<PAGE>
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 16, 1999
MULTIMEDIA K.I.D., INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 000-24637 91-1890338
------------------------------- ------------------------ -------------
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
7600 N.E. 41ST STREET, SUITE 350
VANCOUVER, WASHINGTON 98662
------------------------------------------------------------
(Address of principal executive offices, including zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (360) 256-4400
<PAGE>
JENKON INTERNATIONAL, INC. AND SUBSIDIARIES
THIS FORM 8-K/A CONSTITUTES AMENDMENT NO. 2 TO THE REGISTRANT'S REPORT ON
FORM 8-K AND AMENDS IN ITS ENTIRETY ITEM 7 OF SUCH REPORT AS ORIGINALLY
FILED DECEMBER 30, 1999 AND SUBSEQUENTLY AMENDED ON FEBRUARY 28, 2000.
On May 31, 2000, the Shareholders approved a change in the Company's name
from Jenkon International, Inc. to Multimedia K.I.D., Inc. For purposes of
this 8-K/A, the terms "Jenkon" or "Jenkon International, Inc." are used to
refer to the Company.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
-- Audited Financial Statements of Multimedia KID - Intelligence
in Education Ltd., (an Israeli Corporation), years ended
December 31, 1998 and 1997.
-- Unaudited Financial Statements of Jenkon International, Inc.
and subsidiaries year ended December 31, 1999.
(b) Pro Forma Financial Information
Pro Forma Condensed Financial Statements of Jenkon International,
Inc. and Subsidiaries
-- Introduction of Pro Forma Combined Condensed Statement of
Operations (Unaudited)
-- Pro Forma Combined Condensed Statements of Operations
(Unaudited) -- year ended June 30, 1999 and six months
ended December 31, 1999
-- Notes to Pro Forma Combined Statements of Operations
(Unaudited)
2
<PAGE>
MULTIMEDIA KID -
INTELLIGENCE IN EDUCATION LTD.
(AN ISRAELI CORPORATION)
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
<PAGE>
MULTIMEDIA KID-
INTELLIGENCE IN EDUCATION LTD.
(AN ISRAELI CORPORATION)
CONTENTS
INDEPENDENT AUDITORS REPORT 3
FINANCIAL STATEMENTS:
Balance sheets 4-5
Statements of operations 6
Statements of changes in shareholder's equity 7
Statements of cash flows 8
NOTES TO FINANCIAL STATEMENTS 9-24
THE AMOUNTS ARE STATED IN U.S. DOLLARS ($)
<PAGE>
INDEPENDENT AUDITORS REPORT
To the Shareholders of
Multimedia KID - Intelligence in Education Ltd.
We have audited the balance sheets of Multimedia KID - Intelligence in Education
Ltd. (the "Company") as of December 31, 1998 and 1997 and the related statements
of operations, changes in shareholder's equity and cash flows for each of the
years ended on those dates. These financial statements are the responsibility of
the Company's Board of Directors and 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, including those prescribed by the Israeli Auditors (Mode of
Performance) Regulations, 1973, which do not differ in any significant respect
from generally accepted auditing standards in the 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, either due
to error or to intentional misrepresentation. 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 the Company's Board of Directors and management,
as well as evaluating the overall financial statement presentation. We believe
that our audits provide a fair basis for our opinion.
The aforementioned financial statements have been prepared in U.S. dollars (see
Note 1a(3)). Condensed nominal Israeli currency data which served as the basis
for the preparation of the financial statements, are presented in Note 12.
In our opinion, the aforementioned financial statements present fairly, in all
material respects, the financial position of the Company as of December 31, 1998
and 1997 and the results of its operations, changes in its shareholders' equity
and its cash flows for each of the years then ended on those dates, in
conformity with generally accepted accounting principles in Israel.
Pursuant to section 211 of the Companies Ordinance (New Version), 1983, we state
that we have obtained all the information and explanations which we have
required and our opinion on the above mentioned financial statements is given
according to the best of our information and the explanations received by us and
as shown by the books of the Company.
Without qualifying our opinion, we draw attention to transactions with a company
under common control, which are described in Note 1a(2) and specifically to the
Company's obligation to pay that company an amount of approximately $1.1
million. Due to the working capital deficiency of the Company (approximately
$1.2 million at December 31, 1998), the Company has extended the due date for
payment of such amount from December 31, 1998 to December 31, 1999 and its
ability to pay the amount stated above by that date depends on raising
sufficient funds from operations or from external sources.
Tel-Aviv, Israel Moshe Harpaz
February 6, 2000 Certified Public Accountant(Isr.)
3
<PAGE>
MULTIMEDIA KID -
INTELLIGENCE IN EDUCATION LTD.
(AN ISRAELI CORPORATION)
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
------------- -------------
U.S. dollars
-----------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents 4,992 418
Accounts receivable:
Trade (Note 9a) 295,315 36,861
Other (Note 9a) 68,725 47,266
Inventories (Note 9b) 534,939 180,453
-----------------------------------------------------------------------------------------------
Total current assets 903,971 264,998
-----------------------------------------------------------------------------------------------
ACTION KID INSTALLATION (Note 6c) - 110,209
LONG-TERM RECEIVABLE, net of current maturities (Note 9c) 231,558 -
FIXED ASSETS (Note 3):
Cost 263,693 96,725
Less - accumulated depreciation 54,745 16,502
-----------------------------------------------------------------------------------------------
208,948 80,223
-----------------------------------------------------------------------------------------------
1,344,477 455,430
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
</TABLE>
/s/ P. Goldenberg
Managing Director
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
4
<PAGE>
MULTIMEDIA KID -
INTELLIGENCE IN EDUCATION LTD.
(AN ISRAELI CORPORATION)
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
------------- -------------
U.S. DOLLARS
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term credit from banks and current maturities of long-term
Liability (Note 9d) 438,863 293,013
Accounts payable and accruals:
Trade 250,692 165,382
Other (Note 1) 180,872 159,247
Unearned income (Note 6b(1)) - 195,413
Amount due to PMD - a company under common control - Net
(Note 1a(2)) 1,237,209 1,567,697
---------------------------------------------------------------------------------------------------------------------------
Total current liabilities 2,107,636 2,380,752
LONG-TERM LIABILITIES
Net of current maturities (Note 4) 29,288 20,396
ACCRUED SEVERANCE PAY (Note 5) 142,788 56,602
COMMITMENT (Notes 6)
---------------------------------------------------------------------------------------------------------------------------
Total liabilities 2,279,712 2,457,750
CAPITAL DEFICIENCY:
Share capital and additional paid-in capital - Ordinary shares of NIS 1 par
value authorized: December 31, 1998 and 1997 - 23,000 shares; issued and
outstanding:
December 31, 1998 - 2,000 shares;
December 31, 1997 - 1,000 shares (Note 11) 495,454 318
Receipts on account of shares (Note 11) 1,000,000 -
Rights in products acquired from a company under common control
(Note 1a(2)) (1,750,000) (1,750,000)
Accumulated deficit (680,689) (252,638)
---------------------------------------------------------------------------------------------------------------------------
Total capital deficiency (935,235) (2,002,320)
---------------------------------------------------------------------------------------------------------------------------
1,344,477 455,430
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
5
<PAGE>
MULTIMEDIA KID -
INTELLIGENCE IN EDUCATION LTD.
(AN ISRAELI CORPORATION)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1998 1997
--------------------------------------------------------------------------------------------------------------------
U.S. Dollars U.S. Dollars
<S> <C> <C>
REVENUES FROM SALES OF PRODUCTS, SERVICES AND MARKETING RIGHTS
(Note 10a) 1,499,082 714,031
COST OF REVENUES (Note 10b) 709,794 278,761
--------------------------------------------------------------------------------------------------------------------
789,288 435,270
RESEARCH AND DEVELOPMENT EXPENSES (Note 1g) 697,611 223,486
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Note 10c) 501,310 237,742
--------------------------------------------------------------------------------------------------------------------
OPERATING LOSS (409,633) (25,958)
FINANCIAL EXPENSES, net (Note 10d) 18,418 24,190
--------------------------------------------------------------------------------------------------------------------
LOSS FOR THE YEAR (428,051) (50,148)
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
6
<PAGE>
MULTIMEDIA KID -
INTELLIGENCE IN EDUCATION LTD.
