<PAGE> 1
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): July 31, 2000
PAN WESTERN ENERGY CORPORATION
(Exact name of registrant as specified in charter)
<TABLE>
<S> <C> <C>
OKLAHOMA 0-22349 73-1130486
(State or other jurisdiction (Commission File Number) (IRS Employer Identification No.)
of incorporation or organization)
</TABLE>
1390 South Potomac Street
Suite 136
Aurora, Colorado 74119
(303) 681-9344
Copy to:
David Groom
5567 South Perry Park Road
Sedalia, CO 80135
Phone: 303-681-9344, Fax: 303-681-2117
Item 7 Financial Statements
See Attached
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.
PAN WESTERN ENERGY CORPORATION
(Registrant)
/s/ Scott B. Campbell
Date: December 19, 2000 ----------------------------------------------
Scott B. Campbell
President and CEO
<PAGE> 2
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTELLIREADY, INC. AND SUBSIDIARY
PROFORMA CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Financial Statements:
Proforma Explanatory Headnote F-2
Unaudited Proforma Consolidated Balance Sheet, September 30, 2000 F-3
For the Period Ended September 30, 2000
Unaudited Proforma Consolidated Statement of Operations F-4
Notes to Unaudited Proforma Consolidated Financial Statements F-5
INTELLIREADY, INC. AND SUBSIDIARY
Independent Auditors' Report F-6
Consolidated Financial Statements:
Balance Sheets F-7
Statement of Operations F-8
Statement of Changes in Stockholders' Equity (Deficit) F-9
Statement of Cash Flows F-10
Notes to Consolidated Financial Statements F-11
</TABLE>
<PAGE> 3
INTELLIREADY, INC. AND SUBSIDIARY
PROFORMA EXPLANATORY HEADNOTE
The following unaudited proforma consolidated financial statement gives effect
to the reverse merger by IntelliReady, Inc. and Subsidiary (the "Company") of
Pan Western Energy Corporation ("Pan Western") and is based on the estimates and
assumptions set forth herein and in the notes to such statement. This proforma
information has been prepared utilizing the historical financial statements of
the Company and notes thereto, which are incorporated by reference herein. The
proforma financial data does not purport to be indicative of the results which
actually would have been obtained had the acquisition been effected on the dates
indicated or the results which may be obtained in the future.
The proforma consolidated statement of operations for the period ended September
30, 2000 includes the operating results of the Company and Pan Western for such
period.
On October 4, 2000 the Company merged into Pan Western's wholly owned subsidiary
in exchange for 81,201,789 shares of Pan Western. Shortly thereafter, Pan
Western changed its name to IntelliReady, re-incorporated in Colorado and
implemented a one for 8.25780933 reverse stock split.
F-2
<PAGE> 4
INTELLIREADY, INC. AND SUBSIDIARY
UNAUDITED PROFORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000
ASSETS
<TABLE>
<CAPTION>
PAN WESTERN INTELLIREADY, PROFORMA PROFORMA
ENERGY CORP. INC. ADJUSTMENTS CONSOLIDATED
------------------ ------------------ ------------------ ------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash $ 12,454 $ 760,820 $ - $ 773,274
Restricted cash 230,999 - (3) (54,149) 176,850
Trade accounts receivable - 40,354 - 40,354
Inventory - 30,258 - 30,258
Deposits - 37,500 - 37,500
Prepaid expenses 15,000 12,789 (3) (15,000) 12,789
------------------ ------------------ ------------------ ------------------
258,453 881,721 (69,149) 1,071,025
FURNITURE AND EQUIPMENT, net - 34,579 - 34,579
DEFERRED ACQUISITION COSTS - 250,000 (2) (189,304) 60,696
GOODWILL, net - 181,374 - 181,374
------------------ ------------------ ------------------ ------------------
$ 258,453 $ 1,347,674 $ (258,453) $ 1,347,674
================== ================== ================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 69,149 $ 71,763 (3) $ (69,149) $ 71,763
