UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-26943
AMERICAN INFLATABLES, INC.
--------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-4702570
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
947 NEWHALL STREET, COSTA MESA, CA 92627
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 949-515-1776
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON STOCK,
PAR VALUE $.01 PER SHARE
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No[ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
The Registrant's revenue for the year ended December 31,1999 was $1,034,113.
The aggregate market value of the voting and non-voting common equity held by
non-affiliates of the Registrant based upon the closing price of the common
stock as of the close of business on April 4, 2000, was approximately
$4,375,000.
As of April 4, 2000, there were 4,518,000 shares of the Registrant's common
stock, $.01 par value per share, issued and outstanding.
Transitional Small Business Disclosure Format (check one) Yes [ ] No [X]
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<PAGE 02>
PART I
NOTE REGARDING FORWARD-LOOKING STATEMENTS.
This Form 10-KSB contains forward-looking statements within the meaning of the
"safe harbor" provisions under Section 21E of the Securities Exchange Act of
1934 and the Private Securities Litigation Reform Act of 1995. We use forward-
looking statements in our description of our plans and objectives for future
operations and assumptions underlying these plans and objectives. Forward-
looking terminology includes the words "may," "expects," "believes,"
"anticipates," "intends," "projects," or similar terms, variations of such
terms or the negative of such terms. These forward-looking statements are based
on management's current expectations and are subject to factors and
uncertainties which could cause actual results to differ materially from those
described in such forward-looking statements. We expressly disclaim any
obligation or undertaking to release publicly any updates or revisions to any
forward-looking statements contained in this Form 10-KSB to reflect any change
in our expectations or any changes in events, conditions or circumstances on
which any forward-looking statement is based. Factors which could cause such
results to differ materially from those described in the forward-looking
statements include those set forth under "Risk Factors" and elsewhere in, or
incorporated by reference into this Form 10-KSB.
ITEM 1. DESCRIPTION OF BUSINESS.
American Inflatables, Inc. (the "Company") to date has had minimal operations,
revenues and cash flows. The ability of the Company to continue is dependent
upon its ability to obtain the necessary financing to continue its expansion
efforts and upon future-profitable operations. There can be no assurance that
the Company will be able to continue the development and manufacturing of its
inflatable advertising products, and market them successfully. There is no
assurance that once completed and marketed revenues from the products will be
sufficient to fund the Company's operations or fund any additional development
or marketing.
COMPANY BACKGROUND
General
The Company was originally formed as GlobaLock Corporation ("Globalock") under
the laws of Delaware on August 5, 1998, for the purpose of engaging in a merger
or other business combination with an operating company. Globalock had no
predecessors and never engaged in any business activity, other than
organizational matters.
Globalock was a development stage company and had no operating history. No
representation was made nor was any intended that Globalock's activities would
be profitable and that Globalock would be able to effect a business
combination. Globalock remained inactive until our reverse merger with Can/Am
Marketing Group, LLC (see Item 6 Management's Discussion and Analysis Reverse
Merger Treatment).
As a result of the reverse merger we acquired the business assets of Can/Am
Marketing Group, LLC (Can/Am) and its operations were organized under the laws
of the state of California in, 1997. Pursuant to the merger agreement, the
directors and officers of Globalock resigned and the management of Can/Am
filled the vacancies and the former membership interestholders of Can/Am
obtained 77.9% of the total voting power at the time. Our short operating
history and operating losses raise substantial doubt about our ability to
continue as a going concern. This fact is reported by our auditors,
Siegal & Smith.
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<PAGE 03>
Can/Am since 1998 has operated under the "American Inflatables" tradename.
Can/Am was formed to manufacture and market an alternative advertising medium:
inflatable blimps and other custom inflatable products. Can/Am has developed a
strong reputation for high quality inflatable products used for advertising and
marketing applications while enhancing its product design through innovation in
raw materials and manufacturing techniques.
The Company, through Can/Am, currently maintains one of the largest and most
comprehensive inventories of custom inflatable patterns. Whether floating,
tethered, flying, this innovative advertising medium creates strong brand
awareness and low cost advertising.
Operations and Products
The Company both designs and manufactures hot air and cold air inflatables.
Hot air inflatables are usually filled with helium, a non-flammable gas, which
floats effortlessly through the air. Cold air inflatables are usually powered
by an electrical fan, which the Company currently manufactures, providing a
constant flow of air. Both styles of inflatables can either be rooftop based
or ground based.
The Company's inflatable products are primarily manufactured at the Company's
Costa Mesa Facilities. The Company uses lightweight and durable fabrics
primarily composed of coated nylon webbing and stainless steel rivets. The
Company believes that this makes each inflatable product, easy to handle,
portable, and easily installed/dismantled without special equipment. The
Company believes that it is a competitive manufacturer and supplier of
alternative promotional balloon solutions that are highly cost effective and
easy to use. The Company's products range from custom inflatable designs and
huge product replicas to standard, low cost, designs such as: cold air and
helium filled advertising balloons, airships, 'hot air balloon' rooftop
displays, airborne helium balls and large flying signs.
The Company seeks to maintain its commitment of producing radically effective
promotional specialties of the highest caliber in quality, durability and
craftsmanship. This continues the Company's tradition of providing quality
inflatable display media with unique capabilities, attention to detail, and
variety.
The Company's products are designed with businesses in mind. The Company's
advertising inflatables have the ability to expand profits by attracting
customers. The unique nature of this alternative advertising medium can lure
passersby with its strong visual appeal to generate an increase in business
turnover. Among the variety of promotional activities, they can be used in
retail as a sophisticated point-of-purchase display aid. The manners in which
these sales enhancement tools are applied are as flexible as your marketing
prowess.
The Company's strategy is to offer the most cost-effective solutions and
options in the industry. Rapid set-up along with quick deflation and packing
are second nature to this medium. From huge oversized product replica models
and corporate logo and standard designs such as custom detailed spheres and
globes floating above a stand. This ensures that the customer promotes its
stand and product effectively, and believes that they have received the best
value for their advertising dollar.
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<PAGE 04>
The Company believes that the most unusual form of advertising display is also
the most portable. Displays can be inflated and deflated within minutes.
Unlike billboards, these publicity-generating tools are reusable both indoors
and outdoors. The choice of helium inflatables offers an aerial advantage
with greater visibility from a great distance. This medium provides the power
of billboard advertising without the expense along with the benefits of
portability and reusability.
