<PAGE>
=============================
OMB APPROVAL
=============================
OMB Number: 3235-0060
=============================
Expires: May 31, 2000
=============================
Estimated average burden
hours per response: 5
=============================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
AMENDMENT TO CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 20, 2000
IQROM Communications, Inc.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 000-25735 88-0370480
------ --------- ----------
(State or other jurisdiction (Commission (IRS Employer
of incorporation File Number) Identification No.)
7635 Ashley Park Court
Suite 503V
Orlando, FL 32835
----------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code (407) 299-2230
Hiking Adventures, Inc.
114 West Magnolia Street
Suite 400-127
Bellingham, Washington 98225
-------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K filed
May 5, 2000.
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
(a), (b). On April 10, 2000, the Registrant amended its
Articles of Incorporation to change its name from Hiking Adventures,
Inc. to IQROM Communications, Inc. in anticipation of the Closing
described below.
The Registrant effected a twelve and one-half to one forward
stock split of its 800,000 issued and outstanding shares of Common
Stock, with a par value of $0.001, effective March 2, 2000. After the
stock split the Registrant had 10,000,000 issued and outstanding shares
of Common Stock.
On April 20, 2000, control of the Registrant changed as the
result of the closing (the "Closing") of the transactions described
herein in accordance with the terms of an Agreement (the "Agreement")
dated April 13, 2000, by and among DXP US, Inc., a Delaware corporation
("DXP"), Aldersey Egerton Maynard-Taylor ("Maynard-Taylor"), Thomas
Gabor Elek ("Elek"), Colin Allmark ("Allmark"), POV US, LLC, a Delaware
limited liability company ("POV"), Gerald A. Pierson ("Pierson"),
Michael Feit ("Feit"), IQROM Communications Acquisitions Co., a Nevada
corporation ("ICA"), a wholly-owned subsidiary of the Registrant, and
the Registrant pursuant to which ICA merged with and became the
successor corporation to DXP by the acquisition of all of the
outstanding shares of DXP's Common Stock in exchange for shares of the
common stock of the Registrant. Mr. Pierson and Mr. Feit are the sole
voting members of POV.
At the Closing, Messrs. Maynard-Taylor, Elek and Allmark
exchanged 500 shares of DXP for 6,400,314 voting common shares of the
Registrant plus up to $1,651,108 in accordance with the terms of the
Agreement (the "Exchange") as follows:
<TABLE>
<CAPTION>
Registrant's Monetary
DXP Shares Shares Consideration
---------- ------ -------------
<S> <C> <C> <C>
Mr. Elek 225 2,880,141 $ 742,998.60
Mr. Maynard-Taylor 225 2,880,141 742,998.60
Mr. Allmark 50 640,032 165,110.80
--- ---------- -------------
Total 500 6,400,314 $1,651,108.00
</TABLE>
Immediately subsequent to the Exchange, DXP merged with and
into ICA (the "Reorganization") and as a result of the Reorganization
all of DXP's shares owned by POV were converted into 6,400,314 voting
common shares of the Registrant, plus up to $1,651,108.
As a result of the Exchange and Reorganization, the Registrant
acquired control of an exclusive United States license for a trading
card optical compact disc and method of using and forming the compact
-2-
<PAGE>
disc described in U.S. Patent No. 5,982,736 issued November 9, 1999
(the "Patent") granted by Diskxpress US, Inc., a Delaware corporation
("Diskxpress"), the owner of the Patent, and the ability to manufacture
and sell business cards using a CD-ROM format using the Patent. The
sole shareholders of Diskxpress are Messrs. Elek, Maynard-Taylor and
Allmark and POV.
Following the Exchange and Reorganization Messrs. Elek,
Maynard-Taylor, Allmark and POV, the former shareholders of DXP, became
the controlling shareholders of the Registrant and assumed control of
the management of the Registrant. Changes in management are described
below.