(AN ISRAELI CORPORATION)
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
RIGHTS IN
SHARE PRODUCTS
CAPITAL ACQUIRED FROM
AND A COMPANY
NUMBER OF ADDITIONAL RECEIPT ON UNDER
ORDINARY PAID-IN ACCOUNT OF COMMON ACCUMULATED
SHARES CAPITAL SHARES CONTROL DEFICIT TOTAL
-------------------------------------------------------------------------------------------------------------------------------
U.S. DOLLARS
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1997 1,000 318 - (1,750,000) (202,490) (1,952,172)
Changes during 1997 - loss - - - - (50,148) (50,148)
-------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 1,000 318 - (1,750,000) (252,638) (2,002,320)
Changes during 1998:
Issuance of share
capital 1,000 495,136 - - - 495,136
Receipts on account of
shares - - 1,000,000 - - 1,000,000
Loss - - - - (428,051) (428,051)
-------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 2,000 495,454 1,000,000 (1,750,000) (680,689) (935,235)
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
7
<PAGE>
MULTIMEDIA KID -
INTELLIGENCE IN EDUCATION LTD.
(AN ISRAELI CORPORATION)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1998 1997
--------------------------------------------------------------------------------------------------------------------
U.S. DOLLARS U.S. Dollars
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss for the year (428,051) (50,148)
Adjustments to reconcile loss to net cash
provided by or used in operating activities:
Income and expenses not involving cash flows:
Depreciation and amortization 38,243 13,233
Liability for employee rights upon retirement - net 86,186 8,003
Linkage differences on long-term loans and other
long-term liabilities (2,124) -
Changes in operating asset and liability items:
Increase in accounts receivables:
Trade (490,012) (11,610)
Other (21,459) (6,109)
Increase (decrease) in accounts payable and accruals:
Trade 85,310 13,386
Other (193,579) 62,145
Increase in inventories (224,486) (205,420)
--------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities (1,149,972) (176,520)
--------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (166,968) (70,281)
--------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (166,968) (70,281)
--------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of share capital 495,136 -
Receipts on account of shares and other paid-in capital 1,000,000 -
Increase in short-term credit from banks and current
maturities of long-term liabilities 142,689 171,552
Debt (repayment) to a company under common control (330,488) 51,736
Long-term loans received and long-term liability
under capital lease undertaken 19,470 20,396
Discharge of long-term loan and other long-term liabilities (5,293) -
--------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 1,321,514 243,684
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,574 (3,117)
BALANCE OF CASH AND CASH EQUIVALENTS, at beginning of year 418 3,535
--------------------------------------------------------------------------------------------------------------------
BALANCE OF CASH AND CASH EQUIVALENTS, at end of year 4,992 418
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
8
<PAGE>
MULTIMEDIA KID -
INTELLIGENCE IN EDUCATION LTD.
(AN ISRAELI CORPORATION)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies, applied on a consistent basis,
are as follows:
a. GENERAL:
1) NATURE OF OPERATIONS
Multimedia KID - Intelligence in Education Ltd. (the "Company")
was incorporated in January 1996 and commenced operations on
February 1, 1996. The Company develops and markets interactive
learning systems which use computers in a multimedia environment,
as well as developing educational software on behalf of others.
2) TRANSACTIONS WITH PMD
Pursuant to an agreement dated January 21, 1996, the Company was
granted a right of first refusal to buy all the rights ("the
rights") to an interactive learning system named "Multimedia KID"
and of the cognitive application named "Action KID" from P.M.D.
Technological and Educational Systems (1992) Ltd. ("PMD") at that
time a company under common control, for a total amount of
$1,750,000 ("the purchase price"). In accordance with applicable
accounting standards, this amount was carried to shareholders'
equity, as a separate item.
On April 2, 1998, the Company and PMD agreed to transfer the
ownership in the above rights to the Company. The parties further
agreed that the remaining balance of the purchase price at April
2, 1998 and at December 31, 1997, amounting to $1,433,000, would
be fully paid no later than December 31, 1999. The amount was
paid in full in January 2000.
In 1996, the majority of PMD's employees were transferred to the
Company. As of the date of transfer, the Company received an
amount of approximately $47,000 from PMD to compensate the
Company for the severance pay liability, which accrued in respect
of those employees through that date.
On March 9, 1998, the Company acquired PMD's tangible assets and
inventory for $100,000. Moreover, PMD undertook to transfer all
orders and payments it receives to the Company.
9
<PAGE>
MULTIMEDIA KID -
INTELLIGENCE IN EDUCATION LTD.
(AN ISRAELI CORPORATION)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3) FUNCTIONAL CURRENCY
The currency of the primary economic environment in which the
operations of the Company are conducted is the U.S. dollar
("dollar" or "$").
Most of the Company's revenues are derived in Israeli currency
linked to the dollar or in dollars. Most of the components of the
products that the Company develops and markets are purchased in
Israeli currency linked to the dollar or in dollars. To the
extent that the Company's revenues are derived, and expenses are
incurred, in Israeli currency linked to the dollar, contract
amounts are stated in dollars and settled in Israeli currency
linked to the changes in the exchange rate between the dollar and
Israeli currency. Thus, the functional currency of the Company is
the dollar.
Transactions and balances originally denominated in dollars or
linked thereto are presented at their original amounts. Balances
in non-dollar currencies are translated into dollars using
historical and current exchange rates for non-monetary and
monetary balances, respectively. For non-dollar transactions and
other items (stated below) reflected in the statements of
operations, the following exchange rates are used: (i) for
transactions - exchange rates at transaction dates or average
rates and (ii) for other items (derived from non-monetary balance
sheet items such as depreciation and changes in inventories) -
historical exchange rates. The resulting currency transaction
gains or losses are carried to financial income or expenses, as
appropriate.
4) ACCOUNTING PRINCIPLES
The financial statements are prepared in accordance with
generally accepted accounting principles ("GAAP") in Israel.
5) USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with GAAP
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 dates of the financial
statements and the reported amounts of revenues and expenses
during the reported periods. Actual results could differ from
those estimates.
10
<PAGE>
MULTIMEDIA KID -
INTELLIGENCE IN EDUCATION LTD.
(AN ISRAELI CORPORATION)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
b. CASH EQUIVALENTS:
The Company considers all highly liquid investments, purchased with a
maturity of three months or less, to be cash equivalents.
c. INVENTORIES:
Inventories are valued at the lower cost or market value. Cost is
determined by the "first-in, first out" method.
d. FIXED ASSETS
These assets are stated at cost and are depreciated by the
straight-line method, on the basis of their estimated useful life.
Annual rates of depreciation are as follows:
<TABLE>
<CAPTION>
%
---------
<S> <C>
Computer equipment 25-33
Office furniture and equipment 6-20
Machinery 10-15
Vehicle 15
</TABLE>
Leasehold improvements are amortized by the straight-line method over
the term of the lease, which is shorter than the estimated useful life
of the improvements.
e. DEFERRED INCOME TAXES
Deferred taxes are computed in respect of differences between the
amounts presented in these financial statements and those taken into
account for tax purposes.
11
<PAGE>
MULTIMEDIA KID -
INTELLIGENCE IN EDUCATION LTD.
(AN ISRAELI CORPORATION)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
f. RECOGNITION OF REVENUES
Revenues from the sales of Multimedia KID and other products are
generally recognized upon shipment. Revenues from sale of Action KID
systems are recognized upon acceptance by the customer.
Service revenue is recognized ratably over the contractual period or
as services are performed.
g. RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses include the direct expenses and cost
of those employees identified by management as research and
development employees. The 1997 figures have been reclassified to
conform to the 1998 presentation (in the 1997 financial statements,
research and development expenses were included under "cost of
revenues and research and development expenses").
h. DATA REGARDING THE EXCHANGE RATE AND THE ISRAELI CONSUMER PRICE INDEX
("CPI")
<TABLE>
<CAPTION>
EXCHANGE RATE OF ONE
U.S. DOLLAR CPI*
------------------------------------------------------------------------------
<S> <C> <C>
At December 31:
1998 NIS 4.16 166.3 points
1997 NIS 3.54 159.1 points
Increase during:
Year ended December 31, 1998 17.6% 8.6%
Year ended December 31, 1997 8.8% 7.0%
</TABLE>
*Based on the index for the month ending on each balance
sheet date, on the basis of 1993 average = 100.
