SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) JUNE 18, 1999
WORKFIRE.COM, INC.
(Exact name of registrant as specified in its charter)
COLORADO 0-23871 84-1434323
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1708 DOLPHIN AVENUE, SUITE 400, KELOWNA, BRITISH COLUMBIA, V1Y 9S4 CANADA
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (250) 717-8966
BUFFALO CAPITAL VII, LTD.
(Former name or former address, if changed since last report)
Exhibit index on consecutive page 3 Consecutive page 1 of 33
<PAGE>
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
On June 18, 1999, a change in control of the Company occurred, in
conjunction with closing under a Reorganization and Stock Purchase
Agreement. Prior to closing under the Reorganization and Stock Purchase
Agreement, the Company had a total of 26,817,687 shares issued and
outstanding. As the first step in the closing process certain
shareholders of the Company agreed to voluntarily surrender for
cancellation a total of 23,253,332 shares, leaving a total of 3,564,355
shares of common stock issued and outstanding.
Following the cancellation of shares, the Company issued 10,375,662
shares of its common stock in exchange for 88.51% of the issued and
outstanding common stock of Workfire.com, a Nevada corporation. As a
result of that transaction, Workfire.com became an 88.51%-owned
subsidiary of the Company.
As the third step in the closing process, certain persons, who are not
affiliates of Workfire.com, purchased a total of 2,952,871 shares and
all of the issued and outstanding Class A and Class B Warrants from
prior shareholders of the Company. The Warrants were then canceled.
As a result of these transactions, the Company now has 13,940,017
issued and outstanding shares of common stock, of which 10,375,662
shares, or approximately 74.43%, are owned by persons who were
previously shareholders of Workfire.com. Certain non-affiliated persons
designated by Workfire.com own 2,952,871 shares, or approximately
21.18% of the issued and outstanding common stock, and persons who were
previously shareholders of the Company own a total of 611,484 shares or
approximately 4.39% of the issued and outstanding common stock.
Prior to closing, the Company adopted the assumed name of Workfire.com,
Inc., and following closing, it has conducted all of its business
operations under that assumed name. At the shareholders' meeting held
July 12, 1999, the name change was formally approved with the
shareholders approving Articles of Amendment to the Articles of
Incorporation of the Company.
In conjunction with the change in ownership of a controlling interest
in the stock of the registrant, the previous officers and directors of
the registrant resigned and appointed as new directors Tom Taylor,
Philip Stern, and Nicholas Miller. The new directors elected Tom Taylor
as the President, Secretary, and Treasurer of the Company.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
See Item 1. above.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
2
<PAGE>
ITEM 5. OTHER EVENTS
Not applicable.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS
Not applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired: Filed with this
report.
(b) Pro forma financial information: Filed with this report.
(c) Exhibits:
<TABLE>
<CAPTION>
REGULATION CONSECUTIVE
S-K NUMBER DOCUMENT PAGE NUMBER
<S> <C>
27 Financial Data Schedule 33
99.1 Reorganization and Stock Purchase Agreement*<F1> N/A
----------
<FN>
<F1>
*Filed previously
</FN>
</TABLE>
ITEM 8. CHANGE IN FISCAL YEAR
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WORKFIRE.COM, INC.
July 14, 1999 By: /S/ TOM TAYLOR
-----------------------------------
Tom Taylor, President
3
<PAGE>
Consolidated Financial Statements of
WORKFIRE TECHNOLOGIES INC.
(A Development Stage Enterprise)
From incorporation on July 7, 1998 to December 31, 1998
<PAGE>
AUDITORS' REPORT TO THE SHAREHOLDERS
We have audited the consolidated balance sheet of Workfire Technologies Inc. as
at December 31, 1998 and the consolidated statements of loss and deficit and
cash flows for the period from incorporation on July 7, 1998 to December 31,
1998. 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 an audit to obtain reasonable
assurance 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.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the company as at December 31, 1998
and the results of its operations and the changes in its cash flows for the
period from incorporation on July 7, 1998 to December 31, 1998 in accordance
with generally accepted accounting principles in The United States of America.
/s/KPMG LLP
Kelowna, Canada
January 27, 1999
<PAGE>
<TABLE>
WORKFIRE TECHNOLOGIES INC.
(A Development Stage Enterprise)
Consolidated Balance Sheet
$ United States
December 31, 1998
<CAPTION>
===============================================================================================================
Assets
<S> <C>
Current assets
Cash (note 3) $ 315,658
Accounts receivable 4,297
Prepaid expenses 5,326
----------------------------------------------------------------------------------------------------------
325,281
Due from related parties (note 4) 10,521
Capital assets (note 5) 43,074
- ---------------------------------------------------------------------------------------------------------------
$ 378,876
===============================================================================================================
<CAPTION>
Liabilities and Stockholders' Equity
<S> <C>
Current liabilities
Accounts payable and accrued liabilities $ 16,016
Due to related party (note 6) 9,943
Stockholders' Equity
Share capital (note 7) 680,213
Deficit accumulated during the development stage (328,086)
Foreign currency translation adjustment 790
----------------------------------------------------------------------------------------------------------
352,917
- ---------------------------------------------------------------------------------------------------------------
$ 378,876
===============================================================================================================
</TABLE>
Related party transactions (note 8)
Subsequent events (note 9)
See accompanying notes to consolidated financial statements.
