SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
<P>
FORM 10-KSB
<P>
Annual Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
<P>
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
<P>
For Fiscal Year Ended
March 31, 2000
<P>
Commission File #0-26187
<P>
ANDERSON COMPUTERS/TIDALWAVE CORP.
(Exact name of registrant as specified in its charter)
<P>
Florida
(State or other jurisdiction of incorporation or
organization)
<P>
65-0693777
(IRS Employer Identification Number)
<P>
1831 NE 45th Street, Fort Lauderdale, Florida 33308
(Address of principal executive offices ) (Zip Code)
<P>
(954) 255-6753
(Registrant's telephone no., including area code)
<P>
(Former name, former address and former fiscal year, if
changed since last report)
<P>
Securities registered pursuant to Section 12(b) of the Act:
None
<P>
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value
<P>
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
<P>
Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B not contained in this
form, and no disclosure will be contained, to the best of
the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III
of this Form 10-KSB or any amendment to this Form 10-KSB.( )
<P>
Revenues for year ended March 31, 2000: $ 266
<P>
Aggregate market value of the voting common stock held by
non-affiliates of the registrant as of March 31, 2000, was:
$4,236,121.40
<P>
Number of shares of the registrant's common stock
outstanding as of March 31, 2000 was: 24,679,956
<P>
Transfer Agent as of March 31, 2000:
American Stock Transfer & Trust
40 Wall Street
New York, New York 10005
<P>
PART I
------
<P>
Item 1. Description of Business
--------------------------------
<P>
General
<P>
Anderson Computers/Tidalwave Corp., a publicly traded,
Florida Corporation (hereinafter referred to as the
"Company") was incorporated on April 23, l996. It was
initially organized for the purpose of targeting profitable
companies that could eventually be acquired. The Company
intends to acquire all or part of the outstanding and issued
stock or assets of the targeted companies. This will happen
following extensive due diligence by the Company, and the
signing of a purchase agreement by both parties. Such
target companies would have products and/or services that
primarily use or could use the Internet as a vehicle for
profit. The Company's strategy is based on the fact that
the Internet marketplace is growing at a rapid pace and the
timing is right to purchase companies that are currently
engaged in the business of manufacturing and/or marketing
services over the Internet or products and/or services that
can eventually be marketed over the Internet.
<P>
BUSINESS OF THE COMPANY
<P>
Present Business - New focus for the next millennium
<P>
Currently, the Company is in transition from being a
computer reseller to becoming a full service Internet
mortgage and mortgage services company. At this time, the
Company is developing a new mortgage services web site as
well as continuing to market products and services offered
under the Company's Joint Venture agreements (see Joint
Ventures in this section). The Company plans on making this
transition complete by December 2000.
<P>
It was time to re-establish the Company's business focus on
the Internet for the next millennium. Before this could
happen, the Company felt it needed to make a strategic
alliance to redirect current and potential computer
customers. This would give the Company's management the
time to research the industry as well as time to go out and
seek potential mortgage and mortgage services acquisition
candidates. The Company anticipates that it may have
separate divisions for its mortgages services, computer
services as well as other potential e-commerce businesses.
<P>
Acquisitions
<P>
In April of 1999, the Company started talking to a mortgage
and a mortgage services company. In June of 1999, the
Company signed a Purchase Agreement with Citizens Title
Services, Inc. ("Citizens Title"). As of July 1999, in two
separate transactions, the Company acquired a total of 10%
of the issued and outstanding shares of the privately held
company, Citizens Title through a stock exchange. Pursuant
to a letter of intent signed by the Company in July 1999,
the Company intends to sign a definitive purchase agreement
for an additional 15% of Citizens Title increasing the
Company's holdings in Citizens Title to 25%.
<P>
Citizens Title is a fully automated full service title
insurance agent with offices in Coral Springs, Florida and
Melbourne, Florida. It is a start up company that began
operations at it's Coral Springs headquarters in 1998.
Citizens Title has a network infrastructure that allows for
expansion of satellite title offices communicating over a
frame relay circuit. Citizens Title generated in excess of
$100 million dollars in loan closings in 1998 and 1999
combined. Citizens Title also offers bundled ancillary
services such as T1-Internet and Ethernet data and document
transfer which allows for on-line processing, and paperless
transaction ability. Citizens Title is also fully Y2K
compliant. The Company feels Citizens Title is a key
component to develop its entry into the Internet mortgage
and mortgage related services industry. The Company feels
that 80% of its future revenue will come from the Internet
mortgage and mortgage related services industry through
acquisitions, joint ventures, and strategic alliances in
this industry. In August 1999, the Company reorganized the
Citizens Title corporate web site
(http://www.citizenstitle.com.)
<P>
The Company plans on funding future acquisitions through
stock exchanges. If additional capital is needed the
Company may consider a secondary offering or private
placement of its shares.
<P>
Joint Ventures
<P>
In March of 1999, the Company signed a joint venture
agreement with Micro Doctor, Inc. This joint venture
allowed the Company to link it's corporate web-site to Micro
Doctor, Inc.'s corporate web-site
(http://www.microdoctor.com) in order to allow the Company's
customers access to Micro Doctor, Inc.'s e-commerce
technology. This technology allows customers to choose from
a large variety of different internal computer parts when
placing an order for a custom made computer over the
Internet. These parts include the following: CPU,
motherboard, memory, video card, sound card, modem, hard
drive as well as a choice of monitors. Using Micro Doctor,
Inc.'s state of the art software, customers can custom build
and order their own computers over the Internet. Micro
Doctor, Inc. is another Internet based computer hardware
reseller. Through this joint venture agreement with Micro
Doctor, Inc., the Company is paid royalties based on sales
of Tidalwave Computers by Micro Doctor, Inc. Micro Doctor,
Inc. is also in charge of all of the manufacturing of
Tidalwave Computers. These computers are built on a per
order basis.
<P>
However, the Company plans on making this a small focus of
its future business and will only remain in this market
through it's interactive e-commerce corporate web-site,
http://www.tidalwavepc.com, with its joint venture with
Micro Doctor, Inc. All previous Tidalwave Computer and
software business is now being sold through Micro Doctor,
Inc., except for brand name computers, palm pilots, and POS
equipment which is still sold direct through the Company on
a limited basis. Micro Doctor plans on adding these name
brand products to its web-site by the end of the year. At
such time these brand name products will no longer be sold
through the Company but through the agreement with Micro
Doctor, Inc. The Company anticipates that sales of all
products sold through this joint venture agreement will make
up approximately 10% of the Company's revenues.
<P>
In April of 1999, the Company signed a joint venture with
the Virginia based Company, Cyberlinkcom Corp. As the
Internet grew in popularity more customers and potential
customers began asking the Company to recommend Internet
service providers as well as to provide or recommend
companies that offer web-site design and promotion. The
Company decided that it would be a logical asset to make an
alliance with an Internet Company. In this agreement, the
Company is able to offer through its corporate web-site,
http://www.tidalwavepc.com, Internet services,
telecommunication services, Internet-related products, and
Internet access. Some of the products and services the
Company offers through this joint venture with Cyberlinkcom
Corp. are web hosting, web design, web promotion, web
evaluation, URL submission, 1+long distance phone service,
calling cards, free e-mail, free web-sites, Internet access,
i-check and products such as the i-phone. The Company
anticipates the sale of these products and services will
make up approximately 10% of the Company's revenue.
