<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
- -------------------------------------------------------------------------------
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of (Date of Earliest Event Reported): May 26, 2000 (March 10, 2000)
Sound Designs, Inc.
(Exact Name of Registrant as Specified in Charter)
Nevada 000-28331 88-0412455
- ------------------------------- ----------- -------------------
(State or Other Jurisdiction of (Commission (I.R.S. Employer
Incorporation or Organization) File Number) Identification No.)
14677 Midway Road, Suite 206, Addison, Texas, U.S.A.
(Address of principal executive offices)
75001
(Zip Code)
972-687-0090
(Registrant's telephone number, including area code)
<PAGE> 2
<TABLE>
<S> <C>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
i. Independent Auditors' Report F-1
ii. Balance Sheet as of December 31, 1999 F-2
iii. Statements of Operations for the Year Ended December 31, 1999, and
Period From October 5, 1998 (Date of Inception) to December 31, 1999 F-3
iv. Statements of Stockholders' Equity for the Year Ended December 31, 1999,
and Period From October 5, 1998 (Date of Inception) to December 31, 1999 F-4
v. Statements of Cash Flows for the Year Ended December 31, 1999, and Period
from October 5, 1998 (Date of Inception) to December 31, 1999 F-5
vi. Notes to Financial Statements F-6
(b) Pro Forma Financial Information (unaudited).
i. Pro Forma Condensed Balance Sheet at December 31, 1999 P-1
ii. Pro Forma Condensed Statement of Operations for the Year Ended
December 31, 1999 P-2
iii. Notes to Pro Forma Financial Statements P-3
</TABLE>
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Plus Solutions, Inc.:
We have audited the accompanying balance sheet of Plus Solutions, Inc. (a
development stage company) (the "Company") as of December 31, 1999, and the
related statements of operations, stockholders' equity and cash flows for the
year then ended, and for the period from October 5, 1998 (date of inception) to
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 auditing standards generally accepted
in the United States of America. 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, such financial statements present fairly, in all material
respects, the financial position of the Company at December 31, 1999, and the
results of its operations and its cash flows for the year then ended, and for
the period from October 5, 1998 (date of inception) to December 31, 1999, in
conformity with accounting principles generally accepted in the United States of
America.
The Company is in the development stage at December 31, 1999. As discussed in
Note 1 to the financial statements, successful completion of the Company's
development program and, ultimately, the attainment of profitable operations are
dependent upon future events, including obtaining adequate financing to fulfill
its development activities and achieving a level of sales adequate to support
the Company's cost structure.
/s/ DELOITTE AND TOUCHE
Dallas, Texas
May 17, 2000
F-1
<PAGE> 4
PLUS SOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash $ 121,629
Prepaid expenses 1,208
-----------
Total current assets 122,837
PROPERTY AND EQUIPMENT - Net (Note 2) 51,297
PRODUCT DEVELOPMENT COSTS (Note 1) 97,440
-----------
TOTAL $ 271,574
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 166,442
Notes payable (Note 3) 68,317
-----------
Total current liabilities 234,759
COMMITMENTS AND CONTINGENCIES (Note 6)
STOCKHOLDERS' EQUITY (Note 4):
Convertible voting preferred stock, 8,000,000 shares authorized;
no shares issued and outstanding
Common stock, no par value; 25,000,000 shares authorized;
13,876,193 shares issued and outstanding 6,969,736
Additional paid-in capital 1,134,981
Deficit accumulated during the development stage since October 5, 1998 (8,067,902)
-----------
Total stockholders' equity 36,815
-----------
TOTAL $ 271,574
===========
</TABLE>
See notes to financial statements.
