Conformed Submission Type: 8-K
Conformed Period of Report: 20000206
Item Information: Acquisition or Disposition of Assets
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
February 6, 2000
KINETIKS.COM, INC.,
a Delaware corporation
Commission File No.
0-15415
Internal Revenue Service Employer Identification No.
76-0478045
Jon V. Ludwig
ELinear Corporation
1055 Westmoore Drive, Suite 230
Westminster, Colorado 80203
Item 2. Acquisition of Disposition of Assets.
(a) Registrant entered into an Agreement and Plan of
Merger, dated October 11, 1999, for its wholly-owned subsidiary,
Elinear Corporation, to acquire by merger substantially all of
the assets of Imagenuity, Inc., a Florida corporation. The plan
was subject to certain contingencies that were satisfied as of
December 9, 1999.
Item 7. Financial Statements, Por Forma Financial Information and Exhibits.
(a) Financial Statements
(i) Filed herewith are the Report of Independant Certified Public
Accountants; the audited Balance Sheets as of December 31, 1998, 1997;
the audited Statements of Operations for the peroid October 20, 1997
(inception) through December 31, 1997 and for the year ended December 31,
1998; the audited statements of Stockholder's Equity for the peroid
October 20, 1997 (inception) through Decmber 31, 1997 and for the year
ended December 31, 1998; and the audited Statements of Cash Flows for
the peroid October 20, 1997 (inception) through December 31, 1998 and
for the year ended December 31, 1998, of Imagenuity, Inc. d/b/a e-Linear,
togther with the notes thereto.
(b) Pro Forma Combined, Condensed Financial Information
Filed herewith are the unaudited Proforma Combined Condensed
Financial Information of Kinetiks.com, Inc. and subsidiary and Imagenuity,
Inc. d/b/a e-Linear, consisting of the unaudited proforma combined,
condernsed Balance Sheet for Kinetiks.com, Inc. and subsidiary and
Imagenuity, Inc. d/b/a e-Linear as of October 31, 1999; unaudited
proforma combined, condensed Statements of Operations for
Kinetiks.com, Inc. and subsidiary and Imagenuity, Inc. d/b/a e-Linear,
for the year ended December 31, 1998 and the ten month peroid ended
October 31, 1999 with adjustments.
(c) Exhibits: The following exhibits are filed with this 8-K:
Exhibit A-1 -- Agreement and Plan of Merger,(incorporated
by reference) dated October 11, 1999
FINANCIAL STATEMENTS AND
REPORT OF INDEPENDANT
CERTIFIED PUBLIC ACCOUNTANTS
Imagenuity, Inc. d/b/a e-Linear
December 31, 1998, 1997
CONTENTS
REPORT OF INDEPENDANT CERTIFIED PUBLIC ACCOUNTANTS
FINANCIAL STATEMENTS
BALANCE SHEETS
STATEMENTS OF OPERATIONS
STATEMENTS OF STOCKHOLDER'S EQUITY
STATEMENT OF CASH FLOWS
NOTES TO FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Imagenuity, Inc. d/b/a e-Linear
We have audited the accompanying balance sheets of
Imagenuity, Inc. d/b/a e-Linear (an S Corporation) as of
December 31, 1997 and 1998, and the related statements of
operations, stockholder's equity, and cash flows for the
period October 20, 1997 (inception) through December 31,
1997 and for the year ended December 31, 1998. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. 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. 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 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 Imagenuity, Inc. d/b/a e-Linear (an S
Corporation) as of December 31, 1997 and 1998, and the
results of its operations and its cash flows for the period
October 30, 1997 (inception) through December 31, 1997 and
for the year ended December 31, 1998 in conformity with
generally accepted accounting principles.