12
<PAGE>
MULTIMEDIA KID -
INTELLIGENCE IN EDUCATION LTD.
(AN ISRAELI CORPORATION)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
i. UNCERTAINTY DUE TO THE YEAR 2000 ("Y2K") ISSUE
The Y2K issue arises because many computerized systems use two (2)
digits, rather than four (4), to identify a year. Date-sensitive
systems may recognize the year 2000 as 1900 or some other date,
resulting in errors when information using year 2000 dates is
processed. In addition, similar problems may arise in some systems
which use certain dates in 1999 to represent something other than a
date. The effects of the Y2K issue may be experienced before, on, or
after January 1, 2000, and, if not addressed, the impact on operation
and financial reporting may range from minor errors to significant
systems failure, which could affect the company's ability to conduct
normal business operations.
It is not possible to be certain that all aspects of the Y2K issue
affecting the entity, including those related to the efforts of
customers, suppliers or other third parties, will be fully resolved.
NOTE 2 - U.S. GAAP
The aforementioned financial statements present fairly, in all material
respects, the financial position of the Company at December 31, 1998 and
1997 and the results of their operations, shareholders' equity and their
cash flows for each of the two years in the period ended December 31, 1998,
in conformity with accounting principles generally accepted in Israel. Such
Israeli accounting principles, as applicable to these financial statements,
are in all material respects, substantially identical to accounting
principles generally accepted in the United States.
13
<PAGE>
MULTIMEDIA KID -
INTELLIGENCE IN EDUCATION LTD.
(AN ISRAELI CORPORATION)
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - FIXED ASSETS
Composition of assets, grouped by major classifications, is as follows:
<TABLE>
<CAPTION>
COST ACCUMULATED DEPRECIATION
------------------------ -------------------------
DECEMBER 31, DECEMBER 31,
------------------------ ----------------------
1998 1997 1998 1997
--------- -------- --------- --------
U.S. $
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Computer equipment 144,319 54,600 42,281 13,796
Office furniture &
equipment 51,436 7,909 3,530 601
Machinery 16,917 6,170 2,025 494
Vehicle* 51,021 28,046 6,909 1,661
----------------------------------------------------------------------------
263,693 96,725 54,745 16,502
----------------------------------------------------------------------------
----------------------------------------------------------------------------
</TABLE>
*One of the vehicles is leased by the Company under a capital lease and
presented as a Company asset, at the regular purchase price (not including the
financial component). The vehicle is pledged to secure the Company's liability
under the lease (see Note 4).
NOTE 4 - LONG-TERM LOAN LIABILITIES
a. Classified by currency of repayment, linkage terms and interest rates:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
INTEREST RATES 1998 1997
% --------- ---------
AMOUNT U.S. $
---------------- ---------------------
<S> <C> <C> <C>
In Israeli currency
Linked to the dollar 9.6 18,821 -
Linked to the CPI* 6.35 19,319 26,087
-------------------------------------------------------------
38,140 26,087
Less - current maturities 8,852 5,691
-------------------------------------------------------------
29,288 20,396
-------------------------------------------------------------
-------------------------------------------------------------
</TABLE>
*A loan received to finance a capital lease on a vehicle, as described
in Note 3.
14
<PAGE>
MULTIMEDIA KID -
INTELLIGENCE IN EDUCATION LTD.
(AN ISRAELI CORPORATION)
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - LONG-TERM LOAN LIABILITIES (CONTINUED)
b. The long-term portion of the liabilities matures in the following
years after the balance sheet dates:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1998 1997
--------- ---------
U.S. $
---------------------
<S> <C> <C>
Second year 9,178 5,691
Third year 9,529 5,691
Fourth year 7,336 5,691
Fifth year 3,245 3,323
-------------------------------------------------------------
29,288 20,396
-------------------------------------------------------------
-------------------------------------------------------------
</TABLE>
NOTE 5 - ACCRUED SEVERANCE PAY
a. Israeli law generally requires payment of severance pay upon dismissal
of an employee or upon termination of employment in certain other
circumstances. The Company's severance pay liability to its employees,
based upon the number of years of service and the latest monthly
salary, is partly covered by insurance policies for senior employees
and the balance - by the balance sheet accrual. Under labor
agreements, these insurance policies are subject to certain
limitations, the property of the employees and, therefore, they are
not reflected in these financial statements.
b. The severance pay expense was $117,848 and $17,100 in the years ended
December 31, 1998 and 1997, respectively.
NOTE 6 - COMMITMENTS
a. RENTAL AGREEMENTS
The Company entered into rental agreements with respect to the
premises it occupies, which are renewed annually. Under these
agreements, the Company pays annual rental fees of approximately
$47,000. To guarantee its rent liability, the Company has given the
lessors promissory notes in a total amount of approximately $48,000,
which are also personally guaranteed by the major shareholder.
15
<PAGE>
MULTIMEDIA KID -
INTELLIGENCE IN EDUCATION LTD.
(AN ISRAELI CORPORATION)
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - COMMITMENTS (CONTINUED)
b. AGREEMENTS RELATING TO COMPANY PRODUCTS:
1) Pursuant to an agreement dated February 8, 1996, the Company is
obligated to pay royalties to a third party of up to 10% of its
sales of the software component of the product to the third
party.
2) Agreements relating to the Action KID system:
(a) Pursuant to an agreement dated January 5, 1997, the buyer is
entitled to royalties in respect of sales of other Action
KID systems in Brazil at rates decreasing from 9% to 6%. In
addition, the buyer is entitled to royalties of 4% in
respect of systems sold in other countries.
(b) According to an agreement signed on May 28, 1998, the
purchaser would act as the Company's sole agent for the sale
of Action KID system for one year from the signing of the
agreement, in consideration of 7% of sales turnover.
c. ACTION KID INSTALLATION
In November 1997, the Company entered into a joint venture agreement
to establish a learning center in Israel based on the Action KID
system. The joint venture set up an Action KID Center in Petach
Tikvah.
In 1998, the Company and the other co-venturer reached an oral
agreement (which has not yet been put into writing) to dissolve the
joint venture. This agreement stipulates that the Petach Tikvah Action
KID Center would remain in the Company's possession. The amount paid
by the other party to the joint venture on account of its share in the
joint venture, approximately $20,000, would be treated as a down
payment on account of future acquisitions by the other co-ventuer from
the Company and is accordingly included in "accounts payable - other."
16
<PAGE>
MULTIMEDIA KID -
INTELLIGENCE IN EDUCATION LTD.
(AN ISRAELI CORPORATION)
NOTES TO FINANCIAL STATEMENTS
NOTE 7 - TAXES ON INCOME
a. Measurement of results for tax purposes under the Income Tax
(Inflationary Adjustments) Law, 1985 (the "Inflationary Adjustments
Law")
Under this law, results for tax purposes are measured in real terms,
in accordance with the changes in the Israeli CPI. The Company is
taxed under this law. These financial statements are presented in
dollars. The difference between the changes in the Israeli CPI and the
exchange rate of the dollar, both on an annual and a cumulative basis,
causes a difference between taxable income and income reflected in
these financial statements.
b. TAX RATES
Income is taxed at the regular rate of 36%.
c. TAX ASSESSMENTS
The Company has not been assessed since incorporation.
NOTE 8 - LIABILITIES SECURED BY PLEDGES
As of December 31, 1998 and 1997, the balances of liabilities of the Company
which are secured by pledges, are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1998 1997
--------- ---------
U.S. $
---------------------
<S> <C> <C>
Short-term bank credit 430,011 287,322
Long-term liability
under capital lease 38,140 26,087
-------------------------------------------------------------
468,151 313,409
-------------------------------------------------------------
-------------------------------------------------------------
</TABLE>
Short-term bank credit is secured by floating charges on the Company's assets
and rights and other assets, share capital, goodwill, cash notes and other
securities held by a bank and by fixed charges on a distribution agreement and
the monies receivable thereunder.
