-15-
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: May 3, 2000
Commission File Number: 000-28251
SUNVEST RESORTS, INC.
a Florida corporation
(IRS Employer Identification Number: 65-0693150)
2234 N. Federal Highway
Boca Raton, Florida 33431
(561) 368-0032
Securities Registered Pursuant to Section 12(g)
of the Securities Exchange Act of 1934:
Common Stock, Par Value $.02 per share
Items 2 and 5. Acquisitions, Dispositions and Other Events.
-------------------------------------------
On March 15, 2000, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement") with US Data Authority, a Florida
corporation ("USDA") and certain shareholders of the Company and
USDA. (The Merger Agreement was filed as Exhibit 10.5 to the
Company's Form 10-KSB on April 12, 2000.) The Merger Agreement
provided for the merger of USDA into the Company, with the
Company as the survivor and the USDA shareholders ending up with
90% of the Company's common stock (the "Merger"). The Merger
Agreement also provided for the Company to effect, prior to the
Merger, a 3.6:1 reverse stock split (the "Stock Split") so that
at the effective time of the Merger the Company would have
2,500,000 (rather than 9,000,000) shares of common stock
outstanding and the USDA shareholders would be issued 22,500,000
new Company shares. The Merger Agreement also required the
Company to have no assets or liabilities as of the effective time
of the Merger.
Accordingly, the Company distributed, on April 25, 2000, all
of its assets, subject to liabilities, to its shareholders pro
rata as a special pre-Merger dividend. The distributed assets
consisted of all of the outstanding common stock, par value $1.00
per share (consisting of 9,000,000 shares), of Cove Development,
Inc., a Florida corporation, and all of the membership interests
(consisting of 9,000,000 units) in Lakeshore Club Development,
L.C., a Florida limited liability company.
The Company then effected the Stock Split of its common
stock effective April 28, 2000. As a result of the Stock Split,
the Company's common stock received a new CUSIP number and a new
trading symbol, "SUNED." The Company's common stock began
trading under the symbol "SUNED" on April 28, 2000.
Effective May 1, 2000, the Company completed the Merger. At
the effective time of the Merger, each share of USDA common stock
was converted into the right to receive 4,500 shares of Company
common stock. The Company issued 22,500,000 new shares of common
stock to USDA's shareholders, and the 2,500,000 shares of Company
common stock held by the Company's pre-Merger shareholders
remained issued and outstanding.
USDA offers an integrated communications platform built on a
unique hybrid network of AT&T and Cable & Wireless backbones,
together with a comprehensive range of Internet services to
business customers nationwide. By providing Internet access, co-
location, remote access, and by functioning as a Total Service
Provider for Applications Services Providers, USDA offers the
optimum solution for clients in industries requiring the time-
sensitive transmission of data.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
------------------------------------------------------------------
Registrant's audited financial statements for the year ended
December 31, 1999 are incorporated by reference to Registrant's
Form 10-KSB, effective April 12, 2000. Audited financial
statements of USDA for the year ended December 31, 1999 follow.
Registrant will file interim financial statements for each of the
Company and USDA, together with pro forma financial information,
as an amendment to this report within 60 days of May 8, 2000.
ST. JOHN & LANDON, P.A.
CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS CONSULTANTS
4401 NORTH FEDERAL HIGHWAY SUITE 202
BOCA RATON, FL 33431
________________
PHONE: (561) 391-4848
FAX: (561) 392-7575
STJOHNANDLANDON.COM
INDEPENDENT AUDITOR'S REPORT
----------------------------
To the Board of Directors Shareholders
U.S. Data Authority, Inc.
We have audited the accompanying balance sheet of U.S. Data
Authority, Inc., a Corporation, as of December 31, 1999, and the
related statements of operations, stockholders' equity, and cash
flows for the period from January 15, 1999 (inception) to
December 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
present fairly, in all material respects, the financial position
of U.S. Data Authority, Inc. as of December 31, 1999, and the
results of its operations and its cash flows for the period from
January 15, 1999 (inception) to December 31, 1999, in conformity
with generally accepted accounting principles.