January 14, 2000
Westminster, Colorado
IMAGENUITY, INC.
d/b/a e-LINEAR
BALANCE SHEETS
ASSETS
October 31, December 31,
1999 1998 1997
(Unaudited)
Current assets:
Cash and cash equivalents 21,519 36,269 414
Accounts receivable, no allowance
deemed necessary 250,085 67,306 21,112
Total current assets 271,604 103,575 21,526
Property and equipment, net 27,797 9,190 4,697
Other assets 3,121 0 0
Total assets 302,522 112,765 26,223
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Checks written in excess of bank
balance 0 0 18,391
Current portion of notes payable 49,000 0 0
Accounts payable 0 8,512 0
Accrued liabilities 6,558 13,920 0
Distributions due to stockholder 171,560 0 0
Total current liabilities 227,118 22,432 18,391
Commitments 0 0 0
Stockholder's equity:
Common stock; $1.00 par value;
7,500 shares authorized; 500,
1,000 and 1,000 shares issued
and outstanding, respectively 500 1,000 1,000
Additional paid in capital 8,195 0 0
Retained earnings 66,709 89,333 6,832
Total stockholder's equity 75,404 90,333 7,832
Total liabilities and
stockholder equity 302,522 112,765 26,223
The accompanying notes are an integral part of these financial statements.
IMAGENUITY, INC.
d/b/a e-LINEAR
STATEMENTS OF OPERATIONS
Period From
October 20, 1997
Ten Months Ended Year Ended (Inception) to
October 31, December 31, December 31,
1998 1999 1998 1997
(Unaudited)(Unaudited)
Net revenues 322,190 707,025 443,240 20,150
Operating expenses:
Wages and benefits 80,758 211,402 121,274 0
Professional services 30,617 30,226 41,724 1,291
Travel and entertainment 17,823 27,681 22,705 0
Rent 0 21,893 5,413 0
Stock issuance expense 0 8,320 0 0
Telephone 4,202 11,976 6,501 0
Depreciation 2,399 5,412 2,880 276
Other 13,448 40,864 19,388 3,304
Total operating
expenses 149,247 357,774 219,885 4,871
Income from operation 172,943 349,251 223,355 15,279
Interest income 0 2,459 624 0
Other expense 0 (1,120) (3,478) 0
Net income 172,943 350,590 220,501 15,279
The accompanying notes are an integral part of these financial statements.
IMAGENUITY, INC.
d/b/a e-LINEAR
STATEMENT OF STOCKHOLDER'S EQUITY
Additional
Common Stock Paid In Retained
Shares Amount Capital Earnings Total
Issuance of common stock for
cash 1,000 1,000 0 0 1,000
Distribution to "S" corporation
stockholders 0 0 0 (8,447) (8,447)
Net income for the period 0 0 0 15,279 15,279
Balance at December 31, 1997 1,000 1,000 0 6,832 7,832
Distribution to "S" corporation
stockholders 0 0 0 (138,000) (138,000)
Net income for the year 0 0 0 220,501 220,501
Balance at December 31, 1998 1,000 1,000 0 89,333 90,333
Compensation expense on
issuance of common stock 125 125 8,195 0 8,320
Purchase and retirement of
common stock (625) (625) 0 (37,654) (38,279)
Distribution to "S" corporation
stockholders 0 0 0 (335,560) (335,560)
Net income for the period 0 0 0 350,590 350,590
Balance at October 31, 1999
(Unaudited) 500 500 8,195 66,709 75,404
The accompanying notes are an integral part of these financial statements.
IMAGENUITY, INC.