The dollar-linked long-term liability (see Note 4) is secured by floating
charges on the Company's assets.
As to the charge on the leasehold vehicle, see Note 3.
17
<PAGE>
MULTIMEDIA KID -
INTELLIGENCE IN EDUCATION LTD.
(AN ISRAELI CORPORATION)
NOTES TO FINANCIAL STATEMENTS
NOTE 9 - SUPPLEMENTARY BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1998 1997
--------- ---------
U.S. $
---------------------
<S> <C> <C>
a. Accounts receivable:
1) Trade:
a) Composed as follows:
Open accounts 191,926 36,861
Checks receivable 103,389 -
-------------------------------------------------------------
295,315 36,861
-------------------------------------------------------------
-------------------------------------------------------------
b) The item includes:
Current maturities of
Long-term receivable 56,370 -
-------------------------------------------------------------
-------------------------------------------------------------
2) Other:
Israeli government
Departments and agencies 16,529 3,354
Prepaid expenses 1,750 7,896
Sundry 50,446 36,016
-------------------------------------------------------------
68,725 47,266
-------------------------------------------------------------
-------------------------------------------------------------
b. Inventories:
Raw materials and supplies *404,939 120,453
Finished products 130,000 60,000
-------------------------------------------------------------
534,939 180,453
-------------------------------------------------------------
-------------------------------------------------------------
</TABLE>
*Includes new versions of electronic components US$90,055
18
<PAGE>
MULTIMEDIA KID -
INTELLIGENCE IN EDUCATION LTD.
(AN ISRAELI CORPORATION)
NOTES TO FINANCIAL STATEMENTS
NOTE 9 - SUPPLEMENTARY BALANCE SHEET INFORMATION (CONTINUED)
c. LONG-TERM RECEIVABLES:
1) On December 3, 1998, the Company signed an agreement for the sale
of an Action KID system for $380,000, of which $30,000 was
received through December 31, 1998.
The balance due as of December 31, 1998, does not bear interest
and is presented under "long-term receivables" at the present
value of payments due through March 31, 2002, as follows:
<TABLE>
<CAPTION>
U.S. $
--------------------------------------------------------------------------------
<S> <C>
Nominal balance due 350,000
Less - unamortized discount based on imputed interest
rate of 8.75% (62,072)
--------------------------------------------------------------------------------
287,928
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
2) This balance is collectible in the following years after December
31, 1998:
<TABLE>
<CAPTION>
U.S. $
--------------------------------------------------------------------------------
<S> <C>
First year 56,370
--------------------------------------------------------------------------------
Second year 51,824
Third year 111,190
Fourth year 68,544
--------------------------------------------------------------------------------
231,558
--------------------------------------------------------------------------------
287,928
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
MULTIMEDIA KID -
INTELLIGENCE IN EDUCATION LTD.
(AN ISRAELI CORPORATION)
NOTES TO FINANCIAL STATEMENTS
NOTE 9 - SUPPLEMENTARY BALANCE SHEET INFORMATION (CONTINUED)
d. SHORT-TERM CREDIT FROM BANKS AND CURRENT MATURITIES OF LONG-TERM
LIABILITIES:
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
---------- ----------
U.S.$
--------------------------------------------------------------------------------
<S> <C> <C>
Short-term credit:
From banks* 430,011 287,322
Current maturities of long-term liabilities 8,852 5,691
--------------------------------------------------------------------------------
438,863 293,013
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
*In NIS - unlinked, bearing average annual interest at the rate of
16-18%
e. ACCOUNTS PAYABLE AND ACCRUALS - OTHER
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1998 1997
---------- ----------
U.S.$
--------------------------------------------------------------------------------
<S> <C> <C>
Payroll and related expenses 117,638 68,871
Accruals 25,980 64,746
Customer advances and other 37,254 35,630
--------------------------------------------------------------------------------
180,872 159,247
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
MULTIMEDIA KID -
INTELLIGENCE IN EDUCATION LTD.
(AN ISRAELI CORPORATION)
NOTES TO FINANCIAL STATEMENTS
NOTE 10 - SELECTED STATEMENT OF OPERATIONS
a. REVENUES FROM SALES OF PRODUCTS, SERVICE AND MARKETING RIGHTS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------------
1998 1997
---------- ----------
U.S.$
--------------------------------------------------------------------------------
<S> <C> <C>
1.) Revenues from principle customers -
revenues from single customers each of
which exceeds 10% of revenues in the
relevant year:
Customer A 746,936 278,306
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Customer B - 65,406
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Customer C - 92,500
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Customer D 260,000 *133,717
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Customer E 315,722 -
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
*Including sales of marketing rights, in
an amount of $100,000, see Note 6b(2).
2.) Revenues for the year ended December 31,
1997 include $40,563, for services
rendered to PMD.
21
<PAGE>
MULTIMEDIA KID -
INTELLIGENCE IN EDUCATION LTD.
(AN ISRAELI CORPORATION)
NOTES TO FINANCIAL STATEMENTS
NOTE 10 - SELECTED STATEMENT OF OPERATIONS (CONTINUED)
b. COST OF REVENUES
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------------
1998 1997
---------- ----------
U.S.$
--------------------------------------------------------------------------------
<S> <C> <C>
Purchases of raw materials and other supplies 456,978 322,242
Salaries 94,830 82,694
Depreciation 33,347 11,460
Other 64,639 52,365
Changes in inventory of finished products (70,000) (60,000)
--------------------------------------------------------------------------------
579,794 408,761
Action KID installation, see Note 6c 130,000 (130,000)
--------------------------------------------------------------------------------
709,794 278,761
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
c. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
<TABLE>
<CAPTION>
<S> <C> <C>
Selling 135,796 163,974
General and administrative 365,514 73,768
--------------------------------------------------------------------------------
501,310 237,742
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
d. FINANCIAL EXPENSES - NET
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1998 1997
---------- ----------
U.S.$
--------------------------------------------------------------------------------
<S> <C> <C>
Income:
Interest of bank deposits 1,022 22
Exchange differences - net 13,817 27,332
--------------------------------------------------------------------------------
14,839 27,354
--------------------------------------------------------------------------------
Expenses:
Interest (30,250) (48,203)
Other (3,007) (3,341)
--------------------------------------------------------------------------------
(33,257) (51,544)
--------------------------------------------------------------------------------
(18,418) (24,190)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
MULTIMEDIA KID -
INTELLIGENCE IN EDUCATION LTD.
(AN ISRAELI CORPORATION)
NOTES TO FINANCIAL STATEMENTS
NOTE 11 - SUBSEQUENT EVENTS
a. After December 31, 1998, the Company issued 2,000 Ordinary Shares of
NIS 1 par value at approximately $1,100 per share. An amount of
$1,000,000 was received through December 31, 1998 as payment on
account of those shares. In 1999, a further amount of $850,000 was
received on account of those shares.
b. Subsequent to December 31, 1998, the Company paid PMD approximately
$470,000 on account of the rights to PMD products (see Note 1a(2)).
NOTE 12 - NOMINAL ISRAELI CURRENCY DATA
a. BALANCE SHEET DATA:
<TABLE>
<CAPTION>
NOMINAL NIS
---------------------------
DECEMBER 31,
---------------------------
1998 1997
--------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets 1,533,761 295,065
Inventories 2,051,217 628,283
Action KID installation - 385,000
Long-term receivable, net of current maturities 963,281 -
Fixed assets 777,301 275,929
--------------------------------------------------------------------------------
5,325,560 1,585,277
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities 8,749,913 8,334,126
--------------------------------------------------------------------------------
Long-term liabilities 121,841 72,059
--------------------------------------------------------------------------------
Accrued severance pay 594,000 186,000
--------------------------------------------------------------------------------
Capital deficiency:
Share capital and premium on shares 1,773,260 1,000
Receipts on account of shares 3,666,310 -
Rights to products acquired from a company
under common control (6,083,028) (6,083,028)
Accumulated deficit (3,496,736) (924,880)
--------------------------------------------------------------------------------
Total capital deficiency (4,140,194) (7,006,908)
--------------------------------------------------------------------------------
5,325,560 1,585,277
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
MULTIMEDIA KID -
INTELLIGENCE IN EDUCATION LTD.
