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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
AMENDMENT 2
FORM 10-SB/A
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
SYNERGY 2000, INC.
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(Exact name of small business issuer as specified in its charter)
Delaware 64-0872630
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(State of incorporation or organization) (IRS Employer Identification No.)
2815 Cox Neck Road, Chester, Maryland 21614
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(Address of principal executive offices)
(410) 643-8320
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(Telephone)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK, par $.001
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(Title of Class)
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INFORMATION REQUIRED
Item 1. Description of Business.
Reference is made to the Glossary at the end of this Business section
for a definition of certain terms.
Introduction
Synergy 2000 Inc. (the "Company") since January, 1997 has been engaged in the
business of providing consulting and management services relating to information
systems. It is also a reseller of software in most instances arising from its
consulting service. To date, a substantial portion of revenues have been
provided from clients and customers seeking solution to problems relating to the
year 2000 ("Y2K"). The Company also provides broad based advisory services in
connection with the organization and management of information departments of
clients. ("Management Advisory Services")
Some computer applications and computer software recognize any year ending in
"00" as "1900". Additionally, many computers were manufactured with built-in
programs or embedded chips which recognize twentieth century dates only. As a
result there is potential for computer programs and hardware not to function or
function incorrectly upon January 1, 2000. For example, a billing system that
does not recognize a date containing 2000 may not send bills or notices after
December 31, 1999. For example, medical equipment which operates on a computer
with timing software may cease to function altogether. This problem could result
in the inability of a client to operate its business profitability or possibly
not at all. Industry and government have undertaken significant programs to make
certain that computer systems are Y2K complaint. The Securities & Exchange
Commission requires disclosure of Y2K problems of public companies.
Finally, the Company is seeking to diversify its business and in June, 1998
formed a joint venture corporation - Argos 2000, Inc. ("Argos") to market
software for certain aspects of the auto insurance industry (See Item 7). The
Company also desires to increase its Management Advisory Services.
The Company's principal office is located at 2815 Cox Neck Road, Chester,
Maryland 21614 and its telephone number is 410-643-8320. The Company was formed
in February 1996 and began operations in 1997. It has not experienced a
consolidation, merger, bankruptcy or other material reclassification.
Nature of Company's Products or Services Offered.
Each client's needs are unique and potentially complex, and with the Company's
Year 2000 and Beyond products and services, the Company creates a unique
solution to meet their specific needs.
The Company has identified multiple niche tools and services specifically for
the Year 2000 marketplace for each computer platform (mainframe, PC's and client
server). The identification of these multiple products and services allows the
Company to pick and chose the best solutions for the client's needs. The Company
provides comprehensive Year 2000 hardware and software solutions for PC, LAN,
and Client Server environments. The Company's solution, Desktops Unlimited,
includes automated tools, project management and technical staff, as needed, for
inventory, impact analysis, detailed analysis, remediation and testing of Year
2000 issues. A network of senior information technology executives is available
through the Company to manage large scale information technology; develop
information technology strategies and implement tactical plans; serve as a
temporary chief information officer. The Company provides mainframe and embedded
systems Year 2000 solutions using third party technology services and engineers.
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The Company's strategy for its Y2K business includes entering into arrangements
with software developers providing products to solve Y2K problems. These
arrangements are generally oral and informal. A part of the arrangement the
Company acts as a reseller of software in connection with its contracts with
clients and in some instances merely resells the software. The supplier on the
other hand may provide technical support and training either directly to the
Company or to the Company's clients.
To perform its agreements the Company utilizes a pool of independent
consultants, generally programmers, engineers and project managers, who act as
independent contractors or are subcontracted to the client. The costs of
consultants are paid pursuant to the agreement with or directly by the client.
The personnel are hired as independent contractors on a "per contract" or "task
order" basis; whereby, the scope of work given and payment made to each person
is based upon the work assignment in Synergy's project scope of work.
The Company has entered into a variety of arrangements to assist its clients to
solve their Y2K problems. These range from simply providing software developed
by others, consulting on various aspects of Y2k compliance program or managing
the entire program. In some instances the Company may sell the required software
and provide consulting and management services.
The Company offers its services to clients with diverse operating systems,
computer language and hardware systems, operating systems included. Microsoft
Windows 3.1, 95 and 97, MVS/ESA, OS/390, AS/400, and other related systems.
Language support includes COBOL, RPG/400, PL/1, Natural, Assembler, Visual Basic
and some 4GLs. Major databases supported include Oracle, Sybase, DB2/400,
Informix, Ingres, and Access. Hardware serviced includes, Pentium PC's, SUN,
Hewlett-Packard, NCR, and IBM platforms.
Synergy 2000 offers the newly introduced "DESKTOPS Unlimited" service which,
through the use of automated tools, scans the hard drive of desktop computers
for recognizable software programs which are known to be vulnerable to date
dependencies. The system provides an on-screen display of the risks identified,
compiles lists of programs which need fixes and suggests remedial action.
Synergy 2000 resells various third party software to analyze PC spreadsheets,
analyze and remediate PC based computer languages to correct potential Year 2000
problems. The third party software utilized is selected based on a specific
client's technology environment. Most of the software sales are made in
conjunction with consulting services.
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During 1998 the Company derived approximately 30% of its revenues from the sale
of Y2K software unrelated to the performance of consulting services. Most of
these revenues were derived from the sale of software from 1st Development
Inc. The software consisted of analysis tools for client services and PC to
embedded Y2K problems. The Company anticipates deriving a lower proportion of
its revenues from software sales and insignificant revenues from 1st Development
Inc. in 1999.
Management Consulting Services, project management, organizational and workforce
issues related to company reorganizations, mergers and acquisitions, growth and
general process improvement, employee relations and development are provided to
clients in a variety of industries. These services are offered independently or
in conjunction with our technology services as a part of a totally integrated
technology and organizational solution.
Marketing
The Company markets its products through the efforts of its President and
Executive Vice President and independent sales representation who are paid a
retainer and commission on clients introduced to the Company by them. It has
been endorsed by or named as a preferred provides of Year 2000 solutions by the
National Food Processor Association, Counsel of Insurance Agent and Brokers
(CIAB), and the Professional Insurance and Agents of America (PIA), among
others.