Mr. John Meyer, a director of the Registrant, resigned prior
to the Closing. Mr. Eric Boehnke, the President and sole remaining
director of the Registrant prior to the Closing, appointed the
following new directors of the Registrant and then resigned. The Board
of Directors currently consists of the following persons:
Thomas Gabor Elek
Aldersey Egerton Maynard-Taylor
Colin Allmark
Michael Feit
Gerald A. Pierson
Mark L. Silow
F. Michael P. Warren
Graham A. Perske
New officers of the Registrant were elected following the
Exchange and Reorganization as follows:
President and Chief Executive Officer Thomas Gabor Elek
Secretary and Treasurer Mark L. Silow
As part of the Closing, the Registrant issued 1,320,000 units
at a price of $7.50 per unit, with each unit consisting of one share of
Common Stock of the Registrant and one-half warrant, to five
subscribers (the "First Subscribers") in accordance with Subscription
Agreements dated April 6, 2000 between the Registrant and the
subscribers (the "First Subscription Agreement") as follows:
<TABLE>
<CAPTION>
Subscriber Shares Acquired Warrants Purchase Price
---------- --------------- -------- --------------
<S> <C> <C> <C>
Agens Ag 400,000 200,000 $3,000,000.00
BWI Avionics Ltd. 143,333 71,667 $1,074,997.50
Euro Atlantic Equity Fund Ltd. 476,667 238,334 $3,575,002.50
Highway Finance Ltd. 166,667 83,334 $1,250,002.50
Blue Capital AG 133,333 66,667 $ 999,997.50
------- -------- -------------
Total 1,320,000 660,002 $9,900,000.00
</TABLE>
-3-
<PAGE>
Each holder of two one-half warrants is entitled to acquire
one further share of Common Stock of the Registrant at a price not less
than $7.50 if the warrant is exercised in the first year after issuance
of the warrants or for a price of not less than $10.00 if the warrant
is exercised in the second year after issuance of the warrants. The
warrants will expire April 20, 2002, if they are not exercised. The
Registrant received a total of $9,900,000 from the proceeds of the
First Subscription Agreement which was used to repay certain debt owed
by DXP, to pay the first tranche of the monetary consideration due to
the former DXP shareholders described above (the "Monetary
Consideration") and for working capital purposes. The first tranche of
the Monetary Consideration represented 25% of the total amount of the
Monetary Consideration due to the former DXP shareholders. The debt
owed by DXP included $786,393.25 owed to Mr. Elek and $786,390.76 owed
to Mr. Maynard-Taylor, both of which debts were paid out of the
proceeds of the First Subscription Agreement.
The Registrant also agreed to issue not more than 330,000
shares of Common Stock at a price not less than $7.50 per share for a
total of $2,475,000 as part of an additional financing to provide funds
for the payment of the second tranche of the Monetary Consideration and
for working capital purposes. The Registrant entered into a
Subscription Agreement dated as of April 6, 2000 (the "Second
Subscription Agreement") with Online Partners Inc. (the "Second
Subscriber") providing for the issuance of the shares and the release
of the funds from trust upon the achievement of certain revenue targets
by the Registrant as set forth in the Second Subscription Agreement.
In connection with the Closing, 2,466,250 shares of Common
Stock held by Mr. Eric Boehnke, the former President of the Registrant,
were cancelled, and a total of 14,120,628 shares were issued to the
former shareholders of DXP and the First Subscribers. A total of
21,654,378 shares of Common Stock were issued and outstanding following
the Closing. The following table sets forth information relating to the
beneficial ownership of the Registrant's Common Stock by those persons
holding beneficially more than 5% of the Registrant's Common Stock and
by all officers and directors.
<TABLE>
<CAPTION>
Shares beneficially Percentage of
Title of Class Names/Address of Owner owned Ownership
-------------- ---------------------- ------------------- ---------
<S> <C> <C> <C>
Common Aldersey Egerton Maynard-Taylor 2,880,141 13.3%
Crouchlands
Kirdford Nr. Billingshurst
West Sussex, England RH 14 0LE
Common Thomas Gabor Elek 2,880,141 13.3%
Lime Tree House
Asthall,
Oxon, England OX18 4 HW
Common POV US, LLC 6,400,314 29.5%
Westgate Management Company
321 West State Street
Trenton, NJ 08618
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Common Gerald A. Pierson 2,560,126(1) 11.8%
7361 Bordwine Drive
Orlando, FL 32818
Common Michael Feit 6,400,314(2) 29.5%
Westgate Management Company
321 West State Street
Trenton, NJ 08618
Common All officers and directors 12,800,628 59.1%
(8 individuals)
</TABLE>
--------
(1) Shares held by POV US, LLC of which Mr. Pierson owns 40% of the membership
interests.
(2) Shares held by POV US, LLC of which Mr. Feit is manager and of which Mr.
Feit owns 30% of the membership interests. Mr. Feit disclaims ownership
of 4,480,220 shares.
