UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
(Amendment No. 1)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND 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 AND
EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number 000-28381
GAMECOM, INC.
(Exact name of Registrant as specified in its Charter)
Texas 93-1207631
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
440 North Center, Arlington, TX 76011
(Address of principal executive offices) (Zip Code)
(817) 265-0440
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE SECURITIES EXCHANGE ACT
OF 1934:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE SECURITIES
EXCHANGE ACT OF 1934:
Common Stock, par value $.005 per share
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. YES |X| NO |_|
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 |_| NO |X|
<PAGE>
The aggregate market value of the voting stock held by non-affiliates of the
Registrant at December 31, 1999 was approximately $2,946,257.
The number of shares of Registrant's Common Stock outstanding on December 31,
1999 was 11,822,150.
Revenue for the most recent fiscal year was $5,431.
<PAGE>
GameCom, Inc. (the "Company"), hereby amends Item 7 of its Form 10-KSB for
the fiscal year ended December 31, 1999, as filed with the Securities and
Exchange Commission on April 5, 2000. This amendment is being filed to remove
from the Consolidated Statement of Operations and the Consolidated Statement of
Cash Flows the columnar data for the fiscal year ended December 31, 1997. The
financial data contained in those columns is not required to be included in the
report, and is not covered by the opinion of the Company's independent auditors.
The Company is replacing the financial statements that were included in the
original 10-KSB filing in their entirety.
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Auditors
Consolidated Financial Statements of GameCom, Inc. and subsidiary:
Consolidated statement of Financial Condition as of
December 31, 1999 ........................................................ 1
Consolidated Statements of Operations for the years ended
December 31, 1999 and 1998 ............................................... 2
Consolidated Statements of Shareholders' Equity (Deficit)
for the years ended December 31, 1999 and 1998 ........................... 3
Consolidated Statements of Cash Flows for the years ended
December 31, 1999 and 1998 ............................................... 4
Notes to Consolidated Financial Statements ................................. 5
<PAGE>
INDEPENDENT AUDITORS REPORTS
Thomas O. Bailey
and Associates, PC
Certified Public Accountants
Report of Independent Public Accountants
To the Shareholders of The Schooner Brewery Incorporated
We have audited the accompanying balance sheet of The Schooner Brewery
Incorporated as of December 31, 1999 and the related statements of operations,
changes in stockholders' equity, and cash flows for the years ended December 31,
1999 and 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 audits in accordance with generally accepted auditing
standards. These 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, revised as described
in Note 15, present fairly, in all material respects, the financial position of
The Schooner Brewery Incorporated as of December 31, 1999, and the results of
their operations and their cash flows for the years ended December 31, 1999 and
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. During the year ended December 31,
1999, the Company incurred a net loss of $361,880. Future working capital
requirements are dependent on the Company's ability to restore and maintain
profitable operations, to restructure it's financing arrangements, and to
continue it's present short-term financing, or obtain alternative financing as
required. It is not possible to predict the outcome of future operations or
whether the necessary alternative financing may be arranged, if needed. Those
conditions raise substantial doubt about the Company's ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Thomas O. Bailey and Associates, P.C.
Dallas, Texas
April 4, 2000
<PAGE>
GAMECOM, INC.
(Fomerly The Schooner Brewery Incorporated)
Consolidated Balance Sheet
December 31, 1999
ASSETS
Current assets
Cash $ 15,564
Accounts receivable 180
Inventories --
-----------
Total current assets 15,744
Property and equipment
Equipment, furniture and fixtures 94,485
Accumulated depreciation (7,932)
-----------
Net property and equipment 86,553
Other assets
Security deposits 8,989
-----------
Total other assets 8,989
-----------
Total assets $ 111,286
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade payables $ 728,849
Accrued interest 49,839
Notes payable to shareholders 380,500
Short-term notes payable to bank --
-----------
Total current liabilities 1,159,188
Redeemable common stock
Common stock to redeem, 1,505,399 shares
at par $.005 7,527
Shareholders' equity
Capital stock 50,000,000 shares authorized
par value $.005; 10,041,751
issued and outstanding, 51,583
Paid-in capital 1,230,459
Retained earnings (2,337,471)
-----------
Total shareholders' equity (1,055,429)
-----------
Total liabilities and shareholder equity $ 111,286
===========
<PAGE>
GAMECOM, INC.