Approved by the Board:
______________________________ Director
______________________________ Director
<PAGE>
<TABLE>
WORKFIRE TECHNOLOGIES INC.
(A Development Stage Enterprise)
Consolidated Statement of Loss and Deficit
$ United States
<CAPTION>
Period from incorporation on July 7, 1998 to December 31, 1998
===============================================================================================================
<S> <C>
Revenue
Interest $ 1,575
Expenses
Research and development
Consultants 559
Internet access charges 2,118
Purchased research and development (note 8) 100,000
Salaries and benefits 97,080
------------------------------------------------------------------------------------------------------
199,757
General and administrative
Amortization 3,944
Marketing and promotion 15,335
Office and administration 12,585
Professional fees 10,973
Rent and utilities 11,798
Salaries and benefits 59,194
Travel 16,075
129,904
------------------------------------------------------------------------------------------------------
Loss, being deficit at end of period $ (328,086)
===============================================================================================================
Weighted average number of shares outstanding during the period 8,975,384
Loss per share (note 1(g)) $ (0.04)
===============================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
WORKFIRE TECHNOLOGIES INC.
(A Development Stage Enterprise)
Consolidated Statement of Cash Flows
$ United States
<CAPTION>
Period from incorporation on July 7, 1998 to December 31, 1998
===============================================================================================================
<S> <C>
Cash provided by (used in):
Operations
Net loss for period $ (328,086)
Items not involving cash:
Amortization 3,944
Changes in non-cash working capital:
Accounts receivable (4,297)
Prepaid expenses (5,326)
Accounts payable and accrued liabilities 16,016
----------------------------------------------------------------------------------------------------------
(317,749)
Financing
Advances to related parties (10,521)
Advances from related parties 9,943
Issue of common shares 680,213
----------------------------------------------------------------------------------------------------------
679,635
Investments
Expenditures on capital assets (47,018)
Foreign currency translation adjustment 790
- ---------------------------------------------------------------------------------------------------------------
Increase in cash, being cash at end of period $ 315,658
===============================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
WORKFIRE TECHNOLOGIES INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
$ United States
Period from incorporation on July 7, 1998 to December 31, 1998
================================================================================
Workfire Technologies Inc. ("WTI" or the "Company") is a development stage
company and was incorporated on September 15, 1998 under the General
Incorporation Laws of the state of Nevada. The Company's principal business
activity is the development of software to deliver extended internet
services to internet users (the "Workfire" technology).
1. SIGNIFICANT ACCOUNTING POLICIES:
a) Translation of Financial Statements
The Company's subsidiary, Workfire Development Corporation, operates in
Canada and its operations are conducted in Canadian currency.
Except as otherwise noted, these statements are presented in United States
currency for the convenience of readers accustomed to United States
currency. The method of translation applied is as follows:
i) Assets and liabilities are translated at the rate of exchange in
effect at the balance sheet date, being US $1.00 per Cdn $1.5333.
ii) Revenues and expenses are translated at the exchange rate in
effect at the transaction date.
iii) The net adjustment arising from the translation is recorded as a
separate component of stockholders' equity called "foreign
currency translation adjustment".
b) Basis of consolidation
The consolidated financial statements include the accounts of the Company
and it wholly-owned subsidiaries, Workfire Technologies International Inc.
("WTII") and Workfire Development Corporation ("WDC").
Effective August 26, 1998 Tantallon Capital Inc. ("Tantallon") acquired
100% of the outstanding common shares of WTII. As WTII shareholders
obtained control of Tantallon through the exchange of their shares of WTII
for shares of Tantallon, the acquisition of WTII has been accounted for in
these consolidated financial statements as a reverse acquisition. Effective
September 15, 1998, Tantallon merged with WTI with the continuing company
using the name Workfire Technologies Inc. Consequently, the consolidated
statements of loss and deficit and cash flows reflect the results of
operations and changes in financial position of WTII, and its wholly-owned
subsidiary, WDC, for the period from incorporation of WTII on July 7, 1998
to December 31, 1998, combined with those of the legal parent, Tantallon
and subsequently WTI, from acquisition on August 26, 1998, in accordance
with generally accepted accounting principles for reverse acquisitions.
In these notes to the consolidated financial statements, the Company, prior
to the business combination with Tantallon, is referred to as "Tantallon",
and after completion of the business combination, is referred to as "WTI".