During 1997 and 1998 the Company derived more than 5% of its revenues from
several customers. In 1997 the Company derived over $160,000 of its revenues
from a contract
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for Management Advisory Services with Jefferson Pilot Insurance Company. In 1998
based on unaudited results the Company derived approximately $300,000 (approx.
22%) of its revenues from Marsh and McLennen Companies, Inc., $635,000 (approx.
45%) from Zenith Insurance Company and $100,000 from Burlington Insurance Group,
Inc. The Company, however, does not believe this to be necessarily significant
as the Company derives its revenues from performing agreements all of which are
relatively short term. Once a project is complete the Company must obtain a new
project to replace it. To date, the Company generally has been able to enter
into new projects with new clients.
The Company believes its multi platform approach utilizing different products
and approach for the Y2K solution, enables it provide services to a broad range
of clients.
Synergy 2000 marketing endorsements enable the Company to reduce the cost of
sale and have direct contact with over 24,000 customers. These Affinity
Marketing Endorsements include: National Food Processors Association (NFPA):
Membership 500; Council of Insurance Agents and Brokers (CIAB): Membership 270;
National Association of Professional Insurance Agents (PIA): Membership 22,000;
Guy Carpenter (a Marsha & McLennan Company): Client Base of 1,500.
Employees
The Company has only three full-time employees. Two of these are the President
and Executive Vice President while the third is an administrative assistant. The
Company's services are provided by independent consultants engaged by the
Company or client as needed to perform the Company's contracts. The Company also
engages independent sales representatives to market its services.
Intellectual Property
The Company does not develop its own software and has no copyrights or patents
or other proprietary rights. Certain aspects of the Company's insurance program
are copyrighted by the developer. The Company has received a license for the
marketing of this product.
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Competition
The Computer consulting business and management advisory business are highly
competitive. Competition in the industry is generally based on cost and
technical ability. The Company competitive strategies include offering a wide
array of software solutions for the clients problems through its knowledge of
the available software and its relationships with independent engineering and
software firms. Therefore, the Company is not wedded to a particular solution
and is able to utilize new products. The Company also competes by offering a
package which includes personnel. The Company's endorsements reduce sales costs
and enables the Company to provide service at a lower price. The Company is not
a significant factor in the business in which it operates. Many of the Company's
competitors have significantly greater financial and other resources.
Description of Y-2K Arrangements
The Company has contracted with Nevamar, a Division of International Paper to
provide Y2K conversion of the client's mainframe program. The Company will
utilize mainframe tools from Computer Information Services. Day to day
management of the project will be provided by consultants to the Company. The
project involves several phases from analysis of database, to modification of
applications and data and testing. The Company will be paid a fee upon
completion of every phase.
An agreement was entered with Zenith Insurance. The project involved Y2K
solution multiple client servers and P.C. workstations. The Company will use IST
Year 2000 Analysis Suite for the project. The Company will be paid a fee for
services in various installments. The projects will be managed by independent
consultants contracted by the Company(Synergy). The project was completed ahead
of schedule.
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The Company has entered into an agreement with Stanislaus Food Products to
provide Y2K conversion services for their client server and embedded systems
using Convert-Tech analysis and remediation capabilities and EQE engineering
services for the embedded systems. The Company will be paid a fixed fee for a
fixed scope of work.
The Company entered into agreement with Marsh and McLennen Companies, Inc. to
sell software for Y-2K solution to this client and provide training. It is also
entered into agreement with American Power for the sale of software.
Management Advisory Services Agreement
In 1997 the Company completed a Management Advisory Services agreement with
Jefferson Pilot Insurance Company. Pursuant to the Agreement the Company
provided advise concerning the clients' information technology department
recommending selection of technology and software and advisory of staff
organization and personal choices.
Insurance
Carnet Insurance Agency an insurance agency located in Los Angeles, California
through its wholly owned subsidiary Argos Technology, Inc. ("ATI") developed
software processing system ("Argos System"). Carnet Insurance Agency is owned by
an affiliate of the Company. This system provides a fully automated policy
administration system for non-standard automobile insurance policies.
Non-standard insurance include insurance for high risk drivers, drivers with
traffic violations and drivers not able to obtain a good driver discount. It
also includes less affluent insureds requiring installment payments of premiums.
The system was developed from approximately September of 1996 until April 1997.
After one month of testing, the system went live on May 1, 1997 at Carnet
Insurance Agency and is still operational. The system has processed over 70,000
insurance policies and all related activities since that date. The system
processes the binding of insurance, underwriting, rating, policy issuance,
billing and claims administration required by an automobile insurance company.
It interfaces with all outside rating services as well as electronic
transference of information to motor vehicles. The Argos System is proprietary
to Carnet and it has copyrighted certain aspects of the Argos System. ATI has
granted Argos the exclusive right except for rights retained by Carnet. See Item
7 Certain Relationships and Related Transactions.
The system is ready for marketing but as is customary in software licensing and
sales. The system will need to be modified for each customer to meet the unique
characteristics and requirements of the customer. The Company anticipates
marketing the product for the near future except for nominal advertising and
promotion costs it does not believe any major funding is required. It is
contemplated that deposits will be made by the customer to offset expenses of
each sale. This product is the first product for the Company's planned entrance
into the insurance marketplace. The target clients are small insurance companies
and managing general agents (large insurance agencies that represent various
insurance companies in the market place). The Company believes that the Argos
System will enable any Company clients to rapidly enter the non standard
automobile insurance market. The system has the technical flexibility to scale
up or down according to client size and to expand to other produce lines beyond
non-standard auto line. The non-standard auto insurance market is a unique niche
with a lack of software providers.
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Glossary
Applications: Software programs that enable the computer to provide useful work,
usually industry or company specific, such as inventory control, attendance
tracking, policy processing, etc.
Applications Maintenance: Once an evaluation is developed, any activity to keep
programs running and in satisfactory condition: including upgrades, elimination
of faults and bugs and other corrections and repairs.
Automated Tools: A software program that will aid a programmer in the
development or repairing of software or hardware.
Client/Server: The relationship between machines in a communications network.
The client is the requesting machine; the server is the supplying machine.
Computer Code: The set of statements that outlines the way in which functions
may be performed and date represented. The computer rules used to convert data
from one representation to another.