(Formerly The Schooner Brewery Incorporated)
Consolidated Statement of Operations
For the Years Ended December 31,
1999 1998
---- ----
Revenues
Restaurant sales 5,431 $ 469,357
Other -- (7,500)
----------- -----------
Total revenues 5,431 461,857
Cost of sales
Food, beer, wine and merchandise (2,893) 182,334
Salaries and labor 27,365 268,826
----------- -----------
Total cost of sales 24,472 451,160
----------- -----------
Gross profit (19,041) 10,697
General and administrative expense
Administrative cost 409,999 1,002,192
Interest 16,065 57,401
Financing charges 55,200 153,250
Depreciation and amortization 5,356 51,122
Impairment of assets -- 132,545
Gain on sale of assets (143,781) --
----------- -----------
342,839 1,396,510
----------- -----------
Net loss $ (361,880) $(1,385,813)
=========== ===========
Per share amounts:
Net loss per share $ (0.038) $ (0.164)
=========== ===========
Average outstanding shares 9,581,072 8,435,721
=========== ===========
<PAGE>
GAMECOM, INC.
(Formerly The Schooner Brewery Incorporated)
Consolidated Statement of Stockholders' Equity
For the Periods From December 31, 1997 through December 31, 1999
<TABLE>
<CAPTION>
Shares of Additional Total
Common Common Paid-in Accumulated Stockholders'
Stock Stock Capital Deficit Equity
<S> <C> <C> <C> <C> <C>
Balance December 31, 1997 6,209,703 $ 31,048 $ 381,294 $ (589,777) $ (177,435)
Stock issued for consulting services 600,000 3,000 222,000 -- 225,000
Contribution of capital for services -- -- 18,750 -- 18,750
Stock issued for loan incentives 613,000 3,065 150,185 -- 153,250
Stock issued in compensation for services 800,000 4,000 196,000 -- 200,000
Sale of stock 60,000 300 14,700 -- 15,000
Contribution of capital for services -- -- 6,250 -- 6,250
Loss for the year ended December 31, 1998 -- -- -- (1,385,814) (1,385,814)
--------- ----------- ----------- ----------- -----------
Balance December 31, 1998 8,282,703 $ 41,413 $ 989,179 $(1,975,591) $ (944,999)
--------- ----------- ----------- ----------- -----------
Stock issued as incentive for loans 240,000 1,200 54,000 -- 55,200
Stock issued in compensation for services 125,000 625 4,375 -- 5,000
Sales of stock 1,369,048 6,845 128,155 -- 135,000
Contribution of capital for services -- -- 18,750 -- 18,750
Exercise of stock options 300,000 1,500 36,000 -- 37,500
Loss for the year ended December 31, 1999 -- -- -- (361,880) (361,880)
--------- ----------- ----------- ----------- -----------
Balance December 31, 1999 10,316,751 $ 51,583 $ 1,230,459 $(2,337,471) $(1,055,429)
========== =========== =========== =========== ===========
</TABLE>
<PAGE>
GAMECOM, INC.
