UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
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 25, 2000)
INFOTOPIA, INC.
(FORMERLY DR. ABRAVANEL'S FORMULAS, INC.)
(Exact name of registrant as specified in its charter)
Nevada 000-25157 95-4685068
(State of (Commission (I.R.S. Employer
organization) File Number) Identification No.)
43 Taunton Green, 3rd Floor, Taunton, MA 02780
(Address of principal executive offices)
Registrant's telephone number, including area code (508) 884-8173
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On April 25, 2000, the Board of Directors of Dr. Abravanel's
Formulas, Inc. (DABV) approved a Plan of Exchange by which the
Company would acquire 100% of the outstanding stock in Infotopia,
Inc., in exchange for common stock of DABV. The exchange was also
approved by the Board of Directors and shareholders of Infotopia,
Inc. on the same day.
Infotopia was, at that time, presently a wholly-owned subsidiary
of National Boston Medical, Inc. ("NBMX"), a Nevada corporation.
NBMX, as the shareholder of Infotopia, Inc., shall receive a
total of 8,167,387 shares of DABV's common stock for the 100
shares of Infotopia, Inc. common stock that it held, representing
100% of the authorized common stock of Infotopia. The Plan of
Exchange was submitted and approved by the Board of Directors of
Infotopia and to the Board of Directors of NBMX, as shareholders
of the common stock of Infotopia, on the same day.
ITEM 5. OTHER EVENTS
On April 26, 2000, as a result of the Plan of Exchange, the
Company changed its name to Infotopia, Inc.
ITEM 6. RESIGNATIONS OF REGISTRANTS' DIRECTORS
On April 25, 2000, the Company accepted the resignation of Dr.
Abravanel as a member of the board of directors and as President
of the Company. Mr. Dan Hoyng was appointed to fill the vacancy
left by Mr. Abravanel's resignation.
On April 25, 2000, the Company also accepted the resignation of
Mr. Mark Delott as a member of the board of the directors and as
an officer of the Company. The remaining board member appointed
Mr. Ernie Zavoral to fill the vacancy left by Mr. Delott.
On April 25, 2000, the Company's Board decided to increase the
Board to three members and appointed Clinton Smith to fill the
vacancy created by the increase to three members.
On April 25, 2000, Mr. Dan Hoyng was appointed as Chief Executive
Officer, Mr. Ernie Zavoral was appointed as President, and Mr.
Marek Lozowicki was appointed as Secretary and Treasurer.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
a) Financial Statements of Dr. Abravanel's Formulas, Inc. for
the year ended February 29, 2000 are included herein.
Dr. Abravanel's Formulas, Inc.
(A Development Stage Company)
BALANCE SHEET
ASSETS
<TABLE>
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February 29,
2000
Current Assets
Cash $ 2,838
Officer receivable 525
Samples and supplies 11,745
Total current assets 15,108
Other Assets
Deferred taxes receivable 9,810
Valuation allowance - Deferred taxes (9,810)
Total other assets -
Total Assets $ 15,108
</TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities:
Accounts payable and accrued liabilities $ -
Total current liabilities -
Shareholders' equity (note 3)
Common Stock, $.001 Par Value
authorized 40,000,000 share; 12,841,353
shares issued and outstanding 12,841
Paid in Capital 38,333
Accumulated deficit (36,066)
Total Equity 15,108
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 15,108
</TABLE>
See accompanying notes to financial statements.
Dr. Abravanel's Formulas, Inc.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the Year Ended February 29, 2000
and the Period from Inception (April 28, 1998) to February 29,
2000
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Period from Period from
Inception Inception
Year Ended (April 28, 1998) (April 28,
to 1998) to
February February 28, February 29,
29,
2000 1999 2000
Sales $ - $ -
Cost of sales - -
Gross profit - -
Costs and Expenses:
General administrative 8,307 26,714 22,231
Sample costs/product 1,045 - 13,835
Total Expenses 9,352 26,714 36,066
Net Loss (9,352) (36,066)
Income Tax Provision:
Deferred tax benefit (4,200) (5,610) -
Income tax benefit - 9,810 - -
reversal - allowance
Total income tax expense 5,610 (5,610) -
(benefit)
Net Loss $ $ (21,104) $ (36,066)
(14,962)
Net loss before income
taxes per share
(note 1 ) $ (0.01) $ (0.01)
Net loss per share (note $ (0.01) $ (0.01)
1)
Weighted average common
shares
(in thousands) (note1) 12,841 10,374
</TABLE>
See accompanying notes to financial statements.
Dr. Abravanel's Formulas, Inc.