-5-
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
IQROM Communications, Inc. (formerly Hiking Adventures, Inc.) filed
with the Commission a Current Report on Form 8-K on May 5, 2000 to report its
purchase of 100% of the outstanding common stock of DXP US, Inc., and its wholly
owned subsidiary, IQROM Limited. At Item 7 of the Report, the Registrant
indicated that it would file audited historical financial statements of the
business acquired and pro forma financial information at a later date. Set forth
below is Item 7 of such Report amended to include the audited and unaudited
financial statements of the business acquired and pro forma financial
information.
Financial Statements of Business Acquired.
(a) Financial Statements - IQROM Limited (Formerly DXP New Media
Services Limited), period ended November 30, 1999.
(b) Pro Forma Financial Information
(1) Pro Forma Combining Consolidated Balance Sheet (unaudited)
at March 31, 2000.
(2) Pro Forma Combining Condensed Statement of Income
(unaudited) for the period ended March 31, 2000.
(3) Pro Forma Combining Condensed Statement of Income
(unaudited) for the period ended December 31, 1999.
(c) Exhibits.
The following exhibits are filed herewith:
S-K Item
Number Description
------ -----------
99.1 Agreement dated April 13, 2000 between DXP US, Inc. and Aldersey
Egerton Maynard-Taylor, Thomas Gabor Elek, Colin Allmark, POV US, LLC,
Gerald A. Pierson, Michael Feit, IQROM Communications, Inc. and IQROM
Communications Acquisitions Co. [Previously filed as part of Form 8-K
on May 5, 2000.]
-6-
<PAGE>
99.2 First Financing Subscription Agreement dated April 6, 2000 between the
Registrant and Agens Ag. Subscription Agreements between the Registrant
and the other Subscribers listed below have not been filed in
accordance with Instruction 2 to Item 601 of Regulation S-K since they
are substantially identical to the Subscription Agreement with Agens Ag
filed herewith. The material details in which the following
Subscription Agreements differ from the Agens Subscription Agreement
are as follows:
<TABLE>
<CAPTION>
Subscriber Units Acquired Purchase Price
---------- -------------- --------------
<S> <C> <C>
BWI Avionics Ltd. 143,333 $1,074,997.50
Euro Atlantic Equity Fund Ltd. 476,667 $3,575,002.50
Highway Finance Ltd. 166,667 $1,250,002.50
Blue Capital AG 133,333 $ 999,997.50
</TABLE>
99.3 Second Financing Subscription Agreement dated April 6, 2000 between the
Registrant and Online Partners Inc.
99.4 Share Purchase Warrant dated April 20, 2000 issued by the Registrant to
Agens Ag for 200,000 Common Shares. Share Purchase Warrants issued by
the Registrant to the other Subscribers listed below have not been
filed in accordance with Instruction 2 to Item 601 of Regulation S-K
since they are substantially identical to the Share Purchase Warrant
issued to Agens Ag filed herewith. The material details in which the
following Share Purchase Warrants differ from the Agens Share Purchase
Warrant are as follows:
Subscriber Warrants Purchase Price
---------- -------- --------------
BWI Avionics Ltd. 71,667 $1,074,997.50
Euro Atlantic Equity Fund Ltd. 238,334 $3,575,002.50
Highway Finance Ltd. 83,334 $1,250,002.50
Blue Capital AG 66,667 $ 999,997.50
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned hereunto duly authorized.
IQROM COMMUNICATIONS, INC.
(Registrant)
Date June 30, 2000 /s/ Thomas Gabor Elek
-----------------------------
(Signature)*
Thomas Gabor Elek, President
-7-
<PAGE>
IQROM LIMITED
(Formerly DXP New Media Services Limited)
Report and Financial Statements
30 November 1999
Deloitte & Touche
Hill House
1 Little New Street
London EC4A 3TR
<PAGE>
IQROM LIMITED (formerly DXP New Media Services Limited)
REPORT AND FINANCIAL STATEMENTS 1999
CONTENTS Page
Officers and professional advisers 1
Directors' report 2
Statement of directors' responsibilities 4
Auditors' report 5
Profit and loss account 6
Reconciliation of movements in shareholders' funds 7
Balance sheet 8
Cash flow statement 9
Notes to the accounts 10
<PAGE>
IQROM LIMITED (formerly DXP New Media Services Limited)
REPORT AND FINANCIAL STATEMENTS 1999
OFFICERS AND PROFESSIONAL ADVISERS
DIRECTORS
T G Elek (Chairman)
A Maynard-Taylor
C Allmark
SECRETARY
G Mellor
REGISTERED OFFICE
Seven Willow Court
Bourton Industrial Park
Bourton-on-the-Water
Gloucestershire
GL54 2HQ
SOLICITORS
Hammond Suddards
7 Devonshire Square
Cutlers Gardens
London
EC2M 4YH
AUDITORS
Deloitte & Touche
Chartered Accountants
Hill House
1 Little New Street
London EC4A 3TR
1
<PAGE>
IQROM LIMITED (formerly DXP New Media Services Limited)
DIRECTORS' REPORT
The directors present their annual report and the audited financial statements
for the period from incorporation on 10 March 1999 to 30 November 1999.