Accrued expenses - 92,316 - 92,316
Bank note payable - 500,000 - 500,000
Current portion of long-term debt - 3,728 - 3,728
Current portion of long-term debt,
Time Direct, LLC acquisition - 82,267 - 82,267
----------------- ----------------- ----------------- -----------------
Total Current Liabilities 69,149 750,074 (69,149) 750,074
LONG-TERM DEBT, net of current
portion - 8,080 - 8,080
LONG TERM DEBT, Time Direct, LLC
acquisition, net of current portion - 90,733 - 90,733
----------------- ----------------- ----------------- -----------------
Total Liabilities 69,149 848,887 (69,149) 848,887
COMMITMENTS AND
CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock - - - -
Common stock 51,055 2,327,748 (2) (51,055) 2,327,748
Additional paid in capital 2,226,347 131,158 (2) (2,226,347) 131,158
Treasury stock (218,982) - (2) 218,982 -
Accumulated (deficit) (1,869,116) (1,960,119)(2) 1,869,116 (1,960,119)
------------------ ------------------ ------------------ ------------------
Total Stockholders' Equity 189,304 498,787 (189,304) 498,787
------------------ ------------------ ------------------ ------------------
$ 258,453 1,347,674 $ (258,453) $ 1,347,674
================== ================== ================== ==================
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
F-3
<PAGE> 5
INTELLIREADY, INC. AND SUBSIDIARY
UNAUDITED PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
PAN WESTERN INTELLIREADY, INC.
ENERGY CORP. FOR THE
NINE MONTHS PERIOD FROM MAY
ENDED 18, 2000 TO
SEPTEMBER 30, SEPTEMBER 30, PROFORMA PROFORMA
2000 2000 ADJUSTMENTS CONSOLIDATED
------------------ ------------------ ------------------ ------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES $ - $ 208,423 $ - $ 208,423
------------------ ------------------ ------------------ ------------------
COSTS AND EXPENSES:
Cost of sales - 168,558 - 168,558
General and administrative - 599,406 - 599,406
Depreciation and amortization - 11,521 (4) 6,070 17,591
Interest - 1,003 - 1,003
Interest - related parties - 34,686 - 34,686
------------------ ------------------ ------------------ ------------------
Total Expenses - 815,174 6,070 821,244
------------------ ------------------ ------------------ ------------------
OTHER INCOME:
Interest income - 2,283 - 2,283
Other income - 913 - 913
------------------ ------------------ ------------------ ------------------
- 3,196 - 3,196
------------------ ------------------ ------------------ ------------------
NET (LOSS) FROM CONTINUED
OPERATIONS - (603,555) (6,070) (609,625)
DISCONTINUED OPERATIONS:
Revenues 1,294,800 - - 1,294,800
Operating expenses (1,361,436) - - (1,361,436)
Interest expense (555,922) - - (555,922)
Loss from rental operations, net (4,860) - - (4,860)
Gain on sale of assets, net 50,330 - - 50,330
Gain on forgiveness of debt 4,115,906 - - 4,115,906
------------------ ------------------ ------------------ ------------------
INCOME ON DISCONTINUED 3,538,818 - - 3,538,818
------------------ ------------------ ------------------ ------------------
OPERATIONS
NET INCOME/(LOSS) $ 3,538,818 $ (603,555) $ (6,070) $ 2,929,193
================== ================== ================== ==================
NET INCOME/(LOSS) PER
COMMON SHARE:
Continued operations $ (0.06)
Discontinued operations 0.34
------------------
NET INCOME PER COMMON SHARE $ 0.28
==================
WEIGHTED AVERAGE NUMBER OF 10,383,266
COMMON SHARES OUTSTANDING
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
F-4
<PAGE> 6
INTELLIREADY, INC. AND SUBSIDIARY
NOTES TO UNAUDITED PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - PROFORMA ADJUSTMENTS
The adjustments relating to the unaudited proforma consolidated statement of
operations are computed assuming the reverse merger with PanWestern was
consummated at the beginning of the period presented.