/S/ St. John & Landon, P.A.
St. John & Landon, P.A.
April 13, 2000
Member, American Institute of Certified Public Accountants
Florida Institute of Certified Public Accountants
U.S. DATA AUTHORITY, INC.
BALANCE SHEET
DECEMBER 31,1999
ASSETS
Current Assets
Cash $ 16,294
Accounts receivable 58,650
---------
Total Current Assets 74,944
---------
Property and Equipment
Furniture and fixtures 1,400
Equipment 52,554
---------
53,954
Accumulated depreciation 7,976
---------
Property and Equipment, net 45,978
---------
Other Assets
Deposits 10,000
Loan receivable-employees 82,208
---------
Total Other Assets 92,208
---------
TOTAL ASSETS $213,130
=========
The accompanying notes are an integral part of the financial
statements.
U.S. DATA AUTHORITY, INC.
BALANCE SHEET (Continued)
DECEMBER 31,1999
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 30,064
Income taxes payable 52,137
Deferred income taxes 6,785
-----------
Total Current Liabilities 88,986
-----------
Total Liabilities 88,986
-----------
Stockholders' Equity
Common stock, $1 par value, 7500 shares
authorized, 5000 shares issued and 5,000
outstanding
Retained earnings 119,144
-----------
Total Stockholders' Equity 124,144
-----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 213,130
============
The accompanying notes are an integral part of the financial
statements.
U.S. DATA AUTHORITY, INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JANUARY 15,1999 (INCEPTION)
TO DECEMBER 31,1999
Net Sales $ 441,436
Cost of Sales 154,064
------------
Gross Profit 287,372
------------
General and Administrative Expenses
Automobile expenses 2,306
Bank charges 236
Depreciation expense 7,976
Dues and subscriptions 1,545
Entertainment expense 1,985
Miscellaneous 1,096
Office expense 14,418
Programming fees 5,774
Rent 2,041
Telephone and internet access 19,939
Travel 1,177
------------
Total General and Administrative 58,493
Expenses ------------
Income from operations 228,879
------------
Other Income (Expense)
Bad debt expense 50,813
------------
Total Other Income (Expense) 50,813
------------
Income before Income Tax 178,066
Provision for Income Tax
Current 52,137
Deferred 6,785
------------
Total Provision for Income Tax 58,922
------------
Net Income $ 119,144
============
The accompanying notes are an integral part of the financial
statements.
U.S. DATA AUTHORITY, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM JANUARY 15,1999 (INCEPTION)
TO DECEMBER 31,1999
COMMON RETAINED
STOCK EARNINGS TOTAL
------- ------- -------
Balance - January 14, 1999 $ 0 $ 0 $ 0
Issuance of Common Stock 5,000 5,000
Net Income 0 119,144 119,144
------- ------- -------
Balance - December 31, 1999 $ 5,000 $119,144 $124,144
======= ======== ========
The accompanying notes are an integral part of the financial
statements.
U.S. DATA AUTHORITY, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JANUARY 15,1999 (INCEPTION)
TO DECEMBER 31,1999
Cash Flows from Operating Activities:
Net Income $ 119,144
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 7,8976
Provision for bad debts 50,813
Deferred income taxes 6,785
Service provided to customer exchanged for (7,000)
asset
(Increase) Decrease in:
Accounts receivable (109,463)
Deposits (10,000)
Increase (Decrease) in:
Accounts payable 30,064
Income taxes payable 52,137
------------
Net Cash Provided by Operating
Activities 140,456
------------
Cash Flows from Investing Activities:
Purchase of property and equipment (46,954)
Advances to employee (82,208)
Net Cash (Used in) Investing Activities (129,162)
------------
Cash Flows from Financing Activities:
Proceeds from the sale of common stock 5,000
------------
Net Cash Provided by Financing
Activities 5,000
------------
Net Increase in Cash 16,294
Cash, Beginning of Period 0
------------
Cash, End of Period $ 16,294
===========
The accompanying notes are an integral part of the financial
statements.