(Formerly The Schooner Brewery Incorporated)
Consolidated Statements of Cash Flows
For the Years Ended December 31,
1999 1998
---- ----
Cash flows from operating activities
Net loss $ (361,880) $(1,385,813)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 5,356 51,122
Impairment of assets 132,545
Gain on sale of assets (143,781)
Services and fees paid with stock 23,750 446,000
Financing fees 55,200 153,250
Stock options issued as compensation -- --
(Increase) decrease in:
Accounts receivable-trade 1,367 483
Prepaid and other assets 3,044 7,317
Increase (decrease) in:
Accounts payable and accrued expense 247,530 240,973
----------- -----------
Net cash provided by operating activities (169,414) (354,123)
Cash flows from investing activities
Sale of capital assets --
Capital expenditures (41,237) --
----------- -----------
Net cash used by investing activities (41,237) --
Cash flow from financing activities
Short-term notes payable 85,547 313,374
Increase in capital stock and paid-in capital 135,000 15,000
----------- -----------
Net cash provided by financing activities 220,547 328,374
Net increase in cash and cash equivalents 9,896 (25,749)
Cash and cash equivalents beginning of period 5,666 31,415
----------- -----------
Cash and cash equivalents end of period $ 15,562 $ 5,666
=========== ===========
Interest paid during the year $ 9,040 $ 19,701
=========== ===========
Income taxes paid during the year $ -- $ --
=========== ===========
<PAGE>
THE SCHOONER BREWERY INCORPORATED AND SUBSIDIARY NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES
Principal Business Activity
The Schooner Brewery Incorporated operates a restaurant and brewpub through it's
wholly owned subsidiary, First Brewery of Dallas, Inc.
Principals of Consolidation
The accompanying consolidated financial statements include the accounts of the
parent company, The Schooner Brewery Incorporated ("Company") and its subsidiary
after elimination of significant intercompany accounts and transactions.
Concentration of Credit Risk
The Company maintains deposits within federally insured limits. Statement of
Financial Accounting Standards No. 105 identifies these items as concentration
of credit risk requiring disclosure, regardless of the degree of risk. The risk
is managed by maintaining all deposits in high quality financial institutions.
Use of Estimates in Preparation of Financial Statements
The preparation of the accompanying financial statements in conformity with
generally accepted accounting principles requires management to make certain
estimates and assumptions that directly affect the results of reported assets,
liabilities, revenues and expenses. Actual results may differ from these
estimates.
Fair Value of Financial Instruments
The fair value of all reported assets and liabilities which represent financial
instruments (none of which are held for trading purposes) approximate the
carrying value of such amounts.
<PAGE>
Inventories
Inventories are stated at the lower of cost or market.
Cash Flow Presentation
For purposes of the Statement of Cash Flows, cash equivalents include time
deposits, certificates of deposits and all liquid debt instruments with original
maturates of three months or less.
Earnings Per Share
Primary earnings per share amounts are computed based upon the weighted average
number of shares actually outstanding. The number of shares used in the
computation was 8,271,554. This number does not include any shares called for by
the penalty provisions of certain of the Company's notes since, based on the
opinion of legal counsel, these penalty provisions are unenforeceable. See Note
5.
Property, Equipment and Depreciation
Property and equipment are valued at cost. Maintenance and repair costs are
charged to expenses as incurred. Gains and losses on disposition of property and
equipment are reflected in income. Depreciation is computed on the straight-
line method for financial reporting purposes, based on the estimated useful
lives of the assets.
Revenue Recognition and Accounts Receivable
Sales are made for cash or they are charged to credit cards. The credit card
sales are recorded as accounts receivable and collected within the following
two-week period. Revenues are recognized at the point sales are made.
Common Stock Issued for Services
The Company has in the past issued stock for service to non-employees on a
negotiated basis where the value of the services is recorded and stock issued
based upon the agreed number of shares issued for the value of the services
performed. The measurement date for determining such value is the date an
agreement is reached for issuance of the shares, and the number of shares issued
is based on the market value of such shares on such date.
<PAGE>
Common Stock Issued as Incentive for Loans
From time to time the Company has obtained non-interest bearing loans or
guarantees of bank loans from individuals. As incentive for these loans the
Company issued some of its common stock and recorded as expense the market value
of the stock. These issuances were as follows:
Market Value
Date Amount Lent Shares Issued of Shares
3/98 $ 50,000 120,000 $ 30,000
9/98 $123,000 493,000 $123,250
1/99 $ 88,500 240,000 $ 55,200
1/00 $ 20,000 100,000 $ 37,500
Charges in amounts equal to the fair market value of the shares issued for such
loans or guarantees are included in the Statement of Operations for the
applicable periods as "Financing Charges." These loans were made pursuant to
subscription agreements with the individual lenders, and were not available to
other note holders.