PRINCIPAL ACTIVITIES
The principal activities of the company are the design and supply of computer
data products and associated services.
RESULTS FOR THE PERIOD
The loss for the period is set out in the profit and loss account on page 6. The
directors do not recommend the payment of a dividend. The loss of (pound)294,427
has been charged to reserves.
Trading commenced in September 1999 after initial one off setup costs had been
incurred.
SIGNIFICANT POST BALANCE SHEET EVENTS
On 15 February 2000 each of the company's existing issued and unissued ordinary
shares of (pound)1 each were subdivided into 100 ordinary shares of 1p each.
On 24 February 2000 the company acquired the business of Two Step Productions
Limited, a company with its main activities in multimedia development, video
production and conference organisation.
On 14 March 2000 the company changed its name from DXP New Media Services
Limited to iQrom Limited.
On 7 April 2000 the company was acquired by DXP US Inc, which was subsequently
acquired on 20 April 2000 by IQROM Communications Inc, a public company quoted
on the US OTC Bulletin Board Market. At the same time IQROM Communications Inc,
raised US$ 12.375 million in cash by way of a share placement to be used for the
purchase price and for working capital purposes.
DIRECTORS
The directors who served during the period are:
T G Elek Appointed 10 March 1999
A Maynard-Taylor Appointed 10 March 1999
C Allmark Appointed 29 July 1999
The interests of the directors in the ordinary shares of (pound)1 each of the
company are as follows:
As at As at date of
30 November 1999 appointment
T G Elek 50 50
A Maynard-Taylor 50 50
C Allmark 50 50
===== =====
YEAR 2000 COMPLIANCE
Following their initial review, the directors continue to be alert to the
potential risks and uncertainties surrounding the year 2000 issue. As at the
date of this report, the directors are not aware of any significant factors
which have arisen, or that may arise, which will affect the activities of the
business; however, the situation is still being monitored. Any future costs
associated with this issue cannot be quantified but are not expected to be
significant.
2
<PAGE>
IQROM LIMITED (formerly DXP New Media Services Limited)
DIRECTORS' REPORT (continued)
AUDITORS
A resolution for the reappointment of Deloitte & Touche as auditors of the
company is to be proposed at the forthcoming Annual General Meeting.
Approved by the Board of Directors
and signed on behalf of the Board
T G Elek
Director
22 June 2000
3
<PAGE>
IQROM LIMITED (formerly DXP New Media Services Limited)
STATEMENT OF DIRECTORS' RESPONSIBILITIES
Company law requires the directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
company as at the end of the financial year and of the profit or loss of the
company for that period. In preparing those financial statements, the directors
are required to:
o select suitable accounting policies and then apply them consistently;
o make judgements and estimates that are reasonable and prudent;
o prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company and to enable them to ensure that the financial statements comply with
the Companies Act 1985. They are also responsible for safeguarding the assets of
the company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
Approved by the Board of Directors
and signed on behalf of the Board
T G Elek
Director
22 June 2000
4
<PAGE>
AUDITORS' REPORT TO THE MEMBERS OF
IQROM LIMITED (formerly DXP New Media Services Limited)
We have audited the financial statements on pages 6 to 13 which have been
prepared under the accounting policies set out on page 10.
Respective responsibilities of directors and auditors
As described on page 4 the company's directors are responsible for the
preparation of financial statements. It is our responsibility to form an
independent opinion, based on our audit, on those statements and to report our
opinion to you.
Basis of opinion
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the financial statements. It
also includes an assessment of the significant estimates and judgements made by
the directors in the preparation of the financial statements, and of whether the
accounting policies are appropriate to the company's circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Opinion
In our opinion the financial statements give a true and fair view of the state
of the company's affairs as at 30 November 1999 and of its loss for the period
from incorporation on 10 March 1999 to 30 November 1999 and have been properly
prepared in accordance with the Companies Act 1985.