<PAGE>
WORKFIRE TECHNOLOGIES INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
$ United States
Period from incorporation on July 7, 1998 to December 31, 1998
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
c) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
d) Financial instruments
The fair values of cash, accounts receivable and accounts payable and
accrued liabilities approximate their carrying values due to the relatively
short periods to maturity of these instruments. It is not possible to
determine the fair value of amounts due from/to related parties as a
maturity date is not determinable. The maximum credit risk exposure for all
financial assets is the carrying amount of that asset.
e) Capital assets
Capital assets are stated at cost. Amortization is provided using the
following methods and annual rates:
<TABLE>
<CAPTION>
==========================================================================================================
Asset Method Rate
----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Office equipment Declining balance 20%
Computer equipment Declining balance 30%
Computer software Declining balance 100%
Incorporation costs Straight line 20%
----------------------------------------------------------------------------------------------------------
</TABLE>
Amortization is provided at one-half the annual rates in the year of
acquisition.
f) Technology
Software development costs have been accounted for in accordance with
Statement of Financial Accounting Standards No. 86, ACCOUNTING FOR THE
COSTS OF COMPUTER SOFTWARE TO BE SOLD, LEASED OR OTHERWISE MARKETED. Under
the standard, capitalization of software development costs begins upon the
establishment of technological feasibility, subject to net realizable value
considerations. Technological feasibility has not been established at
December 31, 1998 and therefore all costs of acquiring, developing and
enhancing the Workfire technology are charged to earnings as incurred.
g) Loss per share
Loss per share has been calculated using the weighted average number of
common shares outstanding during the period. The full exercise of the stock
options referred to in note 7 is anti-dilutive and consequently loss per
share on a fully diluted basis has not been presented.
<PAGE>
WORKFIRE TECHNOLOGIES INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
$ United States
Period from incorporation on July 7, 1998 to December 31, 1998
- --------------------------------------------------------------------------------
2. BUSINESS COMBINATION:
Effective August 26, 1998, WTII and Tantallon executed a business
combination agreement. Tantallon issued 10,800,000 common shares to the
shareholders of WTII in consideration for all of the issued and outstanding
common shares of WTII on the basis of 1.12 common shares of Tantallon for
every common share of WTII. As the former shareholders of WTII obtained
control of Tantallon through the share exchange, this transaction has been
accounted for in these financial statements as a reverse acquisition and the
purchase method of accounting has been applied. Under reverse acquisition
accounting, WTII is considered to have acquired Tantallon with the results
of Tantallon's operations included in the consolidated financial statements
from the date of acquisition.The acquisition has been recorded at the net
asset value of Tantallon at the date of acquisition. The acquisition details
are as follows:
Net assets acquired
Cash 10
============================================================================
Consideration given for net assets acquired
10,800,000 Common shares issued 10
============================================================================
As WTII is deemed to be the continuing entity, share capital of WTI has been
increased by $375,948 as a result of accounting for this combination as a
reverse takeover.
The consolidated statements of loss and deficit and cash flows reflect the
results of operations and changes in financial position of WTII, the legal
subsidiary, for the period from incorporation of WTII on July 7, 1998 to
December 31, 1998, combined with those of WTI (formerly Tantallon) the legal
parent, from August 26, 1998, being the effective date of the acquisition,
to December 31, 1998.
Under reverse takeover accounting principles and the purchase method of
accounting, the results of operations of Tantallon are included in the
consolidated financial statements only from the effective date of the
acquisition. Accordingly, supplementary financial information presenting the
results of operations and changes in financial position of Tantalllon for
the period from January 1, 1998, being the date following the most recent
financial statements, to August 26, 1998, being immediately prior to the
effective date of the combination, is presented below.
<TABLE>
<CAPTION>
=========================================================================================================
Tantallon Capital Inc.
Statement of Loss and Deficit
Period from January 1, 1998 to August 26, 1998
<S> <C>
General and administrative expense, representing net loss for the period $ 18,578
Deficit, beginning of period 6,267
---------------------------------------------------------------------------------------------------------
Deficit, end of period $ 24,845
=========================================================================================================
</TABLE>
<PAGE>
WORKFIRE TECHNOLOGIES INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
$ United States
Period from incorporation on July 7, 1998 to December 31, 1998
================================================================================
<TABLE>
2. BUSINESS COMBINATION (CONTINUED):
========================================================================================================
<CAPTION>
Tantallon Capital Inc.
Statement of Cash Flows
Period from January 1, 1998 to August 26, 1998
<S> <C>
Operations
Net loss for period $ (18,578)
Net change in working capital
Accounts payable and accrued liabilities (6,642)
-----------------------------------------------------------------------------------------------
(25,220)
Financing
Redemption of common shares (25,000)
Issue of common shares 1,750
----------------------------------------------------------------------------------------------------
(23,250)
--------------------------------------------------------------------------------------------------------
Decrease in cash for the period (48,470)
Cash, beginning of period 48,480
--------------------------------------------------------------------------------------------------------
Cash, end of period $ 10
========================================================================================================
</TABLE>
3. CASH:
Included in cash is $15,650 restricted for credit purposes on corporate
credit cards. The funds will be released upon the company completing one
year of operations.
4. DUE FROM RELATED PARTIES:
Amounts due from related parties are unsecured with no stated terms of repayment
and do not bear interest.
<TABLE>
5. CAPITAL ASSETS:
==========================================================================================================
<CAPTION>
Accumulated Net book
Cost amortization value
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Office equipment $ 6,194 $ 310 $ 5,884
Computer equipment 36,748 2,756 33,992
Computer software 3,138 784 2,354
Incorporation costs 938 94 844
----------------------------------------------------------------------------------------------------------
$ 47,018 $ 3,944 $ 43,074
==========================================================================================================
</TABLE>
<PAGE>
WORKFIRE TECHNOLOGIES INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
$ United States
Period from incorporation on July 7, 1998 to December 31, 1998
6. DUE TO RELATED PARTY:
The amount due to a related party is unsecured with no stated terms of
repayment and does not bear interest.
