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) June 3,1999
THE HARMAT ORGANIZATION, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or Other Jurisdiction of Incorporation)
333-3501 11-2780723
(Commission File Number) (I.R.S. Employer Identification No.)
P.O. Box 549, Speonk, New York 11972
(Address of principal executive offices) (Zip Code)
(516) 234-2888
(Registrant's telephone number, including area code)
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ITEM 2. Acquisition or Disposition of Assets
On June 3, 1999 the Company acquired all of the issued and outstanding
shares of BarPoint.com, Inc. ("BarPoint") pursuant to an Acquisition Agreement
dated May 20, 1999. BarPoint will soon launch a new internet shopping portal web
site. The site, www.barpoint.com, will feature a patent-pending search engine
and software technology that allows consumers to use the standard UPC barcode
that appears on approximately 100 million retail items to search for product
specific information from the internet. Scheduled for launch in the fall of
1999, www.barpoint.com will offer consumers the opportunity to search for
product specific information and shop for products by entering any UPC barcode
number. The internet search results that BarPoint delivers are tailored for the
needs of the consumer and include manufacturer contact information, comparative
pricing from a variety of on-line sources, links to purchase the item from a
variety of e-commerce vendors and more. Unlike current search engines such as
Yahoo, Lycos or Excite which present broad results that may include information
the consumer is not looking for, BarPoint delivers product specific information
and affords the consumer immediate access to such information on both wired and
wireless internet devices.
The consideration for the acquisition was 6,634,042 shares of the
Company's common stock based upon a negotiated value of $1.90 per share. The
purchase price is subject to adjustment depending upon the value of certain of
the Company's assets at the date of Closing and over a 45 day period following
the Closing.
A group of investors headed by Matthew Schilowitz, a shareholder and
the President and Director of the Company, made a capital contribution to the
Company of 250,000 shares of FinancialWeb.com, Inc. (the "Fweb Stock") and
certain other assets. The Board of Directors of the Company have declared a
stock dividend of the Company's common stock to the Company's shareholders of
record on June 3, 1999 (excluding the shareholders of BarPoint who have received
the Company's common stock in the transaction). The number of shares to be
distributed in the dividend will be determined based upon the value of the Fweb
Stock over a 45 day period plus the agreed upon value of the other assets
contributed. No payment date has been established for the dividend but it is
expected to be in August or September 1999.
As part of the transaction the Company sold to Leigh Rothschild three
(3) shares of the Company's Class A Preferred Stock for a purchase price of
$10.00 per share. The Preferred Stock shall vote on a pari-pasu basis with the
Company's Stock. The Company has outstanding 1,000,000 Class A Warrants and
1,000,000 Class B Warrants (collectively, the "Warrants"). One share of
Preferred Stock shall be voted in accordance with the issuance of the Class A
Warrants and one share of Preferred Stock shall be voted in accordance with the
issuance of the Class B Warrants. The Preferred Stock shall be entitled to one
vote for each share of common stock issued upon exercise of the Warrants. So
long as the Warrants are outstanding and are not exercised, then the Preferred
Stock allocated to the Warrants shall have no vote. In the event the Warrants
are not exercised and expire by their terms, then the Preferred Stock shall be
canceled. The third share of Preferred Stock shall have 346,766 votes. In no
event will any of the Preferred Stock have any votes after five (5) years from
the date of issue.
As part of the acquisition the Company granted five (5) year options to
purchase 800,000 shares of the Company's commons stock at an exercise price of
$1.90 per share. BarPoint's management shall determine the distribution of such
options. Such options vest as follows: one-third (1/3) immediately after one
year from the date of Closing, one-third (1/3) after the second year from the
date of Closing, in the event BarPoint achieves 50% of its revenue projection of
$49,000,000 in such second year, and the balance of one-third (1/3) after the
third year from the date of Closing, in the event BarPoint achieves 50% of its
revenue projection of $179,000,000 in such third year. Projections referred to
herein are the Seller's April 1, 1999 business projections as presented to
Purchaser.
In connection with services rendered,the new consulting agreement and guarantees
issued by
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Matthew Schilowitz relating to collectability of certain assets of the Company
Mr. Schilowitz was awarded options to purchase an aggregate of 190,615 shares at
$1.90 per share, which options are exercisable over a five (5) year period.