F-2
<PAGE> 5
PLUS SOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999, AND
PERIOD FROM OCTOBER 5, 1998 (DATE OF INCEPTION) TO DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CUMULATIVE
FROM
1999 1998 INCEPTION
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES $ -- $ -- $ --
OPERATING EXPENSES:
Salaries and benefits 1,145,559 78,853 1,224,412
General and administrative 897,992 5,912,202 6,810,194
Depreciation expense 21,177 4,245 25,422
----------- ----------- -----------
Total operating expenses 2,064,728 5,995,300 8,060,028
----------- ----------- -----------
OPERATING LOSS (2,064,728) (5,995,300) (8,060,028)
OTHER EXPENSE - Net (2,373) (5,501) (7,874)
----------- ----------- -----------
NET LOSS $(2,067,101) $(6,000,801) $(8,067,902)
=========== =========== ===========
</TABLE>
See notes to financial statements.
F-3
<PAGE> 6
PLUS SOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1999, AND
PERIOD FROM OCTOBER 5, 1998 (DATE OF INCEPTION) TO DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONVERTIBLE COMMON STOCK ADDITIONAL
PREFERRED ------------------------------- PAID-IN
STOCK SHARES AMOUNT CAPITAL
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
BALANCE AS OF OCTOBER 5, 1998 $ -- -- $ -- $ --
Issuance of preferred stock for services,
307,000 shares 767,500
Issuance of common stock for services 10,260,055 5,130,028
Issuance of common stock for cash 200,000 100,000
Conversion of preferred stock, 62,989
shares (157,472) 314,945 157,472
Issuance of common stock for due from
stockholder 40,000 20,000
Net loss
------------- ------------- ------------- -------------
BALANCE AS OF DECEMBER 31, 1998 610,028 10,815,000 5,407,500 --
Issuance of common stock for services 1,523,917 761,958
Issuance of common stock for cash 317,221 190,250
Capital contributions 374,981
Conversion of preferred stock, 244,011
shares (610,028) 1,220,055 610,028
Stock options granted to employees 760,000
Collection of due from stockholder
Net loss
------------- ------------- ------------- -------------
BALANCE AS OF DECEMBER 31, 1999 $ -- 13,876,193 $ 6,969,736 $ 1,134,981
============= ============= ============= =============
<CAPTION>
DEFICIT
ACCUMULATED
DURING THE
DUE FROM DEVELOPMENTAL
STOCKHOLDER STAGE TOTAL
------------- ------------- -------------
<S> <C> <C> <C>
BALANCE AS OF OCTOBER 5, 1998 $ -- $ -- $ --
Issuance of preferred stock for services,
307,000 shares 767,500
Issuance of common stock for services 5,130,028
Issuance of common stock for cash 100,000
Conversion of preferred stock, 62,989
shares --
Issuance of common stock for due from
stockholder (20,000) --
Net loss (6,000,801) (6,000,801)
------------- ------------- -------------
BALANCE AS OF DECEMBER 31, 1998 (20,000) (6,000,801) (3,273)
Issuance of common stock for services 761,958
Issuance of common stock for cash 190,250
Capital contributions 374,981
Conversion of preferred stock, 244,011
shares --
Stock options granted to employees 760,000
Collection of due from stockholder 20,000 20,000
Net loss (2,067,101) (2,067,101)
------------- ------------- -------------
BALANCE AS OF DECEMBER 31, 1999 $ -- $ (8,067,902) $ 36,815
============= ============= =============
</TABLE>
See notes to financial statements.