(A Development Stage Company)
STATEMENT OF SHAREHOLDER'S EQUITY
For the Year Ended February 29, 2000
and the Period from Inception (April 28, 1998) to February 29,
2000
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Twelve Month Period from Inception
Period Ended (April 28,
1998) to
February 29,2000 February 29, 2000
Beginning Balance 62,107 -
Issuance of common stock:
10,000,000 shares on 4/28/98
(issued as
partial consideration for
product
formulas; valued at stock par 10,000
value)
25,000 shares on 6/15/98 250
53,500 shares on 6/15/98 8,025
100,000 shares on 7/10/98 15,000
10,000 shares on 7/16/98 100
40,000 shares on 7/16/98 6,000
135,000 shares on 7/23/98 1,350
233,461 shares on 7/23/98 35,019
27,500 shares on 7/30/98 275
33,500 shares on 7/30/98 5,025
25,000 shares on 8/18/98 250
81,667 shares on 8/18 98 12,250
750,000 shares on 8/20/98 750
60,600 shares on 8/21/98 9,090
100,000 shares on 8/21/98 1,000
137,500 shares on 8/25/98 1,375
173,000 shares on 8/25/98 25,950
750,000 shares on 8/26/98 750
40,000 shares on 8/31/98 400
10,000 shares on 9/4/98 1,500
55,625 shares on 9/18/98 10,500
Special distribution (19,475) (60,000)
Common stock offering costs (12,562) (33,685)
Net loss (14,962) (36,066)
Balance at February 29, 2000 15,108 15,108
</TABLE>
See accompanying notes to financial statements.
Dr. Abravanel's Formulas, Inc.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Year Ended February 29, 2000
And the Period from Inception (April 28, 1998) to February 29,
2000
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Year Ended Period from Period from
February Inception Inception
29, 2000 (April 28, (April 28,
1998) to 1998) to
February February
29, 2000 29, 2000
Cash Flows used in Operating
Activities:
Net loss $ $ (21,140) $ (36,066)
(14,962)
Adjustments to reconcile net
loss to net cash used in
operating
activities :
Valuation allowance to 5,610 (5,610) -
eliminate deferred tax asset
Net cash used by operating (9,352) (26,750) (36,066)
activities
Changes in Assets and
Liabilities:
Advance to officer (525) (525)
Increase (decrease) in prepaid 1,045 (12,790) (11,745)
supplies
Net cash used by operations (8,832) (12,790) (48,336)
Cash Flows from Financing
Activities:
Issuance of common stock - 134,859 134,859
Common stock offering costs (12,562) (21,123) (33,685)
Return of capital to founders (19,475) (30,525) (50,000)
Net cash (used) from financing (32,037) 83,211 51,174
activities
Net (decrease) increase in cash (40,869) 83,211 2,838
Cash, at Beginning of Period 43,707 - -
Cash, at End of Period $ 2,838 $ 43,707 $ 2,838
Supplemental Cash Flow
Disclosures:
Interest paid $ - $ - $ -
Income taxes paid $ - $ - $ -
Non Cash Transactions:
On April 28, 1998, 10,000,000
shares of common stock
were issued to founders for $ 10,000
formulas contributed to the
Company.
</TABLE>
See accompanying notes to financial statements.
Dr. Abravanel's Formulas, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Note 1 - Nature of business and summary of significant accounting
policies
Nature of business - Dr. Abravanel's Formulas, Inc. was
incorporated on April 28, 1998, in the state of Nevada. The
Company was formed as a nutritional supplement development and
marketing corporation. The Company has developed products
specifically for the reduction or elimination of cravings in
people.
As a development stage company, management's efforts have been in
product development and marketing strategies.
Basis of presentation - The financial statements have been
prepared in conformity with generally accepted accounting
principals.
Inventories - Inventories, which at February 29,2000, consisted
primarily of production supplies, are stated at the lower of cost
or market determined on the first-in, first-out (FIFO) basis.
Intangibles - Start-up costs, research and development costs and
formula costs are charged to the expense in the period incurred.
Income taxes - The Company accounts for income taxes under the
provisions of SFAS No. 109, Accounting for Income Taxes (SFAS No.
109). Under the asset and liability method of SFAS No. 109,
deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under SFAS
No. 109, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that
includes the enactment date.
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 at the date of the financial
statements and the reported amounts of revenue and expenses
during the reporting period. Actual amounts could differ from
those estimates.
Per share information - Per share information has been computed
using the weighted average number of common shares outstanding
during the period.
Note 2 - Contract payable
Effective on April 28, 1998, the Company agreed to give
10,000,000 shares of common stock, with a par value of $10,000,
and $50,000 in cash. The stock was issued on April 28, 1998, and
the cash was paid in installments of $30,525 in 1998 and $19,475
in March 1999.
Note 3 - Shareholders equity
Voting rights and powers - Common stock shall be entitled to cast
thereon one (1) vote in person or by proxy for each share of the
common stock standing in his name.
Dividends and distributions -
a) Cash dividends - subject to the rights of holders of
preferred stock, holders of common stock shall be entitled
to receive such cash dividends as may be declared thereon by
the board of directors from time to time out of assets or
funds of the Corporation legally available thereof;
b) Other dividends and distributions - The board of
directors may issue shares of the common stock in the form
of a distribution or distributions pursuant to a stock
dividend or split-up of the shares of the common stock;
c) Other rights - Except as otherwise required by the
Nevada Revised Statutes and as may otherwise be provided in
these Amended Articles of Incorporation, each share of the
common stock shall have identical powers, preferences and
rights, including rights in liquidation;
Preferred stock - The powers, preferences, rights,
qualifications, terms, limitations and restrictions pertaining to
the preferred stock, or any series thereof, shall be such as may
be fixed, from time to time, by the board of directors in its
sole discretion, authority to do so being hereby expressly vested
in the board.
Transfer restrictions - No sale, offer to sell, or transfer of
any common stock issued shall be made unless a registration
statement under the Federal Securities Act of 1933, as amended
with respect to such shares is then in effect or an exemption
from the registration requirements of said act is then in fact
applicable to said shares. In addition, all common stock issued
at $.01 (500,000 shares) may not be sold, offered for sale, or
transferred unless approved and authorized in writing by the
Company's board of directors.