7. STOCKHOLDERS' EQUITY:
a) Authorized:
100,000,000 common voting shares with a par value of $0.0001 per
share.
1,000,000 non-voting preferred shares with a par value of
$0.01 per share
b) Common Shares Issued and Outstanding
The continuity of the Company's issued and outstanding share capital,
commencing with WTII on July 7, 1998 to August 26, 1998, being the
effective date of the reverse takeover, is as follows:
<TABLE>
<CAPTION>
Number
of
WTII Shares Amount
--------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Issued July 7, 1998 for cash at $0.0001 per share 8,032,000 $ 803
Issued August 19, 1998 for cash at Cdn $0.20 (US $0.13) 1,250,000 166,667
Issued August 20, 1998 for cash at Cdn $1.00 (US $ 0.67) 350,000 233,333
--------------------------------------------------------------------------------------------------------------
WTII balance, August 26, 1998 9,632,000 400,803
Exchanged into Tantallon common shares at 1.12 Tantallon shares for each
WTII share 1,168,000 -
--------------------------------------------------------------------------------------------------------------
Common shares of Tantallon issued to WTII shareholders, at time of business
combination on August 26, 1998 10,800,000 $ 400,803
==============================================================================================================
WTI
--------------------------------------------------------------------------------------------------------------
Tantallon balance, July 7, 1998 1,450,000 $ 49,855
Shares redeemed July 20, 1998 (250,000 (25,000)
--------------------------------------------------------------------------------------------------------------
1,200,000 24,855
Adjustment to record business combination
Increase in the book value of Tantallon's share capital to that of WTII - 375,948
--------------------------------------------------------------------------------------------------------------
Tantallon balance, August 26, 1998, prior to the business combination with WTII 1,200,000 400,803
Shares of Tantallon issued to acquire shares of WTII (above), recorded at
the carrying value of Tantallon net assets (note 2) 10,800,000 10
--------------------------------------------------------------------------------------------------------------
Tantallon balance, August 26, 1998, after business combination with WTII 12,000,000 400,813
--------------------------------------------------------------------------------------------------------------
Share subscriptions received pursuant to Offering Disclosure Document
dated November 23, 1998 at $0.75 per share 372,533 279,400
--------------------------------------------------------------------------------------------------------------
WTI balance, December 31, 1998 12,372,533 $ 680,213
==============================================================================================================
</TABLE>
<PAGE>
WORKFIRE TECHNOLOGIES INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
$ United States
Period from incorporation on July 7, 1998 to December 31, 1998
================================================================================
7. STOCKHOLDERS' EQUITY (CONTINUED):
c) Stock option plan:
The Company has reserved 1,760,631 common shares for issuance to directors,
officers and key employees pursuant to stock options granted during the
period as follows:
<TABLE>
<CAPTION>
=======================================================================================================
Stock options issued
during period and outstanding Exercise price Expiry
at December 31, 1998 per share date
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
560,631 Cdn $0.20 April 30, 1999
1,200,000 Cdn $1.00 July 31, 2000
-------------------------------------------------------------------------------------------------------
1,760,631
=======================================================================================================
</TABLE>
8. RELATED PARTY TRANSACTIONS:
During the period, the Company purchased capital assets from a company under
common control for $26,589. The Company also acquired the rights to the
Workfire software from this company in return for the issuance of a note
payable for Cdn $150,000. The note was subsequently repaid in full.
These transactions are in the normal course of operations and are measured at
the vendor's cost, which is the amount of consideration agreed to by the
related party.
9. SUBSEQUENT EVENTS:
a) Commitment: Premises lease
Subsequent to December 31, 1998, the company signed a new triple net lease
agreement with base rent payments in each of the next five years as
follows:
1999 $ 23,240
2000 $ 25,350
2001 $ 25,350
2002 $ 25,350
2003 $ 25,350
b) Share capital:
On January 8, 1999, the company received $45,000 as consideration for a
subscription of 60,000 common shares at $0.75 per share pursuant to its
Offering Disclosure Document dated November 23, 1998.
<PAGE>
WORKFIRE TECHNOLOGIES INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
$ United States
Period from incorporation on July 7, 1998 to December 31, 1998
================================================================================
10. THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information
using year 2000 dates is processed. In addition, similar problems may arise
in some systems which use certain dates in 1999 to represent something other
than a date. The effects of the Year 2000 Issue may be experienced before,
on, or after January 1, 2000, and, if not addressed, the impact on operations
and financial reporting may range from minor errors to significant systems
failure which could effect an entity's ability to conduct normal business
operations. It is not possible to be certain that all aspects of the Year
2000 Issue effecting the entity, including those related to the efforts of
customers, suppliers, or other third parties, will be fully resolved.