While the Company's product designs vary and reflect customer preferences,
most inflatable products incorporate specially coated nylon webbing and
stainless steel rivets as raw material components. These raw materials are
purchased from specific suppliers under purchasing agreements the Company has
with each supplier. The Company believes that it is not dependent upon its
suppliers since the raw materials it requires can be obtained from many
sources.
The Company's management believes that through its efforts it will be
successful in the introduction of the Company's design and manufacturing
capabilities to the industry. As of December 31, 1999, the Company had
approximately 15,000 customers. The Company's sales records show that the
average customer order is $2,500. As a group, the Company's customers are
concentrated as follows: 50% of sales have been made to customers in the auto
industry, 20% of sales have been made to customers in the housing industry,
and 30% of these have been made to customers in the various miscellaneous
retail industries.
Sales & Marketing
The Company secures orders through its own in-house marketing and sales staff.
Currently, the Company has nine persons devoted to full-time marketing and
sales of the Company's products. Each account representative ("Account
Representative") receiving 80 hours of training from the management.
Account representatives are compensated with basic salary and commission.
Each Account representative is required to meet a minimum sales quota of
$25,000 each month (the "Quota Amount"). After an Account Representative meets
or exceeds the Quota Amount, he is eligible to receive a 10% commission on each
additional sales order. The Company anticipates that it will need to increase
the number of its Account Representatives by a minimum of 5 in the next 12
months. After the Company receives an order for the sale of the Company's
products, the Company's design staff works with the Account Representative that
generated the order to develop the most effective design. The mock up design
is then submitted to the customer for approval. After the customer approves
the design, the Company's manufacturing staff commences work on the product.
For most orders, the Company has found that from product design to product
completion, the Company's manufacturing process requires seven to 10 days.
After completion, each product is then shipped to the customer via Federal
Express. Each inflatable product is packaged and delivered to the customer
with instructions to assist the customer in erecting the product for maximum
marketing impact. Customers are responsible for all installation.
The Company will pursue a strategy of attracting proven management talent
from within the industry and outside to expand its sales and marketing
efforts. The Company will further use its management in developing a
strategy of rapid but sustainable growth. This strategy the Company believes
can be achieved by implementing an aggressive acquisition strategy centered
on local and regional competitors, which can enhance the Company's overall
business objective.
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<PAGE 05>
ITEM 2. Description of Property
The Company has 22 employees of whom eight employees are employed in
administrative, sales, marketing and an additional 14 employees who work in
manufacturing and production. The Company believes it has an excellent
relationship with its employees. None of its employees are represented by a
collective bargaining agreement.
The Company leases 10,000 square feet of office and manufacturing facilities at
947 Newhall Street, Costa Mesa, California 92627 under the terms of a one-year
lease (the "Lease") with ten one-year renewal options. Under the terms of the
Lease the Company pays $6,800 in monthly rent and common area operating
expenses. The Company's Chief Executive Officer, Gregg R. Mulholland, has
personally guaranteed the Company's obligations under the Lease.
ITEM 3. LEGAL PROCEEDINGS
During June 1999 Can/Am was in breach of contract in the amount of $4,000, for
advertising purchased. Virgo Publishing, Inc. obtained a default judgement in
the amount of $5,500 plus attorney fees and costs.
During 1999, S.D.D. Enterprises, Inc. obtained a judgment from Can/Am of $7,144
requiring payment April 1, 1999. The judgment was for breach of contract and
non-payment. The Company paid the judgement subsequent to year end.
During 1999, Glassforms, Inc. obtained a judgement from Can/Am in the amount of
$3,000. The judgment was for breach of contract and non-payment.
During December 1999, FedEx Corporation filed an action which was later settled
for approximately $19,500. The Company has been notified of a refiling in the
amount of $25,000.
There are no other material legal proceedings to which the Company is currently
a party or to which the property of the Company is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
During the fourth quarter of 1999 the following matter was put forth to a
majority of the directors and shareholders. The Company's Board of Directors
and a majority vote of the shareholders approved a reverse stock split of
0.1125 for 1 of the Company's common stock.
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<PAGE 06>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
On December 28, 1999 the Company's common stock began trading on the Over the
Counter Bulletin Board (OTC-BB) Market under the symbol "GLLK." Prior to
December 28, 1999, there was no public market for the Company's common stock.
The following sets forth the quarterly high and low bid prices during the
fourth quarter 1999 as reported on OTC-BB. These prices are based on quotations
between dealers, which do not reflect retail mark-up, markdown or commissions
and may not reflect actual transactions.
PRICE
QUARTER ENDED HIGH LOW
----------------- ------ ------
December 31, 1999 $4.00 $4.00
On March 28, 2000, the closing price of the Company's common stock (which
currently trades under the symbol BLMP) on the OTC-BB Market was $ 3 3/8 per
share. The Company has approximately 200 holders of record of its common stock
and estimates that it has approximately 300 beneficial holders.
DIVIDEND POLICY
The Company has paid no cash dividends to date. The Company does not anticipate
paying any cash dividends in the foreseeable future and intends to retain
future earnings, if any, for the development of its business.
CHANGES IN SECURITIES
The Company did not issue any additional equity securities during the quarter
ended December 31, 1999 which were not registered under the Securities Act of
1933, as amended; The Company did issue the following securities
registered under the Securities Act of 1933.
During November 1999, the Company issued 775,000 shares of its common stock to
three individuals who performed services under various consulting agreements.
These shares were issued pursuant to Form S-8 filed December 27, 1999.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
SECURITIES LITIGATION REFORM ACT.
Except for the historical information contained herein, the matters discussed
in this Form 10-KSB are forward-looking statements which involve risks and
uncertainties, including but not limited to economic, competitive,
governmental and technological factors affecting the Company's operations,
markets, products, services, prices, and other factors discussed in the
Company's filings with the Securities and Exchange Commission.
Prior to December 28, 1999 the Company was a non-operating business.
Pursuant to a Plan of Reorganization Agreement, Globalock Corporation merged
with Can/Am Marketing Group LLC. The Financial Statements included with the
Form 10-KSB are the combined Financial Statements as of and for the year ended
December 31, 1999 of the Company and Can/Am Marketing Group, LLC.
The operations discussion that follows, is the results of the Company of which
consists of Globalock and Can/Am on a proforma basis.
RESULTS OF OPERATIONS.