Note 4 - Income Taxes
As of February 29, 2000, the company has available net operating
loss carryforwards of approximately $39,000. These carryforwards
will expire in the years 2014 and 2015. As of February 29, 2000,
the Company recognized a deferred tax asset amounting to $8,260
from its loss carryovers.
Note 5 - Contingencies
The Company is dependent on Dr. Elliot Abravanel for the
development and marketing of the Company's product line.
Note 6 - Private placement memorandum and filings with the SEC
As of February 29, 2000, 1,341,353 shares of common stock have
been issued through the Company's private placement offerings.
The Company has applied for and received the CUSIP number for the
or the Company's publicly traded shares. The Company, through its
sponsoring market maker Equitrade Securities, Inc., filed Form
211 on July 21, 1999, for listing its shares on the OTC
Electronic Bulletin Board. The Company has received two sets of
comments from OTC Bulletin Board examiners and responded to them.
The Company filed with SEC on December 10, 1998, and this filing
became effective February 8, 1999. The SEC has notified the
Company that all questions and comments have been cleared.
Note 7 - Equity Funding
The Company anticipates the need for additional capital to launch
its product line. Management may elect to sell additional equity,
debt or enter into partnerships to fund its financial needs.
Currently, the Company has developed its first product, ?Replen
100 for Vibrant Health", and has a limited inventory of this
product.
b) Financial Statements of Infotopia, Inc. will be filed by
amendment on or before July 9, 2000
INFOTOPIA, INC.
(A DIVISION OF NATIONAL BOSTON MEDICAL, INC.)
FINANCIAL STATEMENTS
MARCH 31, 2000
INFOTOPIA, INC.
(A DIVISION OF NATIONAL BOSTON MEDICAL, INC.)
FINANCIAL STATEMENTS
MARCH 31, 2000
C O N T E N T S
PAGE
INDEPENDENT AUDITORS' REPORT 1
BALANCE SHEETS 2 - 3
STATEMENTS OF OPERATIONS 4
STATEMENTS OF CASH FLOWS 5-6
NOTES TO FINANCIAL STATEMENTS 7 -
22
INDEPENDENT AUDITORS' REPORT
TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF
INFOTOPIA, INC.
We have audited the accompanying balance sheet of Infotopia,
Inc.(a Division of National Boston Medical, Inc.) as of March 31,
2000 and the related statements of operations and cash flows for
the year ended June 30, 1999 and the nine months ended March 31,
2000. 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 audits.
We conducted our audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Infotopia, Inc. as of March 31, 2000, and the results of its
operations and cash flows for the year ended June 30, 1999 and
the nine months ended March 31, 2000, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed
in Note 14 to the financial statements, the Company has suffered
recurring losses from operations and its limited capital
resources raise substantial doubt about its ability to continue
as a going concern. Management's plans in regard to these
matters are also described in Note 14. The financial statements
do not include any adjustments that might result from the outcome
of this uncertainty.
MERDINGER, FRUCHTER, ROSEN & CORSO, P.C.
Certified Public Accountants
New York, New York
July 9, 2000
INFOTOPIA, INC.
(A DIVISION OF NATIONAL BOSTON MEDICAL, INC.)
BALANCE SHEETS
MARCH 31, 2000
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CURRENT ASSETS
Cash and cash equivalents $ 4,579
Accounts receivable, net of allowance for
doubtful accounts of $15,000 82,585
Inventory 195,531
Prepaid expenses and other current assets
724,231
----------
Total current assets 1,006,926
PROPERTY AND EQUIPMENT, less
accumulated depreciation and amortization
of $182,154 204,430
CAPITALIZED PRODUCTION COSTS, less
accumulated amortization of $21,668 690,235
OTHER ASSETS
Licenses and Other Intangibles, less
accumulated amortization of
$403,820 1,320,453
Investment
375,000
------------
TOTAL ASSETS $ 3,597,044
=========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
- 2 -
INFOTOPIA, INC.
(A DIVISION OF NATIONAL BOSTON MEDICAL, INC.)
BALANCE SHEETS
MARCH 31, 2000
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Due to Related Party $ 9,249,296
Accounts payable and accrued expenses 2,125,310
Current maturities of long-term debt 216,918
Current maturities of notes payable to stockholders 120,627
and affiliates
Customer deposits 631,301
---------
Total current liabilities 12,343,452
LONG-TERM LIABILITIES
Long-term debt, less current maturities
867,672
---------
TOTAL LIABILITIES 13,211,124
COMMITMENTS AND CONTINGENCIES -
STOCKHOLDERS' EQUITY
Accumulated deficit
(9,614,080)
---------
Total Stockholders' Equity
(9,614,080)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,597,044
=========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
- 3 -
INFOTOPIA, INC.
(A DIVISION OF NATIONAL BOSTON MEDICAL, INC.)