U.S. DATA AUTHORITY, INC.
STATEMENT OF CASH FLOWS (Continued)
FOR THE PERIOD FROM JANUARY 15, 1999 (INCEPTION)
TO DECEMBER 31,1999
Supplemental Cash Flow Information:
- ----------------------------------
Cash Paid for Interest and Income Taxes:
Interest $0
Income taxes $0
Supplemental Schedule of Noncash Investing and Land Financing Activities:
- ------------------------------------------------------------------------
During the period ended December 31, 1999, the Company provided
internet service and other assets in exchange for property and
equipment with a value of $44,500. The value of service
exchanged for equipment amounted to $7,000.
The accompanying notes are an integral part of the financial
statements.
U.S. DATA AUTHORITY, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31,1999
NOTE 1 - ORGANIZATION AND PURPOSE AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Principal Business Activities
- -----------------------------
U.S. Data Authority, Inc. ("Company") was incorporated January
15, 1999 and provides a range of bandwidth, internet access and
supporting services and network management, primarily to business
customers. The Company provides Internet access, co-location
access and remote access on a high speed digital network. The
Company also provides advisory services associated with the
selection and installation of computer hardware to its service
customers. The Company is located in Palm Beach County, Florida.
Revenue Recognition
- -------------------
Sales revenue is recognized at the time service is provided to
the customer. Revenue associated with the installation of
equipment is recognized when the equipment is installed.
Cash
- ----
Cash consists of a non-interest bearing checking account.
Accounts Receivable
- -------------------
The Company considers accounts receivable to be fully
collectible; accordingly, no allowance for doubtful accounts is
required.
Property and Equipment
- ----------------------
Property and equipment purchases are recorded at cost.
Depreciation is calculated using straight-line and accelerated
methods over the estimated useful lives of the assets. The
useful lives of property and equipment and capital lease assets
for purposes of computing depreciation are as follows:
Useful Lives
------------
Equipment 3-10 Years
Furniture and fixtures 3-7 Years
Income Taxes
- ------------
Deferred income tax assets and liabilities are computed annually
for differences between the financial statement and tax basis of
assets and liabilities that will result in taxable or deductible
amounts in the future based on enacted tax laws and rates
applicable to the periods in which the differences are expected
to affect taxable income. Valuation allowances are established
when necessary to reduce deferred tax assets to the amount
expected to be realized. Income tax expense is the tax payable
or refundable for the period plus or minus the change during the
period in deferred tax assets and liabilities.
NOTE 1 - ORGANIZATION AND PURPOSE AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
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.
NOTE 2 - DEFERRED INCOME TAXES
The accompanying balance sheet includes a deferred tax liability
in the amount of $6,785 at December 31, 1999. This liability
results from temporary differences created by using different
depreciation methods for financial reporting than those used for
income tax purposes.
The expense (benefit) for income taxes for the period ended
December 31, 1999, consists of the following:
Federal State Total
Current $ 43,445 $ 8,692 $ 52,137
Deferred 5,946 6,785
839
-------- -------- ---------
$ 49,391 $ 9,431 $ 58,922
========= ========= ==========
NOTE 3 - LOAN RECEIVABLE - EMPLOYEE
At December 31, 1999, there was a balance due from an employee of
the Company in the amount of $82,208. This balance is a result
of various personal expenses of the employee which were paid by
the Company. The loan is not evidenced by a written note.
Additionally, the Company did not require any principal or
interest payments for the period ended December 31, 1999. The
loan is unsecured. Management anticipates collection of the
balance through technical services and other assets provided to
the Company by the employee. As of the date of this report, the
loan balance remains unpaid.