Net sales were $1,034,100 in fiscal 1999, an increase of $583,700 or 129.5%
compared to net sales of $450,400 for fiscal 1998. The increase in sales is
due to the Company substantially increasing its customer base. Sales for the
Company continue to grow at an increasing rate not just from repeat customers
but from new customers. The company has increased its presence and exposure
in the advertising markets.
Gross margin in fiscal 1999 was 60.8%, compared to 21.7% for fiscal
1998. The $629,100 gross profit for fiscal 1999 compares to $97,600 for
fiscal 1998. The increase in net sales and production efficiencies, are the
primary cause for the increase in gross margin as a percentage of sales. The
Company through higher quality materials for production, which decreased
replacement and provided a stronger product for sale. During fiscal 1999 the
Company increased its production and manufacturing staff but at a lower rate
than sales increase, enabling the Company to utilize its production staff to
increase gross margin.
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<PAGE 07>
The Company's selling expense totaled $356,600 for fiscal 1999 compared to
$137,400 for fiscal 1998, an increase of $219,200 or 159.6%. The Company
during fiscal 1999 substantially increased its trade show presence 700% fold
from fiscal 1998. Management believes that the additional tradeshow costs
associated with this presence will be realized in increased sales over the
next year as evidenced by the Company's project first quarter of fiscal 2000.
The Company's total general and administrative (G & A) expenses increased by
$486,900 or 332.5%, in fiscal 1999 due to increased costs related to the
Company's activities in preparation for going public and legal fees as well as
an increase in personnel. The Company's added two experienced senior management
to its staff, and several other positions. Total G & A expenses as a percentage
of sales were 61.6% for fiscal 1999, up from 35.1% for fiscal 1998. G & A as a
percentage of revenues increase, related to the Company's expansion efforts and
its preparation for going public.
The Company's interest expense was $39,400 in fiscal 1999 and $0 in fiscal
1998. The increase in interest expense during fiscal 1999 when compared to
fiscal 1998 is due to the interest expense associated with the convertible
notes and other short term financing.
REVERSE MERGER TREATMENT
On December, 27, 1999 Globalock completed its merger with Can/Am. Can/Am was
formed during 1997 as a limited liability company. As a result of the merger
Globalock acquired the business operations, services and assets of Can/Am which
are a significant part of our ongoing business and product that we sell. In
conformance with generally accepted accounting principles, the merger has been
accounted for as a "reverse merger" and the accounting survivor is Can/Am.
The reverse merger was completed pursuant to the statutory requirements of
California and Delaware through the exchange of 3,518,000 shares of American
Inflatables, Inc. common stock for 100% of outstanding membership interests of
Can/Am Marketing Group, LLC. The merger was treated as a reverse merger for
accounting purposes, therefore the financial statements of the Company are the
financial statements of Globalock and Can/Am.
LIQUIDITY AND CAPITAL RESOURCES
The Company's capital requirements have been nominal, and, to date, its cash
requirements have exceeded its cash flow from operations. The Company
historically has satisfied cash requirements through borrowings and the private
sale of equity. As of December 31, 1999, the Company had limited cash and/or
cash equivalents.
The Company's success will be dependent upon its ability to generate sufficient
cash flow to meet its obligations on a timely basis, to obtain financing or
refinancing as may be required, and ultimately to attain profitability. The
Company believes that it may not have sufficient cash resources to fund the
Company's operations through fiscal 2000. The Company as of December 31,1999
had begun its efforts of obtaining financing. The Company is currently
conducting a private placement pursuant to an exemption under Rule 504. The
even with its current private placement plans may not be able to obtain
sufficient financing to satisfy its cash requirements. The Company may be
required to obtain financing on terms that are not favorable to it and its
shareholders. If the Company is unable to obtain additional financing when
needed, it may be required to delay or scale back, which could have a material
adverse effect on its business, financial condition and results of operations.
The Company once finished with this private placement anticipates that it will
need to raise additional capital on a private placement basis through the sale
of the Company's common stock, preferred stock, debt securities, or some
combination thereof. The Company believes that if it is able to raise an
additional financing, this will meet the Company's external financing
requirements for a period of about twelve to twenty months after which the
Company may need additional financing on such terms as may then be available.
The amount of additional financing that the Company will need has not been
determined. While the Company is currently exploring opportunities it may have
to raise the additional capital, the Company has not received any commitment
from any investor, underwriter, or broker-dealer to provide any such funds.
There can be no assurance that the Company will be successful in raising
additional funds, or, if it is successful, that any such funds can be raised on
terms that are reasonable in view of the Company's current circumstances.
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<PAGE 08>
SELECTED FINANCIAL DATA.
The following financial data was prepared in accordance with the basis of
presentation discussed in Note 1 to the Financial Statements. No dividends have
been paid on the Company's common stock.
American Inflatables, Inc.
Statement of Operations
For the period ending December 31,
<TABLE>
DECEMBER 31,
-----------------------
1999 1998
----------- ----------
<S> <C> <C>
Revenues............................ $1,034,100 $ 450,400
Net income (loss)................... $ (408,600) $(209,200)
Proforma Loss per common share:
Basic............................. $ (0.09) $ (0.05)
Diluted........................... $ (0.09) $ (0.05)
Total assets........................ $1,047,100
===========
</TABLE>
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS 137 defers
for one year the effective date of SFAS 133. The rule will now apply to all
fiscal quarters of all fiscal years beginning after June 15, 2000. Management
does not anticipate the adoption of the new statement will have an effect on
earnings or the financial position of the Company.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
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<PAGE 09>
Independent Auditor's Report
----------------------------
Members
Can-Am Marketing Group LLC
dba American Inflatables
947 Newhall Street
Costa Mesa, CA 92627
We have audited the accompanying balance sheet of Can-Am Marketing Group LLC as
of December 27, 1999, and the related statements of operations, changes in
members equity, and cash flows for the pre merger period, January 1, 1999
through December 27, 1999 and the year ended 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 the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Can-Am Marketing Group LLC as
of December 31, 1999, and the results of its operations and its cash flows for
the pre merger period, January 1, 1999 through December 27, 1999, and the year
ended December 31, 1998 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 I to the
financial statements, the Company has suffered recurring losses from operations
and a net working capital deficiency that 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 I. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The proforma financial statements are
presented for purposes of additional analysis and is not a required part of the
basic financial statements. Such information has not been subjected to the
auditing procedures applied in the audit of the basic financial statements, and
accordingly we express no opinion on it.