Contingentcies
Connect Computer Group, Inc., the firm which has been largely responsible for
development of the Company's kiosk and computer systems ("Connect Computer"),
has performed its development work on the basis of an oral understanding or
"gentleman's agreement" with the Company's Chief Executive Officer that if the
Company is successful in marketing the product, Connect Computer will be issued
a significant equity position in the Company, the amount of which is yet to be
determined. If marketing of the product is not successful, Connect Computer will
not be entitled to any shares for its efforts. The parties have not explicitly
agreed upon any method for determining whether marketing of the product has been
successful. There is considerable uncertainty as to both the standards for
determining whether any shares are issuable and the number of shares, if any,
which may ultimately be issued for those services. However, the Company has made
a charge to its earnings for those services based on its estimate of the number
of shares which will ultimately be issuable for those services and the fair
market value of the Company's shares as of December 31, 1999. Subsequent
negotiations may result in significant adjustments to these estimates.
NOTE 2 GOING CONCERN
<PAGE>
As shown in the accompanying financial statements the Company has incurred
losses from operations and has a deficit working capital. The Company's current
net operating revenues are not sufficient to provide adequate cash flow required
to pay all of the Company's administrative expenses. For this reason the Company
must rely on short-term borrowing and equity financing. The Company's subsidiary
ceased operations of its business on January 10, 1999, the effect of which
eliminates sources of cash flow from operations. Because the subsidiary was
generating negative cash flow Management closed those operations to mitigate
further deterioration. Until the new operations begin the Company must rely on
public and private funding to meet any of its cash flow requirements. Management
has begun efforts for a new line of business. The Company plans to make a public
offering of its common stock and expects to obtain funds through private
offering of its securities. The Company expects to begin receiving revenues from
its new operations in the first quarter of the year 2000.
NOTE 3 IMPAIRMENT OF ASSETS
Operation of the Company's brewpub and restaurant, its only operation, was
discontinued in early 1999 and was being phased out in 1998. For the year 1998
the Company identified certain assets that were impaired as the result of the
discontining operations. A provision for the impairment of related equipment and
other fixed assets that would be impaired is shown as a separate item in the
Statement of Operations. The provision for the loss was provided based on an
assessments of all of the Company's operating assets and the likelihood that the
carrying value of certain of those assets could not be realized. In the
subsequent period other equipment and fixed assets not included in the impaired
assets were sold at a gain.
NOTE 4 ACQUISITION OF SUBSIDIARY
In March 1997 the Company acquired all of the outstanding stock of First Brewery
of Dallas, Inc. ("First") by exchanging 3,860,000 shares of the Company's common
capital stock for all of the outstanding capital stock of First, whereby First
became the wholly-owned subsidiary of the Company. Although the Company was the
surviving entity in this transaction, the acquisition was accounted for as a
purchase of the Company by First. Since Schooner's assets consisted solely of
cash, no goodwill was recorded in connection with the transaction. Prior to the
acquisition by the Company, First had acquired the interest of all of the
partners in First Brewery of Dallas I, Ltd., a limited partnership, by issuing
its capital stock in exchange for all of the partners' interest in the
partnership. The partnership had operated a restaurant and brewpub in the West
End district of Dallas, Texas since June 1994. On March 13, 1997, First acquired
all of the assets of the partnership in exchange for 49,500 shares of common
stock of First. The transaction between First Brewery of Dallas, Inc. and First
Brewery of Dallas, Ltd. was accounted for as a reorganization.
NOTE 5 NOTES PAYABLE
<PAGE>
Notes payable at December 31, 1998 consisted of the following:
Note payable to bank due March 16, 2000 with interest at 8.5% $ 20,000
Notes payable to stockholders due on demand, interest at 12% $ 25,000
Notes payable to stockholders due June 10, 1998, interest at 12% 100,000
Notes payable to stockholders due from August 1 through
December 2, 1998 with no interest 172,000
Notes payable to stockholders due in February and March 1999
Without interest 63,500
--------
$380,500
The notes due to stockholders due in dates through December 31, 1998 were in
default at December 31, 1998. The notes due to stockholders due in 1999 have
subsequently become in default. Notes payable to stockholders in the amount of
$100,000 were issued by the Company in increments of $10,000 having a maturity
date of May 10, 1998. The holder of each of these Convertible Promissory Notes
has a non-assignable option to purchase 7,500 shares of Common Stock at par
value. Alternately, each holder has the right to convert their Convertible
Promissory Note to equity in the form of 12,500 shares of Common Stock. None of
the notes have been converted.