<P>
Future Competition
<P>
Although the Company believes it will be able to establish
and maintain a sizable market niche, competitors with
greater financial and human resources than the Company can
enter the Company's market with products and services
similar or identical to those of the Company. The Company
plans to enter into the growing Internet mortgage and
mortgage services related industry in the coming months. The
mortgage banking industry is highly competitive. The
Company and Citizens Title will have to compete with other
financial institutions, such as mortgage bankers, commercial
banks, savings and loan associations, savings banks, credit
unions, loan brokers and insurance companies in the
production of mortgage loans. The Company will compete
principally by offering loans with competitive features, by
emphasizing the quality of its service, and by pricing its
range of products at competitive rates. The Company also
feels that by offering bundled ancillary services through
it's Citizens Title acquisition it will have a specialized
edge that will draw business away from competitors. By
offering the combination of these services along with
traditional mortgage loans, customers will have more
resources at their finger tips in one place on the Internet
than currently available. Most of the Company's competitors
such as E-Loan, QuickenMortgage, GetSmart, Mortgage.com, and
HomeShark will have financial resources that are
substantially greater than those of the Company but at this
time do not offer the ancillary services that the Company
will offer on the Internet. However, through acquisitions,
strategic alliances, and ancillary services, the Company
believes it will be able to compensate for that difference.
<P>
Risk Factor
<P>
Our issuances of Common Stock pursuant to Section 4(2) of
the Securities Act of 1933 might be considered a public
offering in violation of the federal securities laws. These
issuances might also have been in violation of certain state
securities laws. If these issuances were public offerings
under federal securities laws or in violation of certain
state securities laws, some of the holders of these
securities might be granted the right to rescind the sale of
shares and demand that we return the purchase price of the
shares. We issued securities to approximately 23 of our
stockholders in the offerings that we believe were conducted
as private placements under Section 4(2) of the Securities
Act of 1933, as amended, and did not require registration
under the federal securities laws. However, due to the
sophistication of the investors in the offering it is
possible that the holders of these securities may allege
that the offering and sale of these securities was not a
valid private placement under Section 4(2) and was not made
in accordance with Section 5 of the Securities Act of 1933.
<P>
Generally, the statute of limitations for this type of claim
is one year after the date of the alleged violation and, if
successful, would entitle the owners to rescind the issuance
of the securities to them and demand a return to them of the
purchase price of those securities. As of June 30, 2000, if
Section 5 of the Securities Act of 1933 was violated, claims
of approximately $10,600 could be made.
<P>
We also believe that we may have violated the securities
laws of several states in connection with the issuance of
our common stock. Similar to the recourse provided under the
federal securities laws, holders of these securities may be
able to make a claim to rescind the sale or issuance of
these securities to them and demand a return of the purchase
price paid for these shares. The recission rights that may
be granted to these holders under state law is not
cumulative to the rights granted under federal law.
Accordingly, if these stockholders rescind the sale of these
securities under federal law, they would not have the right
to additional payments from the Company under state law.
<P>
We are not aware of any pending claims of rescission against
us. We intend to vigorously defend any rescission or other
claim by the holders of our securities. Nevertheless, it is
possible that a claim could be made by one or more of the
holders of our securities, and if a court were to hold that
the private placement exemption is not available for the
sale of our securities or that we violated state securities
laws, we could be forced to rescind the sales of our
securities, requiring significant monetary payments to the
claiming owners. These claims, if successful, could
significantly exceed our cash reserves and require us to
borrow funds and would materially and adversely affect our
results of operations and financial condition. Therefore,
these claims may have a significant impact on the Company
and force the Company to consider bankruptcy or a similar
alternative.
<P>
PREVIOUS BUSINESS
<P>
The Company has been involved with the business of providing
technical support and training for computers and software
users. In addition, it has provided developmental help to
individual customers as well as small businesses in
designing and configuring computers and computer systems.
This includes home systems consisting of a computer,
monitor, printer and software as well as POS (Point of
Sales) systems for small businesses, and setting up
management software as well as trouble shooting current and
future hardware and software applications for small
businesses in developing computer networks and software that
will allow these small businesses to run more efficiently.
The Company also provided other business related services
and products such as POS software, cash drawers, and receipt
printers for small businesses, which combine state of the
art techniques related to the design, development, marketing
and implementation of computer equipment and/or related
products and/or services.
<P>
The Company has been in the business of supplying and
furnishing: (1) the services of technical and specialized
personnel to inspire confidence in it's customers and
potential customer's; and (2) equipment, instruments,
devices, appliances, and parts in connection with all
related forms whether mechanical, electrical, or otherwise
including products under development.
<P>
Tidalwave Computers
<P>
The Company was a direct reseller of customized state of the
art computers on the Internet. The Company's computers use
only the most up to date computer parts to ensure each
computer is Y2K compliant. The Company introduced its own
line of personal computers under the brand name "Tidalwave."
Tidalwave Computers are top quality, affordable, pre-
assembled computers pre-configured with software and are
built to meet the special needs of individuals with
capabilities such as voice recognition software and/or video
conferencing, learning software for children such as
interactive encyclopedias or educational games, or software
for home use such as spreadsheets, word processing, and
financial applications. Tidalwave Computers are also built
to meet the needs of small and mid-size businesses needing
large capacity hard drives and tape or CD back-up as well as
network/LAN cards and more advanced office software such as
Microsoft Office or Windows NT.
<P>
Tidalwave PC's capitalize on the following technologies:
inexpensive, top quality Pentium Microprocessors, brand name
components such as Intel Pentium Processors, Western Digital
and Seagate large capacity hard drives, CD-ROM or CD-ROM/DVD
drives and modems, PC centric operating systems such as
Microsoft Windows 98 and NT, mini-tower and desk-top PCs,
software, and multimedia applications. There are three
models of Tidalwave Computers. All models are powerful
enough to run all IBM compatible software applications on
the market. The three models of Tidalwave Mini-Tower or
Desk-top Computers offered are the Value line which starts
under $600, the Surf line which starts under $800, and the
Tsunami line which starts at approximately $1,100. Tidalwave
computers made up approximately 60% of the Company's revenue
prior to the Company's joint venture with Micro Doctor in
March, 1999.
<P>
In addition to it's lines of Tidalwave Computers, the
Company was involved in the sales of name brand mini-towers
systems, notebook computers, surge protectors, power
supplies, scanners, software, and other types of computer
equipment from manufacturers such as AST, APC, Digital,
Intuit, Microsoft, NEC, Toshiba, Tripp Lite and many more.
In addition, the Company sells major brands of monitors such
as CTX, Hitachi, MAG Innovision, Mitsubishi, NEC, Panasonic,
Sony, Viewsonic, printers such as Cannon, Epson, Hewlett
Packard, and Okidata, scanners from Hewlett Packard, and
3Com Palm Pilots. The sale of these products made up
approximately 20% of the Company's revenue.