STATEMENTS OF OPERATIONS
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For
the
For the Year Nine Months
Ended Ended
June 30, 1999 March 31, 2000
--------------- ------------
REVENUE
Sales, net of returns and allowances
of $185,715 and $345,205 $ 2,258,910 $ 2,374,474
COST OF SALES 759,842 1,186,781
-------------- --------------
GROSS PROFIT 1,499,068 1,187,693
-------------- --------------
OPERATING EXPENSES
General and administrative 3,770,632 3,573,874
Selling and marketing 2,402,304 1,709,676
Depreciation and amortization 235,728 371,914
Total operating expenses 6,408,664 5,655,464
LOSS FROM OPERATIONS (4,909,596) (4,467,771)
OTHER INCOME (EXPENSE)
Interest expense ( 106,240) ( 130,473)
-------------- --------------
LOSS FROM OPERATIONS BEFORE INCOME TAXES (5,015,836) (4,598,244)
INCOME TAXES - -
-------------- --------------
NET LOSS $(5,015,836) $(4,598,244)
========= =========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
- 4 -
INFOTOPIA, INC.
(A DIVISION OF NATIONAL BOSTON MEDICAL, INC.)
STATEMENTS OF CASH FLOWS
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For the
For the Year Nine Months
Ended Ended
June 30, March 31,
1999 2000
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (5,015,836) $ (4,598,244)
Adjustments to reconcile net loss
to net cash
provided by operating activities
Depreciation and amortization 235,728 371,914
Changes in assets and liabilities
Accounts receivable - trade - ( 82,586)
Due to related party 5,015,836 4,233,460
Inventory - ( 195,530)
Prepaid expenses - ( 724,231)
Other assets - -
Accounts payable and accrued - 2,125,310
expenses
Customer deposits - 631,301
------------ -------------
Net cash provided by operating activities 235,728 1,761,394
------------ -------------
-
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in Dermaguard - ( 375,000)
Purchase of property and equipment (91,020) ( 295,564)
Capitalized Production Cost - ( 711,903)
Licenses and other intangibles (144,708) (1,579,565)
------------ -------------
Net cash used in investing activities
(235,728) (2,962,032)
------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of notes payable 1,292,735
Payments on notes payable - (87,518)
------------ -------------
Net cash provided by financing activities - 1,205,217
------------ -------------
NET INCREASE IN CASH AND CASH EQUIVALENTS - 4,579
------------ -------------
CASH AND CASH EQUIVALENTS - BEGINNING OF - -
YEAR
------------ -------------
CASH AND CASH EQUIVALENTS - END OF YEAR $- $4,579
======== ========
SUPPLEMENTAL INFORMATION:
Interest paid $ 56,240 $88,526
======== ========
Income taxes paid $- $ -
========= ========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
- 5 -
INFOTOPIA, INC.
(A DIVISION OF NATIONAL BOSTON MEDICAL, INC.)
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 1999
AND NINE MONTHS ENDED MARCH 31 2000
SUPPLEMENTAL SCHEDULE OF NON-CASH ACTIVITIES:
During the fiscal year June 30, 1999, the Parent:
Issued stock to acquire assets and exclusive
licenses that amounted to $248,000
Issued stock towards the conversion of debt for $1,381,834
Issued stock for services rendered that amounted to $892,353
During the nine months ending March 31, 2000, the Parent:
Issued stock to acquire assets and exclusive
licenses and fixed assets in the amount of $1,617,375
Issued stock to retire notes due for $753,288
Issued stock to lenders for $2,786,175 as collateral
Issued stock for services rendered totaling $2,833,296
The accompanying notes are an integral part of these financial
statements.
- 6 -
INFOTOPIA, INC.
(A DIVISION OF NATIONAL BOSTON MEDICAL, INC.)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Organization and Basis of Presentation
INFOTOPIA, INC. (Formerly Flex Marketing Inc.(OH)) (the
"Company" or "Infotopia") was incorporated under the
laws of Ohio in September 11, 1997. The Company was
acquired by its parent company, National Boston
Medical, Inc.("Parent"), in a share exchange agreement
executed on November 21, 1998 and operated as a division
of its parent from that time. The Company is to be spun-
off from its Parent in April 2000.
b) Business Operations
The Company engages in the development, marketing,
advertising and selling of innovative new wellness
products through direct marketing and response efforts.
Since its acquisition by the Parent, the Company has
expanded its line of products and is also producing its
own programming to promote its products.
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 disclosure of contingent assets and liabilities at
the date of the financial statements and the reported
amounts of revenue and expenses during the periods
presented. Actual results could differ from those
estimates.
d) Revenue Recognition
Infotopia recognizes product revenues upon shipment to
the customer. Sales are taken on the phone with
payments conducted by credit cards and check. Products
are often back-ordered and are not shipped immediately.
The Company recognizes these cash receipts as customer
deposits for sales that have yet to be completed.
e) Cash and Cash Equivalents
The Company considers all highly liquid
investments purchased with original maturities of three
months or less to be cash equivalents.
f) Concentration of Credit Risk
The Company places its cash in what it believes to be
credit-worthy financial institutions. However, cash
balances exceeded FDIC insured levels at various times
during the year.
g) Accounts Receivable
For financial reporting purposes, the Company utilizes
the allowance method of accounting for doubtful
accounts. The Company performs ongoing credit
evaluations of its customers and maintains an allowance
for potential credit losses. The allowance is based on
an experience factor and review of current accounts
receivable. Uncollectible accounts are written off
against the allowance accounts when deemed
uncollectible.
-7-
INFOTOPIA, INC.
(A DIVISION OF NATIONAL BOSTON MEDICAL, INC.)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
h) Inventory
Inventory consists primarily of component parts and
finished goods, which are valued at the lower of cost
or market on a first-in, first-out basis.
j) Property and Equipment
Property and equipment is stated at cost.