Databases: A collection of data in a centralized library, made up of related
date and records.
Dead Code: Computer code that is no longer used but still resides on the system.
Generally, should be identified and eliminated or archived.
Hardware: The physical equipment of the technology world including magnetic,
electronic and mechanical devices such as mainframes, PC's, servers, printers,
etc.
Languages: A way of passing information to the computer other than through
direct code. Set of rules, conventions and representations used to convey
information, process and procedures. Examples include FoxPro, PowerBuilder,
COBOL, and RPG..
Local Area Networks: A communications network linking various hardware devices
within a facility using continuous cable or in-house voice/data system.
Mainframe: The largest and most costly class of computers used for running large
data processing operations with millions of transactions and large databases.
Open Systems: A computer or operating design for which detailed specifications
are provided by the manufacturer, allowing other vendors to produce compatible
hardware and software.
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Operating System: The master set of programs that manage the computer. Controls
input and output to peripherals such as screens, keyboards, etc., among other
things.
Proprietary Hardware: Specific hardware dedicated to a set of pre-defined
applications that cannot be used for other purposes.
Software: Instructions that direct the hardware to do work.
Software Applications: Programs that are written to perform specific tasks.
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Item 2. Management Discussion and Analysis
Introduction
The Company revenues are derived from the performance of consulting and
management arrangements. These arrangements generally last several months and
generally are not with the same client. The Company's future revenues are always
dependent upon obtaining additional contracts.
Statement of Operations September 30, 1997 to September 30, 1998 (unaudited)
The Company's revenues or fee bills was approximately $1,458,000 for the nine
months ended September 30, 1998 compared to approximately $377,790 comparable
period in 1997. The increase was due primarily to increase in the number of
consulting arrangements entered into by the Company as well as increased
revenues derived from the sale of software.
The Company's operating expenses during the nine month ended September 30, 1998
were $1,307,295 compared to $353,030 during the comparable period. The increased
expenses were primarily attributable to the increased volume. The increase in
pre tax and after tax net income is primarily the result of increased volume.
The Company does not believe that 1997 is a representative year as the Company
did not commence operations until January 1997. A substantial portion of its
activities in 1997 were devoted to start-up activities. During this period the
Company incurred marketing and other expenses arising prior to substantial
income producing activities.
The Company is not aware of any trend that will adversely affect its revenues in
1999. The Company relies on programmers to perform its contracts and from time
to time there have been shortages of programmers. The Company has not in the
past nor does it anticipate any difficulty in the immediate future in obtaining
programmers. Any change could result in increased fees paid to consultants.
The Company revenues beyond 1999 are dependent upon its ability to diversify
beyond offering Y2K services.
1997 Compared to 1996 [Audited]
During 1996 the Company had no income and only nominal expenses of less then
$500. The Company commenced operations in 1997 and had revenues of $480,335 and
expenses of approximately $479,000 resulting in pre tax net income of
approximately $1,360 and after tax net income of $353.
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Liquidity
The Company's working capital was approximately $421,000 as of September 30,
1998 compared to approximately $299,000 at December 31, 1997. The increase was
primarily attributable to accounts receivable arising from increased revenues.
The Company has derived its cash from operations and the sale of shares. The
Company has no commitments for capital expenditures and believes its available
cash is available for its present operations for the next twelve months.
Item 3. Description of Property.
The Company rents executive office space in Washington, D.C. and Pasadena, CA on
a month-to-month basis. The officers also operate offices from their homes. No
property is owned directly by the Company.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
Shareholders owning more than 5% of the common stock of the corporation and the
number and percent of outstanding shares owned as of December 31, 1998 are as
follows:
Percentage
Number of Of Company
Name of Shareholder Shares Owned Owned
- ------------------- ------------ ----------
Eli Dabich, Jr. 3,780,000 36%
2815 Cox Neck Road
Chester, Maryland 21614
Jeanette T. Smith 2,520,000 24%
225 South Lake Avenue
Pasadena, CA 91101
Michael York 2,200,000 21%
160 Cypress Avenue
Hermosa Beach, CA 90254
William Tabor* 625,000 6.1%
1479 Old Robinson Road
Louisville, Mississippi 39339
*These Shares are beneficially owned by William Tabor but held of record by Mr.
Tabor and other affiliates or associates of Mr. Tabor
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Item 5. Directors, Executive Officers, Promoters and Control Persons.
Eli Dabich, Jr. - President and Director
Jeanette Tebrich Smith - Exec. Vice President, Secretary and
Director
Virgil Pittman - Director
ELI DABICH, JR., age 59, is President and a Director of Synergy 2000. He
oversees operations and participates in sales and marketing activities. A 1963
graduate of the U. S. Naval Academy, Dabich earned his B.S. in Engineering and
served in the Navy, initially as a naval aviator. He earned the M. S. degree in
Administration from George Washington University in 1970, and during the period
from 1968-1970, he taught chemistry and computer science at the Naval Academy.
From 1970-74, Dabich served as a marketing representative with IBM. From
1974-82, he worked as senior vice president of Sun Life Insurance Company in
Baltimore, where he was responsible for data processing and administrative
services. From 1982-88, Dabich served as executive vice president for
administration and finance for Maryland Casualty Company. There, he was
responsible for over 600 people and a budget of $50 million. Responsibilities
included information systems, human resources, agency automation, software
development, and systems and administration. From 1988-90, he served as National
Director of Insurance Consulting for Coopers & Lybrand.
From 1990-93, Dabich was senior vice president of Nationale Nederlanden, North
American Corporation, in Washington, DC. There, he was responsible for the
operations of thirteen property and casualty insurance companies in the US and
Canada having $2.5 billion in premium revenue. From 1993-95, Dabich served as
senior vice president and Chief Administrative Officer for TIG Insurance Company
(a TransAmerica Insurance company), where he was responsible for administrative
services, human resources, information systems and other related duties. In 1996
in Baltimore, Dabich started a personal consulting practice in the field of
information processing, which ultimately led into the development of a network
of professional information systems practitioners and the development of Synergy
2000.
JEANETTE TEBRICH SMITH, age 50, Executive Vice President, Secretary and a
Director of Synergy 2000 serves the company in operations and administration.