Of the $235,500 payable without interest as described above, $103,500 in
principal amount provides for a per diem issuance of common Stock as a penalty
for late payments. As of December 31, 1999, the per diem issuance would be in
excess of 2,800,000 shares of the Company's Common Stock. The Company has
received an opinion from counsel, Richard L. Wright, P.C., that the penalty
provisions are unenforceable as illegal usury under applicable Texas law.
However, there has not been any litigation between the Company and the holder of
the note as to this issue, and in the absence of a court decision directly
applicable to the parties, there remains at least some risk that the opinion of
counsel could be wrong. Should the holder of the note prevail in any such
litigation, the shares issuable under the penalty provisions would result in
this holder's becoming the Company's largest single shareholder. Further,
depending upon how long it took to resolve the issue, an adverse decision could
result in such holder's becoming a controlling shareholder of the Company.
According to legal counsel there is no likelihood of a sustainable assessment of
the per diem late penalty. Therefore, in accordance with SFAS No. 5, no
provision for such charges has been provided.
NOTE 6 STOCKHOLDERS' EQUITY
Common Stock
<PAGE>
The Company's authorized number of Common Shares that can be issued is
50,000,000 shares with a par value of $.005. The number of shares outstanding at
December 31, 1999 was 11,822,150. There were 1,505,399 common shares redeemable
for the total amount of $7,527. The Company's board of directors adopted a
resolution on December 12, 1997 to redeem 1,505,399 shares of the Common Stock
from certain shareholders to be redeemed from the proceeds of a subsequent stock
offering no later than March 31, 1998. At December 31, 1999 none of the stock
has been redeemed.
Redeemable Common Stock
In December 1997, the ten former shareholders of First Brewery of Dallas, Inc.,
acquired by the Company in March, 1997, collectively agreed with the Company's
Board of Directors that a dilution of their collective equity interest was in
the best interest of the Company. Therefore, the Company adopted a resolution on
December 12, 1997 to redeem 1,505,399 shares of the Common Stock from the ten
shareholders, at par value, $.005, with the consideration for such redemption to
be paid pro rata to such shareholders no later that March 31, 1998, presumably
out of the proceeds of a future equity offering. None of the shares have been
redeemed but can be redeemed at the Company's option. The total number of shares
and the redemption liability is reflected in the balance sheet under,
"Redeemable Common Stock."
NOTE 7 INCOME TAXES
The Company follows Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," which requires an asset and liability approach
for accounting for income taxes. Deferred income taxes arise from temporary
differences between financial and tax basis of certain assets and liabilities. A
valuation allowance has been established in the amount of $186,430. It is not
likely that the allowance will be realized; consequently the allowance has been
fully reserved. The Company's net operating loss carryforward is $1,950,849.
NOTE 8 LEASES
The Company leases its restaurant space under a lease agreement, which expired
October 1, 1999. During the year ended December 31, 1998, the Company paid
$130,960 under the lease agreement.
NOTE 9 OFFICER AND DIRECTOR COMPENSATION
No director receives or has received any compensation from the Company for
service as a member of the Board of Directors. None of the officers have
received any compensation for service from the Company. However, based on the
time spent by one officer expense was
<PAGE>
recorded based on the estimated compensation and that amount was credited to
paid-in captial as a contribution to capital.