Depreciation is provided for in amounts sufficient to
relate the cost of depreciable assets to operations
over their estimated service lives, primarily on a
straight-line basis. The estimated service lives used
in determining depreciation are five to seven years for
computers, software, furniture and equipment.
Leasehold improvements are amortized over the shorter
of the useful life of the asset or the lease term.
Maintenance and repairs are charged to expense as
incurred; additions and betterments are capitalized.
Upon retirement or sale, the cost and related
accumulated depreciation of the disposed assets are
removed and any resulting gain or loss is credited or
charged to operations.
k) Capitalized Production Costs
SFAS No. 53 "Financial Reporting by Producers and
Distributors of Motion Picture Films" requires the
capitalization of production costs and is to be
amortized over the useful life of the program.
l) Intangibles
Intangibles consist of goodwill, covenants not to
compete, customer lists and license costs. Goodwill
represents costs in excess of net assets acquired in
connection with businesses acquired. Goodwill is being
amortized to operations over 15 years. Customer lists
are being amortized over a period of 2 to 7 years.
License costs are amortized over 10 years.
Should events or circumstances occur subsequent to the
acquisition of a business which brings into question
the realizable value or impairment of the related
goodwill, the Company will evaluate the remaining
useful life and balance of goodwill and make
adjustments, if required. The Company's principal
consideration in determining an impairment includes the
strategic benefit to the Company of the particular
assets as measured by undiscounted current and expected
future operating income of that specified groups of
assets and expected undiscounted future cash flows.
Should an impairment be identified, a loss would be
reported to the extent that the carrying value of the
related goodwill exceeds the fair value of that
goodwill as determined by valuation techniques
available in the circumstances.
- 8 -
INFOTOPIA, INC.
(A DIVISION OF NATIONAL BOSTON MEDICAL, INC.)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
m)
Income Taxes
Income taxes are provided for based on the liability
method of accounting pursuant to Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for
Income Taxes". The liability method requires the
recognition of deferred tax assets and liabilities for
the expected future tax consequences of temporary
differences between the reported amount of assets and
liabilities and their tax bases.
n) Offering Costs
Offering costs consist primarily of professional fees.
These costs are charged against the proceeds of the
sale of common stock in the periods in which they
occur.
p) Advertising Costs
Advertising costs are expensed as incurred and are
included in selling expenses. For the year ended June
30, 1999 and for the nine months ended March 31, 2000,
advertising expense amounted to $2,402,304 and
$1,709,676, respectively.
q) Fair
Value of Financial Instruments
The
carrying values of cash and cash equivalents, accounts
receivable, notes receivable, accounts payable, accrued
expenses and income taxes payable approximate fair
value due to the relatively short maturity of these
instruments. The fair value of long-term borrowings
was determined based upon interest rates currently
available to the Company for borrowings with similar
terms. The fair value of long-term borrowings
approximates the carrying amounts at March 31, 2000.
r) Long-lived Assets
Long-lived assets to be held and used are reviewed for
impairment whenever events or changes in circumstances
indicate that the related carrying amount may not be
recoverable. When required, impairment losses on
assets to be held and used are recognized based on the
fair value of the assets and long-lived assets to be
disposed of are reported at the lower of carrying
amount or fair value less cost to sell.
t) Stock-Based Compensation
The Company has adopted the intrinsic value method of
accounting for stock-based compensation in accordance
with Accounting Principles Board Opinion ("APB") No.
25, "Accounting for Stock Issued to Employees" and
related interpretations.
- 9 -
INFOTOPIA, INC.
(A DIVISION OF NATIONAL BOSTON MEDICAL, INC.)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
v) Impact of Year 2000 Issue
During the year ended December 31, 1998, the Company
conducted an assessment of issues related to the Year
2000 and determined that it was necessary to modify or
replace portions of its software in order to ensure
that its computer systems will properly utilize dates
beyond December 31, 1999. The Company completed Year
2000 systems modifications and conversions in 1999.
Costs associated with becoming Year 2000 compliant are
not material. At this time, the Company cannot
determine the impact the Year 2000 will have on its key
customers or suppliers. If the Company's customers or
suppliers don't convert their systems to become Year
2000 compliant, the Company may be adversely impacted.
The Company is addressing these risks in order to
reduce the impact on the Company.
NOTE 2 - INVESTMENTS
In June 1998, the Parent had acquired ten percent of
Dermaguard's Common Stock. The investment is carried
at lower of cost or market.
NOTE 3 - PREPAID EXPENSES
Prepaid expenses are summarized as follows:
<TABLE>
<C>
<S>
March 31, 2000
--------------
Legal and professional services paid $ 334,587
in stock
Capital development fee 212,331
Employee compensation 123,313
Royalties 40,000
Deposit on Inventory 14,000
-------------
Total prepaid expenses $ 724,231
========
</TABLE>
The Parent had issued stock in lieu of cash payments
for legal, professional fees and employee compensation.
- 10 -
INFOTOPIA, INC.
