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 Report (Date of earliest event reported): September 25, 2000
-------------------
Regency Group Limited
----------------------------------------------------
(Exact name of registrant as specified in its charter)
NEVADA 000-26687 88-0416790
---------------------------- ------------------------ ---------------------
(State or other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification Number)
8930 E. Raintree Drive, Suite 100, Scottsdale, Arizona 85260
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (480) 444-2014
---------------
--------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE>
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
None
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Regency Group Limited (the Company) has completed the previously
reported acquisition of e-River Marketing, Inc..
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
None
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
None.
ITEM 5. OTHER EVENTS.
None.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
None.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) The audited financial statements of e-River Marketing, Inc. for the
period ending June 30, 2000 are filed as a part of this report.
ITEM 8. CHANGE IN FISCAL YEAR.
None
2
<PAGE>
E-RIVER MARKETING, INC.
FINANCIAL STATEMENTS
FOR THE PERIOD FROM THE DATE OF
INCEPTION, JANUARY 14, 2000
THROUGH JUNE 30, 2000
3
<PAGE>
INDEPENDENT AUDITORS' REPORT
To The Stockholders and Board of Directors of
e-River Marketing, Inc. (Formerly DealUpdate.com)
We have audited the accompanying balance sheet of e-River Marketing, Inc. as of
June 30, 2000, and the related statements of operations, changes in
stockholders' equity, and cash flows for the period from the date of inception,
January 14, 2000 through June 30, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our 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 e-River Marketing, Inc. as of
June 30, 2000, and the results of its operations, changes in stockholders'
equity, and its cash flows for the period from the date of inception, January
14, 2000, through June 30, 2000, in conformity with generally accepted
accounting principles.
/s/ Semple & Cooper, LLP
Certified Public Accountants
Phoenix, Arizona
July 25, 2000
4
<PAGE>
E-RIVER MARKETING, INC.
BALANCE SHEET
JUNE 30, 2000
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Notes 1) $ 39,614
Accounts receivable - trade, net (Note 1) 461,400
Inventory (Note 1) 93,917
Other current assets 6,584
---------
TOTAL CURRENT ASSETS 601,515
---------
PROPERTY AND EQUIPMENT, NET (NOTES 1 AND 2) 15,952
SOFTWARE DEVELOPMENT COSTS, NET (NOTE 1) 6,636
---------
TOTAL ASSETS $ 624,103
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Loan payable to related parties(Note 3) $ 340,000
Accounts payable 4,424
Accrued liabilities 9,139
---------
TOTAL CURRENT LIABILITIES 353,563
---------
COMMITMENTS: (NOTE 5) --
STOCKHOLDERS' EQUITY: (NOTE 6)
Common stock, $.0001 par value, 100,000,000 shares
authorized, 12,414,000 shares issued and outstanding 1,241
Additional paid-in capital 744,975
Accumulated Deficit (475,676)
---------
TOTAL STOCKHOLDERS' EQUITY 270,540
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 624,103
=========
The Accompanying Notes are an Integral Part
of the Financial Statements
5
<PAGE>
E-RIVER MARKETING, INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM THE DATE OF INCEPTION,
JANUARY 14, 2000 THROUGH JUNE 30, 2000
REVENUES $ 885,304
COST OF REVENUES 793,084
-----------
GROSS PROFIT 92,220
GENERAL AND ADMINISTRATIVE EXPENSES 565,506
-----------
NET LOSS FROM OPERATIONS (473,286)
-----------
OTHER EXPENSE:
Interest expense (2,390)
-----------
NET LOSS $ (475,676)
===========
BASIC LOSS PER COMMON SHARE $ (0.05)
===========
WEIGHTED AVERAGE SHARES OUTSTANDING 9,521,700
===========
The Accompanying Notes are an Integral Part
of the Financial Statements
6
<PAGE>
E-RIVER MARKETING, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM THE DATE OF INCEPTION,
JANUARY 14, 2000 THROUGH JUNE 30, 2000
<TABLE>
<CAPTION>
COMMON STOCK
-------------------- ADDITIONAL ACCUMULATED
SHARES AMOUNT PAID IN CAPITAL DEFICIT TOTAL
------ ------ --------------- ------- -----
<S> <C> <C> <C> <C> <C>
Balance at January 14, 2000 -- $ -- $ -- $ -- $ --
Common stock issued at inception 8,000,000 800 16 -- 816
Common stock sold for cash 910,000 91 219,909 -- 220,000
Conversion of debt to common stock 1,000,000 100 49,900 -- 50,000
Conversion of warrants to common stock 1,000,000 100 99,900 -- 100,000
Common stock issued for services 1,504,000 150 375,250 -- 375,400
Net loss -- -- -- (475,676) (475,676)
---------- ------ -------- --------- ---------
Balance at June 30, 2000 12,414,000 $1,241 $744,975 $(475,676) $ 270,540
========== ====== ======== ========= =========
</TABLE>
The Accompanying Notes are an Integral Part
of the Financial Statements
7
<PAGE>
E-RIVER MARKETING, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM THE DATE OF INCEPTION,
JANUARY 14, 2000 THROUGH JUNE 30, 2000
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(475,676)
Adjustments to reconcile net loss to net
Cash used by operating activities:
Depreciation 914
Stock issued for services and other conversions 423,966
Changes in Assets and Liabilities:
Accounts receivable-trade (461,400)
Inventory (93,917)
Other current assets (6,584)
Accounts payable 4,424
Accrued liabilities 9,139
---------
NET CASH USED BY OPERATING ACTIVITIES (599,134)
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (16,866)
Software development costs (6,636)
---------
NET CASH USED BY INVESTING ACTIVITIES (23,502)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loan payable to relted parties 340,000
Proceeds from issuance of stock 322,250
---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 662,250
---------
Net change in cash and cash equivalents 39,614
Cash and cash equivalents at beginning of period --
---------
Cash and cash equivalents at end of period $ 39,614
=========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ (2,390)
=========
NONCASH INVESTING AND FINANCING ACTIVITIES: (NOTE 6)
Common stock issued for services and other conversions $ 423,966
=========
The Accompanying Notes are an Integral Part
of the Financial Statements
8
<PAGE>
E-RIVER MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
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NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
NATURE OF OPERATIONS AND USE OF ESTIMATES:
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NATURE OF OPERATIONS:
e-River Marketing, Inc. (the "Company"), is a Nevada corporation formed on
January 14, 2000. e-River Marketing, Inc. was formerly known as DealUpdate.com,
Inc. The principal business purpose of the Company is the distribution of
computer components over the internet to businesses throughout the world.
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS:
Cash and cash equivalents are considered to be all highly liquid investments
purchased with an initial maturity of three (3) months or less.
ACCOUNTS RECEIVABLE - TRADE:
The Company provides for potentially uncollectible accounts receivable by use of
the allowance method. The allowance is provided based upon a review of the
individual accounts outstanding, and the Company's prior history of
uncollectible accounts receivable. As of June 30, 2000, no provision has been
established.
SOFTWARE DEVELOPMENT COSTS:
The Company capitalizes software development costs in accordance with Statement
of Position No. 98-1, "Accounting for Costs of Computer Software Developed or
Obtained for Internal Use." Capitalization of software development costs begins
when the preliminary project stage is completed and management authorizes and
commits to funding the computer software project and it is probable that the
project will be completed and the software will be used to perform the function
intended. Upgrades and enhancements that result in additional functionality are
capitalized as incurred. The Company periodically reviews the carrying value of
software development costs. Impairments, if any, will be recognized when the
asset is not expected to provide any future service potential to the Company.
Amortization of capitalized software development costs begins when all
substantial testing is complete, and the computer software is ready for its
intended use. Software development costs are amortized using the straight-line
method with a useful life of five years, which represents the remaining
estimated economic life of the computer software.
INVENTORY:
Inventory, consisting of primarily computer equipment, is stated at the lower of
cost or market. The Company periodically reviews its inventory and makes
provisions for damaged or obsolete inventory, if necessary. No provisions for
damaged or obsolete inventory has been included in the accompanying financial
statements.
9
<PAGE>
E-RIVER MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
NATURE OF OPERATIONS AND USE OF ESTIMATES:
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PROPERTY AND EQUIPMENT:
Property and equipment are recorded at cost. Depreciation is provided for on the
straight-line method over the estimated useful lives of the assets. The average
life of the assets are five years. Maintenance and repairs that neither
materially add to the value of the property nor appreciably prolong its life are
charged to expense as incurred. Betterments or renewals are capitalized when
incurred. Property and equipment are reviewed each year to determine whether any
events or circumstances indicate that the carrying amount of the assets may not
be recoverable. Such review includes estimating future cash flows. Property and
equipment costs are expensed when determined to be not realizable.
INCOME TAXES:
Deferred income taxes are provided on an asset and liability method, whereby
deferred tax assets are recognized for deductible temporary differences and
operating loss and tax credit carryforwards, and deferred tax liabilities are
recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their tax
basis. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, there is uncertainty of the utilization of the operating
losses in future periods. Deferred tax assets and liabilities are adjusted for
the effects of changes in tax laws and rates on the date of enactment.