<P>
Past Competition
<P>
The Company's main competition is small to mid-size computer
resellers that sell custom built computers and computer
products direct to the public on the Internet. The
Company's customers usually are also comparing prices with
direct custom computer sales leaders Dell, Gateway, and
Micron. The Company uses the same high quality parts inside
of each Tidalwave Computer as these industry leaders,
therefore educated price conscious computer buyers are
willing to give the Company a chance to build their computer
system if we can beat the industry leaders price. The
Company is able to offer such competitive prices because of
its low overhead. In 1996 and 1997, Tidalwave Computers
were 10% to 20% lower in price then Dell, Gateway, and
Micron. In 1998 and 1999 prices of computers have become
extremely competitive. The Company's prices in these
competitive times can be 1% to 5% less then Dell, Gateway,
and Micron and comparable in price to other small and mid-
size computer resellers on the Internet. Occasionally the
Company's computers are slightly more expensive than it's
small to mid-size computer competitors but the Company has
seen that it's customers are willing to pay a little more
for personalized friendly service. Others like the
availability of the option to design their own computer
systems, and with the Company's willingness to order special
parts that other direct sales computer companies will not.
Customers don't have to use the configurations offered in
the Value, Surf, or Tsunami lines; they can just be used as
examples. The Company feels that most second time computer
buyers customize the computers they order with the type of
equipment they specifically want. The Company uses parts in
each Tidalwave Computer from manufacturers such as Intel, US
Robotics, Microsoft, Western Digital, Seagate, Diamond,
Matrox, ATI, and more - there are hundreds of manufacturers
to choose from.
<P>
Distributors
<P>
The Company purchased all of it's name brand computers, and
computer parts, and software such as CPU's, modems, video
cards, motherboards, monitors, printers, memory, etc. from
computer distributors. These distributors are made up of
computer distribution companies such as Ingram Micro, Tech
Data, D&H, ICG, as well as others, that keep an extensive
inventory of name brand computers, computer parts, and
software for computer and software resellers, manufacturers,
etc.
<P>
Outsourcing
<P>
The Company outsources its lines of Tidalwave Computers to
established computer manufacturers. This helps the company
lower costs by not having to keep a large inventory of parts
as well as being able to utilize the manufacturers large
staff of trained computer engineers. The Company will only
buy from manufacturers that have high-quality control and
the availability of additional technical support if needed,
including repair facilities. At this time the Company still
purchases product from computer distributors but limits this
to replacement parts for past Tidalwave Computers sold and
only for small orders by previous customers.
<P>
Employees
<P>
The Company had two (2) employees as of March 31, 2000.
<P>
Item 2. Description of Property
-------------------------------
<P>
As of March 31, 2000, the Company shares office space with a
company owned by Eric Anderson, a stockholder, located at
1831 NE 45th Street, Fort Lauderdale, Florida 33308. The
office is exclusively executive offices for businesses. No
rent is being charged to the Company. The Company
anticipates moving from this space by December 31, 2000 at
which time it will move it's headquarters to a leased space
located at 210 University Drive, #206, Coral Springs,
Florida.
<P>
Item 3. Legal Proceedings
--------------------------
<P>
The Company and its subsidiaries are not presently parties
to any litigation, nor to the Company's knowledge and belief
is any litigation threatened or contemplated.
<P>
Item 4. Submission of Matters to a Vote of Security Holders
-----------------------------------------------------------
<P>
None.
<P>
PART II
<P>
Item 5. Market for Common Equity and Related Stockholder
Matters
---------------------------------------------------------
<P>
On March 31, 2000, there were 24,508,594 shareholders of
record of the Company's common stock. Based on information
received from brokers and others in fiduciary capacities,
the Company estimates that the total number of shareholders
of the Company's common stock exceeds 500. Until 1999, the
Company's common stock was traded on the OTC Electronic
Bulletin Board. During 1999, the Company no longer qualified
for this listing and was available through electronic
trading services via the National Quotations Bureau Pink
Sheets. In June 2000, the Company's common stock was re-
listed for trading on the OTC Electronic Bulletin Board.
<P>
The following table sets forth, for the periods indicated,
the range of high and low closing bid prices for the
Company's common stock through March 31, 2000 and as
available through electronic trading services subsequent to
such date.
<TABLE>
<S> <C> <C>
Common Stock Bid
High Low
---- ---
<P>
Fiscal Quarter High Low
-------------- ---- ---
June 30, 1998 2.2500 0.8750
September 30, 1998 2.2500 0.7500
December 31, 1998 1.2500 0.2500
March 31, 1999 1.0620 0.2000
June 30, 1999 1.0720 0.1560
September 30, 1999 0.1250 0.0625
December 31, 1999 0.2700 0.0500
March 31, 2000 0.4700 0.0600
</TABLE>
<P>
Dividends
---------
<P>
The Company does not intends to retain future earnings to
support the Company's growth. Any payment of cash dividends
in the future will be dependent upon: the amount of funds
legally available therefore; the Company's earnings;
financial condition; capital requirements; and other factors
which the Board of Directors deems relevant.
<P>
Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations
-----------------------------------------------------------
<P>
Certain matters discussed herein (including the documents
incorporated herein by reference) are forward-looking
statements intended to qualify for the safe harbors from
liabilities established by the Private Litigation Reform Act
of 1995. These forward-looking statements can generally be
identified as such because the context of the statement will
include words such as the Company "believes," "plans,"
"intends," "anticipates," "expects," or words of similar
import. Similarly, statements that describe the Company's
future plans, objectives, estimates, or goals are also
forward-looking statements. Such statements address future
events and conditions concerning capital expenditures,
earnings, litigation, liquidity and capital resources and
accounting matters. Actual results in each case could
differ materially from those currently anticipated in such
statements by reason of factors such as future economic
conditions, including changes in customer demands; future
legislative, regulatory and competitive developments in
markets in which the Company operates; and other
circumstances affecting anticipated revenues and costs.
<P>
Forward-Looking Statements
---------------------------
<P>
Forward-looking statements, based on management's current
views and assumptions, are made throughout the Management's
Discussion and Analysis and elsewhere in this report to
stockholders. These statements are subject to certain risks
and uncertainties that could cause actual results to differ
materially from historical results and those presently
anticipated or projected. Among the factors that may affect
operating results are the following: success of the
Company's change in focus; competitive environment; and
general economic conditions. Our Form 10-KSB for the year
ended March 31, 2000 contains further discussion of these
matters.
<P>
Results of Operations
---------------------
<TABLE>
<S> <C> <C> <C>
Fiscal Year Ended March 31,
2000 1999 1998
------------------------------------------------
Net Sales $ 266 $ 7,526 $ 44,360
Cost of Sales 265 5,352 41,678
Gross Profit 1 2,174 2,682
Selling, General and Administrative
Expenses 270,339 382,078 46,095
</TABLE>
<P>
Our net sales decreased 96% in 2000 and 83% in 1999.