(AN ISRAELI CORPORATION)
NOTES TO FINANCIAL STATEMENTS
NOTE 12 - NOMINAL ISRAELI CURRENCY DATA (CONTINUED)
b. STATEMENT OF OPERATIONS:
<TABLE>
<CAPTION>
NOMINAL NIS
---------------------------
DECEMBER 31,
---------------------------
1998 1997
--------------------------------------------------------------------------------
<S> <C> <C>
Revenues from sales of products, services and
marketing rights 5,676,005 2,427,056
Cost of revenues 2,724,512 935,940
--------------------------------------------------------------------------------
2,951,493 1,491,116
Research and development expenses 2,713,322 770,869
Selling, general and administrative expenses 1,917,335 818,103
--------------------------------------------------------------------------------
Operating loss (1,679,164) (97,856)
Financial expenses - net 892,692 230,648
--------------------------------------------------------------------------------
Loss for the year (2,571,856) (328,504)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
c. STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY:
RIGHTS IN
SHARE PRODUCTS
CAPITAL ACQUIRED FROM
AND A COMPANY
NUMBER OF ADDITIONAL RECEIPT ON UNDER
ORDINARY PAID-IN ACCOUNT OF COMMON ACCUMULATED
SHARES CAPITAL SHARES CONTROL DEFICIT TOTAL
-----------------------------------------------------------------------------------------------------------------------------
NOMINAL NIS
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1997 1,000 1,000 - (6,083,028) (596,376) (6,678,404)
Changes during 1997 - loss - - - - (328,504) (328,504)
-----------------------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1997 1,000 1,000 - (6,083,028) (924,880) (7,006,908)
Changes during 1998:
Issuance of share capital 1,000 1,772,260 - - - 1,772,260
Receipts on account of
shares - - 3,666,310 - - 3,666,310
Loss - - - - (2,571,856) (2,571,856)
-----------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 2,000 1,773,260 3,666,310 (6,083,028) (3,496,736) (4,140,194)
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
JENKON INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31, 1999
------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,122,788
Short-term investments 306,376
Trade receivables 1,246,405
Other receivables 356,143
Inventory 650,000
Net assets of discontinued operations 453,222
-----------
Total current assets 6,134,934
PROPERTY AND EQUIPMENT, net 242,849
LONG TERM RECEIVABLES, net 703,249
OTHER ASSETS, net 1,213,338
-----------
Total assets $ 8,294,370
===========
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Short-term bank credit and current maturities of long-term liability $ 865,234
Accounts payable 393,596
Other accrued liabilities 109,400
Convertible debt, net of original issue discount of $3,825,377 674,623
Amount due to a company under common control 677,072
-----------
Total current liabilities 2,719,925
Long-term liabilities
Accrued severance payment 145,000
Notes payable, net of current portion 1,120,271
-----------
Total Liabilities 3,985,196
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK, SERIES B, par value $.001, 1,208,000 shares issued
and outstanding, liquidation preference of $10 per share 3,421,966
REDEEMABLE PREFERRED STOCK, SERIES C, par value $.001, 1,208,000 shares issued
and outstanding, liquidation preference of $10 per share 3,421,967
STOCKHOLDERS' DEFICIT
Common stock, par value $.001; 20,000,000 shares authorized; 5,633,398 shares issued,
5,476,944 shares outstanding 5,633
Additional paid-in-capital 2,759,433
Stock subscriptions receivable (8,500)
Rights in products acquired from a company under Common control (1,750,000)
Foreign currency translation (13,119)
Accumulated deficit (3,188,206)
Treasury stock, at cost, 156,454 shares (340,000)
-----------
Total stockholders' deficit (2,534,759)
-----------
Total liabilities, redeemable preferred stock and stockholders' deficit $ 8,294,370
===========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
JENKON INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1999 1998
--------------------------------------------------------------------------------------------------------------
(Unaudited) (Audited)
<S> <C> <C>
NET SALES FROM PRODUCTS, SERVICES AND
MARKETING RIGHTS $ 2,014,581 $ 1,499,082
TOTAL COST OF REVENUES 852,266 709,794
---------- ----------
GROSS PROFIT 1,162,315 789,288
OPERATING EXPENSES
Product research, development and enhancements 1,753,827 697,611
Selling, general and administration 905,724 501,310
Acquisition expense 116,563 --
Goodwill amortization 10,196 --
---------- ----------
Total operating expenses 2,786,310 1,198,921
---------- ----------
LOSS FROM CONTINUING OPERATIONS (1,623,995) (409,633)
OTHER EXPENSE
Interest expense, net (785,399) (18,418)
---------- ----------
LOSS BEFORE INCOME TAX AND
DISCONTINUED OPERATIONS (2,409,394) (428,051)
PROVISION FOR INCOME TAX -- --
---------- ----------
LOSS BEFORE DISCONTINUED OPERATIONS (2,409,394) (428,051)
LOSS FROM DISCONTINUED OPERATIONS,
net of income taxes (98,123) --
---------- ----------
NET LOSS $ (2,507,517) $ (428,051)
========== ==========
BASIC AND DILUTED LOSS PER SHARE
Loss before discontinued operations $ (3.07) $ (1.58)
Discontinued operations (0.13) --
---------- ----------
NET LOSS PER SHARE $ (3.20) $ (1.58)
---------- ----------
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic and diluted 784,804 270,170
========== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
JENKON INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1999 1998
------------------------------------------------------------------------------------------------------------------------------------
(Unaudited) (Audited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(2,507,517) $ (428,051)
Adjustments to reconcile net loss to net cash used in
operating activities
Depreciation and amortization 81,194 38,243
Amortization of original issue discount 623,703 --
Change in net assets of discontinued operation (50,533) --
Loss from discontinued operations 98,123 --
Decrease in other long-term liabilities -- (2,124)
Stock compensation 1,748,508 --
Increase (decrease) from changes in operating
assets and liabilities:
Receivables (951,090) (511,471)
Long-term receivables (471,691) --
Prepaid and other assets (287,418) --
Inventories (115,061) (224,486)
Accounts payable 142,904 (108,269)
Accrued severance 75,320 --
Other accrued liabilities (71,472) 86,186
---------- ----------
Net cash used in operating activities (1,685,030) (1,149,972)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (104,899) (166,968)
Cash acquired in purchase 129,154 --
Deposits (306,376) --
---------- ----------
Net cash used in investing activities (282,121) (166,968)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Short-term credits received, net 426,371 142,689
Loan payments (329,049) (5,293)
Loan proceeds 1,346,924 19,470
Proceeds from sale of common stock 1,060,304 1,495,136
Decrease in amount due to a company under common control (560,137) (330,488)
Proceeds from sale of convertible debt, net of costs 3,140,534 --
---------- ----------
Net cash provided by financing activities 5,084,947 1,321,514
---------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 3,117,796 4,574
CASH AND CASH EQUIVALENTS, beginning of period 4,992 418
---------- ----------
CASH AND CASH EQUIVALENTS, end of period $ 3,122,788 $ 4,992
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
Jenkon International, Inc.