NOTE 2 - ACQUISITION OF SUBSIDIARY
The acquisition is recorded using the purchase method.
NOTE 3 - PAYMENT OF LIABILITIES
The unaudited proforma consolidated balance sheet reflects payments made for
accounts payable.
NOTE 4 - ADDITIONAL AMORTIZATION
The unaudited proforma consolidated statement of operations reflects
amortization of goodwill using the straight-line method over 10 years.
F-5
<PAGE> 7
AJ. ROBBINS, P.C.
3033 EAST FIRST AVENUE, SUITE 201
DENVER, COLORADO 80206
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of IntelliReady, Inc.
Aurora, Colorado
We have audited the accompanying balance sheet of IntelliReady, Inc. (a Colorado
corporation) as of December 31, 1999. This financial statement is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement 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 balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall balance sheet presentation. We believe that our audit
of the balance sheet provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of IntelliReady, Inc. as of December
31, 1999, in conformity with generally accepted accounting principles.
AJ. ROBBINS, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
AND CONSULTANTS
DENVER, COLORADO
JUNE 30, 2000
F-6
<PAGE> 8
INTELLIREADY, INC.
BALANCE SHEETS
DECEMBER 31, 1999 (UNCONSOLIDATED)
AND SEPTEMBER 30, 2000 (CONSOLIDATED)
<TABLE>
<CAPTION>
ASSETS
DECEMBER 31, SEPTEMBER 30,
1999 2000
--------------- ---------------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash $ -- $ 760,820
Trade accounts receivable -- 40,354
Inventory -- 30,258
Prepaid expenses -- 12,789
Deposits -- 37,500
--------------- ---------------
-- 881,721
DEFERRED ACQUISITION COSTS -- 250,000
FURNITURE AND EQUIPMENT, net -- 34,579
GOODWILL, net -- 181,374
--------------- ---------------
$ -- $ 1,347,674
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Payable, related parties $ 574,261 $ --
Accounts payable -- 71,763
Accrued expenses -- 92,316
Bank note payable -- 500,000
Current portion of long-term debt -- 3,728
Current portion of long-term debt, Time Direct, LLC acquisition -- 82,267
--------------- ---------------
Total Current Liabilities 574,261 750,074
LONG-TERM DEBT, net of current portion -- 8,080
LONG TERM DEBT, Time Direct, LLC acquisition, net of current portion -- 90,733
--------------- ---------------
Total Liabilities 574,261 848,887
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, no par value, 10,000,000 shares authorized -- --
Common stock, no par value, 50,000,000 shares authorized -
9,000,000 and 10,383,266 shares issued and
outstanding, respectively 500,000 2,327,748
Stock subscription receivable (500,000) --
Contributed capital -- 131,158
Accumulated (deficit) (574,261) (1,960,119)
--------------- ---------------
Total Stockholder's Equity (Deficit) (574,261) 498,787
--------------- ---------------
$ -- $ 1,347,674
=============== ===============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-7
<PAGE> 9
INTELLIREADY, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD FROM MAY 18, 2000
TO SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
(UNAUDITED)
---------------
<S> <C>
REVENUES $ 208,423
---------------
COSTS AND EXPENSES:
Cost of sales 168,558
General and administrative 599,406
Depreciation and amortization 11,521
Interest expense 1,003
Interest expense - related parties 34,686
---------------
Total Expenses 815,174
---------------
OTHER INCOME
Interest income 2,283
Other income 913
---------------
3,196
NET (LOSS) $ (603,555)
===============
NET (LOSS) PER COMMON SHARE - BASIC $ (.06)
===============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 10,383,266
===============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-8
<PAGE> 10
INTELLIREADY, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
STOCK
COMMON STOCK SUBSCRIPTION CONTRIBUTED ACCUMULATED
SHARES AMOUNT RECEIVABLE CAPITAL (DEFICIT) TOTAL
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCES,