However, our gross margins increased from 6% in 1998 to 29%
in 1999 but decreased to less than 1% in 2000. The decrease
in net sales and increase in gross profit between 1998 and
1999 reflects the fact that the Company had turned its focus
away from low-margin computer hardware and software products
to selling higher margin technical computer services. The
decrease in net sales and gross profit between 2000 and 1999
was due to the Company changing its focus from providing
technical computer services and selling computer products to
aggressively seeking potential acquisitions for financing
and future expansion in noncomputer related industries (See
Future Outlook).
<P>
Selling, general and administrative expenses decreased 29%
in 2000 but increased 725% in 1998. The decrease in 2000 was
primarily due to the elimination of consulting fees paid to
the finance and management consultant hired in 1999. The
increase in 1999 was primarily due to 1) hiring a marketing
and public relations company to increase exposure to public
markets at a cost of $99,750; 2) development and maintenance
of our website at a cost of $6,900; and 3) hiring a finance
and management consultant to seek investors and potential
acquisitions as well as to provide assistance in financial
and management matters at a cost of $245,700.
<P>
Liquidity
---------
<TABLE>
<S> <C> <C> <C>
Fiscal Year Ended March 31,
2000 1999 1998
---------------------------------
Net Cash Used in Operations $48,470 $ 94,667 $59,690
Working Capital Deficiency 13,451 126,466 16,198
</TABLE>
<P>
Cash flow deficiencies from operations for 2000 continued to
be financed by common stock issuances and loans similar to
that in 1999 and 1998. Net cash received from common stock
amounted to $35,560, $21,925 and $35,000 during 2000, 1999
and 1998 respectively. Working capital deficiency decreased
to $13,451 as of March 31, 2000 from $126,466 as of March
31, 1999. This increase in working capital was primarily due
to the payment of the amount due to Internet TV Connector
Corp. (a major stockholder) of $111,017 by issuing 145,459
common shares and the payment of accounts payable and
website development services totaling $12,900 by issuing
25,800 common shares. The increase in working capital
deficiency from $126,466 as of March 31, 1999 from $16,198
as of March 31, 1998 was primarily due to the payment of the
marketing and public relations company by Internet TV
Connector Corp. Although our auditor included an explanatory
paragraph with regards to our ability to continue as a going
concern in our audited financial statements, we believe we
can overcome his concerns (See Future Outlook). Our
consultant continues to seek investors and potential
mortgage related acquisitions or possible joint ventures. In
addition, we have not yet had an opportunity to take full
advantage of the products and services we are able to offer
through our joint venture agreements with Cyberlinkcom Corp.
and Micro Doctor, Inc. In addition, we have not had an
opportunity to market the services we now have through our
recent 10% acquisition of Citizen's Title Services, Inc.
<P>
Item 7. Financial Statements
----------------------------
<P>
The financial statements of the Company, together with the
report of auditors, are included in this report after the
signature pages.
<P>
Item 8. Changes In and Disagreements With Accountants on
Accounting and Financial Disclosure
<P>
The Company's accountant is Earl M. Cohen, C.P.A., P.A. of
Boca Raton, Florida. The Company does not presently intend
to change accountants. At no time has there been any
disagreements with such accountants regarding any matter of
accounting principles or practices, financial statement
disclosure, or auditing scope or procedure. The Company
initially engaged Earl M. Cohen, C.P.A., P.A. to render
accounting services on April 26, 1999. The Company
dismissed its prior accountants, Durland & Company,
Certified Public Accountants, of Palm Beach, Florida on
December 31, 1998. Such accountant prepared the Company's
audited financial statements for the year ended March 31,
1998 and from April 23, 1996 (inception of the Company)
through March 31, 1997. Such accountant's report on the
audited financial statements contained a going concern
opinion on the Company. Furthermore, the decision to change
accountants was approved by the Company's Board of
Directors. From the Company's inception through the date of
dismissal, there were no disagreements with the former
accountant on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope
or procedure, which, if not resolved to the former
accountant's satisfaction, would have caused it to make
reference to the subject matter of the disagreement in
connection with its report.
<P>
PART III
<P>
Item 9. Directors, Executive Officers, Promoters and Control
Persons: Compliance With Section 16(a) of the
Exchange Act
------------------------------------------------------------
<P>
The directors and officers of the Company and its
subsidiaries, as of March 31, 2000, are set forth below. The
directors hold office for their respective term and until
their successors are duly elected and qualified. Vacancies
in the existing Board are filled by a majority vote of the
remaining directors. The officers serve at the will of the
Board of Directors.
<TABLE>
<S> <C> <C> <C>
With Company
Name Age Since Director/Position
-----------------------------------------------------------------------------------------
Leon Kline 28 1996 President, Chief Executive Officer,
Treasurer and Director
<P>
James Baker 50 1999 Vice President and Secretary
</TABLE>
<P>
The Company has not yet filed Form 3's for Messrs. Kline and
Baker. In addition, Internet TV Connector Corp. owned more
than 10% of the Company's issued and outstanding common
stock when the Company became subject to the reporting
requirements of the 1934 Exchange Act on July 25, 1999.
Finally, Barbara Anderson was an officer and director of the
Company as of July 25, 1999. The Company intends to file
Form 3's for each of Messrs. Kline, Baker and Anderson; and
for Internet TV Connector Corp. A Form 5 will not be filed
for the Company's fiscal year ended March 31, 2000 since all
reportable transactions for such fiscal year will be
reported on Form 3's filed with the Commission.
<P>
Business Experience
-------------------
<P>
LEON KLINE has been President and Chief Executive Officer
of the Company since April 1996. He is responsible for all
day to day business operations, including dealing one-on-one
with customers, distributors, manufacturers, attorneys,
accountants, public relations persons, and consultants. He
has been personally involved in designing the Company's line
of Tidalwave personal computers, servers and notebooks.
Prior to his position with Anderson Computers, Mr. Kline was
President of Internet TV Connector Corp. (a more than 5%
shareholder of the Company) from January 1996 through May
1997. While serving as President of Internet TV Connector
Corp., he created and applied for a United States Patent for
a low Internet appliance that allows users to connect to the
Internet through their television sets. He also arranged
for the first prototype of this Internet TV Connector Box to
be manufactured. His daily responsibilities included
assisting associates in marketing and meeting with
potential clients to promote the Internet TV Connector Box
and to develop solutions for various applications of the
Internet TV Connector Box. From June 1994 to December 1995,
Mr. Kline was an Editor for Blue Chip Newsletter. In this
capacity, he developed a formula for buying and selling New
York Stock Exchange stocks and created the only daily faxed
newsletter that was sent out prior to the New York Stock
Exchange market opening.
<P>
Mr. Kline attended American University in Washington, D.C.
from 1989 through 1990. Thereafter, he enrolled in
Montgomery College in Rockville, Maryland from 1990 through
1991. Finally, he enrolled in Broward Community College,
Coconut Creek, Florida from 1994 through 1995.