F-4
<PAGE> 7
PLUS SOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1999, AND
PERIOD FROM OCTOBER 5, 1998 (DATE OF INCEPTION) TO DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CUMULATIVE
FROM
1999 1998 INCEPTION
----------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss $(2,067,101) $(6,000,801) $(8,067,902)
Adjustments to reconcile net loss to net cash
used in operating activities:
Loss on disposal of property and equipment 5,501 5,501
Depreciation of property and equipment 21,177 4,245 25,422
Issuance of common and preferred stock for services 761,958 5,897,528 6,659,486
Compensation from stock options granted to employees 760,000 760,000
Net changes in operating assets and liabilities:
Prepaid expenses (1,208) (1,208)
Accounts payable and accrued expenses 123,322 43,120 166,442
----------- ----------- -----------
Net cash used in operating activities (401,852) (50,407) (452,259)
----------- ----------- -----------
INVESTING ACTIVITIES:
Additions to property and equipment (5,408) (395) (5,803)
Capitalized product development costs (97,440) (97,440)
----------- ----------- -----------
Net cash used in investing activities (102,848) (395) (103,243)
----------- ----------- -----------
FINANCING ACTIVITIES:
Proceeds from issuance of common stock 190,250 100,000 290,250
Collection of due from stockholder 20,000 20,000
Capital contributions 374,981 374,981
Payments on notes payable (5,100) (3,000) (8,100)
----------- ----------- -----------
Net cash provided by financing activities 580,131 97,000 677,131
----------- ----------- -----------
NET INCREASE IN CASH 75,431 46,198 121,629
CASH, BEGINNING OF PERIOD 46,198
----------- ----------- -----------
CASH, END OF PERIOD $ 121,629 $ 46,198 $ 121,629
=========== =========== ===========
SUPPLEMENTAL INFORMATION:
Interest paid $ -- $ -- $ --
=========== =========== ===========
Income taxes paid $ -- $ -- $ --
=========== =========== ===========
NONCASH INVESTING AND FINANCING ACTIVITIES:
Notes payable issued for purchase of property and
equipment (Note 3) $ -- $ 76,417 $ 76,417
=========== =========== ===========
Common stock issued for due from stockholder $ -- $ 20,000 $ 20,000
=========== =========== ===========
</TABLE>
See notes to financial statements.
F-5
<PAGE> 8
PLUS SOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1999, AND
PERIOD FROM OCTOBER 5, 1998 (DATE OF INCEPTION) TO DECEMBER 31, 1999
- -------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BUSINESS - Plus Solutions, Inc. (a development stage
company) (the "Company") was organized in October 1998 and is to be a
provider of Internet-based, business-to-business, e-commerce solutions
and services that enable buyers and suppliers to automate business
transactions on the Internet. The Company is headquartered in Addison,
Texas.
The Company has experienced cumulative operating losses, and its
operations are subject to certain risks and uncertainties, including,
among others, risks associated with technology and regulatory trends,
growth competition by entities with greater financial and other
resources, and the need for additional capital. There can be no
assurances that the Company will be successful in becoming profitable or
generating positive cash flow in the future. The Company is considered
to be a development stage company.
PREPARATION OF FINANCIAL STATEMENTS in conformity with auditing
standards generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, and disclosure of contingencies at
the date of the financial statements and the reported amounts of
revenues and expenses for the period. Differences from those estimates
are recognized in the period they become known.
PROPERTY AND EQUIPMENT are stated at cost less accumulated depreciation.
Depreciation is provided on a straight-line basis over the estimated
useful lives of the related assets. The following is a summary of useful
lives for major categories of property and equipment:
<TABLE>
<CAPTION>
ASSET USEFUL LIFE
<S> <C>
Furniture and fixtures 7 years
Computers and office equipment 3 years
</TABLE>
RESEARCH AND PRODUCT DEVELOPMENT COSTS are expensed as incurred until
technological feasibility is established. Thereafter, product
development and significant enhancement costs are capitalized and, upon
product release, amortized to expense using the straight-line method
over three years. Total costs related to research and product
development were $97,440 and were capitalized in 1999. No amortization
has been recorded to date.
STOCK-BASED COMPENSATION arising from stock option grants is accounted
for by the intrinsic value method under Accounting Principles Board
("APB") Opinion No. 25. Statement of Financial Accounting Standards
("SFAS") No. 123 encourages (but does not require) compensation
arrangements with
F-6
<PAGE> 9
employees to be measured based on the fair value of the equity
instrument awarded. As permitted by SFAS No. 123, the Company applies
APB No. 25 to its stock-based compensation awards to employees and
discloses the required pro forma effects on operations in Note 4.