DECEMBER 31, 1999 9,000,000 $ 500,000 $ (500,000) -- $ (574,261) $ (574,261)
Purchase of stock -- -- 500,000 -- -- 500,000
Payments to related
parties -- -- -- -- (782,303) (782,303)
Contributed capital,
services -- -- -- 131,158 -- 131,158
Stock issued for deferred
acquisition costs 333,333 250,000 -- -- -- 250,000
Stock issued for debt to
Time Direct, LLC 40,000 60,000 -- -- -- 60,000
Stock issued for services 76,435 125,000 -- -- -- 125,000
Stock issued in private
placements, net of
offering costs 933,498 1,392,748 -- -- -- 1,392,748
Net (loss) from -- -- -- -- (603,555) (603,555)
operations
----------- ----------- ----------- ----------- ----------- -----------
BALANCES, SEPTEMBER 30,
2000 (UNAUDITED) $10,383,266 $ 2,327,748 $ -- $ 131,158 $(1,960,119) $ 498,787
=========== =========== =========== =========== =========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-9
<PAGE> 11
INTELLIREADY, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM MAY 18, 2000 TO SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
(UNAUDITED)
---------------
<S> <C>
CASH FLOWS FROM (TO) OPERATING ACTIVITIES:
Net (loss) $ (603,555)
Adjustments to reconcile net (loss) to net cash from operating
activities:
Depreciation and amortization 11,521
Stock issued for services 125,000
Contributed capital for services 131,158
Changes in assets and liabilities:
Accounts receivable 27,271
Prepaid expenses (12,789)
Inventory (30,258)
Deposits (37,500)
Payables, related parties (4,064)
Accounts payable and accrued expenses 139,869
---------------
Net Cash (Used) by Operating Activities (253,347)
---------------
CASH FLOWS FROM (TO) INVESTING ACTIVITIES:
Cash acquired-acquisition of subsidiary 23,275
Acquisition of equipment (6,739)
---------------
Net Cash Provided by Investing Activities 16,536
---------------
CASH FLOWS FROM (TO) FINANCING ACTIVITIES:
Payment of long-term debt (2,617)
Payment of bank note payable (385,000)
Payment of long-term debt, Time Direct, LLC (15,000)
Sale of common stock 1,400,248
---------------
Net Cash Provided by Financing Activities 997,631
---------------
INCREASE IN CASH 760,820
CASH, beginning of period --
---------------
CASH, end of period $ 760,820
===============
</TABLE>
See Note 9
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-10
<PAGE> 12
INTELLIREADY, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF SEPTEMBER 30, 2000
AND FOR THE PERIOD THEN ENDED IS UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
HISTORY
IntelliReady, Inc. (formerly known as Wiens Industries, Inc.) (the Company), was
organized under the laws of the State of Colorado on April 21, 1998. The Company
was in the development stage as defined in Financial Accounting Standards Board
Statement No. 7 until the acquisition of IntelliReady of Colorado (IROC)
formerly known as Time Direct, LLC (see Note 2).
UNAUDITED INTERIM FINANCIAL STATEMENTS
In the opinion of management, the unaudited interim financial statements for the
period May 18, 2000 to September 30, 2000 is presented on a basis consistent
with the audited annual financial statements and reflect all adjustments,
consisting only of normal recurring accruals, necessary for fair presentation of
the results of such period. The results of operations for the interim period
September 30, 2000 are not necessarily indicative of the results to be expected
for the year ended December 31, 2000.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary IROC. All significant intercompany
accounts and transactions have been eliminated in consolidation.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist primarily of cash in banks and highly liquid
investments with original maturities of 90 days or less.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value of financial instruments approximate carrying value due to the short
maturity of the instruments. Fair value of notes payable was based upon current
borrowing rates available for financing with similar maturities.