d/b/a e-LINEAR
STATEMENT OF CASH FLOWS
Period From
Ten Months October 20, 1997
Ended Year Ended (Inception) to
October 31, December 31, December 31,
1999 1998 1997
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 350,590 220,501 15,279
Adjustments to reconcile net income
to net cash used in operating
activities:
Depreciation 5,412 2,880 276
Compensation expense on employee
arrangement 8,320 0 0
Changes in operating assets and
liabilities:
Accounts receivable (182,779) (46,194) (21,112)
Accounts payable (8,512) 8,512 0
Accrued expenses (7,362) 13,920 0
(184,921) (20,882) (20,836)
Net cash provided by (used in)
operating activities 165,669 199,619 (5,557)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (24,019) (7,373) (4,973)
Increase in deposits (3,121) 0 0
Net cash used in investing
activities (27,140) (7,373) (4,973)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings on line of
credit 49,000 0 0
Checks written in excess of bank
balance 0 (18,391) 18,391
Purchase of common stock 0 0 1,000
Distributions to "S" corporation
stockholders (335,560) (138,000) (8,447)
Increase in distributions due to
"S" corporation stockholder 171,560 0 0
Purchase and retirement of common
stock (38,279) 0 0
Net cash provided by (used
in) financing activities (153,279) (156,391) 10,944
Net increase (decrease) in cash and cash
equivalents (14,750) 35,855 414
Cash and cash equivalents at beginning of
period 36,269 414 0
Cash and cash equivalents at end
of period 21,519 36,269 414
The accompanying notes are an integral part of these financial statements.
IMAGENUITY, INC.
d/b/a e-LINEAR
NOTES TO FINANCIAL STATEMENTS
1. Description of Business and Significant Accounting Policies
Imagenuity, Inc. (`Imagenuity") is a leading Internet
professional services firm providing strategic consulting,
creative design and technology services to companies seeking to
capitalize on the Internet. Imagenuity's current customers are
based in the United States. Historically, Imagenuity's revenues
are derived primarily from one customer. During the period from
October 20, 1997 (inception) through the middle part of 1998,
Imagenuity's revenues were primarily derived from training
classes that it conducted through one of its divisions, Tech
Instruct.
Cash and Cash Equivalents
Imagenuity considers all highly liquid instruments with
an original maturity of three months or less to be cash equivalents.
Concentration of Credit Risk
Financial instruments that potentially subject
Imagenuity to concentrations of credit risk consist primarily of
cash equivalents and accounts receivable. All of Imagenuity's
cash equivalents are held at high credit quality financial
institutions. Accounts receivables are typically unsecured and
are derived from revenues earned primarily from one client
located in the United States. Imagenuity performs ongoing
credit evaluations of its client's financial condition and
maintains reserves for potential credit losses based upon the
expected collectibility of total accounts receivable. To date,
losses resulting from uncollectible receivables have not
exceeded management's expectations.
At October 31, 1999 and December 31, 1998 and 1997 one
client accounted for approximately 100% of the Imagenuity's net
revenues and total accounts receivable.
Fair Value of Financial Instruments
Financial instruments that are subject to fair value
disclosure requirements are carried in the financial statements
at amounts that approximate fair value and include cash and cash
equivalents, accounts receivables, accounts payable and other
credit facilities. Fair values are based on quoted market
prices and assumptions concerning the amount and timing of
estimated future cash flows and assumed discount rates
reflecting varying degrees of perceived risk.
Property and Equipment
Property and equipment are stated at cost.
Depreciation is computed using the straight-line method over the
estimated useful lives of the assets, generally three years.
Unaudited Interim Financial Statements
Financial information as of October 31, 1999 and for
the ten months ended October 31, 1998 and 1999 is unaudited. In
the opinion of Imagenuity's management, the October 31, 1998 and
1999 unaudited interim financial statements include all
adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of the financial position and
results of operations for those periods. The results of
operations for the ten months ended October 31, 1999 are not
necessarily indicative of the results of operations to be
expected in the future.
1. Description of Business and Significant Accounting Policies, continued
Revenue Recognition
Substantially all of Imagenuity's revenues are derived
from professional services which are generally provided to
clients on a fixed-price, fixed-time basis. Revenues on fixed-
price engagements are recognized using the percentage of
completion method (based on the ratio of costs incurred to the
total estimated project cost at completion). Unbilled
receivables represent revenue recognized in advance of amounts
billed. Billings received in advance of services performed are
recorded as deferred revenues. Provisions for estimated losses
on contracts are made during the period in which such losses
become probable and can be reasonably estimated. To date, such
losses have not been significant. Imagenuity reports revenues
net of reimbursable expenses which are billed to and collected
from clients.