Siegel & Smith
April 10, 2000
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<PAGE 10>
CAN/AM MARKETING GROUP, LLC
BALANCE SHEET
PRE MERGER DECEMBER 27, 1999
----------------------------------------
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash .....................................................$ 900
Inventory................................................. 59,600
Prepaid expenses and other current assets................. 53,300
----------
Total current assets.............................. 113,800
Fixed assets
Display and promotional blimps, net....................... 22,300
Computers, furniture and office equipment, net............ 34,000
Leasehold improvements, net............................... 51,600
----------
Total fixed assets................................ 107,900
Other assets:
Deposits.................................................. 7,000
----------
Total assets......................................$ 228,700
==========
LIABILITIES AND MEMBERS' EQUITY (DEFICIT)
Current liabilities:
Notes payable.............................................$ 323,000
Notes payable investors................................... 259,000
Accounts payable.......................................... 113,300
Accrued payroll liabilities............................... 289,500
Accrued liabilities....................................... 48,700
----------
Total current liabilities......................... 1,033,500
Member's equity (deficit)................................... (804,800)
----------
Total liabilities and members' equity (deficit)...$ 228,700
==========
</TABLE>
See accompanying notes to financial statements.
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<PAGE 11>
CAN/AM MARKETING GROUP, LLC
STATEMENTS OF OPERATIONS AND CHANGES IN MEMBERS' DEFICIT
FOR THE PRE MERGER PERIOD ENDED DECEMBER 27, 1999
AND YEAR ENDED DECEMBER 31, 1998
<TABLE>
1999 1998
----------- ----------
<S> <C> <C>
Revenues............................................ $ 1,034,100 $ 450,400
Cost of goods sold............................. 405,000 352,800
----------- ----------
Gross profit........................................ 629,100 97,600
----------- ----------
Selling and tradeshow expenses
Sales commissions.............................. 62,000 60,300
Trade show expense............................. 138,000 29,300
Trade show travel and entertainment............ 71,500 800
Other selling and marketing expenses........... 85,100 47,000
----------- ----------
Total .................................... 356,600 137,400
----------- ----------
Administrative expenses
Depreciation and amortization.................. 20,300 8,000
Legal and accounting........................... 102,800 5,000
Office expense................................. 80,300 50,500
Other administrative expenses.................. 72,300 21,500
Salaries and payroll expenses.................. 361,700 65,500
----------- ----------
Total..................................... 637,400 150,500
----------- ----------
Net loss from operations.............. (364,900) (190,300)
Other Expenses
Interest expense............................... 39,400 7,100
Other losses................................... 4,300 11,800
----------- ----------
Total..................................... 43,700 18,900
----------- ----------
Net loss.............................. $ (408,600) $ (209,200)
Beginning members' deficit..................... (333,500) (61,800)
Member draws................................... (62,700) (62,500)
----------- ----------
Members' deficit.......................... $ (804,800) $ (333,500)
=========== ===========
</TABLE>
See accompanying notes to financial statements.
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<PAGE 12>
CAN/AM MARKETING GROUP, LLC
STATEMENTS OF CASH FLOWS
FOR THE PRE MERGER PERIOD ENDING DECEMBER 27, 1999
AND YEAR ENDED DECEMBER 31, 1998
<TABLE>
Period Ended Year Ended
December, 27 December, 31
1999 1998
------------ ------------
<S> <C> <C>
Cash flows from operating activities
Net loss.......................................... $(408,600) $(209,200)
Adjustments to reconcile net income to net cash
Provided by operating activities:
Depreciation................................... 14,100 4,200
Amortization.............................. 6,200 3,800
Changes in:
Inventory............................... (55,200) (4,400)
Prepaid expenses........................ (46,000) (7,300)
Accounts payable........................ 107,200 9,200
Accrued payroll liabilities............. 232,000 21,200
Accrued liabilities..................... 11,900 2,500
Deposits................................ (400) (5,000)
--------- ---------
Net cash used in operating activities............... (138,800) (185,000)
Cash flows from investing activities
Promotional blimps constructed............ (24,400) (3,000)
Purchase of office equipment and computers (10,000) (17,100)
Purchase of manufacturing equipment....... (11,400) (10,400)
Leasehold improvements.................... (800) (60,700)
--------- ---------
Net cash used by investing activities............... (46,600) (91,200)
Cash flows from financing activities
Notes payable............................. 275,000 340,300
Member draws.............................. (62,700) (62,500)
Debt reduction............................ (33,300) -
--------- ---------
Net cash provided by financing activities........... 179,000 277,800
Net increase in cash (decrease) .......... (6,400) 1,600
Cash, beginning of the year.................... 7,300 5,700
--------- ---------
Cash, December 27 and December 31.............. $ 900 $ 7,300
========= =========
Supplemental Information:
Interest Paid....................................... $ - $ -
Taxes Paid.......................................... $ - $ -
</TABLE>
See accompanying notes to financial statements.
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<PAGE 13>
Independent Auditor's Report
----------------------------
Board of Directors and Stockholders
American Inflatables, Inc.
947 Newhall Street
Costa Mesa, CA 92627
We have audited the accompanying balance sheet of American Inflatables, Inc. as
of December 31, 1999, and the related statements of operations, stockholders'
equity, and cash flows for the post merger period December 27, 1999 through
December 31, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of American Inflatables, Inc. as
of December 31, 1999, and the results of its operations and its cash flows for
the post merger period, December 27 1999 through December 31, 1999 in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note I to the financial
statements, the Company has suffered recurring losses from operations an has a
net working capital deficiency that raises substantial doubt about its ability
to continue as a going concern. Management's plans in regard to these matters
are also described in Note I. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The proforma financial statements are
presented for purposes of additional analysis and is not a required part of the
basic financial statements. Such information has not been subjected to the
auditing procedures applied in the audit of the basic financial statements, and
accordingly we express no opinion on it.