INCOME TAXES
The Company uses the liability method of accounting for income taxes pursuant to
Statement of Financial Accounting Standards No. 109. Under this method, deferred
income taxes are recorded to reflect the tax consequences in future years of
temporary differences between the tax basis of the assets and liabilities and
their financial amounts at year end.
F-11
<PAGE> 13
INTELLIREADY, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF SEPTEMBER 30, 2000
AND FOR THE PERIOD THEN ENDED IS UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
For federal income tax purposes, substantially all expenses must be deferred
until the Company commences business and then they may be written off over a
60-month period. Therefore, $574,261 of net losses incurred in the period from
April 21, 1998 (inception) to December 31, 1999 have not been deducted for tax
purposes and represent a deferred tax asset. The Company is providing a
valuation allowance in the full amount of the deferred tax asset since there is
no assurance of future taxable income. Tax deductible losses can be carried
forward for 20 years until utilized.
GOODWILL
Goodwill represents the excess of cost over the fair value of assets acquired
and is amortized using the straight-line method over 10 years. The Company
assesses the recoverability of its goodwill whenever adverse events or changes
in circumstances or business climate indicate that expected future cash flows
(undiscounted and without interest charges) for individual business units may
not be sufficient to support recorded goodwill. If undiscounted cash flows are
not sufficient to support the recorded asset, impairment is recognized to reduce
the carrying value of the goodwill based on the expected discounted cash flows
of the business unit. Expected cash flows are discounted at a rate commensurate
with the risk involved. Amortization expense for the period ended September 30,
2000 was $7,073.
DEFERRED ACQUISITION COSTS
Costs incurred in connection with the Company's anticipated acquisition of Pan
Western Energy Corp. are deferred. Costs consist of 333,333 shares of common
stock issued in anticipation of the merger.
IMPAIRMENT OF LONG LIVED ASSETS
The Company evaluates its long lived assets by measuring the carrying amount of
the assets against the estimated undiscounted future cash flows associated with
them. At the time such evaluations indicate the future undiscounted cash flows
of certain long lived assets are not sufficient to cover the carrying value of
such assets, the assets are adjusted to their fair values. No adjustment to the
carrying value of the assets has been made.
F-12
<PAGE> 14
INTELLIREADY, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF SEPTEMBER 30, 2000
AND FOR THE PERIOD THEN ENDED IS UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
STOCK-BASED COMPENSATION
The Company accounts for stock based compensation in accordance with the
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 123 "Accounting for Stock-Based Compensation" (SFAS No. 123). Under the
provisions of SFAS No. 123, companies can either measure the compensation cost
of equity instruments issued under employee compensation plans using a fair
value based method, or can continue to recognize compensation cost using the
intrinsic value method under the provisions of APB No. 25. However, if the
provisions of APB No. 25 are continued, proforma disclosures of net income or
loss and earnings or loss per share must be presented in the financial
statements as if the fair value method had been applied. The Company recognizes
compensation costs under the provisions of APB No. 25 and will provide the
expanded disclosure required by SFAS No. 123.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In 1999 the FASB issued Statement No. 133, Accounting for Derivative Instruments
and Hedging Activities. The adoption by the Company of Statement 133 did not
impact the Company's financial statements.
EARNINGS (LOSS) PER COMMON SHARE
During 1997 the Financial Accounting Standard Board (FASB) issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" (SFAS 128). SFAS
128 replaced the calculation of primary and fully diluted earnings per share
with basic and diluted earnings per share. Basic earnings (loss) per common
share is computed based upon the weighted average number of common shares
outstanding during the period. Diluted earnings per share consists of the
weighted average number of common shares outstanding plus the dilutive effects
of options and warrants calculated using the treasury stock method. In loss
periods, dilutive common equivalent shares are excluded as the effect would be
anti-dilutive.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates and assumptions.
CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially expose the Company to concentrations of
credit risk consist primarily of trade accounts receivable. The Company's
customer base includes three significant home builders. Although the Company is
directly affected by the financial well-being of the home building industry,
management does not believe significant credit risk existed at September 30,
2000.
F-13
<PAGE> 15
INTELLIREADY, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF SEPTEMBER 30, 2000
AND FOR THE PERIOD THEN ENDED IS UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
At September 30, 2000, the accounts receivable balance for one major customer
totaled $12,563 or 31% of the total accounts receivable balance.
The Company maintains all cash in bank deposit accounts which at times may
exceed federally insured limits. The Company has not experienced a loss in such
accounts.
FURNITURE AND EQUIPMENT
Furniture and equipment is recorded at cost. Depreciation expense is provided on
a straight-line basis using the estimated useful lives of 5-7 years. Maintenance
and repairs are charged to expense as incurred. When assets are retired or
otherwise disposed of, the property accounts are relieved of costs and
accumulated depreciation and any resulting gain or loss is credited or charged
to operations. Depreciation expense for the period ended September 30, 2000 was
$4,448.
REVENUE RECOGNITION
There are generally two or three phases of completion for installation of the
Company's products. Revenues are recognized after each phase has been completed.
YEAR 2000 ISSUES
Many computer systems and other equipment with embedded chips or microprocessors
may not be able to appropriately interpret dates after December 31, 1999 because
such systems use only two digits to indicate a year in the date field rather
than four digits. If not corrected, many computers and computer applications
could fail or create miscalculations, causing disruptions to the Company's
operations. In addition, the failure of customer and supplier computer systems
could result in interruption of sales and deliveries of key supplies or
utilities. Because of the complexity of the issues and the number of parties
involved, the Company cannot reasonably predict with certainty the nature or
likelihood of such impacts.
While the Company believes that its own internal assessment and planning efforts
with respect to its external service providers, suppliers, customers and
financial institutions are and will be adequate to address its Year 2000
concerns, there can be no assurance that these efforts will be successful or
will not have a material adverse effect on the Companies' operations. Costs in
connection with compliance were not significant.
To date, the Company has not experienced any interruptions with respect to the
Year 2000 issue, but cannot reasonably predict with certainty that they will not
experience any interruptions.
F-14
<PAGE> 16
INTELLIREADY, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF SEPTEMBER 30, 2000
AND FOR THE PERIOD THEN ENDED IS UNAUDITED)
NOTE 2 - ACQUISITION OF TIME DIRECT, LLC
On May 18, 2000, the Company acquired all of the issued and outstanding limited
liability interests of Time Direct, LLC, a Colorado limited liability company.
Time Direct's principal business is pre-wiring homes for integrated
communication, audio and video services. Subsequent to the acquisition, Time
Direct had been operating under the business name IntelliReady Homes and is now
known as IntelliReady of Colorado. The purchase price has been allocated as
follows:
<TABLE>
<S> <C>
Cash $ 23,275
Accounts receivable 67,625
Property and equipment 32,288
Accounts payable and accrued expenses (24,210)
Notes payable (14,425)
Goodwill 188,447
-------------
Total purchase price 273,000
Notes payable (248,000)
-------------
Cash paid at closing $ 25,000
=============
</TABLE>
The $248,000 notes payable consist of a $75,000 non-interest bearing promissory
note due the earlier of a minimum funding of $1,000,000 to the Company or August
18, 2000 collateralized by the right of the holder to extend the due date or
foreclose on the membership interests transferred and a $200,000 non-interest
bearing promissory note due in equal $100,000 installments on May 18, 2001 and
2002, respectively. The Company imputed interest at 9.8% on the note in the
amount of $27,000 and reduced the note by this amount. The Company will
recognize interest expense as incurred. During June 2000, the Company issued
40,000 shares of common stock in exchange for $60,000 of the above debt and paid
$15,000.