--------------------------------------------------------------------------------
NOTE 2
PROPERTY AND EQUIPMENT:
--------------------------------------------------------------------------------
At June 30, 2000 property and equipment consists of:
Computers and equipment $ 12,027
Furniture and fixtures 4,839
--------
16,866
Less: accumulated depreciation (914)
--------
$ 15,952
========
Depreciation expense for the period from the date of inception, January, 14,
2000 through June 30, 2000 was $914.
--------------------------------------------------------------------------------
NOTE 3
RELATED PARTY TRANSACTIONS:
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LOAN PAYABLE TO RELATED PARTIES:
At June 30, 2000, the company had two loans payable to related parties in the
amount of $340,000. The loans payable bear interest at 1.5% monthly and are due
on demand.
10
<PAGE>
E-RIVER MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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NOTE 4
INCOME TAXES:
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As of June 30, 2000 long-term deferred tax assets (liabilities) consist of the
following:
Net operating loss carryforwards $ 109,375
Depreciation (175)
---------
109,200
Less: valuation allowance (109,200)
---------
$ --
=========
The Company has established a valuation allowance equal to the full amount of
the net deferred tax asset primarily because of uncertainty in the utilization
of net operating loss carryforwards.
At June 30, 2000, the Company has federal and state net operating loss
carryforwards in the approximate amount of $475,000 available to offset future
taxable income through 2020 and 2005, respectively.
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NOTE 5
COMMITMENTS:
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The Company currently leases office space in Scottsdale, Arizona under a
non-cancelable operating lease agreement, which expires in January 2001. For the
year ended June 30, 2000, expense under the aforementioned non-cancelable
operating lease agreement was approximately $8,000.
The Company has future minimum lease payments due under the operating lease
agreement in the amount of $11, 088 for the year ended June 30, 2001.
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NOTE 6
STOCKHOLDERS' EQUITY:
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START UP COST:
During January, 2000, the Company issued 8,000,000 shares of $.0001 par value
common stock for expenses in relation to the startup of the Company.
SALE OF COMMON STOCK:
On January 25, 2000, the Company sold 150,000 shares of $.0001 par value common
stock for $.20 a share.
PRIVATE PLACEMENT:
In February, 2000 the Company authorized a private offering of 1,000,000 shares
of $.0001 par value common stock at $.25 per share. As of June 30, 2000, 760,000
shares had been sold and proceeds from the offering, in the amount of $190,000
were used for working capital. The shares issued have registration rights, and
an anti-dilution clause.
11
<PAGE>
E-RIVER MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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NOTE 6
STOCKHOLDERS' EQUITY:
(CONTINUED)
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BRIDGE FINANCING:
The Company secured bridge financing in January, 2000. In consideration of the
financing, the lender received 3 year warrants to purchase 1,000,000 shares of
the Company's common stock at an exercise price of $.10 per share. The warrants
were called in April of 2000 and all were exercised. In May of 2000 the bridge
financing loan was converted to 1,000,000 shares of the Company's common stock
at an exercise price of $.05 per share.
STOCK ISSUED FOR FINANCING EXPENSE:
In May, 2000, the Company issued 4,000 shares of $.0001 par value common stock
for financing expense in relation to the bridge note.
STOCK ISSUED FOR SERVICES:
During May, 2000, the Company issued 1,500,000 shares of $.0001 par value common
stock for employment agreements with three individuals. The common stock was
valued at $.25 per share.
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NOTE 7
SUBSEQUENT EVENTS:
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On July 10, 2000, Regency Group Limited, Inc., based in Scottsdale, Arizona,
acquired all of the assets of e-River Marketing, Inc. Regency Group Limited,
Inc. exchanged 5,000,000 shares of their common restricted stock, and 2,500
shares of convertible preferred stock for all of the shares of e-River
Marketing, Inc. stock. The total value of the equities issued was $1,500,000 as
of the date of the transaction.
The following unaudited pro forma condensed consolidated financial statements
give effect to the acquisition in July, 2000 of e-River Marketing, Inc. by
Regency Group Limited, Inc. They are based on the estimates and assumptions set
forth herein and in the notes to such statements. This pro forma information has
been prepared utilizing the historical financial statements and notes thereto,
which are incorporated by reference herein. The pro forma financial data does
not purport to be indicative of the results which actually would have been
obtained had the purchase been effected on the dates indicated or of the results
which may be obtained in the future.
The pro forma financial information is based on the purchase method of
accounting for the acquisition of e-River Marketing, Inc. by Regency Group
Limited, Inc. The pro forma entries are described in the accompanying footnotes
to the unaudited pro forma condensed consolidated financial statements.