DEFERRED INCOME TAXES are provided under the asset and liability method
for temporary differences in the recognition of income and expense for
tax and financial reporting purposes.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS - In June 1998, the Financial
Accounting Standards Board issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which establishes
accounting and reporting standards for derivative instruments. SFAS No.
133 is effective beginning in 2001. The Company currently does not use
derivative financial products for hedging or speculative purposes and,
as a result, does not anticipate any impact on the Company's financial
statements.
2. PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1999, consist of the following:
<TABLE>
<S> <C>
Furniture and fixtures $ 23,077
Computers and office equipment 53,642
----------
Total 76,719
Less accumulated depreciation (25,422)
----------
Property and equipment - net $ 51,297
==========
</TABLE>
3. NOTES PAYABLE
The Company purchased property and equipment in 1998 from a related
company for a note payable of $76,417. The note bears interest, on
unpaid scheduled payment amounts, monthly at 7% and is due on August 15,
2000.
4. STOCKHOLDERS' EQUITY
COMMON STOCK - The Company has authorized the issuance of up to
25,000,000 shares of its no par value common stock. The holders of
common stock are entitled to one vote per share and are entitled to
dividends when and if declared by the Board of Directors of the Company.
SERIES A CONVERTIBLE VOTING PREFERRED STOCK - The Company has authorized
the issuance of up to 8,000,000 shares of its convertible voting
preferred stock. Each share of preferred stock shall have such rights,
preferences, privileges and restrictions, including voting rights,
dividend rights, conversion rights and liquidation preferences, as shall
be determined by the Board of Directors. In October 1998, the Company
issued 307,000 shares of preferred stock to directors and officers of
the Company for services performed. Each share of preferred stock is
convertible into five shares of common stock, and each share of
preferred stock was valued at $2.50 per share based on the $0.50
per-share price of common shares
F-7
<PAGE> 10
issued for cash. In 1999 and 1998, all shares of preferred stock were
converted into 1,535,000 shares of common stock. As of December 31,
1999, no shares of preferred stock are outstanding.
STOCK OPTION PLAN - On October 25, 1999, the Company adopted the 1999
Stock Incentive Plan (the "Plan"). The Plan provides for the granting of
incentive stock options and nonqualified options for up to 4,000,000
shares of common stock. Options expire no later than 10 years after the
date of grant. Options granted in 1999 are fully vested and exercisable
as of the date of grant and remain exercisable for a period of five or
ten years after the date of grant. A summary of the activity for this
plan follows:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE WEIGHTED AVERAGE
NUMBER EXERCISE REMAINING
OF SHARES PRICE PER SHARE CONTRACTUAL LIFE
---------- ---------------- -----------------
<S> <C> <C> <C>
BALANCE JANUARY 1, 1999 -- $ --
Options granted in 1999 1,900,000 .10 6.64 years
---------- ----------
Options outstanding at
December 31, 1999 1,900,000 $ .10 6.64 years
========== ==========
Options exercisable at
December 31, 1999 1,900,000 $ .10 6.64 years
========== ==========
Reserved for future options at
December 31, 1999 2,100,000
==========
</TABLE>
The Company applies the provisions of APB No. 25 and related
Interpretations in accounting for the Plan. Compensation of $760,000 was
recorded for the 1,900,000 options granted in 1999, based on the $0.40
per-share excess of the estimated fair value of the stock of $0.50 per
share over the exercise price, and is recorded in 1999 in salaries and
benefits expense as the options are fully vested. SFAS No. 123
prescribes a method to record compensation cost at the fair value of the
options granted. Had compensation cost been determined with the method
prescribed by SFAS No. 123, the Company's pro forma net loss would have
been approximately $2,099,000 in 1999.