She earned the B. A degree in History/Education at UCLA and worked for Greyhound
Personnel Services from 1977-80, where she served as regional manager. From
1980-86, Smith served as Vice President Human Resources & Administration for
Bekins Moving and Storage in Glendale, CA. There, she directed human resources
for headquarters and field locations. From 1986-95, Smith served as Assistant
Vice President, Human Resources, for TransAmerica Insurance Company in Los
Angeles, CA, where she provided support to field
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human resource managers nationally. Her key responsibilities included
enhancement of employee relations, training, salary and benefits administration,
organization development and employment.
In 1995, Jeanette Tebrich Smith formed a personal consulting practice and
network in association with Eli Dabich and others. She consulted in the areas of
corporate restructures and relocation, human resources, team building,
recruiting, resolution of employee conflicts, and other related topics. The
consulting practice led to recruiting of computer programming specialists needed
by customers to resolve computer date-change program problems. In 1997, she
joined Synergy 2000.
VIRGIL L. PITTMAN, JR., age 57, is a director of Synergy 2000. He received his
B. S. degree in Physics and Math from Northwestern Louisiana State University in
Natchitoches, LA in 1964. He joined the Navy and worked in data gathering and
systems development. He has held several management positions in the insurance
field including vice presidential posts with USAA, Equitable, and Nationwide
Insurance. In 1987, he joined Fireman's Fund Insurance where he serves today as
Senior Vice President. There, he is responsible for management of billing and
collection of $3 billion in annual premiums for the company. He is widely known
for his experience and capability in the information management field. He became
a director of Synergy 2000 in 1997.
Each director holds office for a term of one year or until his or her successor
is elected and qualified.
Item 6. Executive Compensation.
The following table sets forth all compensation paid by the Company during 1997
and 1998 to those persons who were employed during such year as (i) the chief
executive officer and (ii) an executive (other than the chief executive officer)
whose annual compensation exceeded $100,000.
Name and Principal Annual
Position Year Compensation
- ------------------------- ---- ------------
Eli Dabich, Jr. 1997 $110,000
President, Chief Executive
Officer
1998 $100,000
Jeanette Tebrich Smith 1997 $113,780
Executive Vice President
1998 $108,520
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The Company entered into one year employment agreements with Eli Dabich Jr. and
Jeanette Tebrich Smith as president and executive vice president respectively.
The agreement provide for the payment of an annual salary of $110,000 and
$106,000 to Jeanette Tebrich Smith. The agreements expires in March, 1999 . It
is anticipated that new employment agreements will be entered into upon terms to
be determined.
Item 7. Certain Relationships and Related Transactions.
Disclosure as to relationships existing among officers, directors and
shareholders:
On the date of incorporation, February 21, 1996, five million (5,000,000) shares
were issued to the initial officer, director, and founder of the corporation,
William E. Tabor. On October 1, 1996, four million shares (4,000,000) were
issued to Corporate Service Group (controlled by Tabor) for corporate
development and management support.
On January 17, 1997, current management joined the company and obtained control
of the company from Corporate Service Group and Tabor. Of the 9,000,000 shares
owned by Corporate Service Group and William E. Tabor, a total of 8,500,000
shares were returned to the treasury and canceled for a consideration of
$67,000. Eli Dabich, Jr., current President and Director, was issued 3,780,000
shares of common stock at par value totaling $3,780, and Jeanette T. Smith,
current Executive Vice President, was issued 2,520,000 shares of common stock at
par value or $2,520. The issuance was treated as an expense. At the same time,
Michael York acquired 2,200,000 shares for a consideration of $100,000.
All future transactions between the Company and its officers, directors,
principal shareholders and affiliates will be approved by a majority of the
independent and disinterested outside directors who will have access, at the
Company's expense, to the Company's legal counsel, and must be on terms no less
favorable to the Company than could be obtained from unaffiliated third parties
under similar circumstances.
Corporate Service Group ("Corporate Services"), an affiliate of Mr. Tabor,
performed services for Synergy 2000 for a fee. The services were generally
related to compliance and shareholder matters. Total fees earned by Corporate
Service Group from Synergy Securities 2000 in 1997 and 1998 were $77,451 and
$33,000. An additional $67,000 was paid to the Tabor Group in January, 1997 for
redemption and cancellation of shares as described above.
In June, 1998 the Company formed Argos to market software programs for the
insurance industry. In connection with the formation the Company contributed
200,000 shares of its common stock and received 51% of Argos. Argos Technology,
Inc. ("ATI") the other major shareholder received 39% of the shares of Argos and
granted Argos an exclusive license to market the Argos Systems. A majority of
the shares of ATI are owned by CarNet a corporation controlled by Michael York,
a principal shareholder of the Company.
The license is for an initial term of ten years and provides for a royalty of
10% of the sales revenue of Argos. The license contains sales commitments of
Argos Systems by June 30, 2000. If the Company has not sold ten of the systems
by June, 1999, ATI will receive 75,000 shares of the Company's common stock
contributed to Argos by the Company. If the additional ten units are not sold by
June 30, 2000 an additional 75,000 shares will be transferred to ATI.
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Item 8. Legal Proceedings.
No legal proceedings are currently on-going, contemplated or threatened.
Item 9. Market for Common Equity and Related Stockholder Matters.
The common stock of Synergy 2000 began trading in October of 1997 on the
Over-the-Counter stock market known as the NASDAQ Election Bulletin Board. The
quarterly high and low closing bid prices for the quarters recently ended
provided is shown below.
1997
----
High Low
---- ---
4th Quarter 4.437 2.125
1998
----
1st Quarter 5.50 4.375
2nd Quarter 5.593 5.00
3rd Quarter 5.50 5.00
4th Quarter 4.50 2.375
These Over-The-Counter market quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not necessarily represent actual
transactions.
As of February 28, 1999 there were 98 recordholders of the Company's common
stock.
Item 10. Recent Sales of Unregistered Securities.
On the date of incorporation, February 21, 1996, five million (5,000,000)
restricted common shares were issued to the initial officer, director, and
founder of the corporation, William E. Tabor III. On October 1, 1996, four
million restricted common shares (4,000,000) were issued to Corporate Service
Group (Tabor is a beneficial owner of Corporate Service Group) for corporate
development and management support. Total consideration for the sale was $4,500.