/s/ Deloitte & Touche
-------------------------
Chartered Accountants and
Registered Auditors
23 June 2000
5
<PAGE>
IQROM LIMITED (formerly DXP New Media Services Limited)
PROFIT AND LOSS ACCOUNT
Period from 10 March 1999 to 30 November 1999
Note 1999
(pound)
TURNOVER 2 94,790
Cost of sales (88,529)
--------
Gross profit 6,261
Distribution costs (153,261)
Administrative expenses (147,427)
--------
OPERATING LOSS 4 (294,427)
--------
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (294,427)
Tax on loss on ordinary activities 5 -
--------
LOSS FOR THE PERIOD (294,427)
--------
RETAINED LOSS FOR THE PERIOD 10 (294,427)
========
All amounts derive from continuing operations.
There are no recognised gains or losses other than those shown above for the
financial period.
6
<PAGE>
IQROM LIMITED (formerly DXP New Media Services Limited)
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Period from 10 March 1999 to 30 November 1999
1999
(pound)
Loss for the financial period (294,427)
Issue of ordinary share capital 150
--------
Net increase in shareholders' deficit (294,277)
Opening shareholders' funds -
--------
Closing shareholders' deficit (294,277)
========
7
<PAGE>
IQROM LIMITED (formerly DXP New Media Services Limited)
BALANCE SHEET
30 November 1999
Note 1999
(pound)
FIXED ASSETS
Tangible Assets 6 4,344
--------
CURRENT ASSETS
Debtors 7 150
CREDITORS: amounts falling due
within one year 8 (298,771)
--------
NET CURRENT LIABILITIES (298,621)
--------
TOTAL ASSETS LESS CURRENT LIABILITIES (294,277)
========
CAPITAL AND RESERVES
Called up share capital 9 150
Profit and loss account 10 (294,427)
--------
TOTAL EQUITY SHAREHOLDERS' DEFICIT (294,277)
========
These financial statements were approved by the Board of Directors on 22 June
2000.
Signed on behalf of the Board of Directors
T G Elek
Director
8
<PAGE>
IQROM LIMITED (formerly DXP New Media Services Limited)
CASH FLOW STATEMENT
Period from 10 March 1999 to 30 November 1999
Note 1999
(pound)
Net cash outflow from operating activities 11 (293,884)
Capital expenditure (4,887)
--------
Net cash outflow before financing (298,771)
Financing - loan owed to Ingman Limited 298,771
--------
Movement in cash in the period 13 -
========
9
<PAGE>
IQROM LIMITED (formerly DXP New Media Services Limited)
NOTES TO THE ACCOUNTS
Period from 10 March 1999 to 30 November 1999
1. ACCOUNTING POLICIES
The financial statements are prepared in accordance with applicable
accounting standards. The particular accounting policies adopted are
described below.
Accounting convention
The financial statements are prepared under the historical cost convention.
Turnover
Turnover represents amounts invoiced excluding VAT to third parties.
Depreciation
Depreciation is calculated on a straight line basis so as to write down the
fixed assets to their residual value over their expected useful lives as
follows:
Computer equipment 10% - 33 1/3% per annum
2. TURNOVER
The geographical destination and origin of all sales was the United Kingdom.
3. INFORMATION REGARDING DIRECTORS AND EMPLOYEES
No emoluments were paid to any directors by the company in the period from
10 March 1999 to 30 November 1999.
No pensions or pension contributions were paid by the company during the
period from 10 March 1999 to 30 November 1999.
1999
No.
Average number of persons employed
(including directors) 4
======
4. OPERATING LOSS
Operating loss is after charging:
1999
(pound)
Depreciation - owned assets 543
Auditors' remuneration - audit services 2,500
Management charges due to Ingman Limited 125,000
=======
5. TAX ON LOSS ON ORDINARY ACTIVITIES
There is no tax charge for the period from 10 March 1999 to 30 November 1999
due to the loss incurred.