(A DIVISION OF NATIONAL BOSTON MEDICAL, INC.)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment is summarized as follows:
<TABLE>
<C>
<S>
March 31, 2000
-------------
Warehouse equipment and molds $ 167,789
Computer equipment and software 152,068
Furniture and office equipment 41,726
Leasehold improvements 11,360
Vehicles 13,641
--------------
386,584
Less: Accumulated depreciation and 182,154
amortization
--------------
Property and equipment, net $ 204,430
========
</TABLE>
Depreciation expense for the year ended June 30, 1999
and for the nine months ended March 31, 2000 was
$91,020 and $85,647, respectively.
NOTE 5 - CAPITALIZED PRODUCTION COSTS
<TABLE>
<S> <C>
Capitalized production costs are
summarized as follows:
March 31,
2000
------------
Fat Fighter System production $ 106,280
Body Rocker production 323,199
Cactus Jack production 282,424
------------
711,903
Less: Accumulated Amortization 21,668
------------
Capitalized Production Costs - net $ 690,235
========
</TABLE>
NOTE 6 - INTANGIBLES
<TABLE>
<S> <C>
Intangibles are summarized as
follows:
March 31,
2000
------------
Goodwill $ 880,277
Safeshield Formula 343,996
Cactus Jack License 330,000
DTCP License 170,000
------------
1,724,273
Less: Accumulated Amortization 403,820
------------
Total intangibles - net $1,320,453
========
</TABLE>
NOTE 7 - NOTES PAYABLES TO RELATED PARTY
As of March 31, 2000, Infotopia has accumulated a balance
to its Parent, National Boston Medical, Inc., in the
amount of $9,249,296. These advances were for working
capital.
- 11 -
INFOTOPIA, INC.
(A DIVISION OF NATIONAL BOSTON MEDICAL, INC.)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
- 12 -
INFOTOPIA, INC.
(A DIVISION OF NATIONAL BOSTON MEDICAL, INC.)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE 8 - LONG-TERM DEBT
In August 1999, the Parent entered into a settlement
agreement with Ernest Zavoral, who currently serves as
a Director and the Company's Manager of the Infotopia
Division f/k/a the Flex Marketing Division. As a part
of that agreement, the Company issued 487,040 shares of
its Common Stock to Mr. Zavoral in exchange for a
release from debt in the amount of $73,056.
- 13 -
INFOTOPIA, INC.
(A DIVISION OF NATIONAL BOSTON MEDICAL, INC.)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE 8 - LONG-TERM DEBT (Continued)
In October 1999, the Parent entered into a Settlement
Agreement with AfterMarket Company ("AfterMarket"),
whereby the Company $34,193 to AfterMarket and
committed to pay an additional $2,000 per week until
the balance of $68,387 is paid in full. Additionally,
the Parent issued 500,000 shares of its Common Stock
valued at $93,750, of which 250,000 shares will be
returned to the Parent upon payment of the balance in
full.
In November 1999, the Company entered into an exclusive
discount and rebate service for products offered by
Member Services of America, LLC (Triad Services).
Also, the Parent signed promissory notes for $150,000
in temporary financing due on demand or no later than
February 11, 2000.
In January 2000, the Parent placed 894,058 shares of
its Common stock into escrow related to the outstanding
debt with Cortland Bank of Ohio.
The aggregate carrying value of the long-term debt at
March 31, 2000 approximates market value.
- 14 -
INFOTOPIA, INC.
(A DIVISION OF NATIONAL BOSTON MEDICAL, INC.)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE 9 - NOTES PAYABLE TO STOCKHOLDERS AND AFFILIATES
The Company has an aggregate of $120,627 of
stockholder loans which arose from the parent's
acquisition of various entities.
NOTE 10 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the
following as of:
<TABLE>
<C>
<S>
March 31, 2000
--------------
Accounts payable $ 1,658,767
Accrued liabilities 466,543
---------------
$ 2,125,310
========
</TABLE>
NOTE 11 - CUSTOMER DEPOSITS
Unfulfilled sales orders at March 31, 2000 amounted
to $631,301.
NOTE 12 - COMMITMENTS AND CONTINGENCIES
Royalties Agreements
In September 1999, the Parent entered into a
manufacturing, marketing and distribution agreement
with Cactus Jack's Marketing Corp. ("Cactus Jack").
Pursuant to the agreement, the Parent (i) issued
1,000,000 shares of its Common Stock valued at
$330,000, (ii) agreed to issue an additional 250,000
shares of its Common Stock on each anniversary date of
the agreement so long as the Agreement is in force,
(iii) granted royalties in the amount of fifty percent
(50%) of net profits on all sales of Cactus Jack
products sold by the Parent, (iv) agreed to establish a
division of its operations devoted to the activities of
manufacturing, marketing and distributing Cactus
- 15 -
INFOTOPIA, INC.
(A DIVISION OF NATIONAL BOSTON MEDICAL, INC.)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE 12 - COMMITMENTS AND CONTINGENCIES (Continued)
Jack products (the Infotopia division) and (v) to make
certain minimum royalty payments per quarter. In
exchange, Cactus Jack granted the Company the
exclusive right to manufacture, use, distribute, sell,
advertise, promote and otherwise exploit certain
Cactus Jack products, which rights include the use
Cactus Jack patents, trademarks and artwork. The Company
also has a right of first refusal on all future Cactus
Jack products. The term of the agreement is until
such time as it fails to make a reasonable commercial
effort to sell Cactus Jack products or to meet the
minimum royalty payments.