David W. Sass, a Director of the Company, is the father of Jeffrey W.
Sass, a founder and shareholder of BarPoint. McLaughlin & Stern, LLP, general
counsel to the Company, is a shareholder of BarPoint and received shares in the
Company as part of the transaction. David W. Sass is a member of said firm.
Audited financial statements of BarPoint and Pro Forma financial
statements combined will be filed by amendment.
In connection with the transaction the Company obtained the advice of
its investment banker as to the reasonablness from a financial point of view of
the foregoing transaction.
As part of the transaction, Messrs. Scott Prizer and David Eiten
resigned as Directors of the Company and Messrs. Leigh M. Rothschild and Jeffrey
W. Sass were elected to fill the vacancies created by such resignations. In
addition, Mr. Leigh M. Rothschild was appointed Chairman and Chief Executive
Officer and Mr. Jeffrey W. Sass was appointed Executive Vice President and
Secretary of the Company. In addition, the Company entered into three year
employment agreements with Leigh M. Rothschild and Jeffrey W. Sass and a three
year consulting agreement with Matthew Schilowitz at annual compensations of no
less than $200,000, $150,000 and $150,000 respectively.
As a result of the acquisition the Company intends to change its name to
BarPoint.com, Inc. and its trading symbol to "BPNT", if available.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial information (filed herewith).
Independent Auditors' Report
Balance Sheet - As of May 31, 1999
Statement of Operations and Accumulated
Development Stage Deficit - For the Period
From Inception of Operations
(October 1, 1998) to May 31, 1999
Statement of Stockholders' Equity - For the Period
From Inception of Operations (October 1, 1998) to May
31, 1999
Statement of Cash Flows - For the Period From
Inception of Operations(October 1, 1998) to May 31,
1999
Notes to Financial Statements
(b) Pro Forma Financial information (filed herewith).
Pro Forma Combined Financial Statements
Pro Forma Combined Statement of Operations
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INDEPENDENT AUDITORS' REPORT
To the Stockholders of
BarPoint.com, Inc.
We have audited the accompanying balance sheet of BarPoint.com, Inc. (a
development stage company) as of May 31, 1999 and the related statements of
operation and accumulated development stage deficit and cash flows for the
period from inception of operations (October 1, 1998) to May 31, 1999. 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 generally accepted auditing standards.
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 presents fairly, in
all material respects, the financial position of BarPoint.com, Inc. as of May
31, 1999, and the results of its operations and its cash flows from inception of
operations (October 1, 1998) to May 31, 1999, in conformity with generally
accepted accounting principles.
September 23, 1999
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Exhibit A
BARPOINT.COM, INC.
(A Development Stage Company)
Balance Sheet
May 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 250,515
Stock subscriptions receivable 1,000
-----------
Total Current Assets 251,515
OTHER ASSETS
Software development 258,120
Other assets 905
$ 510,540
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable $ 250,000
Loan payable - Stockholder 108,642
----------
Total Current Liabilities 358,642
STOCKHOLDERS' EQUITY
Common stock, 100 shares, $1 par value, authorized, issued and 100
outstanding
Paid-in capital 241,400
Accumulated development stage deficit (89,602)
151,898
$ 510,540
See notes to the financial statements
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BARPOINT.COM, INC.
(A Development Stage Company)
Statement of Operations and Accumulated Development Stage Deficit
Inception of Operations (October 1, 1998) to May 31, 1999
REVENUE $ -
EXPENSES
Salaries 20,000
Insurance 4,637
Legal and professional 21,000
Auto 11,715
Travel and entertainment 15,733
Telephone 6,594
Office 4,266
Miscellaneous 5,657
------------
NET (LOSS) AND ACCUMULATED DEVELOPMENT STAGE DEFICIT $ (89,602)
===========
See notes to the financial statements.
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BARPOINT.COM, INC.