<PAGE>
WORKFIRE.COM
(A Development Stage Enterprise)
Consolidated Balance Sheet
$ United States
MARCH 31, 1999
================================================================================
Assets
Current assets
Cash $ 366,366
Accounts receivable 2,949
Prepaid expenses 33,333
-----------------------------------------------------------------------------
402,638
Due from related parties 15,596
Capital assets 48,910
- --------------------------------------------------------------------------------
$ 467,174
================================================================================
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities $ 19,147
Stockholders' Equity
Share capital 942,880
Deficit accumulated during the development stage (489,188)
Foreign currency translation adjustment (5,685)
-----------------------------------------------------------------------------
448,127
- --------------------------------------------------------------------------------
$ 467,174
================================================================================
<PAGE>
WORKFIRE.COM
(A Development Stage Enterprise)
Consolidated Statement of Loss and Deficit
$ United States
PERIOD FROM JANUARY 1 TO MARCH 31, 1999
================================================================================
Revenue
Interest $ 4,432
Expenses
Research and development
Consultants 2,197
Internet access charges 1,451
Salaries and benefits 73,789
--------------------------------------------------------------------------
77,437
General and administrative
Amortization 3,333
Marketing and promotion 37
Office and administration 17,758
Professional fees 12,009
Rent and utilities 17,564
Salaries and benefits 34,197
Travel 3,199
--------------------------------------------------------------------------
88,097
- --------------------------------------------------------------------------------
Net loss for the period $ (161,102)
DEFICIT, BEGINNING OF PERIOD (328,086)
- --------------------------------------------------------------------------------
DEFICIT, END OF PERIOD $ (489,188)
================================================================================
Weighted average number of shares outstanding during the period 8,975,384
Loss per share $ (0.04)
================================================================================
<PAGE>
WORKFIRE.COM
(A Development Stage Enterprise)
Consolidated Statement of Cash Flows
$ United States
PERIOD FROM JANUARY 1 TO MARCH 31, 1999
================================================================================
Cash provided by (used in):
Operations
Net loss for period $ (161,102)
Items not involving cash:
Amortization 3,333
Changes in non-cash working capital:
Accounts receivable 1,348
Prepaid expenses (28,007)
Accounts payable and accrued liabilities 3,131
-----------------------------------------------------------------------------
(181,297)
Financing
Advances to related parties (5,075)
Advances from related parties (9,943)
Issue of common shares 262,667
-----------------------------------------------------------------------------
247,649
Investments
Expenditures on capital assets (9,169)
Foreign currency translation adjustment (6,475)
- --------------------------------------------------------------------------------
Increase(decrease) in cash in period 50,708
Cash, beginning of period 315,658
- --------------------------------------------------------------------------------
Cash, end of period $ 366,366
================================================================================
<PAGE>
WORKFIRE.COM INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
$ United States
Period from January 1, 1999 to March 31, 1999
================================================================================
Workfire.com (the "Company") is a development stage company and was
incorporated on September 15, 1998 under the General Incorporation Laws of
the state of Nevada. The Company's principal business activity is the
development of software to deliver extended internet services to internet
users (the "Workfire" technology). The Company changed its name from
Workfire Technologies Inc.(WTI) on January 7, 1999.
1. SIGNIFICANT ACCOUNTING POLICIES:
a) Translation of Financial Statements
The Company's subsidiary, Workfire Development Corporation, operates in
Canada and its operations are conducted in Canadian currency.
Except as otherwise noted, these statements are presented in United States
currency for the convenience of readers accustomed to United States
currency. The method of translation applied is as follows:
i) Assets and liabilities are translated at the rate of exchange in
effect at the balance sheet date, being US $1.00 per Cdn $1.50.
ii) Revenues and expenses are translated at the exchange rate in
effect at the transaction date.
iii) The net adjustment arising from the translation is recorded as a
separate component of stockholders' equity called "foreign
currency translation adjustment".
b) Basis of consolidation
The consolidated financial statements include the accounts of the
Company and it wholly-owned subsidiaries, Workfire Technologies
International Inc. ("WTII") and Workfire Development Corporation
("WDC").
c) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
<PAGE>
WORKFIRE.COM INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
$ United States
Period from January 1, 1999 to March 31, 1999
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
d) Financial instruments
The fair values of cash, accounts receivable and accounts payable and
accrued liabilities approximate their carrying values due to the
relatively short periods to maturity of these instruments. It is not
possible to determine the fair value of amounts due from/to related
parties as a maturity date is not determinable. The maximum credit risk
exposure for all financial assets is the carrying amount of that asset.
e) Capital assets
Capital assets are stated at cost. Amortization is provided using the
following methods and annual rates:
<TABLE>
<CAPTION>
==================================================================================================
Asset Method Rate
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Office equipment Declining balance 20%
Computer equipment Declining balance 30%
Computer software Declining balance 100%
Incorporation costs Straight line 20%
--------------------------------------------------------------------------------------------------
</TABLE>
Amortization is provided at one-half the annual rates in the year of
acquisition.
f) Technology
Software development costs have been accounted for in accordance with
Statement of Financial Accounting Standards No. 86, ACCOUNTING FOR THE
COSTS OF COMPUTER SOFTWARE TO BE SOLD, LEASED OR OTHERWISE MARKETED.
Under the standard, capitalization of software development costs begins
upon the establishment of technological feasibility, subject to net
realizable value considerations. Technological feasibility has not been
established at December 31, 1998 and therefore all costs of acquiring,
developing and enhancing the Workfire technology are charged to
earnings as incurred.
g) Loss per share
Loss per share has been calculated using the weighted average number of
common shares outstanding during the period. The full exercise of the
stock options referred to in note 7 is anti-dilutive and consequently
loss per share on a fully diluted basis has not been presented.