Consolidated Statement of Stockholders Equity (Unaudited)
<TABLE>
<CAPTION>
Foreign
Additional Stock Currency
Common Stock Paid-in Subscriptions Translation
Shares Amount Capital Receivable Adjustment
------ ------ ---------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1998 156,279 $ 156 $ 5 $ -- $ --
Sale of common stock 156,279 156 1,492,980 -- --
Net loss -- -- -- -- --
--------- ----------- ----------- ----------- -----------
Balance, December 31, 1998 312,558 312 1,492,985 -- --
Common stock issued 527,442 527 (527) -- --
Shares issued in
reverse acquisition, net 4,532,255 4,689 1,056,776 (8,500) (13,119)
Cashless exercise of
warrants 6,605 7 (7) -- --
Exercise of stock options 97,784 98 210,206 -- --
Net loss -- -- -- -- --
--------- ----------- ----------- ----------- -----------
Balance, December 31, 1999 5,476,644 $ 5,633 $ 2,759,433 $ (8,500) $ (13,119)
========= =========== =========== =========== ===========
<CAPTION>
Rights in
Products
Acquired from
a Company
Under
Accumulated Common Treasury Stock
Deficit Control Shares Amount Total
------------ -------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1998 $ (252,638) $(1,750,000) -- $ -- $(2,002,477)
Sale of common stock -- -- -- -- 1,493,136
Net loss (428,051) -- -- -- (428,051)
------------ ------------ ------- - --------- -----------
Balance, December 31, 1998 (680,689) (1,750,000) -- -- (937,392)
Common stock issuance -- -- -- --
Shares issued
reverse acquisition, net -- -- 156,454 (340,000) 699,846
Cashless exercise of
warrants -- -- -- -- --
Exercise of stock options -- -- -- -- 210,304
Net loss (2,507,517) -- -- -- (2,507,517)
------------ ------------ ------- - --------- -----------
Balance, December 31, 1999 $(3,188,206) $(1,750,000) 156,454 $ (340,000) $(2,534,759)
============ ============ ======= ============ ===========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
Jenkon International, Inc.
Notes to Consolidated Financial Statements (Unaudited)
1. STATEMENT OF INFORMATION FURNISHED
On December 16, 1999, Jenkon International, Inc. ("Jenkon") acquired all
the outstanding common stock of Multimedia Kid Intelligence in Education Ltd.
(an Israeli corporation) ("MMKid"). The acquisition has been accounted as a
reverse acquisition. Accordingly, the historical financial statements prior
to December 16, 1999 are those of MMKid and Jenkon's operations are included
from December 16, 1999 through December 31, 1999.
In the opinion of management the accompanying unaudited financial
statements contain adjustments (including normal and recurring accruals)
necessary to present fairly the financial position as of December 31, 1999 and
the results of operations and cash flows for the year ended December 31, 1999.
These results have been determined on the basis of generally accepted accounting
principles and practices.
Certain information and footnote disclosures normally included in
financial statements presented in accordance with generally accepted
accounting principles have been condensed or omitted. This should be read in
conjunction with the Form 10QSB for the three and six month periods ended
December 31, 1999 which was filed as amended on May 19, 2000 and the
accompanying audited financial statements of MMKid included in Item 7(a) of
this Form 8-K/A.
A transition Form 10-K for MMKid for the six months ended June 30, 1999
was filed on March 30, 2000.
2. BUSINESS AND REVENUE RECOGNITION
MMKid develops educational systems for kindergartens, schools, special
education, management training and enrichment centers. MMKid's computer-based
systems combine interactive software, playful didactic aides and unique
electronic interfaces. MMKid's products are used to create educational, three
dimensional computerized environments that combine physical components such as
wooden blocks, task cards, worksheets and books with computer-based
technologies.
MMKid derives revenue primarily from the sale of Multimedia K.I.D.
interactive learning systems and Action K.I.D. systems (an interactive learning
center for children which is comprised of a physical wooden playground-like
structure with activity points that provide electronic feedback to children).
Revenue from the sale of Multimedia K.I.D. systems is recognized at
shipment. Revenue from the sale of Action K.I.D. systems are recognized when
accepted by the customer.
3. EARNINGS (LOSS) PER COMMON SHARE
The Company computes loss per common share under SFAS No. 128, "Earnings
Per Share," which requires presentation of basic and diluted earnings (loss) per
share. Basic earnings (loss) per common share is computed by dividing income or
loss available to common shareholders by the weighted average number of common
shares outstanding for the reporting period. Diluted earnings (loss) per common
share reflects the potential dilution that could occur if securities or other
contracts, such as stock options, to issue Common Stock were exercised or
converted into Common Stock. Common stock equivalents from options, convertible
debt, and redeemable preferred stock of 29,053,382 have not been included in the
computation of diluted loss per common share as the effect would be
antidilutive.
As a result of the December 16, 1999 reverse acquisition, Jenkon issued
840,000 shares of Common Stock in exchange for 5,375 shares of MMKid Common
Stock. This has been treated as a stock split of 156.28 for 1 and is
retroactively reflected for all periods presented.
4. ACQUISITION AND DISCONTINUED OPERATIONS
On December 16, 1999, Jenkon entered into a Stock Exchange Agreement and
Plan of Reorganization (the "Agreement") with MMKid and the holders of all
MMKid's capital stock, to purchase all the outstanding capital stock of MMKid in
exchange for 840,000 shares of Common Stock, 1,208,000 shares of Series B
Preferred Stock, and 1,208,000 shares of Series C Preferred Stock. The
acquisition has been accounted for as a reverse acquisition and accordingly the
outstanding stock of Jenkon at December 16, 1999 was valued at approximately
$7,806,000. The Series B and Series C Preferred Stock will be
<PAGE>
convertible into an aggregate of 24,160,000 shares of Jenkon Common Stock and
will have no voting or conversion rights unless and until the stockholders of
Jenkon have approved the conversion rights of Series B and Series C Preferred
Stock. Upon stockholder approval, (i) the Series B Preferred Stock will
automatically convert into 12,080,000 shares of Common Stock, and (ii) the
Series C Preferred Stock will have voting rights on an as-converted basis and
will be convertible into an aggregate of 12,080,000 shares of Common Stock
subsequent to December 16, 1999 at such time as the revenues of MMKid exceed
$1,700,000 for any 12 month period. This revenue amount had been reached by
December 16, 1999. Assuming all shares of Series B and Series C Preferred
Stock are converted into Common Stock, the former stockholders of MMKid would
hold approximately 73% of Jenkon's fully-diluted Common Stock after taking
into account the Convertible promissory notes described in Note 5. Jenkon
obtained stockholder approval of the grant of conversion rights to the Series
B and Series C Preferred Stock on May 31, 2000.
For accounting purposes, the acquisition has been treated as a reverse
acquisition whereby MMKid acquired Jenkon. The assets and liabilities of
Jenkon have been recorded at estimated fair market value on the date of
acquisition using the purchase method of accounting. The combined
consolidated financial statements represent MMKid on a historical basis with
the results of operations of Jenkon for the period from December 16, 1999
through December 31, 1999. At December 16, 1999, the purchase price exceeded
the estimated net assets by approximately $13,725,300, which has been recorded
as goodwill.
Subsequent to the acquisition, on April 6, 2000, Jenkon's Board of
Directors entered into a Stock Purchase Agreement for the sale of all its
operating assets and liabilities associated with the software solutions for
network marketing companies involved in the direct sales industry. In
February, 2000, Jenkon's Board of Directors had a formal plan to dispose of
these operations. In accordance with EITF 95-18, "Accounting and Reporting
for a Discontinued Business Segment When the Measurement Date occurs after
the Balance Sheet Date but before the Issuance of Financial Statements", the
discontinued operations have been reflected in the financial statements
assuming the discontinued operations were recorded at the beginning of the
period presented. The combined entity did not recognize a deferred tax
benefit on the loss from discontinued operations due to a 100% valuation
allowance provided on the deferred tax assets. The combined entity
anticipates disposing of these operating assets and liabilities within one
year of the measurement date. The loss on disposal is estimated to be
$12,501,000, which represents net assets of $500,812, goodwill of
$13,725,300, reduced by estimated operating losses subsequent to the
discontinued operation measurement date of approximately $475,000 and accrued
estimated run-off and other disposal costs of $75,000 less the purchase price of
$1,175,000. In accordance with EITF 87-11, "Allocation of Purchase Price to
Assets to Be Sold", the loss on disposal of $6,792,000 has been accounted for
as an adjustment to the purchase price of Jenkon and reduced goodwill
recorded as a result of the reverse acquisition. The remaining goodwill of
$1,223,500, after the purchase price adjustment, is being amortized over five
years on a straight-line basis.