Professional Services
Professional services expenses consist primarily of
compensation paid to independent contractors that Imagenuity
hires to assist in the delivery of professional services and non-
reimbursable expenses related to client projects.
Stock-Based Compensation
Imagenuity accounts for stock-based compensation in
accordance with Accounting Principles Board Opinion No. 25,
"Accounting for Stock issued to Employees." Accordingly, no
compensation expense is recorded for options issued to employees
in fixed amounts and with fixed exercise prices at least equal
to the fair market value of Imagenuity's common stock at the
date of grant. Imagenuity follows the disclosure requirements
of Financial Accounting Standards (`SFAS") No. 123, " Accounting
for Stock-Based Compensation." All stock-based awards to non-
employees are accounted for at their fair value in accordance
with SFAS No.123.
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 revenue and expenses
during the reported period. Actual results could differ from
those estimates.
Income Taxes
Imagenuity has elected to be taxed under the provisions
of Subchapter S of the Internal Revenue Code. Under those
provisions, Imagenuity does not pay federal corporate income
taxes on its taxable income. Instead, the stockholders are
liable for individual federal income taxes based on their
respective ownership percentages. Imagenuity prepares its
financial statements on the accrual basis of accounting; however
uses the cash basis of accounting for income tax purposes. The
primary difference between financial and income tax reporting is
that Imagenuity recognizes revenue for financial statement
purposes as it is earned, while recognizing revenue for income
tax purposes as it is collected.
2. Property and Equipment
Property and equipment consist of the following:
October 31, December 31,
1999 1998 1997
(Unaudited)
Computer equipment 33,649 12,346 4,973
Office equipment 2,716 - -
36,365 12,346 4,973
Less: accumulated
depreciation (8,568) (3,156) (276)
27,797 9,190 4,697
Depreciation expense for the period ended December 31, 1997, the
year ended December 31, 1998, and the ten months ended October
31, 1999 was $ 276, $ 2,880, and $ 5,412, respectively (unaudited).
3. Credit Facility
In April 1999, Imagenuity secured a credit facility
with a bank that provided for borrowings of up to $ 50,000.
Borrowings under the credit facilities bore interest at the
bank's prime rate plus 2.25% (10.5% at October 31, 1999). The
credit facility was secured by substantially all of Imagenuity's
assets. Imagenuity repaid this credit facility subsequent to
October 31, 1999.
In November 1999, Imagenuity secured an additional
credit facility with a bank that provided for borrowings of up
to $20,000. Borrowings under the line of credit bore interest
at the bank's prime rate plus 2.25% (10.5% at October 31, 1999).
The credit facility was secured by essentially all of
Imagenuity's assets. Imagenuity repaid this credit facility in
November 1999.
4. Lease Commitment
Imagenuity leases office facilities for its corporate
operations conducted in Colorado under an operating lease that
expires in January 2002. Additionally, Imagenuity leased
temporary office space on a month-to-month basis prior to
relocating to its corporate offices. Rent expense for the
period ended December 31, 1997, the year ended December 31,
1998, and the ten months ended October 31, 1999 was $ 0, $
5,413, and $ 21,893 respectively (unaudited).
Minimum future lease commitments under the
noncancelable operating lease are $ 37,449, $37,449, and $
3,121 for the years ending December 31, 2000, 2001 and 2002,
respectively.
5. Common Stock
In October 1997, Imagenuity issued 1,000 shares of its
common stock to two individuals for cash in the aggregate amount
of $1,000.
On March 1, 1999, Imagenuity repurchased and retired
500 shares of its common stock by paying cash in the amount of
$ 33,279.
In May 1999, Imagenuity issued to an individual 125
shares of its common stock in connection with an employment
agreement (the"Agreement"). Imagenuity received no
consideration for the issuance of these shares. The Board of
Directors determined that the value of these shares would be
equivalent to the value of the shares purchased by Imagenuity in
March 1999. Accordingly, Imagenuity recorded $ 8,320 as stock
issuance expense and additional paid in capital. In October
1999, Imagenuity and this employee severed their relationship
and Imagenuity purchased and retired these shares for $ 5,000.