NOTE 4 - OPERATING LEASE OBLIGATION
During the period ended December 31, 1999, the Company leased
certain office space on a month to month basis. Effective March
1, 2000, the Company entered into an agreement to lease these
facilities under an operating lease agreement. The base rent
amounts to $2,321 per month. The lease expires February 2001.
Rent expense amounted to $2,041 for the period ended December 31, 1999.
NOTE 5 - CONTINGENCY
The Company maintains no property or liability insurance to
provide for loss mitigation in the event of an unforeseen loss.
Management currently is obtaining quotes/bids for liability and
property coverage. However, as of the date of this report no
insurance had been obtained. In the event of a loss, the impact
could have a significant affect on the Company's ability to
continue operations.
NOTE 6 - COMMITMENTS
During 1999, the Company entered into an agreement with AT&T
Corp. to purchase co-location services, whereby the Company will
co-locate certain equipment necessary for the operations of the
Company at various locations throughout the United States. The
term of the commitment is five years from the point of
installation. The agreement contains two renewal options, a five-
year renewal option followed by a three-year renewal option. The
Company has committed to pay a licensing fee of $1,318 per month
per location for these co-location services. At December 31,
1999, the Company had co-located in 39 locations. The annual
commitment related to the licensing fee amounts to approximately
$51,000.
Additionally, during 1999 the Company entered into an agreement
with AT&T Corp to purchase asynchronous transfer mode services
("ATM"). AT&T's ATM service is based on asynchronous transfer
mode technology that includes value added options and features.
These services will be available to the Company's customers who
are located in the contiguous United States. The Company's
commitment for these services is based on connection charges.
Fees associated with these services are waived for those
connections continuing connectivity for 18 months. If the
location connection does not remain in place for 18 months, these
waived fees will become due and payable. Upon the expiration of
the 18 month period (August 2000), fees associated with these
location connections will be billed monthly. The agreement
requires minimum fees in the amount of $400,000 annually, based
on the location and connections in place as of the date of this
report. The agreement expires in 2002 and contains two five-year
renewal options.
Additionally, during 1999, the Company entered into an agreement
with Cable & Wireless USA, Inc., to provide unlimited internet
access, transport, interconnection, web hosing, support and other
related services, to the customers of the Company. Fees
associated with these services are based on number of users
connecting to the internet. Fees amount to $8 per user for the
first 49,999 users, $7 per user for 250,000 to 499,999 users and
$6 per user for 500,000 and more users. The agreement requires a
minimum commitment of 500,000 users by the completion of the
first year, or approximately $3,750,000 monthly thereafter. The
term of the agreement is two-years and contains an automatic
renewal option for an additional year unless either party gives
written notice of its intention to terminate at least 60 days
prior to the expiration of the current term.
The annual minimum commitments related to the above agreements
and based on connections in place as of December 31, 1999 are as
follows:
2000 $ 25,950,000
2001 25,667,667
2002 315,664
2003 51,000
2004 29,750
------------
$ 55,817,081
=============
NOTE 7 - SUBSEQUENT EVENTS
On January 19, 2000, the Company entered into an employment
agreement with an individual (Chief of Technology) to advise the
Company regarding the technical aspects of the Company's
operations. The Chief of Technology will report directly to the
Board of Directors of the Company. The agreement includes a base
compensation of $125,000 annually. The agreement also includes a
performance based incentive bonus based on 1% of the Company's
profit, as defined more fully in the agreement. The incentive
bonus will be paid in cash or the Company's stock, at the
employee's discretion. If the employee chooses to be paid in
stock, the amount of stock issued will be based on 80% of the
market (average bid (asked)) price on the day the employee
exercises his option to be paid in stock. As long as the
employee is an employee of the Company there will be no time
limit restriction on the employee exercising this stock option
except for the employee having already received the cash bonus.