<P>
JAMES BAKER has been the Vice President and Secretary of the
Company since June 1, 1999. Mr. Baker is an attorney
licensed to practice in the State of Florida. His
employment history has included positions as counsel for
Statewide Lending Centers Inc., Citizens Title Services
Inc., and National Homebuyers Help Center Realty Corp. He
was also counsel for Mortgage 2000 Inc./Heritage Corporation
of South Florida Inc., where he was instrumental in
structuring a corporate buy-out of Florida's oldest
privately held mortgage bank. In addition, Mr. Baker held
the following positions: counsel for S&S Ltd., an offshore
commercial real estate development company; President of
Baker Capital Management Inc. doing business as Market
Watch, an investment management firm; Senior Trust Officer
for Bank One Trust Co., N.A. in Columbus, Ohio; and staff
attorney for Cory, Leonard, Witter and Cheny, an insurance
defense law firm. Mr. Baker obtained his law degree from
Western State University School of Law located in San Diego,
California in 1982 and his Bachelor of Arts degree from Ohio
State University in 1977.
<P>
Certain Legal Proceedings
-------------------------
<P>
No director, nominee for director, or executive officer of
the Company has appeared as a party in any legal proceeding
material to an evaluation of his ability or integrity during
the past five years.
<P>
Item 10. Executive Compensation
-------------------------------
<P>
The following information relates to compensation received
by the Chief Executive Officer of the Company in fiscal year
ending March 31, 2000, to executive officers who were
serving as of fiscal year ending March 31, 2000, whose
salary and bonus during fiscal year ending March 31, 2000
exceeded $100,000. In 1999, no officer received compensation
in excess of $100,000.
<P>
Summary Compensation Table
<P>
Annual Compensation
-------------------
<TABLE>
<S> <C> <C> <C> <C>
Name and Principal Position Year Salary Bonus Restricted Stock Award
--------------------------------------------------------------------------------------
None
</TABLE>
<P>
Employment Agreements. No officer or director has been
granted an employment contract or been provided a future
benefit to be received upon separation from service with the
Company.
<P>
Item 11. Security Ownership of Certain Beneficial Owners and
Management
------------------------------------------------------------
<P>
The following table sets forth as of March 31, 2000,
information with respect to the beneficial ownership of the
Company's Common Stock by (i) each person known by the
Company to own beneficially 5% or more of such stock, (ii)
each Director of the Company who owns any Common Stock, and
(iii) all Directors and Officers as a group, together with
their percentage of beneficial holdings of the outstanding
shares.
<TABLE>
<S> <C> <C>
Number of Shares of
Name of Beneficial Owner/ Common Stock % of Beneficial
Identity of Group Beneficially Owned Ownership
------------------------- -------------------------- -------------------
Internet TV Connector Corp. 1,722,309 Common Shares 6.98%
<P>
Citizens Title Services, Inc. 2,014,884 Common Shares 8.16%
210 University Drive
Coral Springs, Florida 33071
Joseph Andy, President
<P>
Leon Kline 1,145,948 Common Shares 4.64%
<P>
All directors and executive
officers as a group (2 persons) 1,145,948 Common shares 4.64%
</TABLE>
<P>
(1) The address of each person and entity other than
Citizens Title Services, Inc. listed in the above table is
c/o the Company, 1831 NE 45th Street, Fort Lauderdale,
Florida 33308.
<P>
(2) The persons and entities named in this table have sole
voting and investment power with respect to all shares of
common stock reflected as beneficially owned by each.
<P>
Item 12. Certain Relationships and Related Transactions.
--------------------------------------------------------
<P>
The Company presently leases space from Eric Anderson, a
Company shareholder. Such office space located at 1831 NE
45th Street, Fort Lauderdale, Florida 33308 is used
exclusively as executive offices for businesses. No rent is
being charged to the Company by Eric Anderson.
<P>
Leon Kline, President and Director of the Company, owns less
than five percent of Internet TV Connector Corp., a
shareholder of the Company.
<P>
The Company has 12% interest bearing notes receivable due
from Internet TV Connector Corp., the majority stockholder.
The notes were issued on various dates from February 27
through May 13, 1998 and are due on demand with interest
payable monthly.
<P>
Monies are due to the President of the Company based on
advances made during July and August, 1996 to the Company by
its President to purchase computer hardware and software
products for resale. These advances are non-interest
bearing and are expected to be fully repaid within the next
twelve months. Subsequent to March 31, 2000, working
capital advances of $4,000 were made by Leon Kline, the
Company's President.
<P>
The amount due to a related party consists of Company
expenses paid by Internet TV Connector Corp., the majority
stockholder. On May 5, 1999, an agreement was made to
settle $93,750 of the liability through issuance of 125,000
common shares. On May 7, 1999, agreement was made to settle
the remaining balance of $17,267 through the issuance of
20,459 common shares.
<P>
In addition, the Company did not owe, at the end of its last
fiscal period, to any business or professional entity for
which a director of the Company has served during the last
fiscal year or currently serves as an executive officer, or
has owned during the last fiscal year or currently owns a
10% record or beneficial interest in, an aggregate amount in
excess of 5% of the Company's total assets at the end of its
last fiscal period. No director of the Company has served as
a partner or executive officer of any investment banking
firm that performed services for the Company during the last
fiscal year or that the Company proposes to have performed
services during the current year, except as noted below.
<P>
PART IV
<P>
Item 13. Exhibits and Reports on Form 8-K
-----------------------------------------
<P>
(a) The following documents are filed as part of this
report:
<P>
1. Financial statements; see index to financial statement
and schedules immediately following the signature
pages of this report.
<P>
2. Financial statement schedules: see index to financial
statements and schedules immediately following the
signature pages of this report.
<P>
3. Exhibits:
<P>
The following exhibits are filed with this Form 10-KSB and
are identified by the numbers indicated; see index to
exhibits immediately following financial statements and
schedules of this report.
<P>
3(i) Articles of Incorporation, as amended (1)
<P>
3.2 Bylaws, as amended (1)
<P>
10.21 Exchange Agreement dated as of June 22, 1999 between
Citizens Title and the Company.
<P>
27 Financial Data Schedule for fiscal year ended March
31, 2000.
(1) Incorporated by reference to the Registrant's Form
10-SB, filed on May 25, 1999
(SEC File No. (000-26187).
<P>
(b) Reports on Form 8-K
<P>
We did not file any reports on Form 8-K for the
quarter ended March 31, 2000.
<P>
SIGNATURES
<P>
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the
undersigned, there unto duly authorized.
<P>
ANDERSON COMPUTERS/TIDALWAVE CORP.
<P>
By: /s/ Leon Kline
-----------------------------------
Leon Kline
President, Chief Executive
Officer, Treasurer and
Director
<P>
Dated: June 12, 2000
<P>
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities
and on the dates indicated.
<P>
<TABLE>
<S> <C> <C>
Name Title Date
-----------------------------------------------------------------------------
/s/ Leon Kline President, Chief Executive Officer, July 12, 2000
Treasurer President and Director
<P>
/s/ James Baker Vice President and Secretary July 12, 2000
</TABLE>
<P>
ANDERSON COMPUTERS/TIDALWAVE CORP.