Prior to the closing of the merger transaction described in Note
6, the former shareholder threatened to bring an action against
Imagenuity, and in December 1999 filed suit against Imagenuity.
(See Note 7)
6. Merger Agreement
In October 1999, Imagenuity executed an Agreement and
Plan of Merger (the "Plan") with Kinetiks.com, Inc. (`Kinetiks")
and Kinetiks' wholly owned subsidiary Elinear Corporation. The
Plan was subject to Kinetiks successfully completing a private
placement in amount $1,000,000 from the sale of 2,500,000 shares
of Kinetiks common stock, the execution of an Inducement
Agreement whereby two shareholders of Kinetiks were to deliver a
written indemnity by which these two shareholders assumed and
agreed to hold Kinetiks, Elinear and Imagenutiy and their
officers, directors and shareholders harmless from Kinetiks
liabilities, and due diligence. Additionally, the Plan required
that the sole shareholder of Imagenuity indemnify Kinetiks and
Elinear from and against any and all loss, liability, damage and
expense suffered or incurred by Kinetiks or Elinear resulting
from or arising out of the defense of the threatened action by a
former shareholder of Imagenuity. In satisfaction of the
requirement, the sole shareholder of Imagenuity delivered to
Kinetiks and Elinear an Indemnification and Pledge Agreement
covering 4,500,000 shares of stock.
The requirements of the Plan were satisfied on December
9, 1999; accordingly, Imagenuity was entitled to receive
22,500,000 shares of Kinetiks common stock. Because the
authorized number of common shares of Kinetiks was insufficient
to satisfy the number of shares to be issued to Imagenuity,
Imagenuity was issued 10,000,000 shares of Kinetiks common stock
and 250,000 shares of Kinetiks preferred stock, that is
convertible into 12,500,000 shares of Kinetiks common stock.
The Plan also provided that since Imagenuity was an S
corporation for income tax purposes, the sole shareholder of
Imagenuity was entitled to receive distributions of
approximately $ 315,000, to satisfy the income taxes that would
be allocated to this shareholder. Imagenuity paid this
shareholder prior to the merger with Kinetiks approximately $
144,000, and accrued the remaining portion in the amount of
approximately $ 171,000 as Distributions due to Shareholder.
Upon the completion of the merger, Imagenuity terminated its S
corporation status for income tax purposes.
7. Litigation
As discussed in Note 5, a former shareholder filed a
lawsuit against Imagenuity alleging breach of the employment
agreement and filed suit against Kinetiks alleging breach of its
fiduciary obligation to deliver the proportionate number of
shares that the former shareholder
claims is due to him pursuant to the merger with Kinetiks. The
lawsuit demands judgment against Imagenuity and Kinetiks that
would require Imagenuity and Kinetiks to deliver to the former
shareholder 20% of the issued and outstanding shares of stock of
Imagenuity or its equivalent in shares of Kinetiks. Imagenuity
has filed an action against the former shareholder requesting a
declaratory judgment that the former shareholder's interest in
Imagenuity was terminated effective October 4, 1999. Imagenuity
believes that the former shareholder's action is without merit
and plans to vigorously defend itself. Imagenuity believes that
should it be unsuccessful in defending itself, an unfavorable
outcome would not have a material impact on the financial
statements taken as a whole.
In October 1999, Imagenuity, Inc. d/b/a e-Linear., ("Imagenuity") executed
and Agreement and Plan of Merger (the"Plan") with Kinetiks.com, Inc.
("Kinetiks") and Kinetiks' wholly owned subsidiary Elinear Corporation.