The following table reflects unaudited pro forma combined results of
operations of the combined entity on the basis that the acquisition had taken
place at the beginning of each period presented:
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1999 December 31, 1998
----------------- -----------------
<S> <C> <C>
Revenues $ 1,337,000 $ 789,000
Net loss from continuing operations (3,144,000) (932,000)
Net loss per common share (0.09)
</TABLE>
===========================================================================
In management's opinion, the unaudited pro forma combined results of
operations are not indicative of the actual results that would have occurred had
the acquisition been consummated at the beginning of the period.
<PAGE>
5. PRIVATE PLACEMENT
On December 16, 1999, Jenkon completed a private placement of an aggregate
of $4,500,000 of Convertible Promissory Notes, of which $3,735,000 was collected
on December 16, 1999. Such Notes are unsecured and bear interest at an annual
rate of 12% from and after January 1, 2000 and are due and payable in full on or
before June 1, 2000. Accrued interest was paid on February 1, 2000, and March 1,
2000. Accrued interest from March 1, 2000 through conversion will be payable
in stock at maturity.
The principal balance of the Notes are automatically converted into Common
Stock of the Company at a conversion rate of $1.00 per share at such time as the
Jenkon's stockholders have approved the issuance of such conversion shares.
Original issue discount of $4,500,000 has been recorded for the difference
between the reported market price of Jenkon's Common Stock when the Convertible
Promissory Notes were issued and the Convertible Promissory Notes conversion
price of $1.00 per share. The original issue discount will be amortized on a
straight-line basis from the issue date to the expected date the Notes are to be
converted and reported as interest expense in the statement of operations.
6. INCOME TAXES
Due to the significant operating losses incurred by the Company for the
years ended December 31, 1999 and 1998, the Company has recorded a 100%
valuation allowance on its net deferred tax assets since management cannot
determine whether it is more likely than not that the deferred tax assets may be
realized.
7. RELATED PARTY TRANSACTIONS
At December 31, 1999, the Company agreed to forgive a receivable due
from an officer of $116,573. This aggregate amount is recorded as acquisition
expense on the consolidated statement of operations.
During December 1999, MMKid issued 300 shares of its stock to an officer
of the Company. The shares converted into Jenkon Common and Preferred Stock
upon the date of acquisition. As a result, MMKid recorded a non-cash expense
of $1,748,508 as compensation expense. This compensation expense was
allocated in accordance with the general allocation of the officer's salary.
The allocation resulted in an increase in cost of revenues of approximately
$175,000, research and development expenses of approximately $1,172,000 and
selling, general and administrative expenses of approximately $402,000.
Also, prior to the acquisition, MMKid issued 1,175 shares of its stock to
an outside advisor. These shares converted into 500,000 shares of Jenkon
Preferred Series B and C Stock and resulted in an acquisition cost of
approximately $5,539,900. This amount was capitalized as part of the overall
purchase price and resulted in additional goodwill (Note 4).
During December 1999, the company paid to Jenetek, LLC, a Company owned and
operated by a Board Member of the Company, consulting fees above and beyond the
monthly amount set forth in the consulting agreement.
8. FINANCIAL VIABILITY
The Company's consolidated financial statements have been prepared on a
going concern basis, which contemplates continuity of operations, realization
of assets and the liquidation of liabilities in the normal course of
business. The appropriateness of using the going concern basis is dependent
upon, among other things, the adequate resolution of the Company's near and
long term liquidity needs. Although the Company raised capital through the
private placement described above, it has and continues to experience
negative cash flow. The Company's ability to continue as a going concern may
be dependent on its ability to raise future capital and generate positive
cash flow from operations. The consolidated financial statements do not
include any adjustments relating to the Company's ability to continue as a
going concern.
In the event the shareholders approve the conversion of the Series B and C
preferred stock and the convertible promissory notes, the Company believes it
will have sufficient capital to meet its cash flow requirements for at least the
next twelve months.
9. FUNCTIONAL CURRENCY
The currency of the primary economic environment in which the operations of
the Company are conducted is the U.S. dollar and Management therefore considers
the functional currency to be the U.S. dollar.
10. INVENTORY
Inventory is valued at the lower of cost or market on a FIFO (first in,
first out) basis and the balance at December 31, 1999 is as follows:
<TABLE>
<CAPTION>
<S> <C>
Raw materials $360,000
Work in process 210,000
Finished goods 80,000
--------
$650,000
========
</TABLE>
11. SHORT-TERM INVESTMENTS
Short-term investments are deposits with banks that have an initial
maturity of three months or less.
<PAGE>
12. PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and are depreciated on a
straight-line basis over their estimated useful lives which range from
approximately 3 to 15 years. Leasehold improvements are amortized on a straight
line basis over the shorter of their lease term or estimated useful lives.
The balance at December 31, 1999 is as follows:
<TABLE>
<CAPTION>
<S> <C>
Computer equipment $230,775
Furniture and fixtures 69,560
Machinery 16,917
Vehicles 51,340
--------
368,592
Less accumulated depreciation 125,743
--------
$242,849
========
</TABLE>
13. COMPREHENSIVE INCOME
Components of comprehensive loss included in the Consolidated Statement of
Stockholders' Equity are as follows:
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1999 December 31, 1998
---------------------------------------------------------------------------------
<S> <C> <C>
Net loss $2,507,517 $ 428,051
Foreign currency translation 13,119 --
---------- ---------
Comprehensive loss $2,520,636 $ 428,051
========== =========
</TABLE>
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED
STATEMENTS OF OPERATIONS OF
JENKON INTERNATIONAL, INC. AND SUBSIDIARIES
Introduction of Pro Forma Combined Condensed Statements of Operations
(Unaudited)
Pro Forma Combined Condensed Statements of Operations (Unaudited)
Notes to Pro Forma Combined Condensed Statements of Operations
(Unaudited)
Introduction to Pro Forma Combined Condensed Statements of Operations
(Unaudited)
On December 16, 1999, Jenkon International, Inc. ("Jenkon") entered into
a Stock Exchange Agreement and Plan of Reorganization (the "Agreement") with
Multimedia KID - Intelligence in Education Ltd., ("MMKid"), an Israeli-based
interactive educational company (together referred to as the "Company"), and
the stockholders of MMKid pursuant to which the Company acquired 100% of the
outstanding capital stock of MMKid in exchange for the following
consideration:
840,000 shares of Jenkon Common Stock,
1,208,000 shares of Jenkon Series B Preferred Stock, and
1,208,000 shares of Jenkon Series C Preferred Stock.
The Series B and Series C Preferred Stock will be convertible into an
aggregate of 24,160,000 shares of Jenkon Common Stock and will have no voting
or conversion rights unless and until the stockholders of Jenkon have
approved the conversion rights of the Series B and Series C Preferred Stock.
Upon such stockholder approval, (i) the Series B Preferred Stock will
automatically convert into 12,080,000 shares of Common Stock, and (ii) the
Series C Preferred Stock will have voting rights on an as-converted basis and
will be convertible into an aggregate of 12,080,000 shares of Common Stock at
such time as the revenues of MMKid (as a stand alone entity) exceed
$1,700,000 for any 12 month period subsequent to December 16, 1999. This
revenue amount was reached by December 16, 1999.
The stockholders approved the conversion rights of the Series B and
Series C Preferred Stock on May 31, 2000.
As such, all shares of Series B and Series C Preferred Stock and the
Convertible Promissory Notes described below were converted into Common Stock,
and the former stockholders of MMKid hold approximately 73% of the Company's
fully-diluted Common Stock.
<PAGE>
As the former shareholders of MMKid will control the Company after the
acquisition, this business combination will be accounted for as a reverse
acquisition transaction under which MMKid is deemed for accounting purposes
to be the acquirer and Jenkon the acquired entity. Under these accounting
principles, the Company's combined consolidated financial statements will
represent MMKid on a historical basis consolidated with the results of
operations of Jenkon from the date of acquisition. The purchase price
exceeded the fair value of net assets acquired by approximately $13.7
million, adjusted for the effects of discontinued operations which reflects a
purchase price adjustment and reduction of goodwill. The remaining goodwill
will be amortized on a straight-line basis over 5 years.