Siegel & Smith
Del Mar, California
April 10, 2000
- 13 -
- -------------------------------------------------------------------------------
<PAGE 14>
CAN/AM MARKETING GROUP, LLC
BALANCE SHEET
<TABLE>
DECEMBER 31, 1999
-----------------
<S> <C>
ASSETS
Current assets:
Cash ..................................................... $ 900
Inventory................................................. 59,600
Prepaid expenses and other current assets................. 53,300
-----------
Total current assets.............................. 113,800
Fixed assets
Display and promotional blimps, net....................... 22,300
Computers, furniture and office equipment, net............ 34,000
Leasehold improvements, net............................... 51,600
-----------
Total fixed assets................................ 107,900
Other assets:
Deposits.................................................. 7,000
Goodwill, net............................................. 818,400
-----------
Total other assets................................ 825,400
Total assets...................................... $ 1,047,100
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable............................................. $ 323,000
Accounts payable.......................................... 113,300
Accrued payroll liabilities............................... 289,500
Accrued liabilities....................................... 48,700
-----------
Total current liabilities......................... $ 774,500
Long term liabilities
Stockholders' equity
Common stock............................................. $ 45,400
Additional paid in capital............................... 254,600
Accumulated deficit...................................... (27,400)
-----------
Total stockholders' equity........................ 272,600
-----------
Total liabilities and stockholders' equity........ $ 1,047,100
===========
</TABLE>
See accompanying notes to financial statements.
- 14 -
- -------------------------------------------------------------------------------
<PAGE 15>
AMERICAN INFLATABLES, INC
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
Post merger
December 27- Year Ended
December 31, 1999
1999 unaudited
---------- ----------
<S> <C> <C>
Revenues............................................ $ 0 $ 0
Cost of goods sold............................. 0 0
---------- ----------
Gross profit........................................ 0 0
---------- ----------
Administrative expenses
Depreciation and amortization................. 0 0
Legal and accounting.......................... 0 14,300
Office expense................................ 0 0
Other administrative expenses................. 0 2,900
Salaries and payroll expenses................. 0 0
---------- ----------
Total.................................... 0 17,200
---------- ----------
Net loss from operations............. 0 <17,200>
Income tax (benefit)
Income tax expense (benefit).................. 0 (2,600)
Valuation allowance(benefit).................. 0 2,600
---------- ----------
Total.................................... 0 0
---------- ----------
Net loss............................. $ 0 $ 17,200
========== ==========
Loss per share................................ (0.01)
Weighted average shares....................... 1,251,648
</TABLE>
See accompanying notes to financial statements.
- 15 -
- -------------------------------------------------------------------------------
<PAGE 16>
AMERICAN INFLATABLES, INC.
STATEMENTS of CASH FLOWS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
Post merger
December 27- Year Ended
December 31, 1999
1999 unaudited
---------- ----------
<S> <C> <C>
Cash Flows From Operating Activities
Net loss....................................... $ - $ (17,200)
---------- ----------
Net Cash Used in Operating Activities............... - (17,200)
Cash Flows From Financing activities
Sale of common stock...................... 900 13,800
Assumption of debt........................ - 4,300
---------- ----------
Net cash provided by financing activities........... 900 18,100
Net Increase in cash...................... 900 900
Cash, beginning of the year.................... - -
---------- ----------
Cash, December 27 and December 31.............. $ 900 $ 900
========== ==========
Supplemental Non Cash Investing and Financing Activities:
The Company acquired all the assets and liabilities of Can/Am Marketing
Group, LLC for 2,910,000 shares of the Company's Common Stock
Supplemental Information:
Interest Paid.................................. $ - $ -
Taxes Paid..................................... $ - $ -
</TABLE>
See accompanying notes to financial statements.
- 16 -
- -------------------------------------------------------------------------------
<PAGE 17>
AMERICAN INFLATABLES, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE POST MERGER PERIOD DECEMBER 27, 1999 THROUGH DECEMBER 31, 1999
<TABLE>
Common Stock Additional Paid Accumulated
Date Description Shares Dollars in Capital Deficit Total
- ----------------- ------------- ------------------ ---------------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Beginning
Balance 1,019,921 $10,200 $ 800 $ (10,200) $ 800
December 27, 1999 Shares issued
to LLC Member 3,000,000 30,000 - - 30,000
December 27, 1999 Convertible
debt 518,000 5,200 253,800 - 259,000
December 31, 1998 Net loss (17,200) (17,200)
------------------ ---------------- ----------- --------
Balance
December 31, 1999 4,537,921 $45,400 $ 254,600 $ (27,400) $272,600
================== ================ =========== ========
</TABLE>
See accompanying notes to financial statements.
- 17 -
- -------------------------------------------------------------------------------
<PAGE 18>
CAN/AM LLC / AMERICAN INFLATABLES, INC.
PROFORMA BALANCE SHEET
DECEMBER 31, 1999
<TABLE>
ASSETS
Adjust- Proforma
Can/Am GlobaLock ments Balance Sheet
---------- --------- -------- -------------
<S> <C> <C> <C> <C>
Current assets:
Cash ......................................... $ 900 $ - $ - $ 900
Inventory..................................... 59,600 - - 59,600
Prepaid expenses and other current assets..... 53,300 - - 53,300
---------- --------- -------- ----------
Total current assets.................. 113,800 - - 113,800
Fixed Asstes
Display and promotional blimps, net........... 22,300 - - 22,300
Computers, furniture and office equipment net. 34,000 - - 34,000
Leasehold improvements, net................... 51,600 - - 51,600
---------- --------- -------- ----------
Total fixed assets.................... 107,900 - - 107,900
Other Assets:
Deposits...................................... 7,000 - - 7,000
Goodwill, net................................. - - 818,400 818,400
---------- --------- -------- ----------
Total other assets.................... 7,000 - 818,400 825,400
---------- --------- -------- ----------
Total Assets.......................... $ 228,700 $ - $818,400 $1,047,100
========== ========= ======== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Notes payable................................. $ 323,000 $11,900 $(11,900) $ 323,000
Notes payable investors....................... 259,000 - (259,000) -
Accounts payable.............................. 113,300 4,500 (4,500) 113,300
Accrued payroll liabilities................... 289,500 - - 289,500
Accrued liabilities........................... 48,700 - - 48,700
---------- --------- -------- ----------
Total current liabilities............. 1,033,500 16,400 (275,400) 774,500
Long Term Liabilities
Members' deficit................................ (804,800) - 804,800 -
Stockholders' equity (deficit)
Common stock.................................. - 10,200 35,200 45,400
Additional paid in capital.................... - 800 253,800 254,600
Accumulated deficit........................... - (27,400) - (27,400)
---------- --------- -------- ----------
Total stockholders' equity (deficit).. - (16,400) 289,000 272,600
---------- --------- -------- ----------
Total liabilities and Stockholders'
(deficit)equity.................. $ 228,700 $ - $818,400 $1,047,100
========== ========= ======== ==========
</TABLE>
See accompanying notes to financial statements.