In September 1999, the Parent entered into a
manufacturing, marketing and distribution agreement
with Dean Tornabene and Charles Perez ("DTCP"), whereby
the Parent (i) gained the exclusive right to
manufacture, use, distribute, sell, advertise, create
brand recognition, promote and otherwise exploit
certain products invented by DTCP in exchange for
500,000 shares of the Parent's Common Stock valued at
$170,000, (ii) paid an initial payment of $50,000 upon
execution of the agreement, (iii) agreed to pay
royalties of ten percent (10%) of gross sales on all
DTCP products including up-sells and (iv) also agreed
to establish a division of its operations which will be
responsible for the activities of manufacturing,
marketing and distributing DTCP products (the Infotopia
division). The Parent also must issue additional
shares of its Common Stock on each anniversary date
of the agreement at which the agreement is still in
force. The number of shares to be issued is dependent
upon the number of shares of the Parent then outstanding.
In November 1999, the Parent entered into a supply,
distribution and trademark licensing agreement with
Herbal Technologies for the Dean Tornabene Fat Fighting
System and related products. In consideration for the
grant of the license, the Company shall pay royalties
based on a flat royalty rate of the base products and a
percentage of adjusted gross sales for licensed up-sale
products. Included in this agreement is a sub-
agreement to pay royalties to Mali Utz for consultant
work at a flat royalty rate.
In November 1999, the Parent entered into a
manufacturing, marketing and distribution agreement for
the Spudwizz product. The Company shall pay distributor
a monthly royalty equal to 5% of adjusted gross sales
revenue plus $.10 per unit for each shipped unit. A
non-refundable prepayment for royalties of $10,000 was
due upon execution. Also, beginning with the second
quarter of 2000, a minimum quarterly royalty payment of
$15,000 was in effect to keep the license.
In February 2000, the Parent entered into a consultant
agreement with Cort Howell & Associates for the Body
Rocker script and as compensation will receive $10,000
and a royalty of not less than .25% of adjusted gross
revenues and up to .5% depending on performance ratios.
- 16 -
INFOTOPIA, INC.
(A DIVISION OF NATIONAL BOSTON MEDICAL, INC.)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE 14 - GOING CONCERN
The accompanying financial statements have been
prepared assuming the Company will continue as a going
concern. As of March 31, 2000, the Company has a
working capital deficit of $10,961,526 and an
accumulated deficit of $9,614,080. Based upon the
Company's plan of operation, the Company estimates
that existing resources, together with funds generated
from operations, will not be sufficient to fund the
Company's working capital. The Company is actively
seeking additional equity and debt financing. There
can be no assurances that sufficient financing will be
available on terms acceptable to the Company or at
all. If the Company is unable to obtain such
financing, the Company will be forced to scale back
operations, which would have an adverse effect on the
Company's financial condition and results of
operation.
NOTE 15 - SUBSEQUENT EVENTS
In April 2000, the Parent entered into a settlement
agreement with Jeff Freedman to rescind the previous
stock purchase, employment, stock pledge and non-
compete agreements related to NBM purchasing Product
Sourcing Ltd. (PSL) during August, 1999. Of the
original 2,500,000 shares issued to Freedman for PSL,
he is to retain 2,000,000 shares plus retention of all
monies received to date including salary, accounts
receivable and note payments. Also, NBM will pay
Freedman a royalty on sales of the Body Rocker of $1.25
per unit and $.25 per unit for the Cactus Jack fishing
lure for a total of $400,000 with a minimum payment due
quarterly of $15,000 per month beginning May 5, 2000.
- 21 -
INFOTOPIA, INC.
(A DIVISION OF NATIONAL BOSTON MEDICAL, INC.)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE 15 - SUBSEQUENT EVENTS (Continued)
On April 25, 2000, Dr. Abravanel's Formulas, Inc.
(DABV) entered into an exchange agreement with the
Parent in which 100% of the outstanding stock of
Infotopia, Inc. would be exchanged for common stock of
DABV. The shareholders of Infotopia, Inc. received
7,949,999 shares for its 100 shares. As a result of
the plan of exchange, Dr. Abravanel's Formulas, Inc.
changed its name to Infotopia, Inc. (IFTP).
On May 10, 2000, Infotopia, Inc. signed a letter of
intent to acquire the exclusive rights to the Torso
Tiger.
- 22 -
c) Pro Forma Financial Information will be filed by amendment
on or before July 9, 2000
Infotopia, Inc.
Pro forma Financial Information
Subsequent to February 29, 2000, the registrant completed the
reverse acquisition of Dr. Abravanel's Formulas, Inc. by
Infotopia, Inc.
The pro forma balance sheet presented reflects the historical
balance sheet of Dr. Abravanel's Formulas, Inc. as of February
29, 2000 and the historical balance sheet of Infotopia, Inc. as
of March 31, 2000. There was no significant activity for Dr.
Abravanel's Formulas, Inc. for the period from February 29, 2000
to March 31, 2000. Pro forma adjustments have been made to give
effect to the acquisition as if it had occurred at March 31,
2000.
The pro forma income statement for the nine month period ended
March 31, 2000 reflects the historical income statement for
Infotopia, Inc. for the nine month period ended March 31, 2000
and the historical income statement for Dr. Abravanel's Formulas,
Inc. for the year ended February 29, 2000. Dr. Abravanel's
Formulas, Inc. is a Development Stage Company and did not have
significant activity for the year ended February 29, 2000 or for
the month of March, 2000. Infotopia, Inc. acquired Dr.