The sale was exempt pursuant to 4(2) of the Securities Act of 1933.
A total of 1,500,000 (post-split) shares were issued pursuant to a stock
offering and sale in New York, Florida, Canada and Greece, pursuant to ss.504
(D). These shares are not restricted. Total consideration paid was $7,500.
On January 17, 1997, current management joined the Company and obtained control
of the Company from Corporate Service Group and the initial officer and
director. Of the 9,000,000 shares their owned by Corporate Service Group and
William E. Tabor, a total of 8,500,000 shares were returned to the treasury and
canceled for $67,000. New management acquired 6,300,000 shares for $6,300 and
the corporation sold 2,200,000 shares for $90,000 to Michael York became a
principal shareholder. The Company believes transaction is exempt under Section
4(2) of the Securities Act as the individual purchases were accredited
investors.
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In September of 1997, the company sold 125,000 restricted common shares to
George Stephanopoulos for $125,000. An additional sale of 12,500 restricted
common shares was made to Ron Huffman in return for $12,500. Huffman subscribed
to an additional 112,500 shares totaling $112,500, but these shares have not yet
been issued or paid for. The Company believes transaction is exempt from the
registration requirements of the Act under Section 4(2) of the Securities Act as
the individual purchases were accredited investors.
In June, 1998 the Company issued 200,000 shares in conjunction with the
formation of a new subsidiary in which the Company received a 51% interest.
Because of the Company's control of the subsidiary these shares are not
considered outstanding. If such shares were deemed outstanding the issuance
would be exempt from the registration requirements of the Act pursuant to
Section 4(2) of the Act as the purchaser, is an entity controlled by the
Company.
The foregoing does not include shares issued by its 51% own subsidiary. Upon
formation of this subsidiary the owner of the exclusive marketing rights to the
Argos System granted the subsidiary an exclusive license to market the Argos
System. In consideration of the license the subsidiary issued 49% of its shares
to the licensor and a key employee of the licensor. The shares of Argos were
issued pursuant to an exemption from the registration requirements of the act
under Section 4(2) thereof.
As of December 31, 1998, there were 10,637,500 common shares outstanding, of
which 9,137,500 were restricted shares.
(NOTE: On December 31, 1996, the company implemented a 2-for-1 forward stock
split without change in the par value of the stock. All references to stock
amounts have been adjusted to reflect the 2-for-1 stock split.)
Item 11. Description of Securities.
The Company is authorized to issue 25,000,000 shares of Common Stock, par value
$0.001 per share. At the close of business on December 31, 1997, there were
10,637,500 shares of Common Stock outstanding. Of the outstanding shares, a
total of 1,500,000 were held by the general public.
Holders of Common Stock are entitled to one vote per share on all matters
concerning which shareholders are entitled to vote. Cumulative voting in the
election of directors is not permitted. As a result, the holders of more than
50% of the outstanding shares have the power to elect all directors. The quorum
required at a shareholders' meeting is a majority of the shares entitled to
vote, represented in person or by proxy. If a quorum is present, the affirmative
vote of a majority of the shares represented at the meeting and entitled to vote
on a matter is required for shareholder approval.
Holders of Common Stock are entitled to receive ratably such dividends, if any,
as may be declared by the Board of Directors out of funds legally available
thereof and after payment of dividends, if any, due on any outstanding shares of
Preferred Stock. Upon liquidation of the Company, such holders would share
ratably in the assets, if any, remaining after payment of all debts and
liabilities and after satisfaction of the liquidation preference of any
outstanding shares of Preferred Stock. Holders of Common Stock do not have
preemptive, conversion or redemption rights.
16
<PAGE>
Transfer Agent
The transfer agent and registrar for the Company's Common and Preferred Stock is
Securities Transfer Corporation, P. O. Box 701629, Dallas, TX 75370.
Paying Agent
The Company will act as the Paying Agent for any dividends.
No Other Classes of Shares Authorized or Issued
No preferred shares are to be registered. The Company has not authorized or
issued any classes of Preferred Stock.
Item 12. Indemnification of Directors and Officers.
As permitted by Delaware law, the Company's Articles and Certificate of
Incorporation provide that the Company will indemnify its directors and officers
against expenses and liabilities they incur to defend, settle or satisfy any
civil or criminal action brought against them on account of their being or
having been directors or officers unless, in any such action, they are adjudged
to have acted with gross negligence or willful misconduct.
Item 13. Financial Statements and Exhibits.
(1) 1996 and 1997 Audited Financial Statement including Income
Statement, Cash Flows and Changes in Shareholder Equity, including
1998 Interim Unaudited Financial Statement for September 30 and
the nine period then enter including Balance Sheet and Statements
of Income, Cash Flows and Changes in Shareholder Equity.
Item 14. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.
No change in accountants has occurred and no disagreements have occurred.
Item 15. Financial Statements. See Item 13
F-1. Audit Report for 1996 and 1997, including Interim Unaudited Financial
Statements for the third quarter of 1998.
PART III
Description to Exhibits (reciting exhibit numbers specified by Regulation S-B).
3. Articles of Incorporation and By-laws.*
17
<PAGE>
10. Material Contracts.*
10.1 Employment Agreements of Eli Dabich, Jr. and Jeanette T. Smith.*
10.2 Company Contract with International Paper.*
10.3 Company Contract with Marsh and McLennan Companies, Inc.*
10.4 Company Contract with Zenith Insurance Company.*
10.5 License Agreement of Argos 2000, a majority-owned subsidiary.*
21. Schedule of Subsidiaries.*
27. Financial Data Schedule.
* Previously Filed.
18
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
(Registrant) SYNERGY 2000, Inc.
------------------
Date February 12, 1999
By /S/ Eli Dabich, Jr.
--------------------
Eli Dabich, Jr. as President
19
<PAGE>
SYNERGY 2000, INC.
Financial Statements
December 31, 1997 and 1996
<PAGE>
SYNERGY 2000, INC.
Financial Statements
Contents Page No.
-------- --------
Report of Independent Auditors 1
Balance Sheets 2
Statements of Operations 3
Statements of Stockholders' Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 6
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Synergy 2000, Inc.