<P>
FINANCIAL STATEMENTS
<P>
MARCH 31, 2000
<P>
ANDERSON COMPUTERS/TIDALWAVE CORP.
<P>
CONTENTS
<P>
<TABLE>
<S> <C>
Page
Independent Auditor's Report 1
<P>
Financial Statements:
<P>
Balance Sheets 2
<P>
Statements of Operations and Comprehensive
Income 3
<P>
Statements of Changes in Stockholders' Equity
(Deficiency) 4
<P>
Statements of Cash Flows 5 - 6
<P>
Notes to Financial Statements 7 - 15
</TABLE>
<P>
INDEPENDENT AUDITOR'S REPORT
<P>
To The Board of Directors
Anderson Computers/Tidalwave Corp.
<P>
I have audited the accompanying balance sheets of Anderson
Computers/Tidalwave Corp., as of March 31, 2000 and 1999 and
the related statements of operations and comprehensive
income, changes in stockholders' equity (deficiency) and
cash flows for the years then ended. These financial
statements are the responsibility of the Company's
management. My responsibility is to express an opinion on
these financial statements based on my audit.
<P>
I conducted my audits in accordance with generally accepted
auditing standards. Those standards require that I 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. I believe that my audit provides a
reasonable basis for my opinion.
<P>
In my opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of Anderson Computers/Tidalwave Corp. as of March
31, 2000 and 1999, and the results of its operations and its
cash flows for the years then ended in conformity with
generally accepted accounting principles.
<P>
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern.
As discussed in Note 9 to the financial statements, the
Company has experienced net losses of $692,994 since
inception and a working capital deficiency of $13,451 as of
March 31, 2000. The Company's financial position and
operating results raise substantial doubt about its ability
to continue as a going concern. Management's plans
regarding those matters are also described in Note 9. The
financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
<P>
June 16, 2000
<P>
Page 1
<P>
ANDERSON COMPUTERS/TIDALWAVE CORP.
BALANCE SHEETS
MARCH 31, 2000 AND 1999
<P>
ASSETS
<TABLE>
<S> <C> <C>
2000 1999
---- ----
CURRENT ASSETS
Cash $ 1,773 $ 22,125
Prepaid expenses 3,500 -
Notes receivable 1,850 13,600
Accrued interest receivable - 154
----------------------
Total Current Assets 7,123 35,879
<P>
COMPUTER SOFTWARE - NET - 66
<P>
INVESTMENT IN EQUITY SECURITY 250,000 -
----------------------
TOTAL ASSETS $257,123 $ 35,945
======================
<P>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
<P>
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 20,174 $ 43,378
Due to officer 400 7,950
Due to related party - 111,017
----------------------
Total Current Liabilities 20,574 162,345
<P>
EQUITY SUBJECT TO POTENTIAL REDEMPTION 50,800 31,321
<P>
STOCKHOLDERS' EQUITY (DEFICIENCY) 185,749 (157,721)
----------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIENCY) $257,123 $ 35,945
======================
</TABLE>
Read accompanying Notes to Financial Statements.
<P>
Page 2
<P>
ANDERSON COMPUTERS/TIDALWAVE CORP.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
YEARS ENDED MARCH 31, 2000 AND 1999
<P>
<TABLE>
<S> <C> <C>
2000 1999
---- ----
NET SALES $ 266 $ 7,526
<P>
COST OF SALES 265 5,352
-----------------------
GROSS PROFIT 1 2,174
-----------------------
OPERATING EXPENSES
Selling, general and administrative 270,339 382,078
Depreciation 66 265
-----------------------
Total Operating Expenses 270,405 382,343
-----------------------
LOSS FROM OPERATIONS (270,404) (380,169)
-----------------------
OTHER INCOME
Forgiveness of indebtedness 9,766 -
Interest income 1,043 2,250
Miscellaneous 543 -
-----------------------
Total Other Income 11,352 2,250
-----------------------
NET LOSS (259,052) (377,919)
<P>
OTHER COMPREHENSIVE INCOME
Unrealized loss on investment in
equity security (347,394) -
-----------------------
COMPREHENSIVE INCOME (LOSS) $(606,446) $(377,919)
=======================
<P>
LOSS PER SHARE $ (.01) $ (0.02)
=======================
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 23,422,569 20,393,794
========================
</TABLE>
Read accompanying Notes to Financial Statements.
<P>
Page 3
<P>
ANDERSON COMPUTERS/TIDALWAVE CORP.
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
YEARS ENDED MARCH, 2000 AND 1999
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulated
Common Stock Additional Stock Other
Number of Par Paid-in Subscription Comprehensive
Shares Value Capital Receivable Deficit Income Total
------------------------------------------------------------------------
BALANCE -
MARCH 31, 1998 20,185,000 $20,185 $ 19,815 $ (175) $ (56,023) $ - $(16,198)
<P>
Repayment of stock
subscription
receivable - - - 67 - - 67
Issuance of common
stock for
services 1,075,000 1,075 244,650 - - - 245,725
Issuance of common
stock for
cash 181,284 181 21,744 - - - 21,925
Equity subject to
potential redemption - - (31,321) - - - (31,321)
Net loss - - - - (377,919) - (377,919)
------------------------------------------------------------------------
<P>
BALANCE -
MARCH 31, 1999 21,441,284 21,441 254,888 (108) (433,942) - (157,721)
<P>
Repayment of stock
subscription
receivable - - - 108 - - 108
Issuance of common
stock for
services 779,955 780 148,936 - - - 149,716
Issuance of common
stock for
cash 272,467 273 35,287 - - - 35,560
Issuance of common
stock in payment
of amount due to
related party 145,459 145 110,872 - - - 111,017
Issuance of common
stock to acquire
10%interest in
Citizen's Title
Services, Inc. 2,040,791 2,041 595,353 - - - 597,394
Increase in equity
subject to potential
redemption - - (19,479) - - - (19,479)
Stock options granted - - 75,600 - - - 75,600
Net loss - - - - (259,052) - (259,052)
Unrealized loss on
investment in equity
security - - - - - (347,394)(347,394)
------------------------------------------------------------------------
<P>
BALANCE
MARCH 31, 2000 24,679,956 $24,680 $1,201,457 $ - $(692,994)$(347,394)$185,749
========================================================================
</TABLE>
<P>
Read accompanying Notes to Financial Statements.
<P>
Page 4
<P>
ANDERSON COMPUTERS/TIDALWAVE CORP.
STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 2000 AND 1999
<TABLE>
<S> <C> <C>
2000 1999
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(259,052) $(377,919)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation 66 265
Issuance of common stock for
services 149,716 245,725
Stock options granted 75,600 -
(Increase) decrease in:
Prepaid expenses (3,500) -
Notes receivable 11,750 18,150
Accrued interest receivable 154 -
Increase (decrease) in:
Accounts payable and accrued
expenses (23,204) 19,112
-----------------------
NET CASH USED IN OPERATING ACTIVITIES (48,470) (94,667)
-----------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Repayment of stock subscription
receivable 108 67
-----------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common
stock 35,560 21,925
Decrease in amount due to officer (7,550) -
Increase in amount due to related
party - 93,750
------------------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 28,010 115,675
------------------------
NET INCREASE (DECREASE) IN CASH (20,352) 21,075
<P>
CASH AND CASH EQUIVALENTS - BEGINNING 22,125 1,050
------------------------
CASH AND CASH EQUIVALENTS - ENDING $ 1,773 $ 22,125
========================
</TABLE>
<P>
Read accompanying Notes to Financial Statements.