NOTE 10 RELATED PARTY TRANSACTIONS
On December 12, 1997, by unanimous consent, the Board of Directors approved
borrowing up to $100,000 from certain stockholders. The promissory notes provide
that the notes be secured by the 'Net Game LinkTM system to be installed at the
Company's restaurant. The holders of said notes shall, for each $10,000 of
notes, in addition to the payment of principal and interest, be entitled to
7,500 shares of the Company's common stock at par value at maturity. Prior to
maturity, the holders of the promissory notes shall have the right to convert
their notes to equity in the amount of 12,500 shares of the Company's restricted
common stock. Thereafter, by unanimous consent, the Board of Directors approved
additional borrowings from certain shareholders, in the aggregate sum of
$162,000. In lieu of interest, the Company issued to such shareholders
restricted shares of the Company's common stock.
NOTE 11 STOCK OPTION PLANS
In 1995 the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ["SFAS"] No. 123, "Accounting for Stock-Based
Compensation." SFAS No. 123 is effective for fiscal years beginning after
December 31, 1995 and requires companies to use recognized option pricing to
estimate the fair value of stock-based compensation, including stock options.
The Statement requires additional disclosure based on the fair value based
method of accounting for an employee stock option and encourages, but does not
require, companies to recognize the value of these option grants as additional
compensation using methodology of SFAS No. 123. The Company has elected to
continue recognizing expense as prescribed by APB Opinion No.25, "Accounting for
Stock Issued to Employees," as allowed under FASB No. 123 rather than
recognizing compensation expense as calculated under SFAS No. 123.
Incentive Stock Options [Non-Compensation]
These options, incentive in nature, provide that Mr. Jones may purchase (i)
111,000 shares at par value subject to the condition precedent that the
Company's shares are trading at $1.50 per share, (ii) 361,000 shares at par
value subject to the condition precedent that the Company's shares are trading
at $3.00 per share, (iii) 111,000 shares at par value subject to the condition
precedent that the Company's shares are publicly trading at $4.50 per share, and
(iv) the balance of 250,000 shares at par value subject to the condition
precedent that the Company's shares are publicly trading at $5.00 per share.
These incentive stock options were granted to Mr. Jones by the Company's board
of directors (Mr. Jones abstaining) on December 12, 1997 and on December 14,
1998.
<PAGE>
Messrs. Poynter and Aleckner each hold an option for 333,000 shares in the
Company's Common Stock. These options, incentive in nature, provide that Messrs.
Poynter and Aleckner may purchaser (i) 111,000 shares at par value subject to
the condition precedent that the Company's shares are trading at $1.50 per
share, (ii) 111,000 shares at par value subject to the condition precedent that
the Company's shares are trading at $3.00 per share, and (iii) the balance of
111,000 shares at par value subject to the condition precedent that the
Company's shares are publicly trading at $4.50 per share. These incentive stock
options were granted to Messrs. Poynter and Aleckner by the Company's board of
directors (Messrs.Poynter and Aleckner abstaining on the grant of their stock
option) on December 14, 1998.
Outstanding options were 1,199,000 at December 31, 1999.
Accounting for the measurement date of these options occurs when the various
stock prices are realized.
Stock Based compensation Plan
The Company has one stock-based compensation plan as noted below. With regard to
its stock option plan, the Company applies APB No. 25 in accounting for such
plans and accordingly no compensation cost has been recognized. Had compensation
expense been determined based on fair value at the grant date for stock options
consistent with SFAS No. 123 the Company's net income and net income per common
share would not have changed for 1998 or 1999 because no grants were made in
those years.
On December 12, 1997, by unanimous consent of the Board of Directors, restricted
options to purchase 50,000 shares of the Company's common stock were issued to
certain key personnel of the Company at an exercise price of $.005 per share
conditioned upon the continued employment of the employee. The shares are
non-transferable and may be redeemed at $.005 per share by the Company in the
event the holder shall cease for any reason to be employed by the Company.