NOTE 3 - PAYMENTS TO RELATED PARTIES
During the periods ended December 31, 1999 and September 30, 2000, the Company
accrued for and subsequently paid to certain related party entities controlled
by the Company's then sole stockholder payments for efforts made on behalf of
the Company prior to the commencement of operations of the Company. The payments
were made in cash and equity and were recorded as a reduction to retained
earnings.
F-15
<PAGE> 17
INTELLIREADY, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF SEPTEMBER 30, 2000
AND FOR THE PERIOD THEN ENDED IS UNAUDITED)
NOTE 4 - FURNITURE AND EQUIPMENT
Furniture and equipment consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1999 2000
--------------- ---------------
<S> <C> <C>
Furniture and fixtures $ -- $ 2,781
Equipment -- 36,246
--------------- ---------------
39,027
Less accumulated depreciation and amortization -- (4,448)
--------------- ---------------
$ -- $ 34,579
=============== ===============
</TABLE>
NOTE 5 - LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1999 2000
--------------- ---------------
<S> <C> <C>
Two notes payable to a financing company; each note has monthly
payments of $268, interest at 8.49%, secured by equipment and
due October 2002. $ -- $ 11,808
Less current portion -- 3,728
--------------- ---------------
$ -- $ 8,080
=============== ===============
</TABLE>
Annual long-term maturities of the notes are as follows:
<TABLE>
<S> <C>
Fiscal year ending December 31, 2000 (partial year) $ 924
2001 5,727
2002 5,157
---------------
$ 11,808
===============
</TABLE>
F-16
<PAGE> 18
INTELLIREADY, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF SEPTEMBER 30, 2000
AND FOR THE PERIOD THEN ENDED IS UNAUDITED)
NOTE 6 - COMMITMENTS AND CONTINGENCIES
CONSULTING AGREEMENTS
During April 2000, the Company entered into a consulting agreement for executive
recruiting. The Company issued common stock valued at $125,000. The Company has
accrued this expense as of September 30, 2000.
During May 2000, the Company entered into an investment banking agreement for
assistance in raising equity capital. The Company will pay 8% of all equity
funding raised directly by the investment bank. In addition to the cash
payments, the Company has issued 25,000 shares of common stock. This is a
non-exclusive agreement and was to expire on September 30, 2000. The agreement
was verbally extended. The Company paid a $7,500 retainer.
During June 2000, the Company entered into a consulting agreement for financial
advisory and investment banking services for a term of one year. The fee for the
financial advisory services will not exceed $15,000. The Company is to pay a fee
of 4% of all funds raised by the Company from investors located by the
consultant.
EMPLOYMENT AGREEMENTS
The Company entered into employment agreements with the former interest owners
of Time Direct. The agreements are for terms of four years each and call for
annual base salaries of $100,000 and performance based cash bonuses. The
employees will receive annual stock options (Annual Options), which quantities
will be based upon the employees' current salaries and prior year bonuses
divided by the average bid and ask price for the 10 consecutive days immediately
after the date of grant. The employees will also receive additional options
(Original Options), which quantities will be based upon the employees' current
salaries and current year bonuses divided by the average bid and ask price for
the 10 trading days immediately following the conversion of the Company to a
public reporting company or the price per share for which the Company's shares
are sold in an initial public offering prior to December 31, 2000. If the
Company's common stock is not publicly traded by December 31, 2000, then the
price per share will be $.01. The Original Options vest one third each year for
the next three years.
F-17
<PAGE> 19
INTELLIREADY, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF SEPTEMBER 30, 2000
AND FOR THE PERIOD THEN ENDED IS UNAUDITED)
NOTE 7 - EQUITY INCENTIVE PLAN
EQUITY INCENTIVE PLAN
On May 18, 2000 the Company adopted the Equity Incentive Plan (the Plan) which
provides for the granting of options to officers, directors, employees and
consultants. 900,000 shares of common stock are reserved under the plan for the
granting of options. The Plan is in effect until May 18, 2007, unless extended
by the Company's stockholders. The options are exercisable to purchase stock for
a period of seven years from the date of grant.