In the pro forma calculations, the weighted average fair value of
options granted during 1999 was estimated at $0.43 per share. The fair
value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions used for grants in 1999: risk-free interest rate of 5.98%;
no expected dividend yield; expected lives of five years; and no
expected volatility (because the Company's stock is not publicly
traded).
5. EMPLOYMENT AGREEMENTS
The Company has employment agreements with four executives of the
Company. Each employment agreement is for a term of three years and
expires in 2001.
6. COMMITMENTS
The Company leases certain office space. Total rental expense was
$21,318 and $25,833 for the year ended December 31, 1999, and for the
period from October 5, 1998 (date of inception) to December 31, 1999,
respectively.
F-8
<PAGE> 11
7. INCOME TAXES
At December 31, 1999, the Company had a net operating loss carryforward
totaling approximately $8 million, the tax benefit of which is offset by
a valuation allowance until realization is more likely than not.
8. SUBSEQUENT EVENTS
On March 10, 2000, the Company closed the Agreement and Plan of Merger
entered into with Sound Designs, Inc. ("Sound Designs"), a Nevada
corporation. As consideration for the merger, the stockholders of the
Company, the accounting acquirer, received approximately 1.69 shares of
Sound Designs, the legal acquirer, common stock for each share of the
Company's common stock that they owned. As a result, the former
stockholders of the Company currently own 60% of the outstanding shares
of common stock of Sound Designs. In addition, the merger agreement
required all existing directors and officers of Sound Designs to resign
and name the directors of the Company as the directors of the surviving
company that will take the name of Plus Solutions, Inc.
******
F-9
<PAGE> 12
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated balance sheet and statement of
operations of Sound Designs, Inc., successor by merger of Plus Solutions, Inc.
(the "Company") as of and for the year ended December 31, 1999, (the "Unaudited
Pro Forma Consolidated Financial Statements") give effect to the acquisition of
Plus Solutions (the "Acquisition") under the purchase method of accounting. On
March 10, 2000, the Company closed the Agreement and Plan of Merger entered into
with Plus Solutions ("Plus Solutions"), a Texas corporation. As consideration
for the merger, the stockholders of Plus Solutions, the accounting acquirer,
received approximately 1.69 shares of the Company, the legal acquirer, common
stock for each share of Plus Solutions' common stock that they owned. As a
result, the former stockholders of Plus Solutions currently own 60% of the
outstanding shares of common stock of the Company. In addition, the merger
agreement required all existing directors and officers of the Company to resign
and name the directors of Plus Solutions as the directors of the surviving
company that will take the name of Plus Solutions, Inc.
The unaudited pro forma balance sheet was prepared assuming that the Acquisition
was consummated as of December 31, 1999.
The unaudited pro forma consolidated statement of operations was prepared
assuming that the Acquisition was consummated at the beginning of 1999.
The Unaudited Pro Forma Consolidated Financial Statements are based upon the
historical financial statements of the Company, which are included elsewhere
herein, for the year ended December 31, 1999 and for the period from October 5,
1998 (date of inception) to December 31, 1999, and should be read in conjunction
with those statements and notes thereto. The Unaudited Pro Forma Financial
Statements may not be indicative of the results that actually would have
occurred if the acquisition of Plus Solutions had been in effect on the dates
indicated or of future results of operations of the combined entities.
The pro forma adjustments and the resulting Unaudited Pro Forma Consolidated
Financial Statements have been prepared based upon information and certain
assumptions and estimates deemed appropriate by the Company. The Company's
management believes, however, that the pro forma adjustments and the underlying
assumptions and estimates reasonably present the significant effects of the
transaction reflected thereby and that any subsequent changes in the underlying
assumptions and estimates will not materially affect the Unaudited Pro Forma
Consolidated Financial Statements presented herein. The Unaudited Pro Forma
Consolidated Financial Statements do not purport to represent what the Company's
results of operations actually would have been had the transaction occurred on
the date indicated or to project the Company's financial position or results of
operations for any future date or period. Furthermore, the Unaudited Pro Forma
Consolidated Financial Statements do not reflect changes that may occur as the
result of post-transaction activities and other matters.