<PAGE>
WORKFIRE.COM INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
$ United States
Period from January 1, 1999 to March 31, 1999
================================================================================
2. CASH:
Included in cash is $15,650 restricted for credit purposes on corporate
credit cards. The funds will be released upon the company completing one
year of operations.
3. DUE FROM RELATED PARTIES:
Amounts due from related parties are unsecured with no stated terms of
repayment and do not bear interest.
<TABLE>
4. CAPITAL ASSETS:
<CAPTION>
==========================================================================================================
Accumulated Net book
Cost amortization value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Office equipment $ 10,167 $ 933 $ 9,234
Computer equipment 39,074 4,990 34,084
Computer software 4,325 1,050 3,275
Incorporation costs 941 154 787
Leasehold improvements 1,627 97 1,530
- ----------------------------------------------------------------------------------------------------------
$ 56,134 $ 7,224 $ 48,910
==========================================================================================================
</TABLE>
<PAGE>
WORKFIRE.COM INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
$ United States
Period from January 1, 1999 to March 31, 1999
================================================================================
5. STOCKHOLDERS' EQUITY:
a) Authorized:
100,000,000 common voting shares with a par value of $0.0001 per
share 1,000,000 non-voting preferred shares with a par value
of $0.01 per share
b) Common Shares Issued and Outstanding
The continuity of the Company's issued and outstanding share capital,
is as follows:
<TABLE>
<CAPTION>
Number of
WTII Shares Amount
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Issued July 7, 1998 for cash at $0.0001 per share 8,032,000 $ 803
Issued August 19, 1998 for cash at Cdn $0.20 (US $0.13) 1,250,000 166,667
Issued August 20, 1998 for cash at Cdn $1.00 (US $ 0.67) 350,000 233,333
-----------------------------------------------------------------------------------------------------------
WTII balance, August 26, 1998 9,632,000 400,803
Exchanged into Tantallon common shares at 1.12 Tantallon shares for
each WTII share 1,168,000 -
-----------------------------------------------------------------------------------------------------------
Common shares of Tantallon issued to WTII shareholders, at time of
business combination on August 26, 1998 10,800,000 $400,803
===========================================================================================================
WTI
-----------------------------------------------------------------------------------------------------------
Tantallon balance, July 7, 1998 1,450,000 $ 49,855
Shares redeemed July 20, 1998 (250,000) (25,000)
-----------------------------------------------------------------------------------------------------------
1,200,000 24,855
Adjustment to record business combination
Increase in the book value of Tantallon's share capital to that of WTII - 375,948
-----------------------------------------------------------------------------------------------------------
Tantallon balance, August 26, 1998, prior to the business combination
with WTII
Shares of Tantallon issued to acquire shares of WTII (above), recorded 10,800,000 10
at the carrying value of Tantallon net assets (note 2)
-----------------------------------------------------------------------------------------------------------
Tantallon balance, August 26, 1998, after business combination with WTII 12,000,000 400,813
Share subscriptions received pursuant to Offering Disclosure 722,755 542,067
Document dated November 23, 1998 at $0.75 per share
-----------------------------------------------------------------------------------------------------------
Workfire.com balance, March 31, 1999 12,722,755 $ 942,880
------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
WORKFIRE.COM INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
$ United States
Period from January 1, 1999 to March 31, 1999
================================================================================
5. STOCKHOLDERS' EQUITY (CONTINUED):
c) Stock option plan:
The Company has reserved 1,760,631 common shares for issuance to
directors, officers and key employees pursuant to stock options granted
during the period as follows:
<TABLE>
<CAPTION>
======================================================================================================
Stock options issued
during period and outstanding Exercise price Expiry
at March 31, 1999 per share date
------------------------------------------------------------------------------------------------------
<S> <C> <C>
560,631 Cdn $0.20 April 30, 1999
1,200,000 Cdn $1.00 July 31, 2000
------------------------------------------------------------------------------------------------------
1,760,631
======================================================================================================
</TABLE>
<PAGE>
BUFFALO CAPITAL VII, LTD.
DBA WORKFIRE.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1999
<PAGE>
CONTENTS
PAGE
PRO FORMA BALANCE SHEET AT MARCH 31, 1999 1
PRO FORMA STATEMENTS OF OPERATIONS FOR THE INTERIM
PERIOD ENDED MARCH 31, 1999 AND THE YEAR ENDED
DECEMBER 31, 1998 2
PRO FORMA BALANCE SHEET AT MARCH 31, 1999 3
PRO FORMA STATEMENTS OF OPERATIONS FOR THE INTERIM
PERIOD ENDED MARCH 31, 1999 4
PRO FORMA STATEMENTS OF OPERATIONS FOR THE YEAR ENDED
DECEMBER 31, 1998 5
NOTES TO PRO FORMA FINANCIAL STATEMENTS 6 - 7
<PAGE>
BUFFALO CAPITAL VII, LTD.