We have audited the accompanying balance sheets of Synergy 2000, Inc. (a
development stage company through December 31, 1996) as of December 31, 1997
and 1996, and the related statements of operations, stockholders' equity and
cash flows for the year ended December 31, 1997 and the period of inception to
December 31, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Synergy 2000, Inc., at
December 31, 1997 and 1996, and the results of its operations and its cash
flows for the year ended December 31, 1997 and the period of inception to
December 31, 1996, in conformity with generally accepted accounting
principles.
MILNER, BALES AND COMPANY
Greenville, South Carolina
April 30, 1998
-1-
<PAGE>
SYNERGY 2000, INC.
Balance Sheets
December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash $137,612 $ 12,000
Accounts Receivable 64,024 --
Common Stock Subscriptions Receivable 112,500 250,000
-------- --------
Total Current Assets 314,136 262,000
Equipment, Net 3,635 --
Organization Costs, Net 136 179
-------- --------
Total Assets $317,907 $262,179
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 5,273 $ 600
Accrued Payroll Taxes 10,395 --
-------- --------
Total Current Liabilities 15,668 600
Deferred Income Taxes 1,007 --
Stockholders' Equity:
Common Stock, Par Value $.001;
Authorized 25,000,000 Shares;
Issued and Outstanding 10,637,500 Shares at
December 31, 1997 and 10,500,000 Shares
at December 31, 1996 10,637 10,500
Common Stock Subscribed, 112,500 Shares at
December 31, 1997 and 250,000 shares at
December 31, 1996 112,500 250,000
Capital in Excess of Par Value of Common Stock 236,663 1,500
Retained (Deficit) (58,568) (421)
-------- --------
Total Stockholders' Equity 301,232 261,579
-------- --------
Total Liabilities and Stockholders' Equity $317,907 $262,179
======== ========
</TABLE>
See accompanying notes to financial statements.
-2-
<PAGE>
SYNERGY 2000, INC.
Statements of Operations
For the Year Ended December 31, 1997 and
the Date of Inception to December 31, 1996
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Fees Billed $480,335 $ --
Operating Expenses:
Salaries 222,391 --
Contract Services 37,451 --
Taxes and Licenses 12,044 --
Auto and Truck 7,661 --
Travel and Business 92,225 --
Meals and Entertainment 7,748 --
Advertising 28,177 --
Professional Fees 15,279 --
Rent 5,778 --
Repairs and maintenance 260 --
Telephone 11,607 --
Supplies 11,343 --
Insurance 11,163 --
Postage 2,449 --
Dues and Subscriptions 2,079 --
Investor Relations 5,125 --
Filing Fees 5,260 --
Miscellaneous 935 421
-------- --------
478,975 421
-------- --------
Net Income (Loss) Before Income Taxes 1,360 (421)
Provision for Income Taxes 1,007 --
-------- --------
Net Income (Loss) $ 353 $ (421)
======== ========
</TABLE>
See accompanying notes to financial statements.
-3-
<PAGE>
SYNERGY 2000, INC.
Statements of Stockholder's Equity
For the Date of Inception to December 31, 1996 and
the Year Ended December 31, 1997
<TABLE>
<CAPTION>
Capital Total
Common In Excess Stock-
Common Stock of Par Retained holders'
Stock Subscribed Value (Deficit) Equity
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance -
Date of Inception $ -- $ -- $ -- $ -- $ --
Shares Sold 5,250 -- 6,750 -- 12,000
Shares Subscribed -- 250,000 -- -- 250,000
Shares Split 5,250 -- (5,250) -- --
Net Loss -- -- -- (421) (421)
------- -------- -------- -------- --------
Balance -
December 31, 1996 10,500 250,000 1,500 (421) 261,579
Shares Sold 9,380 -- 104,420 -- 113,800
Subscriptions
Received 137 (137,500) 137,363 -- --
Shares Redeemed (9,380) -- (6,620) (58,500) (74,500)
Net Income -- -- -- 353 353
------- -------- -------- -------- --------
Balance -
December 31, 1997 $10,637 $112,500 $236,663 $(58,568) $301,232
======= ======== ======== ======== ========
</TABLE>
See accompanying notes to financial statements.
-4-
<PAGE>
SYNERGY 2000, INC.
Statements of Stockholder's Equity
For the Date of Inception to December 31, 1996 and
the Year Ended December 31, 1997
<TABLE>
<CAPTION>
1997 1996
-------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 353 $ (421)
Adjustments to Reconcile Net Income (Loss) to Net Cash
Provided by (Used) in Operating Activities:
Depreciation 404 --
Amortization 43 36
Increase in Accounts Receivable (64,024) --
Increase in Accounts Payable 4,673 600
Increase in Accrued Payroll Taxes 10,395 --
Increase in Deferred Income Taxes 1,007 --
-------- -------
Net Cash Provided by (Used) in Operating Activities (47,149) 215
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Aquisition of Equipment (4,039) --
Organization Costs -- (215)
-------- -------
Net Cash Used in Investing Activities (4,039) (215)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Stock 251,300 12,000
Redemption of Stock (74,500) --
-------- -------
Net Cash Provided by Financing Activities 176,800 12,000
-------- -------
NET INCREASE IN CASH 125,612 12,000
CASH - BEGINNING 12,000 --
-------- -------
CASH - ENDING $137,612 $12,000
======== =======
</TABLE>
See accompanying notes to financial statements.
-5-
<PAGE>
SYNERGY 2000, INC.
Notes to Financial Statements
December 31, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Synergy 2000, Inc. (the
Company) is presented to assist in understanding the Company's financial
statements. The financial statements and notes are representations of the
Company's management who is responsible for their integrity and objectivity.
These accounting policies conform to generally accepted accounting principles
and have been consistently applied in the preparation of the financial
statements.
Nature of Operations - The Company was incorporated on February 20, 1996 in the
state of Delaware and was a development stage company through December 31, 1996.