10
<PAGE>
IQROM LIMITED (formerly DXP New Media Services Limited)
NOTES TO THE ACCOUNTS
Period from 10 March 1999 to 30 November 1999
6. TANGIBLE FIXED ASSETS
Computer
equipment
(pound)
Cost
Additions 4,887
-------
At 30 November 1999 4,887
-------
Accumulated depreciation
Charge for the period 543
-------
At 30 November 1999 543
-------
Net book value
At 30 November 1999 4,344
=======
7. DEBTORS
1999
(pound)
Called up share capital not paid 150
=======
8. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
1999
(pound)
Loan owed to Ingman Limited 298,771
=======
9. CALLED UP SHARE CAPITAL
1999
(pound)
Authorised:
1,000 ordinary shares of(pound)1 each 1,000
=======
Called up, allotted and unpaid:
150 ordinary shares of(pound)1 each 150
=======
The company was incorporated on 10 March 1999 with authorised share capital
of 1,000 ordinary shares of (pound)1 each. On 10 March 1999, 100 ordinary
shares of (pound)1 each were issued for a consideration of (pound)100. On 29
July 1999, 50 ordinary shares of (pound)1 each were issued for a
consideration of (pound)50.
11
<PAGE>
IQROM LIMITED (formerly DXP New Media Services Limited)
NOTES TO THE ACCOUNTS
Period from 10 March 1999 to 30 November 1999
10. PROFIT AND LOSS ACCOUNT
1999
(pound)
Retained loss brought forward -
Retained loss for the period (294,427)
--------
Retained loss carried forward (294,427)
========
11. RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM
OPERATING ACTIVITIES
1999
(pound)
Operating loss (294,427)
Depreciation 543
--------
Net cash outflow from operating activities (293,884)
========
12. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
1999
(pound)
Net cash flow in the period -
Cash inflow from loan owed to Ingman Limited (298,771)
--------
Movement in net debt in the period (298,771)
--------
Net debt at 10 March -
--------
Net debt at 30 November (298,771)
========
13. ANALYSIS OF CHANGES IN NET DEBT
<TABLE>
<CAPTION>
10 March 30 November
1999 Cash flows 1999
(pound) (pound) (pound)
<S> <C> <C> <C>
Cash in hand and at bank - - -
Loan owed to Ingman Limited - (298,771) (298,771)
------ -------- --------
Total - (298,771) (298,771)
====== ======== ========
</TABLE>
12
<PAGE>
IQROM LIMITED (formerly DXP New Media Services Limited)
NOTES TO THE ACCOUNTS
Period from 10 March 1999 to 30 November 1999
14. CONTROLLING AND RELATED PARTIES
As at 30 November 1999, the company was wholly owned and controlled by its
directors, the interests of whom in the shares of the company are shown in
the Directors' Report.
On 20 April 2000, IQROM Communications Inc became the ultimate parent
company and controlling entity, a Nevada corporation having an office at
Suite 400-127, 114 West Magnolia Street, Bellingham, Washington, United
States of America 98225.
Related party balances are disclosed in notes 7 and 8. Included within
debtors is the unpaid share capital owed by the three directors amounting to
(pound)150. The related party balance in note 8 comprises a (pound)298,771
loan owed to Ingman Limited, which at 30 November 1999 was a company
controlled by T G Elek and A Maynard-Taylor and registered in England and
Wales, registered office: Seven Willow Court, Bourton Industrial Park,
Bourton-on-the-Water, Gloucestershire GL54 2HQ.
As disclosed in note 4, the results for the period from 10 March 1999 to 30
November 1999 include expenses of (pound)125,000 relating to management
charges payable to Ingman Limited.
15. SUBSEQUENT EVENTS
On 15 February 2000 each of the company's existing issued and unissued
ordinary shares of (pound)1 each were subdivided into 100 ordinary shares of
1p each.
On 24 February 2000 the company acquired the business of Two Step
Productions Limited, a company with its main activities in multimedia
development, video production and conference organisation.
On 14 March 2000, the company changed its name from DXP New Media Services
Limited to iQrom Limited.
On 7 April 2000 the company was acquired by DXP US Inc, which was
subsequently acquired on 20 April 2000 by IQROM Communications Inc, a public
company quoted on the US OTC Bulletin Board Market. At the same time IQROM
Communications Inc, raised US$ 12.375 million in cash by way of a share
placement to be used for the purchase price and for working capital
purposes.
16. SIGNIFICANT DIFFERENCE BETWEEN UK GAAP AND US GAAP
The financial statements have been prepared in accordance with UK GAAP,
which differs in certain respects from US GAAP. For the company the
principal difference relates to the treatment of deferred taxation while any
other differences are considered unlikely to have a material effect.