Preceding the agreement, Jenkon completed a private placement of an
aggregate of $4.5 million of Convertible Promissory Notes. Such Notes bear
interest at an annual rate of 12% from and after January 1, 2000 and are due and
payable in full on or before June 1, 2000. Subsequent to the reverse
acquisition and upon shareholder approval, the Company plans to execute the
Conversion of the convertible promissory note into 4,500,000 shares of common
stock. The shareholders approved the conversion of the convertible promissory
notes on May 31, 2000.
The unaudited pro forma combined condensed statements of operation
illustrate the affect of the reverse acquisition and the financing transaction
previously described as if they had occurred on July 1, 1998.
The unaudited pro forma combined condensed statements of operation of
Jenkon are based upon the historical financial statements of MMKid and Jenkon.
These unaudited pro forma combined condensed statements of operations are not
necessarily indicative of the results of operations that would have been
attained had the transactions actually taken place at the date indicated and do
not purport to be indicative of the effects that may be expected to occur in the
future.
The Company's Board of Directors has elected to discontinue or dispose
of the operations of Jenkon's software solutions for network marketing
companies involved in the direct sales industry operations.
The accompanying unaudited pro forma combined condensed statements of
operations should be read in connection with the historical financial
statements of MMKid (included as item 7. A in this Form 8-K/A) and Jenkon
(filed as part of Form 10-KSB for the year ended June 30, 1999) as well as
Jenkon International, Inc.'s 10QSB for the period ending December 31, 1999
which was filed as amended on May 19, 2000.
<PAGE>
Jenkon International, Inc.
Pro Forma Combined Condensed
Statements of Operations (Unaudited)
------------------------------------
<TABLE>
<CAPTION>
Pro Forma Merger
and Financing
Year Ended June 30, 1999 Jenkon MMKid Adjustments Pro Forma
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES $ 6,500,045 $ 1,488,486 $ (6,500,045)2(a) $ 1,488,486
COST OF REVENUES 3,500,091 595,462 (3,500,091)2(a) 595,462
---------- -------- --------- --------
Gross Profit 2,999,954 893,024 (2,999,954) 893,024
OPERATING EXPENSES:
Product research, development and enhancements 938,575 630,663 (938,575)2(a) 630,663
Selling, general and administration 4,823,860 487,273 (4,823,860)2(a) 487,273
Acquisition expense -- -- 116,573 2(c) 116,573
Goodwill amortization -- -- 159,729 2(b) 159,729
---------- -------- --------- --------
Total operating expenses 5,762,435 1,117,936 (5,486,133) 1,394,238
---------- -------- --------- --------
LOSS FROM CONTINUING OPERATIONS (2,762,481) (224,912) 2,486,179 (501,214)
OTHER INCOME (expense)
Interest, net (510,165) (71,491) 559,468 2(a) (22,188)
Other income (expense) (34,161) -- 34,161 2(a) --
---------- -------- --------- --------
LOSS FROM CONTINUING OPERATIONS $(3,306,807) $(296,403) $3,079,808 $(523,402)
=========== ========= ========== =========
BASIC AND DILUTED LOSS PER SHARE FROM CONTINUING OPERATIONS $ (0.03)
=========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING (basic and diluted) Note 2(e) 17,142,117
==========
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF
OPERATIONS.
<PAGE>
Jenkon International, Inc.
Pro Forma Combined Condensed
Statements of Operations (Unaudited)
------------------------------------
<TABLE>
<CAPTION>
Pro Forma Merger
Six Months Ended and Financing
December 31, 1999 Jenkon MMKid Adjustments Pro Forma
==================================================================================================================================
<S> <C> <C> <C> <C>
REVENUES $ 1,733,535 $ 1,266,838 $ (1,733,535)2(a) $ 1,266,838
COST OF REVENUES 1,185,324 644,903 (1,185,324)2(a) 644,903
----------- ----------- ------------- -----------
Gross Profit 548,211 621,935 (548,211) 621,935
OPERATING EXPENSES:
Product research, development and enhancements 822,760 1,434,360 (822,760)2(a) 1,434,360
Selling, general and administrative 1,912,471 635,237 (1,912,471)2(a) 635,237
Goodwill amortization -- -- 122,352 2(b) 122,352
----------- ----------- ------------- -----------
Total operating expenses 2,735,231 2,069,597 (2,612,879) 2,191,949
----------- ----------- ------------- -----------
LOSS from continuing operations (2,187,020) (1,447,662) 2,064,668 (1,570,014)
OTHER INCOME (expense)
Interest, net (672,034) (101,790) 2,798 2(a)
674,623 2(d) (96,403)
Other income (expense) 8,152 -- (8,152)2(a) --
----------- ----------- ------------- -----------
LOSS FROM CONTINUING OPERATIONS $(2,850,902) $(1,549,452) 2,733,937 $(1,666,417)
=========== =========== ============= -----------
BASIC AND DILUTED LOSS PER SHARE FROM CONTINUING OPERATIONS $ (0.08)
===========
BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 22,003,652
===========
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA COMBINED CONDENSED STATEMENTS OF
OPERATIONS.
<PAGE>
Jenkon International, Inc.
Notes to Pro Forma Combined Condensed
Statements of Operations (Unaudited)
------------------------------------
1. DISCONTINUED OPERATIONS
On April 6, 2000, Jenkon's Board of Directors entered into a Stock
Purchase Agreement for the sale of Summit V. An adjustment is made to remove the
results of operations, as the business is considered a discontinued operation
for accounting purposes.
2. PRO FORMA ADJUSTMENTS
(a) Elimination of the discontinued software solutions for network
marketing companies involved in the direct sales industry operations.
(b) To record amortization of goodwill related to reverse acquisition.
(c) To record the forgiveness of a receivable due from officer of
$116,573. This expense relates to a severance package directly
associated with the acquisition.
(d) To eliminate amortization of original issue discount on the $4,500,000
convertible debt due, the amount being a material non-recurring charge
which will be expensed within twelve months. (Note 3)
(e) The weighted average number of shares outstanding represents Jenkon's
actual weighted average number of shares for the period presented
increased by the shares issuable on completion of the pro forma
adjustments as described above. Per share information is presented as
if the common shares issuable were issued at the beginning of July
1998.
3. MATERIAL NONRECURRING CHARGES
The following material nonrecurring charges, and related tax effects, which
result directly from the reverse acquisition and will be included in the
Statement of Operations within the twelve months following the reverse
acquisition are not reflected in the accompanying pro forma condensed Statement
of Operations.
(i) Amortization of original issue discount of $4,500,000 related to the
Convertible Promissory Notes.
(ii) Interest at 12% on the Convertible Promissory notes for January 2000
through March 2000 which totals $135,000.
4. EARNINGS (LOSS) PER COMMON SHARE
The Company computes loss per common share under SFAS No. 128, "Earnings
Per Share," which requires presentation of basic and diluted earnings (loss)
per share. Basic earnings (loss) per common share is computed by dividing
income or loss available to common shareholders by the weighted average
number of common shares outstanding for the reporting period. Diluted
earnings (loss) per common share reflects the potential dilution that could
occur if securities or other contracts, such as stock options, to issue
Common Stock were exercised or converted into Common Stock. Common stock
equivalents from options, convertible debt and redeemable preferred stock
have not been included in the computation of diluted loss per commom share as
the effect would be antidilutive.
As a result of the December 16, 1999 reverse acquisition, Jenkon issued
840,000 shares of Common Stock in exchange for 5,375 shares of MMKid Common
Stock. This has been treated as a stock split of 156.28 for 1 and is
retroactively reflected for all periods presented.
<PAGE>
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.
JENKON INTERNATIONAL, INC.
(Registrant)
June 12, 2000 /s/ DAVID A. EDWARDS
--------------------- ---------------------------------------
Date Chief Executive Officer, Interim Chief
Financial Officer, Chairman and Director
June 12, 2000 /s/ PESSIE GOLDENBERG
--------------------- ---------------------------------------
Date Director and President of Multimedia K.I.D.
June 12, 2000 /s/ CLIFFORD DEGROOT
--------------------- ---------------------------------------
Date Controller and Principal Accounting
Officer