It began operations in 1997 as an information systems integrator and management
consulting firm providing value added technology and management solutions for
companies to prepare them tactically and strategically for the Year 2000 and
beyond. The Company offers a suite of products and services for solving systems'
problems related to the Year 2000 and the inability to process computer
application code with date-related fields. The Company provides services to
clients throughout the nation, as well as some foreign markets. Since the
Company's clients include all industries, its ability to collect amounts due
from them as a result of extending them credit, is not affected by economic
fluctuations in any particular industry.
Revenue Recognition - Revenue from contract consulting services are recognized
on the percentage-of-completion method. Revenue from sales of software and
software documentation products is generally recognized upon product shipment
provided that no significant vendor obligations remain and collection of the
resulting receivable is deemed probable.
Depreciation - The Company's equipment is depreciated using the straight-line
method. Depreciation expense totalled $404 for the year ended December 31, 1997
and $0 for the period of inception to December 31, 1996.
Organization Costs - Organization costs ($215) are being amortized using the
straight-line method over 60 months. Amortization expense charged to operations
amounted to $43 for the year ended December 31, 1997 and $36 for the date of
inception to December 31, 1996. Accumulated amortization was $79 at December 31,
1997 and $36 at December 31, 1996.
Deferred Income Taxes - For income tax reporting, the Company uses accounting
methods that recognizes depreciation sooner than for financial statement
reporting and does not recognize income and certain expenses until received or
paid. As a result, the basis of equipment, accounts receivable, and certain
accrued expenses for financial reporting exceeds its tax basis. Deferred income
taxes have been recorded for the excess, which will be taxable in future periods
through reduced depreciation deductions, and increased income for tax purposes.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from these estimates.
-6-
<PAGE>
NOTE 2 - EQUIPMENT
Equipment consists of the following:
1997 1996
------ ------
Computer Equipment $4,039 $ --
Accumulated Depreciation (404) --
------ ------
$3,635 --
====== ======
NOTE 3 - INCOME TAXES
The provision for income taxes consists of the following:
1997 1996
------ ------
Current $ -- $ --
Deferred 1,437 --
------ ------
$1,437 $ --
====== ======
The tax provision differs from the expense that would result from applying
statutory rates to income before income taxes because of nondeductible meals and
entertainment or $3,874.
NOTE 4 - STOCKHOLDERS' EQUITY
Common Stock - For the year ended December 31, 1997, the Company sold 9,380,000
shares of its $.001 par value common stock for a total price of $113,800.
Additionally, the Company redeemed 9,380,000 shares for a total price of
$74,500.
On September 9, 1996, the Company sold 750,000 shares of its $.001 per value
common stock in the state of New York, pursuant to a registration with the New
York Department of Law and pursuant to a Section 504 (D) exemption with the
United States Securities and Exchange Commission, for a total price of $7,500.
Common Stock Split - On December 31, 1996, the Company approved a 2-for-1 common
stock split.
Common Stock Subscribed - On December 31, 1996, 250,000 shares of the Company's
$.001 par value common stock was subscribed to for a total price of $250,000.
For the year ended December 31, 1997, $137,500 of the subscriptions were
received. The remaining $112,500 was outstanding at December 31, 1997.
Net Income (Loss) Per Share - Net income (loss) per common share has not been
computed since it is not significant.
-7-
<PAGE>
SYNERGY 2000, INC. AND SUBSIDIARY
Consolidated Balance Sheet (Unaudited)
September 30,
1998
--------------
ASSETS
Current Assets:
Cash $ 141,232
Accounts Receivable 272,841
Common Stock Subscriptions Receivable 112,500
-----------
Total Current Assets 526,573
Equipment, Net 4,532
Other Assets:
Intangible Assets, Net 936,765
Organization Costs, Net 104
-----------
Total Other Assets 936,869
-----------
Total Assets $ 1,467,974
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 44,645
Accrued Payroll Taxes 9,020
Accrued Income Taxes 51,237
-----------
Total Current Liabilities 104,902
Deferred Income Taxes ---
Minority Interest in Consolidated Subsidiary 463,728
Stockholders' Equity:
Common Stock, Par Value $.001;
Authorized 25,000,000 Shares;
Issued and Outstanding 10,637,500 Shares 10,637
Common Stock Subscribed, 112,500 Shares 112,500
Capital in Excess of Par Value of Common Stock 726,663
Retained Earnings 49,544
-----------
Total Stockholders' Equity 899,344
-----------
Total Liabilities and Stockholders' Equity $ 1,467,974
===========
See accompanying consolidated notes to financial statements.
<PAGE>
SYNERGY 2000, INC. AND SUBSIDIARY
Consolidated Statements of Operations (Unaudited)
Nine Months Nine Months
Ended Ended
September 30, September 30,
1998 1997
------------ -------------
Fees Billed $ 1,458,581 $ 377,789
Operating Expenses:
Salaries 182,280 168,300
Contract Services 853,972 33,122
Taxes and Licenses 14,476 10,571
Auto and Truck 1,414 5,766
Travel and Business 42,718 71,809
Meals and Entertainment 1,455 4,801
Advertising 62,838 14,340
Professional Fees 42,640 13,635
Rent 8,777 2,250
Telephone 20,368 6,280
Supplies 11,874 6,328
Insurance 27,239 7,845
Postage and Shipping 3,678 1,033
Dues and Subscriptions 690 1,545
Investor Relations 4,617 ---
Miscellaneous 28,259 5,405
----------- ----------
1,307,295 353,030
----------- ----------
Net Income Before Income Taxes 151,286 24,759
Income Tax (50,230) (5,228)
----------- ---------
Net Income Before Minority Interest 101,056 19,531
Minority Interest in Net Loss 7,056 ---
----------- ---------
Consolidated Net Income $ 108,112 $ 19,531
=========== =========
See accompanying consolidated notes to financial statements.
<PAGE>
SYNERGY 2000, INC. AND SUBSIDIARY
Consolidated Statement of Stockholders' Equity (Unaudited)
<TABLE>
<CAPTION>
Capital Total
Common In Excess Retained Stock-
Common Stock of Par Earnings holders'
Stock Subscribed Value (Deficit) Equity
------------- ----------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Balance -
December 31, 1997 $10,637 $ 112,500 $236,663 $(58,568) $301,232
Sale of Subsidiary
Common Stock --- --- 490,000 --- 490,000
Net Income --- --- --- 108,112 108,112
------- --------- -------- -------- --------
Balance -
September 30, 1998 $10,637 $ 112,500 $726,663 $49,544 $899,344
======= ========= ======== ======= ========
</TABLE>
See accompanying consolidated notes to financial statements.