Under UK GAAP, deferred taxation is only provided to the extent an asset or
liability is expected to crystallise. Under US GAAP, deferred taxation is
provided on all temporary differences under the liability method, subject to
a valuation allowance on deferred tax assets where applicable, in accordance
with SFAS 109, Accounting for Income Taxes. The principal adjustment to
apply US GAAP is to record a deferred taxation asset as a result of current
period losses.
The deferred taxation asset under US GAAP would be (pound)88,131.
13
<PAGE>
IQROM Communications, Inc.'s historical fiscal year ends on December 31,
while IQROM Limited's historical fiscal year ends on November 30. For
purposes of combining IQROM Communications, Inc.'s historical financial data
with IQROM Limited's historical financial data in the pro forma combined
statement of income for the period ended March 31, 2000 the unaudited
financial data of IQROM Communications, Inc. for the three month period
ended March 31, 2000 has been combined with IQROM Limited's unaudited
financial data for the three month period ended February 29, 2000. In
addition, IQROM Communications, Inc.'s audited financial statements for the
period ended December 31, 1999 has been combined with IQROM Limited's
audited financial statements for the period ended November 30, 1999.
We have included this unaudited pro forma combined data only for the purpose
of illustartion, and it does not necessarily indicate what the operating
results or financial position would have been if the merger of IQROM
Communications, Inc. and IQROM Limited had been completed at the dates
indicated. Moreover, this data does not necessarily indicate what the future
operating results or financial position of the combined company will be. You
should read this unaudited pro forma combined summary financial data in
conjunction with the historical financial statements of IQROM
Communications, Inc. and IQROM Limited and the related notes thereto,
included elsewhere in this document and also incorporated by reference.
IQROM Communications, Inc.
Pro-forma Combining Condensed Balance Sheet
March 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
IQROM
Communications, Pro-forma
Assets Inc. IQROM Limited Adjustments Combined
------------ ------------- ----------- --------
<S> <C> <C> <C> <C>
Current Assets
Cash $57,665 $417,240 6,500,000 (a) $6,974,905
Inventories 0 22,472 22,472
Accounts Receivable 5,726 157,026 162,752
----- ------- --------
Total Current Assets 63,391 596,738 7,160,129
Property and equipment, net 1,050 47,542 48,592
Intangible Assets, net 0 572,810 154,806,869 (b) 155,379,679
Deferred Income Taxes 0 0 0
Organization costs, net 123 0 123
--------- --------- -----------
Total Assets $64,564 $1,217,090 $162,588,523
Liabilities and Stockholder's Equity
Current Liabilities
Accounts payable $1,390 674,701 $676,091
Accrued Expenses 50,000 0 50,000
Notes Payable 100,000 1,479,989 (1,000,000) (a) 579,989
--------- --------- -----------
Total Current Liabilities 151,390 2,154,690 1,306,080
Stockholder's Equity
Common Stock, $0.001 par value,
authorized 50,000,000 shares;
issued and outstanding, 21,654,378
shares 800 240 1,320 (c) 2,360
Additional paid-in-capital 44,192 0 9,898,680 (c) 9,942,872
Accumulated deficit (131,818) (937,840) 152,406,869 (b)(d) 151,337,211
--------- --------- -----------
Total stockholder's equity (86,826) (937,600) 161,282,443
Total liabilities and stockholder's equity $64,564 $1,217,090 $162,588,523
difference 0 0 0
</TABLE>
Note 1 - The pro-forma balance sheet has been prepared to reflect the
acquisition of DXP US, Inc. By IQROM Communications, Inc. for an
aggregate price of $154.8 million. Pro-forma adjustments are made to
reflect:
(a) To record cash proceeds from First Subscription Agreement of $9.9
million, net of debt repaid and shareholder distributions.
(b) To record intangible assets obtained from DXP US at date of
purchase.
(c) To record sale of 1,320,000 shares of common stock pursuant to
First Subscription Agreement.
(d) To record distribution of $2.4 million to DXP US shareholders.
14
<PAGE>
IQROM Communications, Inc.