- 18 -
- -------------------------------------------------------------------------------
<PAGE 19>
CAN/AM LLC / AMERICAN INFLATABLES, INC.
PROFORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
Adjust- Proforma
Can/Am GlobaLock ments Balance Sheet
---------- --------- -------- -------------
<S> <C> <C> <C> <C>
Sales........................................... $1,034,100 $ - $ - $1,034,100
---------- --------- -------- ----------
Cost of goods sold.............................. 405,000 - - 405,000
---------- --------- -------- ----------
Gross profit.................................... 629,100 - - 629,100
Selling and tradeshow expenses
Sales commissions.......................... 62,000 - - 62,000
Trade show expense......................... 138,000 - - 138,000
Trade show travel and entertainment........ 71,500 - - 71,500
Other selling and marketing expenses....... 85,100 - - 85,100
---------- --------- -------- ----------
Total ................................ 356,600 - - 356,600
Administrative expenses
Depreciation and amortization.............. 20,300 - - 20,300
Legal and accounting....................... 102,800 14,300 - 117,100
Office expense............................. 80,300 - - 80,300
Other administrative expenses.............. 72,300 2,900 - 75,200
Salaries and payroll expenses.............. 361,700 - - 361,700
---------- --------- -------- ----------
Total................................. 637,400 (17,200) - 654,600
---------- --------- -------- ----------
Net Loss from operations.......... (364,900) - - (382,100)
Other expenses
Interest expense........................... 39,400 - - 39,400
Other losses............................... 4,300 - - 4,300
---------- --------- -------- ----------
Total................................. 43,700 - - 43,700
Income tax (benefit)
Income tax expense (benefit)............... - (2,600) (61,300) (61,300)
Valuation allowance........................ - 2,600 61,300 61,300
---------- --------- -------- ----------
Total................................. - - - -
Net loss.......................... $ (408,600) $ (17,200) $ - $ (425,800)
========== ========= ======== ==========
</TABLE>
See accompanying notes to financial statements.
- 19 -
- -------------------------------------------------------------------------------
<PAGE 20>
Notes to Financial Statements
Note A. ORGANIZATION AND BASIS OF PRESENTATION
American Inflatables, Inc., (the "Company")(a Delaware Corporation) provides,
manufactures and markets alternative advertising products such as, inflatable
blimps and other custom inflatable products.
Effective December 27, 1999 (the Acquisition Date) the Company acquired the
alternative advertising medium business from Can/Am Marketing Group, LLC in an
exchange of common stock of the Company for assets of Can/Am Marketing Group,
LLC. The closing for this transaction occurred on December 27, 1999. The
acquisition was accounted for under the purchase method of accounting.
Accordingly, the acquired assets and liabilities were recorded at fair market
value, deemed to be the net book value carried by Can/Am. The difference
between fair market value and purchase price was charged to goodwill.
Note B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS: Cash and cash equivalents include all cash balances
and highly liquid investments having original maturities of three months or
less.
INVENTORY: Finished goods and raw materials are valued at the lower of cost
(first in first out) or market. Work-in-process, consisting of labor,
materials, and overhead on partially completed projects, are recorded at cost
but not in excess of net realizable value.
PROPERTY, PLANT, AND EQUIPMENT: Property, plant, and equipment is stated at
cost. Depreciation is computed using the straight-line method over the
estimated useful lives of the assets, which generally range from three years
for computer software to seven years for equipment. Leasehold improvements and
Goodwill are amortized on a straight-line method over ten years.
REVENUE AND EXPENSE RECOGNITION: Revenue from product sales are generated
primarily from the manufacturing and selling of advertising products, which
consist of inflatable blimps and other custom inflatables. The period of time
from initial order to final shipment of the product typically ranges from seven
to ten days. Revenue is recognized when the product is shipped by the Company
to the client. Expenses are recorded when incurred.
ADVERTISING: The Company follows the policy of charging the costs of
advertising to expense as incurred. The Company's significant advertising
expenses are trade show costs. The Company depreciates the tradeshow blimps
over 60 months.
INCOME TAXES: The newly merged Company accounts for income taxes under the
provisions of Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes." Can/Am Marketing Group, LLC was treated as a
partnership for federal and state income tax purposes, prior to the acquisition
date income or losses from Can/Am passes to the members.
ESTIMATES: The preparation of these financial statements in conformity with
generally accepted accounting principals requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities.
Actual results could differ from those estimates.
- 20 -
- -------------------------------------------------------------------------------
<PAGE 21>
Note C. INVENTORY
Inventories as of December 27, 1999 and December 31, 1999 by major
classification, were as follows:
1999
--------
Finished Goods.......................... $ 25,700
Work-in-Process......................... 5,400
Raw Materials........................... 28,500
--------
$ 59,600
========
Inventory is valued using the first in first out (FIFO) method.
Note D. PREPAID EXPENSES
The Company markets its products by attending trade shows. To secure strategic
locations and favorable rates a deposit is required to be placed in excess of
nine months prior to the show. Accordingly the Company has $49,503 in deposits
as of December 27, 1999 and December 31, 1999. These amounts are expensed in
the period of the trade show.
Note E. PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment as of December 27, 1999 and December 31, 1999
consisted of the following:
1999
--------
Machinery and equipment.............. $ 20,200
Leasehold improvements............... 61,500
Computer and software................ 17,300
Furniture and fixtures............... 8,500
Trade show blimps.......... ......... 28,700
--------
136,200
Less accumulated depreciation......... 28,300
--------
$107,900
========
Depreciation and amortization expense for the period ended December 27, 1999
and year end 1999 was $20,290.
Note F. NOTES PAYABLE
Notes payable as of December 27, 1999 and December 31, 1999 consisted of:
Short Term Note.................... $ 23,000
Convertible Notes.................. 300,000
Membership Subscriptions........... 259,000
--------
$582,000
========
The convertible notes in the amount of $50,000 in 1998 and $250,000 during 1999
provide for a term loan and include interest payable at 12%. These loans are
secured by shares owned by an officer of the Company. The Company is required
to either make payment for principal and interest or make payment in the form
of common stock of the Company once the Company becomes a publicly traded
company. The lenders have the option to convert the debt to common shares at
$1.00 per share. The total accrued interest at December 27, 1999 and
December 31, 1999 was $23,000. No conversions have been made as of
December 31, 1999.