<PAGE>
SYNERGY 2000, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
1998 1997
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 101,056 $ 19,531
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation 668 ---
Amortization 24,052 32
Dec. (Inc.) in Accounts Receivable (208,817) (37,465)
Inc. (Dec.) in Accounts Payable 39,372 14,950
Inc. (Dec.) in Accrued Payroll Taxes (1,375) 15,551
Inc. (Dec.) in Deferred Income Taxes (1,007) ---
Inc. (Dec.) in Accrued Income Taxes 51,237 5,228
--------- --------
Net Cash Provided by Operating
Activities 5,186 17,827
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Aquisition of Equipment (1,566) ---
--------- --------
Net Cash Used in Investing Activities (1,566) ---
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Stock --- 138,800
Redemption of Stock --- (74,500)
--------- --------
Net Cash Provided by Financing
Activities --- 64,300
--------- --------
NET INCREASE IN CASH 3,620 82,127
CASH - BEGINNING 137,612 12,000
--------- --------
CASH - ENDING $ 141,232 $ 94,127
========= ========
</TABLE>
See accompanying consolidated notes to financial statements.
<PAGE>
SYNERGY 2000, INC. AND SUBSIDIARY
Consolidated Notes to Financial Statements (Unaudited)
September 30, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements of Synergy 2000,
Inc. and subsidiary (the Company) have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the regulations of the Securities and Exchange Commission. Accordingly,
they do not include all the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the nine month period ended September 30, 1998 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1998. These interim consolidated financial statements should be read in
conjunction with the financial statements and notes for the year ended December
31, 1997 contained herein.
Organization and Business - The Company is an information systems integrator and
management consulting firm providing value added technology and management
solutions for companies to prepare them tactically and strategically for the
Year 2000 and beyond. The Company offers a suite of products and services for
solving systems' problems related to the Year 2000 and the inability to process
computer application code with date-related fields.
On June 25, 1998, the Company and Argos Technologies, Inc. (an unrelated
company) agreed to form Argos 2000, Inc. for the purpose of marketing Year 2000
compatible policy administration software to the auto insurance industry. The
Company received 51% of the newly issued common stock of Argos 2000, Inc. in
exchange for 200,000 shares of its $.001 par value common stock. This common
stock is not reflected as issued and outstanding in the accompanying unaudited
consolidated financial statements since it is eliminated in consolidation. Argos
Technologies, Inc. received 49% of the newly issued common stock of Argos 2000,
Inc., plus certain contingent commissions based on sales, in exchange for an
exclusive, non-transferable, license, throughout the world, to market certain
proprietary software products. This transaction was valued at $960,785 which was
the estimated fair value of the common stock issued by Argos 2000, Inc. as of
June 25, 1998.
The results of operations presented in the accompanying unaudited consolidated
financial statements include Argos 2000, Inc. from its formation on June 25,
1998 through September 30, 1998, and are insignificant.
Since the Company's clients include all industries, its ability to collect
amounts due from them as a result of extending them credit, is not affected by
economic fluctuations in any particular industry.
Principles of Consolidation - The consolidated financial statements include the
accounts of the Company and its 51% owned subsidiary, Argos 2000, Inc. All
significant intercompany transactions and balances have been eliminated.
<PAGE>
SYNERGY 2000, INC. AND SUBSIDIARY
Consolidated Notes to Financial Statements (Unaudited)
(Continued)
September 30, 1998
Revenue Recognition - Revenue from contract consulting services are recognized
on the percentage-to-completion method. Revenue from sales of software and
software documentation products is generally recognized upon product shipment
provided that no significant vendor obligations remain and collection of the
resulting receivable is deemed probable.
Depreciation - The Company's equipment is depreciated using the straight-line
method. Depreciation expense totalled $668 for the nine months ended September
30, 1998.
Intangible Asset - In June 1998, Argos 2000, Inc. acquired an exclusive,
non-transferable, license, throughout the world, to market a fully automated,
year 2000 compatible, policy administration system designed for the auto
insurance industry. This intangible asset is amortized using the straight-line
method over 10 years. Amortization expense totalled $24,020 for the nine months
ended September 30, 1998.
Organization Costs - Organization costs ($215) are being amortized using the
straight-line method over 60 months. Amortization expense charged to operations
amounted to $32 for the nine months ended September 30, 1998. Accumulated
amortization was $111 at September 30, 1998.
Deferred Income Taxes - For income tax reporting, the Company uses accounting
methods that recognizes depreciation sooner than for financial statement
reporting and does not recognize income and certain expenses until received or
paid. As a result, the basis of equipment, accounts receivable, and certain
accrued expenses for financial reporting exceeds its tax basis. Deferred income
taxes have been recorded for the excess, which will be taxable in future periods
through reduced depreciation deductions, and increased income for tax purposes.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from these estimates.
NOTE 2 - EQUIPMENT Equipment consists of the following:
Computer Equipment $ 5,604
Accumulated Depreciation (1,072)
--------
$ 4,532
========
<PAGE>
SYNERGY 2000, INC. AND SUBSIDIARY
Consolidated Notes to Financial Statements (Unaudited)
(Continued)
September 30, 1998
NOTE 3 - INCOME TAXES
The income tax provision consists of the following:
Current $ 51,237
Deferred (1,007)
--------
$ 50,230
========
The income tax provision differs from the expense that would result from
applying statutory rates to income before income taxes because of nondeductible
meals and entertainment or $727.
NOTE 4 - STOCKHOLDERS' EQUITY
Common Stock Subscribed - On December 31, 1996, 250,000 shares of the Company's
$.001 par value common stock was subscribed to for a total price of $250,000.
For the year ended December 31, 1997, $137,500 of the subscriptions were
received. The remaining $112,500 was outstanding at September 30, 1998.
Net Income Per Share - Net income per common share has not been computed since
it is not significant.
NOTE 5 - RELATED PARTY TRANSACTIONS
For the nine months ended September 30, 1998, the Company paid Argos 2000, Inc.
$72,044 for services provided to the Company.