Pro-forma Combining Condensed Statement of Income
Period ending March 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
IQROM
Communications, Pro-forma
Inc. IQROM Limited Adjustments Combined
--------------- ------------- ----------- --------
<S> <C> <C> <C> <C>
Net sales $0 $354,410 $354,410
Cost of goods sold 0 254,067 254,067
--------- --------- -----------
Gross profit 0 100,342 100,342
Selling, general & administrative expenses 118,320 570,112 688,432
--------- --------- -----------
Operating loss ($118,320) ($469,770) (588,090)
Amortization of intangible assets 0 0 3,870,172 3,870,172
Other income, net 0 2,773 81,255 84,028
--------- --------- -----------
Loss before taxes (118,320) (466,997) (4,374,233)
Income taxes 0 0 0
--------- --------- -----------
Net Loss ($118,320) ($466,997) ($4,374,233)
Net loss per share, basic and diluted ($0.20)
Shares used in per share calculation,
basic and diluted 21,654,378
</TABLE>
Note 1 - The above statement gives effect to the following pro-forma
adjustments necessary to reflect the acquisition:
(a) To record interest income earned on net cash received from First
Subscription of $6.5 million.
(b) To record amortization of intangible assets related to
acquisition of DXP US, Inc.
15
<PAGE>
IQROM Communications, Inc.
Pro-forma Combining Condensed Statement of Income
Period ending December 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
IQROM Pro-forma
Communications, Inc. IQROM Limited Adjustments Combined
-------------------- ------------- ----------- --------
<S> <C> <C> <C> <C>
Net sales $29,700 $151,664 $181,364
Cost of goods sold 0 141,646 141,646
------- -------- --------
Gross profit 29,700 10,018 39,718
Selling, general & administrative expenses 26,866 481,101 507,967
------- -------- --------
Operating income (loss) $2,834 ($471,083) (468,249)
Amortization of intangibles 0 0 15,480,687 (b) 15,480,687
-
Other income, net 0 0 325,021 (a) 325,021
------- -------- --------
Income (loss) before taxes 2,834 (471,083) (15,623,916)
Income taxes 0 0 0
------- -------- --------
Net Income (loss) $2,834 ($471,083) ($15,623,916)
Net income (loss) per share, basic ($0.72)
Net income (loss) per share, diluted ($0.70)
Shares used in per share calculation, basic 21,654,378
Shares used in per share calculation, diluted 22,314,380
</TABLE>
Note 1- The above statement gives effect to the following pro-forma adjustments
necessary to reflect the acquisition:
(a) To record interest income earned on net cash received from
First Subscription of $6.5 million.
(b) To record amortization of intangible assets related to
acquisition of DXP US, Inc.
16
<PAGE>
EXHIBIT INDEX
Number Description
------ -----------
99.1 Agreement dated April 13, 2000 between DXP US, Inc. and
Aldersey Egerton Maynard-Taylor, Thomas Gabor Elek, Colin
Allmark, POV US, LLC, Gerald A. Pierson, Michael Feit, IQROM
Communications, Inc. and IQROM Communications Acquisitions Co.
[Previously filed as part of Form 8-K on May 5, 2000.]
99.2 First Financing Subscription Agreement dated April 6, 2000
between the Registrant and Agens Ag. Subscription Agreements
between the Registrant and the other Subscribers listed below
have not been filed in accordance with Instruction 2 to Item
601 of Regulation S-K since they are substantially identical
to the Subscription Agreement with Agens Ag filed herewith.
The material details in which the following Subscription
Agreements differ from the Agens Subscription Agreement are as
follows:
Subscriber Units Acquired Purchase Price
---------- -------------- --------------
BWI Avionics Ltd. 143,333 $1,074,997.50
Euro Atlantic Equity Fund Ltd. 476,667 $3,575,002.50
Highway Finance Ltd. 166,667 $1,250,002.50
Blue Capital AG 133,333 $ 999,997.50
99.3 Second Financing Subscription Agreement dated April 6, 2000
between the Registrant and Online Partners Inc.
99.4 Share Purchase Warrant dated April 20, 2000 issued by the
Registrant to Agens Ag for 200,000 Common Shares. Share
Purchase Warrants issued by the Registrant to the other
Subscribers listed below have not been filed in accordance
with Instruction 2 to Item 601 of Regulation S-K since they
are substantially identical to the Share Purchase Warrant
issued to Agens Ag filed herewith. The material details in
which the following Share Purchase Warrants differ from the
Agens Share Purchase Warrant are as follows:
Subscriber Warrants Purchase Price
---------- -------- --------------
BWI Avionics Ltd. 71,667 $1,074,997.50
Euro Atlantic Equity Fund Ltd. 238,334 $3,575,002.50
Highway Finance Ltd. 83,334 $1,250,002.50
Blue Capital AG 66,667 $ 999,997.50
17