Individual investors have purchased unsecured membership subscriptions totaling
$259,000 in Can/Am, in return they will were issued common shares at $ .50 per
share. No interest was paid on these subscriptions.
As of December 31, 1999 the Company owed Scott Rettberg $23,000 which is
unsecured and bears no interest. This loan was a result of the purchase of his
interest in Can/Am.
- 21 -
- -------------------------------------------------------------------------------
<PAGE 22>
Note G. RELATED PARTY TRANSACTIONS
The officers and directors of the Company are involved in other business
activities and may, in the future, become involved in additional business
opportunities. If a specific business opportunity becomes available, such
persons may face a conflict in selecting between the Company and their other
business interests. The Company has not formulated a policy for the resolution
of such conflicts.
The Company's officer has received funds on a unsecured basis from the Company.
These borrowings occurred during the period that the Company was a limited
liability company (LLC). Upon termination of the Company's LLC operation and
organization these advances were reclassified as draws and netted against
member equity.
Scott Rettberg, a former member of Can/Am, agreed to sell his Can/Am interest
in May 1998. The agreement offered Mr. Rettberg 50,000 shares of common stock
when the Company becomes a publicly traded company in addition to a cash
payment of $39,600 paid in 24 monthly installments. Subsequent to the balance
sheet date the 50,000 shares were issued.
Note H. WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional shares
of common stock.
Note I. GOING CONCERN
The Company's financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company had not commenced its planned principal
operations. Prior to the merger, Can/Am sustained significant losses and has
negative working capital. Without the realization of additional capital, it may
be unlikely for the Company to continue as a going concern.
Note J. COMMITMENTS & CONTINGENCIES
The financial statements reflect accruals management believes sufficient to the
mentioned pending legal proceedings.
The Company's sales to the automobile industry exceed 50% of the Company's
total sales. An economic downturn to the auto industry could seriously impact
Company sales.
Note K. LEASES
The Company leases a combination of offices and production facility in Costa
Mesa, California totaling 10,000 square feet. The lease is accounted for as an
operating lease, under the terms of a one-year lease with ten one-year
consecutive renewal options.
Note L. STOCK
The Company has authorized 20,000,000 shares of $0.01 par value common stock.
As of December 31, 1999 there were 4,537,921 shares issued and outstanding.
The Company also has 20,000,000 authorized shares of $0.001 par value preferred
shares. As of December 31, 1999 there were no shares issued and outstanding.
- 22 -
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<PAGE 23>
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
As filed on Form 8-K, January 13, 2000, the Company terminated its prior
accountants. There have been no disagreements with the Company's accountants
on any accounting or financial disclosure matters during fiscal 1999 and
fiscal 1998.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
DIRECTORS AND EXECUTIVE OFFICERS
The current executive officers of the Company are as follows:
Name Age Title
------------------ ------ ----------------------------------
Gregg Mulholland 31 Chairman of the Board,
Chief Executive Officer
Jeffrey Jacobson 52 President, Chief Operating Officer
and Director
David Ariss 60 Director
Gregg R. Mulholland, age 31, is the Company's Chief Executive Officer and has
served in that capacity since inception. From February 1995 to May 1997,
Mr. Mulholland was President/CEO at Hurlys Roadhouse Inc. From March 1993 to
January 1995, Mr. Mulholland was General Partner at Arpatia Inc.
Mr. Mulholland holds a BA degree from California State University at
Long Beach (1991).
Jeffrey Jacobson, age 52, is the Company's Chief Operations Officer and has
served in that capacity since February 1999. From January 1997 to
February 1999, Mr. Jacobson was National Sales Manager at Giant Advertising.
From June 1987 to June 1995, Mr. Jacobson was President of Micro Warehouse.
Mr. Jacobson holds a Bachelor of Commerce degree from the University of
Witwatersrand.
David Arris, age 60, is on the Board of Directors and was appointed during
December 1999. Mr. Ariss spent the majority of his professional career in the
Industrial and Commercial Real Estate Industry. Mr. Ariss is Principal with
P.I.B. Realty Advisors, a real estate consulting firm, and was recently
appointed to the California World Trade Commission.
- 23 -
- -------------------------------------------------------------------------------
<PAGE 24>
SECTION 16 (A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
SECTION 16(a) of the securities Exchange Act of 1934, as amended, requires the
company's directors, executive officers and persons who own more than 10% of a
class of the Company's equity securities which are registered under the
Exchange Act to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes of ownership of such registered
securities. Such executive officers, directors and greater than 10% beneficial
owners are required by Commission regulation to furnish the Company with copies
of all Section 16(a) forms filed by such reporting persons.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and on representations that no other reports
were required, no person required to file such a report failed to file on a
timely basis during fiscal 1999.
ITEM 10. EXECUTIVE COMPENSATION
The following summary compensation table sets forth the aggregate compensation
paid or accrued by the Company named executive officers and the Company's
executive officers whose annual compensation exceeded $100,000 for fiscal 1999
and who are no longer serving in such capacity at December 31, 1999, for
services rendered during the fiscal years ended December 31, 1999 and 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
Annual Compensation Long-Term Compensation
-------------------------- -------------------------------------------------------
Other Annual Restricted Securities
Name and Bonus Compensation Stock Underlying All other
Principal Position Year Salary ($) ($)(1) ($) Awards($) Options(#) Compensation($)
- ------------------ ---- ---------- ------ ------------ --------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gregg Mulholland 1999 $ 80,000 - - - - -
Chairman, President 1998 $ 45,050 - - - - -
and Chief Executive Officer
Jeffrey Jacobsen 1999 $ 60,050 - - - - -
Chief Operating Officer
- -----------------
</TABLE>
OPTION GRANTS IN THE LAST FISCAL YEAR
The following table sets forth certain information regarding stock options
granted to the named executive officers during the fiscal year ended
December 31, 1999. No stock appreciation rights were granted to these
individuals during such year.