(A Development Stage Company)
Statement of Stockholders' Equity
Inception of Operations (October 1, 1998) to May 31, 1999
Accumulated
Common Paid-In Development
Stock
Shares Par Value Capital Stage Deficit Total
Subscription to common stock 100 $100 $ 900 $ - $ 1,000
Software development and other
costs - 240,500 - 240,500
Net loss - - - (89,602) (89,602)
------- ------- -------------- --------- ----------
Balance at May 31, 1999 100 $100 $241,400 $(89,602) $151,898
==== ==== ======== ========= ========
See notes to the financial statements.
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BARPOINT.COM, INC.
(A Development Stage Company)
Statement of Cash Flows
Inception of Operations (October 1, 1998) to May 31, 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (89,602)
Adjustments to reconcile net (loss) to net cash (used)
by operating activities:
Legal and accounting services 20,500
contributed to the Company
Net Cash (Used) by Operating Activities (69,102)
CASH FLOW FROM INVESTING ACTIVITIES
Software development costs $ (38,120)
Purchase of fixed assets (405)
Other assets (500)
-------------
Net Cash (Used) by Investing Activities (39,025)
CASH FLOW FROM FINANCING ACTIVITIES
Loan from stockholder 108,642
Note payable 250,000
Net Cash Provided by Financing Activities 358,642
----------
Increase in Cash and Cash Equivalents and Ending Balance $ 250,515
==========
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING TRANSACTIONS: Two
stockholders contributed services valued at $220,000 to the Company (Note 2). A
subscription receivable of $1,000 was received for the issuance of 100 shares of
common stock.
See notes to the financial statements.
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BARPOINT.COM, INC.
(A Development Stage Company)
Notes to Financial Statements
May 31, 1999
NOTE 1 ORGANIZATION
BarPoint.com, Inc. ("The Company") is a developmental stage
company incorporated in Florida and formed in September 1998
for the purpose of developing and implementing a technology
that will facilitate Internet shopping. Operations are
expected to begin by the end of 1999. The Company will launch
a shopping portal website named www.barpoint.com which will
feature a search engine and software technology that will
allow consumers to search for specific product information
simply by entering any UPC barcode number.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased
with a maturity of three months or less to be cash
equivalents.
Concentration of Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk are cash and cash equivalents.
The Company places its cash and cash equivalents with high
credit quality financial institutions which at times exceeds
federally insured limits.
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.
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BARPOINT.COM, INC.
(A Development Stage Company)
Notes to Financial Statements
May 31, 1999
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Software Development Costs
In accordance with AICPA Statement of Position 98-1, the
Company capitalizes the direct cost of materials, services and
interest consumed in the development of computer software.
Such costs will be amortized over five years subject to
periodic evaluation for impairment.
The Company has capitalized $220,000 for unpaid services
rendered by certain stockholders in connection with the
development of computer software.
Income Taxes
The Company experienced a net operating loss for the period
ended May 31, 1999. Since the Company is a development stage
company and its ability to obtain future earnings is
uncertain, the deferred tax asset of approximately $36,000 has
been offset by a valuation allowance of $36,000.
NOTE 3 LOAN PAYABLE - STOCKHOLDER
The loan payable to a stockholder in the amount of $108,642
represents operational, including stockholder salaries of
$20,000, and software development costs advanced by one of the
stockholders. The loan is unsecured and non-interest bearing.
In August, 1999, approximately $106,000 of the loan was
repaid.
NOTE 4: SUBSEQUENT EVENTS
On June 3, 1999, all of the Company's issued and outstanding
shares of stock were purchased by The Harmat Organization
(Harmat) pursuant to an Acquisition Agreement dated May 20,
1999. The transaction was accounted for as a reverse
acquisition, as if the Company acquired Harmat, due to the
fact that the former shareholders of the Company owned a
majority of Harmat common stock after the transaction. In
connection with the reverse acquisition, Harmat loaned the
Company $250,000 on May 21, 1999. The note is a two year
promissory note which bears interest at two points above the
prime rate as designated by Chase Manhattan Bank.
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BARPOINT.COM, INC.
(A Development Stage Company)
Notes to Financial Statements
May 31, 1999
NOTE 5: RELATED PARTY TRANSACTIONS
David W. Sass, a stockholder of the Company, is the father of
Jeffrey W. Sass, a founder, stockholder, and director of
BarPoint. McLaughlin & Stern, LLP, general counsel to the
Company, is a stockholder of BarPoint and received shares in
the Company as part of the transaction. David W. Sass is a
member of said firm. Lorraine Jahn, a stockholder of the
Company, serves as the Company's general counsel.