Abravanel's Formulas, Inc. in a reverse acquisition, which then
changed its name to Infotopia, Inc. Pro forma adjustments have
been made to give effect to all of the above transaction as if it
had occurred at the beginning of the nine month period presented.
Infotopia, Inc
PROFORMA BALANCE SHEET
March 31, 1999
<TABLE>
<S> <C> <C> <C> < <C> < <C> <C>
C C
> >
Dr. Infotopia Pro Forma
Abravanel's Adjustments
Formulas, Division To Record
Inc. Acquisition
Balance Balance At March
Sheet Sheet 31,2000
February March 31, Combined Dr Cr Pro Forma
29,2000 2000
ASSETS
Current assets
Cash and cash equivalents 2,838 4,579 7,417 7,417
Accounts receivable - 82,585 82,585 82,585
Inventory - 195,531 195,531 195,531
Prepaid expenses and other 12,270 724,231 736,501 736,501
current assets
---------- ------------ ----------- ----------
---- -- --- ----
Total current assets 15,108 1,006,926 1,022,034 1,022,034
Furniture and equipment, less - 204,430 204,430 204,430
accumulated depreciation
Capitalized production, less - 690,235 690,235 690,235
accumulated amortization
Other intangibles, less 1,320,453 1,320,453 1,320,453
accumulated amortization
Investment 375,000 375,000 375,000
---------- ------------ ----------- ----------
------ ---- --- ------
Total assets 15,108 3,597,044 3,612,152 3,612,152
========= ========= ======== =========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and 2,125,310 2,125,310 2,125,310
accrued expenses
Deferred revenue 631,301 631,301 631,301
Due to affiliates 9,249,296 9,249,296 9,249,296
Current maturities of notes 120,627 120,627 120,627
payable, stockholders and
affiliates
Current maturities of long 216,918 216,918 216,918
term debt
---------- ------------ ----------- ----------
----- --- ----- ------
Total current liabilities - 12,343,452 12,343,452 12,343,452
Long term liabilities ---------- ------------ ----------- ----------
----- ---- ----- ------
Long term debt, less - 867,672 867,672 867,672
current maturities
Shareholders' equity
(deficit)
Common stock 12,841 - 12,841 1 8,167 21,008
Additional paid in capital 38,333 - 38,333 1 44,233 (5,900)
Retained deficit (36,066) (9,614,080) (9,650,146) 1 36,066 (9,614,080
)
---------- ------------ ----------- ----------
---- ---- ----- ------
Total shareholders' 15,108 (9,614,080) (9,598,972) (9,598,972
equity )
---------- ------------ ----------- ----------
---- ---- ----- ------
Total liabilities and 15,108 3,597,044 3,612,152 3,612,152
shareholders' equity
========= ========= ======== =========
</TABLE>
Infotopia, Inc.
PROFORMA STATEMENT OF OPERATIONS
For the Nine Months Ended March 31,2000
<TABLE>
<S> <C> <C> <C> < <C> <C> <C>
C
>
Pro Forma
Adjustments to
Reflect Acquisitions Income
Statement
Dr. Infotopia for the for the
Abravanel'
s
Formulas, Division Nine Months Ended Nine Months
Inc. Ended
Year Ended Nine Months March 31, 2000 March 31,
Ended 2000
February March 31, Combined Dr Cr Pro Forma
29, 2000 2000
Revenue - 2,374,474 2,374,474 2,374,474
Cost of sales - 1,186,781 1,186,781 1,186,781
--------- ----------- ----------- ------------
Gross profit - 1,187,693 1,187,693 1,187,693
--------- ----------- ----------- ------------
Marketing and sales 1,045 1,709,676 1,710,721 1,710,721
General and administrative 8,307 3,632,138 3,640,445 3,640,445
Depreciation and - 313,650 313,650 313,650
amortization
--------- ----------- ----------- ------------
Total 9,352 5,655,464 5,664,816 5,664,816
--------- ----------- ----------- ------------
Loss from operations (9,352) (4,467,771) (4,477,123) (4,477,123)
Interest expense (130,473) (130,473) (130,473)
--------- ----------- ----------- ------------
Loss before income taxes (9,352) (4,598,244) (4,607,596) (4,607,596)
Income tax expense 5,610 - - -
--------- ----------- ----------- ------------
Net loss (14,962) (4,598,244) (4,607,596) (4,607,596)
========= ========= ========= ==========
Basic and diluted loss per (0.00) - (0.36) (0.22)
share
Weighted average shares 12,841,353 - 12,841,353 2 8,167,387 21,008,740
outstanding
</TABLE>
Infotopia, Inc.
Notes to pro forma financial statements
Balance Sheet, March 31, 2000
1) To record the reverse acquisition of Dr. Abravanel's
Formulas, Inc. by Infotopia, Inc. Dr. Abravanel's issued
8,167,387 shares of common stock for all of the common stock of
Infotopia, Inc. The former shareholders of Infotopia, Inc.
control the registrant after the acquisition.
Income Statement, nine months ended March 31, 2000
2) To adjust outstanding shares to reflect the acquisition as
if it had occurred at the beginning of the period presented.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly
authorized.
Infotopia, Inc.
By: /s/ Dan Hoyng
Dan Hoyng, Chief Executive Officer
Date: July 10, 2000