<P>
Page 5
<P>
ANDERSON COMPUTERS/TIDALWAVE CORP.
STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED MARCH 31, 2000 AND 1999
<P>
<TABLE>
<S> <C> <C>
2000 1999
---- ----
SUPPLEMENTAL DISCLOSURES OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
<P>
Issuance of common stock for services. $149,716 $245,725
===================
Issuance of common stock in payment
of amount due to related party. $111,017 $ -
===================
Issuance of common stock to acquire
a 10% interest in Citizen's Title
Services, Inc. $597,394 $ -
===================
Stock options granted in payment of
marketing and public relations
services. $ 75,600 $ -
===================
</TABLE>
<P>
Read accompanying Notes to Financial Statements.
<P>
ANDERSON COMPUTERS/TIDALWAVE CORP.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
<P>
NOTE 1. ORGANIZATION
------------
<P>
Anderson Computers/Tidalwave Corp. was incorporated on
April 23, 1996 under the laws of the State of Florida. The
company operates as a reseller of its customized "Tidalwave"
brand and other non "Tidalwave" brand computer products via
the Internet. The Company's headquarters is in Fort
Lauderdale, Florida.
<P>
The Company is in the process of shifting its focus
away from sales of computer products to providing mortgage
services via the Internet.
<P>
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
<P>
Revenue Recognition
-------------------
<P>
Sales are recognized upon shipment to the customer.
<P>
Computer Software
-----------------
<P>
Computer software is recorded at cost. Depreciation is
computed on the straight line basis using an estimated
useful life of three years.
<P>
Syndication Costs
-----------------
<P>
Costs incurred in raising capital through the issuance of
common stock is recorded as a reduction in additional paid-
in capital.
<P>
Income Taxes
------------
<P>
Deferred income taxes are provided for differences
between the basis of assets and liabilities for financial
and income tax reporting. A valuation allowance is provided
against deferred income tax assets in circumstances where
management believes recoverability of a portion of the
assets is not reasonably assured.
<P>
PAGE 7
<P>
ANDERSON COMPUTERS/TIDALWAVE CORP
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
<P>
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
----------------------------------------------
<P>
Loss Per Share
--------------
<P>
Loss per share is computed by dividing net loss for the year
by the weighted average number of shares outstanding.
<P>
Statement of Cash Flows
-----------------------
<P>
For purposes of this statement the Company considers all
highly liquid investments with a maturity of three months
or less to be cash equivalents.
<P>
Use of Estimates
----------------
<P>
Management uses estimates and assumptions in preparing
financial statements in accordance with generally
accepted accounting principles. Those estimates and
assumptions affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and
liabilities, and the reported revenues and expenses.
Accordingly, actual results could vary from the estimates
that were assumed in preparing the financial statements.
<P>
NOTE 3. COMPUTER SOFTWARE
-----------------
Computer software as of March 31, 2000 and 1999 are as
follows:
<TABLE>
<S> <C> <C>
2000 1999
---- -----
Cost $ 795 $ 795
Accumulated Depreciation (795) (729)
<P>
Total $ - $ 66
===== =======
</TABLE>
<P>
NOTE 3. INVESTMENT IN EQUITY SECURITY
-----------------------------
<P>
On June 22, 1999, the Company purchased a 4.9% interest
<P>
Page 8
<P>
ANDERSON COMPUTERS/TIDALWAVE CORP.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
<P>
NOTE 3. INVESTMENT IN EQUITY SECURITY (CONTINUED)
-----------------------------------------
<P>
In Citizen's Title Services, Inc., a privately held title
insurance company, for $297,717 by issuing 488,060 common
shares. On July 19, 1999, the Company signed a letter of
intent to purchase an additional 20.1% interest. This
transaction has not yet closed. However, on October 27,
1999, the Company purchased an additional 5.1% interest for
$299,677 by issuing 1,526,824 common shares and $5,000 cash.
On January 5, 2000, the $5,000 cash was returned in exchange
for 25,907 common shares. The common stock was valued using
the 30 day average market trading price.
<P>
The investment is classified as an available for sale
security and is reported at fair value, with unrealized
gains and losses included in comprehensive income. As of
March 31, 2000, the investment had an estimated fair value
of $250,000, a cost of $597,394 and an unrealized loss of
$347,394.
<P>
NOTE 4. INCOME TAXES
------------
<P>
As of March 31, 2000, the Company has net operating loss
carryforwards for income tax purposes of approximately
$693,000 expiring through March 31, 2020, available
to offset future taxable income. No deferred tax assets
have been recorded due to the Company having no history of
profitable operations.
<P>
NOTE 5. RELATED PARTY TRANSACTIONS
--------------------------
<P>
Office Facilities
-----------------
<P>
The Company shares office space with a company owned by
a stockholder. No rent is being charged to the Company.
<P>
Notes Receivable
----------------
<P>
Notes receivable represent 12% interest bearing notes due
from Internet TV Connector Corp., a majority stockholder.
<P>
Page 9
<P>
ANDERSON COMPUTERS/TIDALWAVE CORP.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
<P>
NOTE 5. RELATED PARTY TRANSACTIONS (CONTINUED)
--------------------------------------
<P>
----------------------------
<P>
The notes were issued on various dates from February 27
through May 13, 1998 and are due on demand with interest
payable monthly.
<P>
Due to Officer
--------------
<P>
Due to officer consists of advances made during July and
August 1996 to the Company by its President to purchase
computer hardware and software products for resale. These
advances are non-interest bearing and are expected to be
repaid within the next twelve months. Subsequent to March
31, 2000, working capital advances of $4,000 were made by
the Company's President.
<P>
Due to Related Party
--------------------
<P>
The amount due to related party consisted of company
expenses paid by Internet TV Connector Corp., a majority
stockholder. On May 5, 1999, agreement was made to settle
$93,750 of the liability through issuance of 125,000 common
shares. On May 7, 1999, agreement was made to settle the
remaining balance of $17,267 through the issuance of 20,459
common shares.
<P>
NOTE 6. CAPITAL STOCK
-------------
<P>
The Company has authorized 100,000,000 common shares with
a par value of $.001 per share. As of March 31, 2000 and
1999, 24,679,956 and 21,441,284 common shares were issued
and outstanding, respectively.