DBA WORKFIRE.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
PRO FORMA BALANCE SHEET
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS
Cash $ 367,676
Prepaid expenses 33,333
Other current assets 2,949
---------------
Total current assets 403,958
PROPERTY AND EQUIPMENT (NET) 48,910
DUE FROM RELATED PARTIES 15,596
---------------
$ 468,464
===============
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C>
CURRENT LIABILITIES
Accounts payable $ 20,367
---------------
Total current liabilities 20,367
MINORITY INTEREST 51,476
SHAREHOLDERS' EQUITY
Common stock, no par value, 100,000,000 shares
authorized; 13,940,017 shares issued and
outstanding 891,964
Deficit accumulated during the development stage (489,658)
Accumulated foreign currency translation adjustment (5,685)
---------------
Total shareholders' equity 396,621
---------------
$ 468,464
===============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE PRO FORMA
FINANCIAL STATEMENTS.
1
<PAGE>
BUFFALO CAPITAL VII, LTD.
DBA WORKFIRE.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
PRO FORMA STATEMENTS OF OPERATIONS
FOR THE INTERIM PERIOD ENDED MARCH
31, 1999 AND THE YEAR ENDED
DECEMBER 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
--------------- -----------------
<S> <C> <C>
REVENUES $ - $ -
OPERATING EXPENSES
Research and development 77,437 199,757
Selling, general and administrative 89,952 154,203
--------------- ---------------
Total operating expense 167,389 353,960
--------------- ---------------
Loss from operations (167,387) (353,960)
OTHER INCOME 4,432 1,575
--------------- ---------------
Loss before income taxes (162,957) (352,385)
INCOME TAX EXPENSE - -
--------------- ---------------
Loss before minority interest (162,957) (352,385)
Plus minority interest in net loss of subsidiary 18,724 40,489
--------------- ---------------
NET LOSS $ (144,233) $ (311,896)
=============== ===============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE PRO FORMA
FINANCIAL STATEMENTS.
2
<PAGE>
BUFFALO CAPITAL VII, LTD.
DBA WORKFIRE.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
PRO FORMA BALANCE SHEET (1) (2)
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
(2) (2) (3) Pro Forma
Buffalo VII Workfire Combined
March 31, March 31, March 31,
1999 1999 ADJUSTMENTS 1999
------------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 1,310 $ 366,366 $ - $ 367,676
Prepaid expenses - 33,333 - 33,333
Other current assets - 2,949 - 2,949
------------- ------------- ----------- --------------
Total current assets 1,310 402,648 - 403,958
------------- ------------- ----------- --------------
PROPERTY AND EQUIPMENT (NET) - 48,910 - 48,910
DUE FROM RELATED PARTIES - 15,596 - 15,596
OTHER ASSETS 470 - (470)(A) -
------------- ------------- ----------- --------------
$ 1,780 $ 467,154 $ (470) $ 468,464
============= ============= =========== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued
liabilities $ 1,220 $ 19,147 $ - $ 20,367
------------- ------------- ----------- --------------
Total current liabilities 1,220 19,147 - 20,367
------------- ------------- ----------- --------------
MINORITY INTEREST - - 51,476 (B) 51,476
SHAREHOLDERS' EQUITY
Common stock, no par value,
100,000,000 shares authorized;
26,817,687 shares issued and
outstanding 32,900 - (32,900)(B) -
Common stock, $.0001 par value,
100,000,000,shares authorized;
12,722,755 shares issued and
outstanding - 942,880 (942,880)(B) -
Common stock, no par value,
100,000,000 shares authorized;
13,940,017 shares issued and
outstanding - - 942,880 (B) 891,964
560 (B)
(51,476)(B)
Additional paid-in capital 3,540 - (3,540)(B) -
Deficit accumulated during the development
stage (35,880) (489,188) 35,880 (B) (489,658)
(470)(A)
Accumulated foreign currency translation
adjustment - (5,685) - (5,685)
------------- ------------- ----------- --------------
560 448,007 (51,946) 396,621
------------- ------------- ----------- --------------
$ 1,780 $ 467,154 $ (470) $ 468,464
============= ============= =========== ==============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE PRO FORMA
FINANCIAL STATEMENTS.
3
<PAGE>
BUFFALO CAPITAL VII, LTD.
DBA WORKFIRE.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
PRO FORMA STATEMENTS OF OPERATIONS (1) (2)
FOR THE INTERIM PERIOD ENDED MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
(2) (2) (4)
Buffalo VII Workfire Pro Forma
Three mths Three mths Combined
March 31, March 31, March 31,
1999 1999 ADJUSTMENTS 1999
------------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
REVENUES $ - $ - $ - $ -
OPERATING EXPENSES
Research and development - 77,437 - 77,437
Selling, general and administrative 1,885 88,097 (30)(A) 89,952
------------- ------------- ----------- --------------
Total operating expenses 1,885 165,534 (30) 167,389
------------- ------------- ----------- --------------
Loss from operations (1,885) (165,534) 30 (167,389)
OTHER INCOME - 4,432 - 4,432
------------- ------------- ----------- --------------
Loss before income taxes (1,885) (161,102) 30 (162,957)
INCOME TAX EXPENSE - - - -
------------- ------------- ----------- --------------
Loss before minority interest (1,885) (161,102) 30 (162,957)
Plus minority interest in net loss of
subsidiary - - 18,724(B) 18,724
------------- ------------- ----------- --------------
NET LOSS $ (1,885) $ (161,102) $ 18,754 $ (144,233)
============= ============= =========== ==============
NET LOSS PER SHARE $ (0.00) $ (0.02) $ (0.01)(C)
============= ============= ==============
WEIGHTED AVERAGE SHARES OUTSTANDING 4,620,000 8,975,384 13,940,017(C)
============= ============= ==============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE PRO FORMA
FINANCIAL STATEMENTS.