Incentive Stock Options granted pursuant to this Plan may not have an option
price that is less than the fair market value of the stock on the date the
option is granted. Incentive stock options granted to significant stockholders
shall have an option price of not less than 110% of the fair market value of the
stock on the date of the grant.
In conjunction with the execution of employment agreements with the former
interest owners of Time Direct, the Company granted options to purchase 30,000
shares of the Company's common stock at a price to be determined in the future,
expiring on May 18, 2007. The pricing of the options is based upon the greater
of the average of the closing price on the exchange on which the Company's stock
is traded for the first 10 consecutive days immediately following the conversion
of the Company to a public reporting company or the price per share for which
the Company's shares are sold in an initial public offering prior to December
31, 2000. If the Company's common stock is not publicly traded by December 31,
2000, then the price per share will be $.01.
<TABLE>
<CAPTION>
OUTSTANDING OPTIONS
----------------------------------------
OPTIONS PRICE PER
AVAILABLE NUMBER SHARE
--------------- --------------- ---------------
<S> <C> <C> <C>
Initial reserve, May 18, 2000 900,000 -- --
Granted during 2000 (30,000) 30,000 *
--------------- --------------- ---------------
Balance, September 30, 2000 870,000 30,000 $ *
=============== =============== ===============
</TABLE>
*-To be determined in the future
NOTE 8 - BANK NOTE PAYABLE
In May 2000, the Company entered into an $885,000 note payable to a bank
controlled by a relative of the then sole stockholder. The note bears interest
at 9.8% per annum, which is due monthly and principal is due in May 2001.
F-18
<PAGE> 20
INTELLIREADY, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF SEPTEMBER 30, 2000
AND FOR THE PERIOD THEN ENDED IS UNAUDITED)
NOTE 9 - SUPPLEMENTAL CASH FLOW INFORMATION
In connection with the acquisition of the Time Direct, the Company executed
notes payable to the former owners for $248,000 and assumed liabilities of
$38,635 in exchange for the following assets during the period ended September
30, 2000:
<TABLE>
<S> <C>
Accounts receivable $ 67,625
Property and equipment 32,288
Membership equity 188,447
------------------
$ 288,360
==================
</TABLE>
Cash paid for interest during the period ended September 30, 2000 was $35,691.
NOTE 10 - RELATED PARTY TRANSACTIONS
Various prepaid expenses and other assets were paid for by certain related party
entities controlled by the Company's then sole stockholder.
NOTE 11 - COMMON STOCK
During July, August and September 2000, the Company sold 933,498 shares of
common stock for $1,392,748 net of offering costs of $7,500.
During 2000, the Company's Chairman of the Board transferred common stock from
his own holdings for services benefitting the Company, valued at $131,158.
During 2000, the Company issued 76,435 shares of common stock for services
valued at $125,000.
During May 2000, the Company exchanged 40,000 shares of common stock for $60,000
of debt payable to the former owners of Time Direct, LLC.
During October 2000, the Company sold an additional 33,400 shares of common
stock in private placements for $50,100.
F-19
<PAGE> 21
INTELLIREADY, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF SEPTEMBER 30, 2000
AND FOR THE PERIOD THEN ENDED IS UNAUDITED)
NOTE 12 - SUBSEQUENT EVENTS
MERGER WITH PAN WESTERN ENERGY CORP.
In October 2000, the Company merged with Pan Western Energy Corp. (Pan Western),
a public entity, which operated in the oil and gas industry. Prior to the
merger, Pan Western transferred all of its oil and gas properties in exchange
for settlement of its outstanding liabilities. The Company is accounting for the
merger as a reverse merger.
LEASE COMMITMENTS
During October and November 2000, the Company's wholly owned subsidiary, IROC
entered into certain lease agreements to be accounted for as operating and
capital leases.
F-20
