synerteck Incorporated)
Notes to the Unaudited Condensed Combined Financial Statements
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
On December 9, 2005, IFSA Strongman, Inc. (formerly Synerteck
Incorporated) (SYNR) entered into a merger agreement to acquire 100% of
the outstanding stock of IFSA Strongman Limited (IFSA) by issuing
20,000,000 shares of its common stock. The accompanying unaudited
condensed combined pro forma financial statements are prepared to
present the acquisition of IFSA by SYNR to aid the user in
understanding the acquisition.
The unaudited condensed combined pro forma balance sheet is presented
as though the acquisition had taken place on September 30, 2005 and the
unaudited condensed combined pro forma statements of operations for the
nine months ended September 30, 2005 and for the year ended December
31, 2004 as though the acquisition took place June 10, 2004.
The unaudited condensed combined pro forma statements of operations and
unaudited condensed combined pro forma balance sheet were derived by
adjusting SYNR's historical financial statements for the acquisition of
IFSA. The unaudited condensed combined pro forma balance sheet and
unaudited condensed combined pro forma statements of operations are
provided for informational purposes only and should not be construed to
be indicative of SYNR's financial position or results of operations had
the transaction been consummated on the dates indicated and do not
project SYNR's financial position or results of operations for any
future period or date.
The unaudited condensed combined pro forma balance sheet and unaudited
condensed combined pro forma statements of operations and accompanying
notes should be read in conjunction with SYNR's historical financial
statements and related notes, SYNR's "Management's Discussion and
Analysis of Financial Condition and Results of Operation" contained in
SYNR's Quarterly Report on Form 10-QSB for the period ended September
30, 2005 and its Annual Report on Form 10-KSB for the year ended
December 31, 2004, and SYNR's financial statements presented herein.
SYNR was incorporated under the laws of the State of Delaware on March
30, 2004. SYNR has authorized common stock of 100,000,000 shares and
authorized preferred stock of 10,000,000 shares. Both classes of stock
have a par value of $0.001 per share.
IFSA was organized under the laws of England and Wales in the United
Kingdom on June 10, 2004. The Company is in the business of organizing,
promoting, and regulating sporting events related to the strongman
sports and strength athletes worldwide. The Company is an integrated
media, entertainment, and athlete representation company, principally
engaged in the development, production, and marketing of television
programming, pay-per-view programming, live events, and the licensing
and sale of branded consumer products featuring both the Company's
brand and the brands of the athletes it represents.
5
IFSA STRONGMAN, INC. AND SUBSIDIARY
(Formerly Synerteck Incorporated)
Notes to the Unaudited Condensed Combined Financial Statements
NOTE 2 - PRO FORMA ADJUSTMENTS AND ASSUMPTIONS
1) Represents the acquisition of IFSA Strongman Limited through the
issuance of 20,000,000 shares of SYNR's common stock at par.
2) Represents the elimination of IFSA's common and preferred stock.
3) Represents the elimination of IFSA's accumulated deficit.
4) Represents the elimination of IFSA's foreign currency translation
adjustment.
6