If the Company terminates the Employee for any reason other than
cause, and the Company has reached at least 50% of the first
plateau in sales as defined in the agreement, the employee will
be given a pro rata share of bonus on termination. Upon
execution of the agreement, the employee received shares equaling
no less than 4.7778% of the Company's common stock.
On March 2, 2000, the Company entered into an employment
agreement with an individual (Interim President) to advise the
Company regarding the operational aspects of the Company's
operations. The Interim President will report directly to the
Board of Directors of the Company. The agreement includes a base
compensation of $125,000 annually. The agreement also includes a
performance based incentive bonus based on 1% of the Company's
profit, as defined more fully in the agreement. The incentive
bonus will be paid in cash or the Company's stock, at the
employee's discretion. If the employee chooses to be paid in
stock, the amount of stock issued will be based on 80% of the
market (average bid (asked)) price on the day the employee
exercises his option to be paid in stock. As long as the
employee is an employee of the Company there will be no time
limit restriction on the employee exercising this stock option
except for the employee having already received the cash bonus.
If the Company terminates the Employee for any reason other than
cause, and the Company has reached at least 50% of the first
plateau in sales as defined in the agreement, the employee will
be given a pro rata share of bonus on termination. Upon
execution of the agreement, the employee received shares equaling
no less than 4.444% of the Company's common stock
On March 15, 2000, the Company entered into an agreement and plan
for merger with SunVest Resorts, Inc., a Florida corporation.
The merger is intended to qualify as a tax-free reorganization
under Section 368(a)(1)(A) of the Internal Revenue Code of 1986,
as amended. Upon the merger closing and by virtue of the merger,
each share of common stock of the Company, and all rights with
respect thereto, shall be converted into 4,500 shares of common
stock, $.02 par value, of SunVest. These certificates (shares)
will bear a legend indicating that the certificate has not been
registered under the Securities Act of 1933 ("Act"), as amended,
and that the certificates are restricted securities. The
securities may not be sold or otherwise transferred unless they
are subsequently registered under the Act. The merged Company
will continue the principal operations of the Company. As of the
date of this report, certain conditions of the merger remain
unsatisfied. However, management anticipates the merger to occur
in April 2000.
Exhibit
Number Sequential Description
2 Agreement and Plan of Merger, by and among SunVest
Resorts, Inc., US Data Authority, Inc. et al., effective
March 15, 2000, incorporated by reference to Exhibit 10.5
of Form 10-KSB, as filed with the SEC on April 12, 2000.
3(i) Articles of Incorporation of Registrant, dated August 6,
1996, incorporated by reference to Exhibit 2.1 to the
Registration Statement on Form 10-SB, File No. 000-28251,
as filed with the SEC on November 21, 1999, and which
became effective on January 21, 2000.
23 Consent of St. John & Landon, P.A., certified public
accountants of USDA.
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
SUNVEST RESORTS, INC.
By: /S/ Dominick F. Maggio
--------------------------------
Dominick F. Maggio
President
Exhibit 23
Consent of St. John & Landon, P.A., certified public accountants
of USDA.
ST. JOHN & LANDON, P.A.
CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS CONSULTANTS
4401 NORTH FEDERAL HIGHWAY SUITE 202
BOCA RATON, FL 33431
-----------------
PHONE: (561) 391-4848
FAX: (561) 392-7575
STJOHNANDLANDON.COM
May 3, 2000
SunVest Resorts, Inc.
2234 N. Federal Highway
Boca Raton, Florida 33431
Via Facsimile: c/o Mr. Dan Dinur
770-395-3171
Ladies and Gentlemen:
We hereby consent to the use in this Current Report on Form 8-K
of our report dated April 13, 2000, relating to the financial
statements of U.S. Data Authority, Inc., Boca Raton, Florida.
Very truly yours,
/S/ Frank Mason, CPA
St. John & Landon, P.A.
Member, American Institute of Certified Public Accountants
Florida Institute of Certified Public Accountants