<TABLE>
Individual Grants
-------------------------------------------
Number of Percent of
Securities Total Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted (#) Fiscal Year(1) ($/Sh) Date
- ------------------ ----------- -------------- ------- ----------
<S> <C> <C> <C> <C>
Gregg Mulholland - - $0.000 -
Jeffrey Jacobsen - - $0.000 -
David Ariss - - $0.000 -
</TABLE>
- 24 -
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<PAGE 25>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table sets forth certain information with respect to the exercise
of stock options during the fiscal year ended December 31, 1999 by the named
executive officers and the number and value of unexercised options held by each
of the named executive officers as of December 31, 1999:
<TABLE>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Fiscal Options at Fiscal
Shares Year-End(#) Year-End($)
Acquired on Value --------------------------- ---------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gregg Mulholland - - - $0 - $0
Jeffrey Jacobsen - - - $0 - $0
David Ariss - - - $0 - $0
- -----------------
</TABLE>
DIRECTOR COMPENSATION
The Company reimburses directors for out-of-pocket expenses incurred in
connection with the rendering of services as a director. No compensation was
paid to any directors during the year ended December 31, 1999.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Unless otherwise indicated, the address of the directors and officers is
American Inflatables, Inc., 947 Newhall Street, Costa Mesa, California 92627.
Beneficial ownership is defined in accordance with the rules of the SEC and
generally means the power to vote and/or to dispose of the securities
regardless of any economic interest therein. In computing number and percentage
ownership of shares of common stock beneficially owned by a person, shares of
common stock subject to options and warrants held by that person that are
exercisable within 60 days are deemed outstanding. Such shares of common stock,
however, are not deemed outstanding for purposes of computing the percentage
ownership of stockholders other than such person.
The following table sets forth certain information as to shares of common stock
owned by (i) each person known to beneficially own more than 5% of the
outstanding common stock, (ii) each director and named executive officer of the
Company, and (iii) all executive officers and directors of the Company as a
group. Unless otherwise indicated, each person has sole voting and investment
power over the shares beneficially owned by him. Unless otherwise indicated,
the address of each named beneficial owner is that of the Company's principal
offices located at 947 Newhall Street, Costa Mesa California 92627.
NAME AND ADDRESS NUMBER OF SHARES PERCENTAGE OF SHARES
OF BENEFICIAL OWNER BENEFICIALLY OWNED BENEFICIALLY OWNED (1)
- --------------------------- ------------------ ----------------------
Gregg Mulholland 3,000,000 66.4%
Jeffrey Jacobsen - 0.0%
Davis Ariss - 0.0%
- ---------------------------
All officers and directors
as a group (3 persons) 3,000,000 66.4%
(1) Based on 4,518,000 shares outstanding.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There are no material relationships or related transactions between the Company
and its officers or directors.
- 25 -
- -------------------------------------------------------------------------------
<PAGE 26>
PART III
ITEM 1. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
Listed below are the documents filed as a part of this report:
1. Financial Statements and the Independent Auditors' Report:
2. Financial Statement Schedules:
3. Exhibits:
2.1 *** Merger Agreement and Plan of Reorganization among
GLOBALOCK CORPORATION,CAN/AM MARKETING GROUP, LLC,
and all of the membership interest-holders of
CAN/AM MARKETING GROUP LLC.
3.1 * Amended and Restated Certificate of Incorporation
of the Company,
3.2 * Bylaws of the Company
4.1 * Specimen of common stock certificate
5 ** Opinion of Sara Churgin, Esq.
10.1 * Employment Agreement Between GlobaLock Corporation
and Daniel Zimmerman
16 *** Letter from Weinberg & Company, P.A.,
re Change in Certifying Accountants.
23.1 Consent of Independent Auditors
27 Financial Data Schedule
* Incorporated by reference to the Company's
Form 10-SB12G filed with the Securities and
Exchange Commission on August 4, 1999.
** Incorporated by reference to the Company's
Form S-8 filed with the Securities and Exchange
Commission on December 27, 1999.
*** Incorporated by reference to the Company's
Form 8-K filed with the Securities and Exchange
Commission on January 13, 2000.
ITEM 3. The Registrant did not file any reports on Form 8-K during
the quarter ended December 31, 1999.
- 26 -
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<PAGE 27>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: April 13, 2000 By: /s/ Gregg Mulholland
-------------- --------------------
Gregg Mulholland
Chief Executive Officer
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
Date: April 13, 2000 By: /s/ Gregg Mulholland
-------------- --------------------
Gregg Mulholland
Chairman of the Board
Chief Executive Officer
Date: April 13, 2000 By: /s/ Jeffrey Jacobsen
-------------- --------------------
Jeffrey Jacobsen
President
Chief Operating Officer
Director
Date: April 13, 2000 By: /s/ David Ariss
-------------- --------------------
David Ariss
Director
- 27 -
- -------------------------------------------------------------------------------
<PAGE 28>
EX-23
CONSENT OF SIEGEL & SMITH
EXHIBIT 23
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference of our report dated April 10,
2000, appearing in this Annual Report on Form 10-KSB of American Inflatables,
Inc. for the year ended December 31, 1999.
SIEGEL & SMITH
April 12, 2000
- 28 -
- -------------------------------------------------------------------------------
<PAGE 29>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND STATEMENT OF INCOME OF THE COMPANY AS OF AND FOR THE YEAR ENDED
DECEMBER 31, 1999, PROFORMA FINANCIAL INFORMATION OF THE COMPANY AND ITS
ACQUISITION AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1999
<PERIOD-START> JAN-01-1999 JAN-01-1999
<PERIOD-END> DEC-31-1999 DEC-31-1999
<CASH> 900 900
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 59,600 59,600
<CURRENT-ASSETS> 113,800 113,800
<PP&E> 107,900 107,900
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 1,047,100 1,047,100
<CURRENT-LIABILITIES> 774,500 774,500
<BONDS> 0 0
0 0
0 0
<COMMON> 45,400 45,400
<OTHER-SE> (227,200) (227,200)
<TOTAL-LIABILITY-AND-EQUITY> 1,047,100 1,047,100
<SALES> 0 1,034,100
<TOTAL-REVENUES> 0 1,034,100
<CGS> 0 405,000
<TOTAL-COSTS> 17,200 654,600
<OTHER-EXPENSES> 0 4,300
<LOSS-PROVISION> (17,200) (342,700)
<INTEREST-EXPENSE> 0 39,400
<INCOME-PRETAX> (17,200) (425,800)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (17,200) (425,800)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (17,200) (425,800)
<EPS-BASIC> (0.01) (0.09)
<EPS-DILUTED> (0.01) (0.09)
</TABLE>