4
<PAGE>
BUFFALO CAPITAL VII, LTD.
DBA WORKFIRE.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
PRO FORMA STATEMENTS OF OPERATIONS (1) (2)
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
(2) (2) (4)
Buffalo VII Workfire Pro Forma
Year ended Initial period Combined
December 31, December 31, December 31,
1999 1999 ADJUSTMENTS 1999
------------- -------------- ----------- --------------
<S> <C> <C> <C> <C>
REVENUES $ - $ - $ - $ -
OPERATING EXPENSES
Research and development - 199,757 - 199,757
Selling, general and administrative 23,799 129,904 500(A) 154,203
------------- -------------- ----------- --------------
Total operating expenses 23,799 329,661 500 353,960
------------- -------------- ----------- --------------
Loss from operations (23,799) (329,661) (500) (353,960)
OTHER INCOME - 1,575 - 1,575
------------- -------------- ----------- --------------
Loss before income taxes (23,799) (328,086) (500) (352,385)
INCOME TAX EXPENSE - - - -
------------- -------------- ----------- --------------
Loss before minority interest (23,799) (328,086) (500) (352,385)
Plus minority interest in net loss of
subsidiary - - 40,489(B) 40,489
------------- -------------- ----------- --------------
NET LOSS $ (23,799) $ (328,086) $ 39,989 $ (311,896)
============= ============== =========== ==============
NET LOSS PER SHARE $ (0.01) $ (0.04) $ (0.02)(C)
============= ============== ==============
WEIGHTED AVERAGE SHARES OUTSTANDING 4,384,384 8,975,384 13,940,017(C)
============= ============== ==============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE PRO FORMA
FINANCIAL STATEMENTS.
5
<PAGE>
BUFFALO CAPITAL VII, LTD.
DBA WORKFIRE.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
1. DESCRIPTION OF TRANSACTION
On June 18, 1999, Buffalo Capital VII, Ltd. ("the Company") underwent a
business combination with Workfire.com, Inc. ("Workfire") pursuant to a
closing under a Reorganization and Stock Purchase Agreement dated May 21,
1999.
Prior to the combination, the Company had a total of 26,817,687 common
shares issued and outstanding. As the first step in the closing process,
certain shareholders of the Company agreed to voluntarily surrender for
cancellation a total of 23,253,332 shares, leaving a total of 3,564,355
shares of common stock issued and outstanding.
Following the cancellation of shares, the Company issued 10,375,662 common
shares in exchange for 88.51% of the issued and outstanding common stock of
Workfire, such that Workfire, after the exchange, became an 88.51% owned
subsidiary of the Company.
As the third step in the closing process, certain persons who are not
affiliates of Workfire purchased from the Company's existing shareholders, a
total of 2,952,871 common shares of the Company.
As a result of, and immediately following, these transactions, the Company
had 13,940,017 common shares issued and outstanding.
For pro forma financial statement purposes, the transaction is accounted for
as a recapitalization of Workfire.com, Inc., which is designated the
accounting acquiror.
2. BASIS OF PRESENTATION
The accompanying pro forma statements of operations are presented for the
year ended December 31, 1998 and for the interim period ended March 31,
1999. It is based upon historical results of the combining entities as
follows: Buffalo Capital VII, Ltd. for the year ended December 31, 1998 and
the three months ended March 31, 1999, and Workfire.com, Inc. for the period
from inception (July 7, 1998) to December 31, 1998, and the three months
ended March 31, 1999. It has been computed assuming the transaction was
consummated at the beginning of each period presented, and includes all
adjustments which give effect to events that are directly attributable to
the transaction, are factually supportable, and are expected to have a
continuing impact on the Company.
The pro forma balance sheet is presented as of March 31, 1999. It is based
upon historical financial position of the combining entities at March 31,
1999. It has been computed assuming the transaction was consummated on March
31, 1999, and includes adjustments which give effect to events that are
directly attributable to the transaction and are factually supportable.
6
<PAGE>
BUFFALO CAPITAL VII, LTD.
DBA WORKFIRE.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
3. BALANCE SHEET ADJUSTMENTS
(a) To charge off non-cash assets of Buffalo VII, Ltd. prior to
recapitalization.
(b) To record the issuance of 10,375,662 common shares of Buffalo Capital
VII, Ltd. for 88.51% of Workfire.com, Inc. and to establish minority
interest.
4. INCOME STATEMENT ADJUSTMENTS
(a) To charge off non-cash assets of Buffalo VII, Ltd. prior to
recapitalization.
(b) To establish minority interest participation in losses.
(c) Earnings per share have been computed as if all shares outstanding
after the recapitalization have been outstanding since the beginning of
each period presented.
7
<PAGE>