The following represents pro forma condensed consolidated balance sheet and
statement of operations for the year ended June 30, 2000. The pro forma balance
sheet assumes the acquisition of e-River Marketing, Inc. occurred as of June 30,
2000, while the pro forma statement of operations assumes the acquisition was
effective as of the first day of the year.
12
<PAGE>
E-RIVER MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
NOTE 7
SUBSEQUENT EVENTS:
(CONTINUED)
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PRO FORMA UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2000
<TABLE>
<CAPTION>
PRO FORMA
REGENCY GROUP E-RIVER PRO FORMA CONSOLIDATED
LIMITED, INC. MARKETING, INC. ADJUSTMENTS AMOUNTS
------------- --------------- ----------- -------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 122,685 $ 39,614 $ 162,299
Accounts receivable-trade, net -- 461,400 461,400
Inventory -- 93,917 93,917
Other current assets 43,921 6,584 50,505
----------- ----------- -----------
TOTAL CURRENT ASSETS 166,606 601,515 768,121
----------- ----------- -----------
PROPERTY AND EQUIPMENT, NET 11,323 22,588 33,911
----------- ----------- -----------
OTHER ASSETS:
Note Receivable 300,000 -- 300,000
Due from related party 78,463 -- 78,463
Investments 795,101 -- 795,101
Goodwill 355,401 -- (1) 1,229,460 1,584,861
----------- ----------- -----------
1,528,965 -- 2,758,425
----------- ----------- -----------
TOTAL ASSETS $ 1,706,894 $ 624,103 $ 3,560,457
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Loans payable-related parties $ 350,000 $ 340,000 $ 690,000
Accounts payable 4,800 13,563 18,363
----------- ----------- -----------
TOTAL CURRENT LIABILITIES 354,800 353,563 708,363
----------- ----------- -----------
STOCKHOLDERS' EQUITY:
Stocks 1,746,750 746,216 (1) 1,500,000
(1) (746,216) 3,246,750
Accumulated Deficit (394,656) (475,676) (1) 475,676 (394,656)
----------- ----------- -----------
TOTAL STOCKHOLDERS' EQUITY 1,352,094 270,540 2,852,094
----------- ----------- -----------
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY $ 1,706,894 $ 624,103 $ 3,560,457
=========== =========== ===========
</TABLE>
(1) To record the acquisition of e-River Marketing, Inc. by Regency Group
Limited, Inc. for stock valued at $1,500,000.
13
<PAGE>
E-RIVER MARKETING SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
NOTE 7
SUBSEQUENT EVENTS:
(CONTINUED)
--------------------------------------------------------------------------------
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE YEAR-ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
PRO FORMA
REGENCY GROUP E-RIVER (1) PRO FORMA CONSOLIDATED
LIMITED, INC. MARKETING, INC. ADJUSTMENTS AMOUNTS
------------- --------------- ----------- -------
<S> <C> <C> <C> <C>
REVENUES $ -- $ 885,304 $ 885,304
COST OF REVENUES -- 793,084 793,084
----------- ---------- -----------
GROSS PROFIT -- 92,220 92,220
GENERAL AND ADMINISTRATIVE EXPENSES 275,323 565,506(2) 245,892 1,086,721
----------- ---------- -----------
NET LOSS FROM OPERATIONS (275,323) (473,286) (1,178,941)
----------- ---------- -----------
OTHER INCOME (EXPENSE):
Loss on investment (25,000) -- (25,000)
Other income 30,165 -- 30,165
Interest income 4,800 -- 4,800
Interest expense (4,800) (2,390) (7,190)
Equity in loss of minority
interest investment (124,498) -- (124,498)
----------- ---------- -----------
TOTAL OTHER INCOME (EXPENSE) (119,333) (2,390) (121,723)
----------- ---------- -----------
NET LOSS $ (394,656) $ (475,676) $(1,300,664)
=========== ========== ===========
LOSS PER COMMON SHARE $ (0.01) $ (0.05) $ (0.03)
=========== ========== ===========
WEIGHTED AVERAGE SHARES USED IN COMPUTATION 40,538,320 9,521,700 44,348,760
=========== ========== ===========
</TABLE>
(1) Represents activity for the period from inception, February 1, 2000,
through June 30, 2000.
(2) To amortize goodwill in connection with the purchase of e-River Marketing ,
Inc. on a straight-line basis over five years.
14
<PAGE>
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.
REGENCY GROUP LIMITED, INC.
By: /s/ Roberto Filice
-----------------------
Its: President
Dated: September 25, 2000
15