<P>
On February 2, 1998, the Company issued a Regulation D,
Rule 504 Offering Memorandum providing for the sale of
7000 units for a total consideration of $35,000. Each
unit consisted of one share of common stock and fifty
common stock purchase warrants. The warrants are not
<P>
Page 10
<P>
ANDERSON COMPUTERS/TIDALWAVE CORP.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
<P>
NOTE 6. CAPITAL STOCK (CONTINUED)
-------------------------
<P>
exercisable until July 26, 1998 and may be exercised until
July 26, 1999 at an exercise price of $2.00 per
share. The exercise date was extended to December 31, 2000
through a resolution of a meeting of directors and
stockholders dated November 30, 1999. The effect of the
assumed exercise of the warrants on loss per share for the
years ended March 31, 2000 and 1999 were anti-dilutive,
therefore, no diluted loss per share has been presented on
the statements of operations. All units offered under the
Offering Memorandum were sold.
<P>
Issuances of common stock pursuant to Regulation D, Rule 504
might be considered a public offering in violation of
federal securities laws. These issuances might also have
been in violation of certain state securities laws. If these
issuances were public offerings under federal securities
laws or in violation of certain state securities laws, some
of the holders of these securities might be granted the
right to rescind the sale of shares and demand that the
purchase price of the shares be returned. Common stock was
issued to approximately 34 of the Company's stockholders in
an offering that were believed to be conducted as private
placements under Regulation D, Rule 504 of the Securities
Act of 1933 as amended, and did not require registration
under the federal securities laws. However, due to the fact
that the Company may be deemed to be a "blank check company"
as defined in Rule 419, it is possible that holders of these
securities may allege that the offering and sale of these
securities was not a private placement under Regulation D,
Rule 504 and was not in accordance with Section 5 of the
Securities Act of 1933.
<P>
Generally, the statute of limitations for this type of claim
is one year after the date of the alleged violation and, if
successful, would entitle the owners to rescind the issuance
of the securities to them and demand a return of the
purchase price of the securities. As of March 31, 2000, if
Section 5 of the Securities Act of
<P>
Page 11
<P>
ANDERSON COMPUTERS/TIDALWAVE CORP.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
<P>
NOTE 6. CAPITAL STOCK (CONTINUED)
-------------------------
<P>
1933 was violated, no claims could be made since these
securities were issued more than one year ago.
<P>
Issuances of common stock pursuant to Section 4(2) of the
Securities Act of 1933 might be considered a public offering
in violation of federal securities laws. These issuances
might also have been in violation of certain state
securities laws. If these issuances were public offerings
under federal securities laws or in violation of certain
state securities laws, some of the holders of these
securities might be granted the right to rescind the sale of
shares and demand that the purchase price of the shares be
returned. Common stock was issued to approximately 20 of the
Company's stockholders in offerings that were believed to
be conducted as private placements under Section 4(2) of the
Securities Act of 1933 as amended, and did not require
registration under the federal securities laws. However, due
to the sophistication of the investors in the offering, it
is possible that holders of these securities may allege that
the offering and sale of these securities was not a valid
private placement under Section 4(2) and was not in
accordance with Section 5 of the Securities Act of 1933.
<P>
Generally, the statute of limitations for this type of claim
is one year after the date of the alleged violation and, if
successful, would entitle the owners to rescind the issuance
of the securities to them and demand a return of the
purchase price of the securities. As of March 31, 2000, if
Section 5 of the Securities Act of 1933 was violated, claims
of approximately $50,800 could be made.
<P>
The Company may have violated securities laws of several
states in connection with the issuances of common stock.
Similar to the recourse provided under the federal
securities laws, holders of these securities may be able to
make a claim to rescind the sale and demand a return of the
purchase price of the securities. The rescission rights that
may be granted to these holders under state
<P>
Page 12
<P>
ANDERSON COMPUTERS/TIDALWAVE CORP.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
<P>
NOTE 6. CAPITAL STOCK (CONTINUED)
-------------------------
<P>
law is not cumulative to the rights granted under federal
law. Accordingly, if stockholders rescind the sale of the
securities under federal law, they would not have the right
to additional payments under state law.
<P>
The Company is not aware of any pending claims for
rescission and intends to vigorously defend any potential
claims. Nevertheless, it is possible that a claim could be
made by holders of the securities, and if a court were to
hold that the private placement exemption is not available
for the sale of the securities or that the Company violated
state securities laws, the Company could be forced to
rescind the sales requiring significant monetary payments to
the claiming owners. These claims, if successful, could
significantly exceed the Company's cash reserves and may
require the borrowing of funds adversely affecting the
Company's financial condition.
<P>
On April 9, 1999, the Company issued 25,800 common shares in
payment of accounts payable of $6,900 and website
development and maintenance services of $6,000. On March 10,
2000, an additional 38,402 common shares were issued in
payment of accounts payable of $1,569 and future website
development and maintenance services of $3,500.
<P>
On April 12, 1999, the Company issued 203,314 common shares
valued at $30,497 ($.15 per share) as payment for entering
into an agreement with a company to market and sell its
"Tidalwave" brand computers.
<P>
On October 1, 1999, the Company issued 424,208 common shares
valued at $93,750 and an option to purchase an additional
424,208 common shares at $.15 per share valued at $75,600 in
payment of marketing and public relation services. The
option expires October 1, 2001.
<P>
On February 15, 2000, the Company issued 88,235 common
shares in partial payment for legal services rendered of
$7,500.
<P>
Page 13
<P>
ANDERSON COMPUTERS/TIDALWAVE CORP.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
<P>
NOTE 7. STOCK OPTIONS
-------------
<P>
On October 1, 1999, an option to purchase 424,208 common
shares at an exercise price of $.15 per share was granted in
payment of marketing and public relations services. The
options expire October 1, 2001.
<P>
The Company has adopted Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based
Compensation". The fair value of the option of $75,600 was
estimated on the date of grant using the Black-Scholes
pricing model with the following assumptions:
<P>
Risk-free interest rate 6.0%
Expected life (years) 1
Expected volatility 10.52
Expected dividends None
<P>
A summary of option transactions during the year ended March
31, 2000 is as follows:
<TABLE>
<S> <C> <C>
Weighted
Number Average Exercise
Of Shares Price
----------- -----------------
Outstanding as of
March 31, 1999 - -
Granted 424,208 $.15
Exercised - -
Forfeited - -
----------- -----------------
Outstanding as of
March 31, 2000 424,208
===========
Exercisable at
March 31, 2000 424,208
===========
</TABLE>
<P>
NOTE 8. FORGIVENESS OF INDEBTEDNESS
---------------------------
<P>
On April 19, 1999, the Company settled a delinquent account
payable totaling $19,566 for $9,800.
<P>
Page 14
<P>
ANDERSON COMPUTERS/TIDALWAVE CORP.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
<P>
NOTE 9. GOING CONCERN
-------------
<P>
The accompanying financial statements have been presented
on the basis of the continuation of the Company as a
going concern and do not include any adjustments relating
to the recoverability and classification of recorded
asset amounts or the amounts and classification of
liabilities that might be necessary should the Company be
unable to continue as a going concern. The Company has
incurred operating losses of $692,994 since inception and
has a working capital deficit of $13,451 as of March 31,
2000. Management is actively seeking investors for
additional funds through stock sales and is in the process
of shifting its focus away from sales of computer products
to providing mortgage services via the Internet. Management
believes that the Company can improve its profitability
through this business.
<P>
Page 15
<P>