P-1
<PAGE> 13
SOUND DESIGNS, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
<TABLE>
<CAPTION>
ASSETS ADJUST
PLUS SOUND TO
SOLUTIONS DESIGNS PRO FORMA PRO FORMA
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash $ 121,629 $ 25,065 $ -- $ 146,694
Accounts and other receivables 40,946 (40,946)(a)
Prepaid expenses 1,208 1,208
Inventory 27,462 (27,462)(a)
Total current assets 122,837 93,473 (68,408)(a) 147,902
PROPERTY AND EQUIPMENT - Net 51,297 51,297
PRODUCT DEVELOPMENT COSTS 97,440 97,440
TOTAL $ 271,574 $ 93,473 $ (68,408)(a) $ 296,639
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 166,442 $ 36,735 $ (36,735)(a) $ 203,177
Notes payable 68,317 68,317
Total current liabilities 234,759 36,735 (36,735)(a) 271,494
STOCKHOLDERS' EQUITY:
Convertible voting preferred stock, 8,000,000 shares
authorized; no shares issued and outstanding
Common stock, $.001 par value; 100,000,000 shares
authorized; 38,940,000 shares issued and outstanding,
on a proforma basis 6,969,736 2,200 (6,932,996)(b) 38,940
Additional paid in capital 1,134,981 60,300 6,895,561 (b) 8,090,842
Deficit accumulated during the development stage (8,067,902) (5,762) 5,762 (b) (8,067,902)
Total stockholders' equity 36,815 56,738 (31,673) 61,880
TOTAL $ 271,574 $ 93,473 $ (68,408) $ 296,639
</TABLE>
P-2
<PAGE> 14
SOUND DESIGNS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA PRO FORMA
SOUND
PLUS SOLUTIONS DESIGNS ADJUSTMENTS OPERATIONS
------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
REVENUES $ -- $ 68,024 $ (68,024)(c) $ --
OPERATING EXPENSES 2,064,728 73,286 2,138,014
OPERATING LOSS (2,064,728) (5,262) (68,024) (2,138,014)
OTHER EXPENSE (2,373) (2,373)
LOSS FROM CONTINUING OPERATIONS $ (2,067,101) $ (5,262) $ (68,024) $(2,140,387)
EARNINGS PER SHARE - BASIC,
CONTINUING OPERATIONS $ (0.06)
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - BASIC 36,174,041
</TABLE>
P-3
<PAGE> 15
SOUND DESIGNS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1999
1. PRO FORMA ADJUSTMENTS
Certain pro forma adjustments have been made to the accompanying pro
forma condensed consolidated financial statements, based on the
acquisition of all of the outstanding capital stock of Sound Designs.
The unaudited pro forma condensed consolidated balance sheet as of
December 31, 1999 gives effect to the acquisition as if it occurred on
December 31, 1999. The unaudited pro forma condensed consolidated
statement of operations for the year ended December 31, 1999, gives
effect to the acquisition as if it had occurred at January 1, 1999.
The following adjustments have been reflected in the unaudited pro
forma condensed consolidated financial statements:
a. Reflects the adjustments to record cash as the only asset
received in the acquisition. There were no other net assets
acquired.
b. Reflects the adjustments to record the pro forma effect of
the issued and outstanding common shares, 38,940,000, at
the time of the acquisition and the reclassification
between common stock, at par of $.001, and additional
paid-in capital.
c. Reflects the adjustments to eliminate the revenues of Sound
Designs, as no revenues are expected to be generated as a
result of the acquisition.
P-4
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: May 26, 2000 SOUND DESIGNS, INC.
By: /s/ MAX L. GOLDEN
---------------------------------------
Max L. Golden
Chairman of the Board of Directors and
Chief Executive Officer