NOTE 6: YEAR 2000 ISSUES
The effects of the Year 2000 issue may be experienced by the
Company before, on, or after January 1, 2000, and, if not
addressed, the impact on operations and financial reporting
may range from minor errors to significant systems' failures
which could affect the Company's ability to conduct normal
business operations. The Company believes that by modifying or
replacing systems, and by monitoring the Year 2000 readiness
of key external parties, it is mitigating its Year 2000 risks.
However, there can be no assurance that the uncertainties
surrounding the Year 2000 issue will not materially and
adversely affect the Company.
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PRO FORMA COMBINED FINANCIAL STATEMENTS
The May 31, 1999 unaudited pro forma combined financial statements of
BarPoint.com Inc. (BarPoint) and The Harmat Organization Inc. (Harmat) give
effect to the acquisition by Harmat of BarPoint, reflected as a reverse
acquisition, as if such transaction had occurred on May 31, 1999, for balance
sheet purposes and on October 1, 1998 for the statement of operations. The pro
forma information is not necessarily indicative of the results that would have
been reported had such events actually occurred on the dates specified, nor is
it indicative of the Company's future results.
PRO FORMA COMBINED BALANCE SHEET
MAY 31, 1999
Historical
Pro Forma
The Harmat
Organization Inc. Purchase
BarPoint.Com Inc. (Unaudited) Adjustments Combined
Cash and cash equivalents $ 250,515 $ 364,227 $ (189,000) (5) $ 425,742
Other current assets 1,000 934,891 (250,000) (4) 685,891
Intangible 259,025 - - 259,025
Marketable securities - 4,645,291 - 4,645,291
---------------- ------------------- -----------
TOTAL ASSETS $ 510,540 $ 5,944,409 $ (439,000) $ 6,015,949
========== ============= ===========
Current liabilities $ 358,642 $ 1,303 $ (250,000) (4) $ 109,945
Deferred taxes - 1,324,500 - 1,324,500
Common stock 100 5,080 6,634 (1) 11,714
(100) (3)
Paid in capital 241,400 4,385,092 228,434 (2) 4,659,392
(6,634) (1)
100 (3)
(189,000) (5)
Comprehensive income - 2,380,585 (2,380,585) (2) -
Accumulated deficit (89,602) (2,152,151) 2,152,151 (2) (89,602)
------------ ----------- --------------
$ 510,540 $ 5,944,409 $ (439,000) $ 6,015,949
========== ============= ===========
(1) Issuance of 6,634,000 shares of $.001 par value Harmat common stock in
exchange for the outstanding common shares of BarPoint.
(2) Eliminate Harmat's accumulated comprehensive income and accumulated deficit.
(3) Eliminate BarPoint's common stock.
(4) Eliminate promissory note.
(5) Fees in connection with the acquisition.
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PRO FORMA COMBINED STATEMENT OF OPERATIONS
Inception of Operations (October 1, 1998) to May 31, 1999
Historical
Pro Forma
The Harmat
Organization Inc. Purchase
BarPoint.Com Inc. (Unaudited) Adjustments Combined
Total Revenues $ - $ 1,331,398 $ - $ 1,331,398
Cost of Sales and Direct
Operating Expenses - 1,233,308 - 1,233,308
----------------- ------------------ -----------
Gross Profit - 98,090 - 98,090
Selling General and
Administrative 89,602 507,862 - 597,464
------------ ------------------ ------------
Expenses
Income (Loss) from Operations (89,602) (409,772) - (499,374)
------------- ------------------ -------------
Other Income (Expenses) - (55,550) - (55,550)
Income Taxes - - - -
---------------- ------------------ -------------------
Net Income $ (89,602) $ (465,322) $ - $ (554,924)
============ ================== =============
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</TABLE>
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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.
THE HARMAT ORGANIZATION, Inc.
(Registrant)
By: /s/ Leigh M. Rothschild, Chairman
DATED: October 6, 1999
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