The Plan was subject to the successful completion of a private placement of
Kinetiks common stock in the amount of $1,000,000, the execution of an
Inducement Agreement whereby two shareholders of Kinetiks assumed all of
Kinetiks' liabilities, and due diligence. The requirements of the Plan
were satisfied on December 9, 1999; accordingly, Imagenuity was entitled
to receive 22,500,000 shares of Kinetiks common stock. Because the
authorized number of shares of Kinetiks was insufficient to satisfy the
number of shares to be issued to Imagenuity, Imagenuity was issued 10,000,000
shares of Kinetiks common stock and 250,000 shares of Kinetiks preferred
stock that is convertible into 12,500,000 shares of Kinetiks common stock.
The following proforma financial information presents the proforma condensed
consolidated balance sheet as of October 31, 1999, and the statements
of operations for the year ended December 31, 1998 and the ten months
ended October 31, 1999.
KINETIKS.COM, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
OCTOBER 31, 1999
UNAUDITED
HISTORICAL
Kinetiks.com, Imagenuity Proforma Proformed
Inc.& Inc.(d/b/a/ Adjustments Combined
Subsidiary e-Linear)
CURRENT ASSETS:
Cash and cash equivalents 77 21,519 927,706 (1) 777,742
(171,560)(3)
Accounts receivable, no allowance 0 250,085 0 250,085
deemed necessary 0
Investment in Subsidiary 1 0 (1) 0
Prepaid Expenses 50,000 0 (50,000)(1) 0
Total current assets 50,078 271,604 706,145 1,027,827
Property and equipment, net 0 27,797 0 27,797
Other assets 0 3,121 0 3,121
Total assets 50,078 302,522 706,145 1,058,745
LIABILITIES AND STOCK HOLDERS' EQUITY:
CURRENT LIABILITIES:
Current portion of notes payable 0 49,000 0 49,000
Accounts payable 441,352 0 (441,352)(2) 0
Accrued liabilities 59,621 6,558 (59,621)(2) 6,558
Current portion of deferred taxes 0 0 65,891 (4) 65,891
Distributions due to stockholder 0 171,560 (171,560)(3) 0
Total current liabilities 500,973 227,118 (606,642) 121,449
STOCKHOLDERS' EQUITY:
Common stock 7,000 500 2,500 (1) 19,500
10,000 (5)
(500)(5)
Preferred stock 0 0 1 (5) 1
Additional paid in Capital 6,803,863 8,195 875,206 (1) 918,978
500,973 (2)
(7,269,259)(5)
Treasury Stock (2,000) 0 0 (2,000)
Retained earnings (accumulated
deficit) (7,259,758) 66,709 (65,891)(4) 817
7,259,757 (5)
Total stockholders' equity (450,895) 75,404 1,312,787 937,296
Total liabilities and stockholders'
equity 50,078 302,522 706,145 1,058,745
KINETIKS.COM, INC. AND SUBSIDIARY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
October 31, 1999
(Unaudited)
PRO FORMA ADJUSTMENTS
(1)
To record the net proceeds received from the sale of 2,500,000 shares of
Kinetiks.com, Inc. common stock
(2)
To record the assumption of liabilities by individual stockholders of
Kinetiks.com, Inc. pursuant to the Agreement and Plan of Merger
(3)
To record the remaining distribution due to Imagenuity, Inc. stockholder
for earned income from S corporation earnings
(4)
To record deferred income tax expense associated with the timing
differences associated with the termination of the S corporation
upon the merger of Imagenuity, Inc. with Kinetiks.com, Inc
(5)
To record the issuance of 10,000,000 shares of Kinetiks.com, Inc.
common stock and 250,000 shares of Kinetiks.com, Inc.
preferred stock which is convertible into 12,500,000 shares
of Kinetiks.com, Inc. common stock. Additionally, record the
merger with Imagenuity, Inc. as a reverse acquisition.
KINETIKS.COM, INC.
PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
UNAUDITED
HISTORICAL
Kinetiks.com Imagenuity, Proforma Proformed
Inc. & Inc.d/b/a Adjustments Combined
Subsidiary e-Linear
Net Revenues 0 443,240 0 443,240
Operating expenses:
Wages and benefits 0 121,274 0 121,274
Professional services 0 41,724 0 41,724
Travel and entertainment 0 22,705 0 22,705
Rent 0 5,413 0 5,413
Stock issuance expense 0 0 0 0
Telephone 0 6,501 0 6,501
Depreciation 0 2,880 0 2,880
Consulting 0 0 0 0
Other 54,436 19,388 0 73,824
Total operating expenses 54,436 219,885 0 274,321
Income(loss)from operations (54,436) 223,355 0 168,919
Interest income 0 624 0 624
Interest expense (21,321) 0 0 (21,321)
Other expense 0 (3,478) 0 (3,478)
Income(loss) before
income taxes (75,757) 220,501 0 144,744
Proforma income tax expense 0 0 (67,627) (67,627)
Net income (75,757) 220,501 (67,627) 77,117
Proforma Basic Earnings Per Share:
Net income 0.0029
Proforma Diluted Earnings Per Share:
Net Income 0.0027
Proforma Earnings per Share Disclosure
Income Shares Per-Share
(Numerator) (Demominator) Amount
Proforma basic earnings per share:
Net income 77,117 26,774,013 0.0029
Effect of dilutive securities:
Warrants 0 1,508,125
Options 0 130,625
Proforma dilutied earnings per share:
Net income 77,117 28,412,763 0.0027
KINETIKS.COM, INC.
PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
TEN MONTH ENDED OCTOBER 31, 1999
UNAUDITED
HISTORICAL
Kinetiks.com Imagenuity, Proforma Proformed
Inc. & Inc. (d/b/a/ Adjustments Combined
Subsidiary e-Linear)
Net Revenues 0 707,025 0 707,025
Operating expenses:
Wages and benefits 0 211,402 0 211,402
Professional services 37,225 30,226 0 67,451
Travel and entertainment 340 27,681 0 28,021
Rent 0 21,893 0 21,893
Stock issuance expense 437,056 8,320 0 445,376
Telephone 139 11,976 0 12,115
Depreciation 0 5,412 0 5,412
Consulting 45,056 0 0 45,056
Other 10,315 40,864 0 51,179
Total operating
expenses 530,131 357,774 0 887,905
Income(loss)from
operation (530,131) 349,251 0 (180,880)
Interest income 0 2,459 0 2,459
Interest expense (77,885) 0 0 (77,885)
Other expense 0 (1,120) 0 (1,120)
Income before income
taxes and Extraordinary
item (608,016) 350,590 0 (257,426)
Proforma income tax
expense 0 0 (65,891) (65,891)
Income before
extraordiary item (608,016) 350,590 (65,891) (323,317)
Extraordinary item-
gain on trouble
debt restructuring,
net of taxes 842,157 0 0 842,157
Net income 234,141 350,590 (65,891) 518,840
Proforma Basic Earnings Per Share:
Loss before extraordinary item (0.012)
Extraordinary item 0.031
Net income 0.019
Proforma Diluted Earnings Per Share:
Loss before extraordinary item (0.011)
Extraordinary item 0.029
Net Income 0.018
Proforma Earnings per Share Disclosure
Income Shares Per-Share
(Numerator) (Demominator) Amount
Proforma basic earnings per share:
Loss before extraordinary item (323,317) 26,774,013 (0.012)
Extraordinary item 842,157 26,774,013 0.031
Effect of dilutive securities:
Warrants 0 1,508,125
Options 0 130,625
Proforma dilutied earnings per share:
Loss before extraordinary item (323,317) 28,412,763 (0.011)
Extraordinary item 842,157 28,412,763 0.029
SIGNATURE
Pursuant to the requirements of the Securities Exchange At
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Kinetiks.com, Inc.
(Registrant)
By: /s/ John V. Ludwig
Name: John V. Ludwig
Title: Corporation President
Date: FEBRUARY 6, 1999
INDEX TO EXHIBITS
Exhibit A-1 -- Agreement and Plan of Merger,(incorporated
by reference) dated October 11, 1999