1999 1998
Options beginning of year 1,499,000 800,000
Number of options granted -- 699,000
---------- ----------
Options exercised during year 300,000 --
---------- ----------
<PAGE>
Options forfeited during year -- --
---------- ----------
Options outstanding end of year 1,199,000 1,499,000
---------- ----------
Options exercisable at end of year -- 300,000
========== ==========
Weighted average exercise price per
share outstanding and exercisable $ .005 $ .005
========== ==========
Weighted average grant date fair value $ -- $ --
========== ==========
Had compensation expense been determined based on the fair value at the grant
dates for the stock option grants consistent with the method of SFAS No.123, the
Company's net income per common share would have been reduced to the pro forma
amounts indicated below:
Net loss: 1999 1998
---- ----
As reported $ 361,880 $ 1,203,643
Pro forma $ 361,880 $ 1,203,643
Net per common share:
As reported $ (0.038) $ .143
Pro forma $ (0.038) $ .143
Calculated in accordance with the Black-Scholes option pricing model, using the
Following assumptions; expected volatility computed using as of the date of the
Grant the prior years average of the Common Stock which averaged 5%; expected
dividend yield of 0%; expected option term of two years and risk free rate of
6%. The Company believes that there is no significant income tax effect.
<PAGE>
NOTE 12 LEGAL PROCEEDINGS
On February 27, 1998 a judgment was rendered against First Brewery of Dallas I,
Ltd. the partnership all of which interest was acquired by First Brewery of
Dallas, Inc. The Company believes this judgment will be liquidated through
bankruptcy proceedings of the subsidiary.
The Company's First Brewery of Dallas, Inc. subsidiary is a defendant in a
proceeding commenced June 14, 1999 in Tarrant County, Texas by Ben Strong
individually and d/b/a Benco & Associates. This litigation arose out of the
construction of a brewpub which First Brewery acquired from its predecessor in
interest, and alleges that the transaction in which first Brewery of Dallas,
Inc. acquired the assets of the predecessor in interest constituted a fraudulent
conveyance. The amount sought is approximately $58,000. The Company believes
that this claim is without merit, and anticipates that it will be eliminated in
any event through the filing of a bankruptcy proceeding by First Brewery of
Dallas, Inc.
NOTE 13 REVERSE STOCK SPLIT
In a Special Meeting of the Board of Directors on June 30, 1997 and pursuant to
the action of taken by the shareholders owning a majority of the issued and
outstanding shares of the Company's common stock the Company gave effect to a
reverse stock split of one share for five shares of the Company's common stock.
Before the stock split the Company had 34,965,000 shares of stock outstanding;
immediately after the stock split the Company had outstanding 6,993,000 shares
of common stock.
NOTE 14 SUPPLEMENTAL CASH FLOW INFORMATION
The following supplemental cash flow information is provided for interest,
Income taxes paid and for non-cash transactions:
For the year ended
December 31,
1999 1998
---- ----
Interest paid 16,065 11,926
Income taxes paid -- --
Non-cash transactions:
<PAGE>
Service compensated with stock 21,250 243,750
Compensation paid in options 36,000 --
Notes exchanged for equipment 70,270 --
NOTE 15 REVISED FINANCIAL STATEMENTS
Subsequent to the completion of the 1998 audit and the issuance of the 1998
audit report it was determined that additional transactions had occurred where
common stock of the Company was issued for consulting and other services. The
financial statements have been revised to reflect these transactions which were
recorded based on the value of the services performed and the price of the stock
at the time of the services. In addition the revised financial statements have
omitted reference to discontinued operations because the Company did not
discontinue a segment of its business as described in APB No.30, rather all of
the Company's prior operations ceased in January 1999. The financial statements
have also been revised to show separately the Redeemable Common Shares outside
the equity disclosure.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
GAMECOM, INC.
(Registrant)
By: /s/ L. Kelly Jones
---------------------------------------
L. Kelly Jones, Chief Executive Officer
Dated April 11, 2000
Pursuant to the requirements of the Securities 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.
Signature Title Date
- --------- ----- ----
/s/ L. Kelly Jones Chief Executive Officer, Chief
- ------------------------- Financial Officer and Director April 11, 2000
L. Kelly Jones
/s/ John F. Aleckner, Jr.
- -------------------------
John F. Aleckner, Jr. Director April 11, 2000
/s/ W. James Poynter
- -------------------------
W. James Poynter Director April 11, 2000
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
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<SECURITIES> 0
<RECEIVABLES> 180
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<DEPRECIATION> 7,932
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