<PAGE> 1
UNITED STATES
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): January 28, 2000
DIGITAL BRIDGE, INC.
(formerly Black Stallion Management, Inc.)
(Exact name of Registrant as specified in its charter)
Nevada 0-26755 88-0409147
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification)
1860 El Camino Real, #100, Burlingame, California 94010
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (650)552-0618
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
In March 2000, our board of directors approved a change in the Registrant's
independent auditors. Previously, the independent auditing firm of Pritchett,
Siler & Hardy, P.C. had issued reports covering the period from inception (July
10, 1996) to June 30, 1999 on financial statements of the Registrant (then known
as Black Stallion Management, Inc.) None of the reports of Pritchett, Siler &
Hardy, P.C. on the financial statements of Black Stallion Management, Inc.
contained any adverse opinion or disclaimer of opinion, or was qualified or
modified as to uncertainty, audit scope or accounting principles, nor have there
been at any time, disagreements between Black Stallion Management, Inc. and
Pritchett, Siler & Hardy, P.C. on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure.
The Registrant retained the accounting firm of Hood & Strong LLP to serve as its
independent accountants to audit its financial statements beginning with the
seven month period ended January 31, 2000. This engagement was effective
March 6, 2000. Prior to its engagement as independent auditors of the
Registrant, Hood & Strong LLP had not been consulted by the Registrant either
with respect to the application of accounting principles to a specific
transaction or the type of audit opinion that might be rendered on financial
statements of the Registrant or on any other matter that was the subject of any
prior disagreement between the Registrant and its previous certifying
accountants.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired.
By Current Report on Form 8-K filed February 9, 2000, the Registrant
reported a business combination and indicated that the required financial
statements would be
<PAGE> 2
filed on or before April 12, 2000. The following financial statements and
notes thereto are filed herewith beginning at page F-1.
<TABLE>
<CAPTION>
Page
<S> <C>
Digital Bridge, Inc. (not the Registrant)
-----------------------------------------
Independent Auditors' Report F-1
Balance Sheets as of January 31, 2000 and F-2
May 31, 1999
Statement of Operations for the Eight Month F-3
Period Ended January 31, 2000 and for the
Period from June 17, 1998 through May 31, 1999
Statements of Stockholders' Equity from the F-4
Date of Inception on June 17, 1998 through
January 31, 2000
Statements of Cash Flows for the Eight Month F-5
Period Ended January 31, 2000 and for the
Period from June 17, 1998 through May 31, 1999
Notes to Financial Statements F-6
Black Stallion Management, Inc. (the Registrant)
------------------------------------------------
Independent Auditors' Report F-8
Balance Sheet as of January 31, 2000 and F-9
June 30, 1999
Statement of Operations for the Seven Month Period Ended F-10
January 31, 2000, for the Year Ended June 30, 1999, and from
Inception on July 10, 1996 through January 31, 2000
Statements of Stockholders' Equity from the F-11
Date of Inception on July 10, 1996 through
January 31, 2000
Statements of Cash Flows for the Seven Month Period Ended F-12
January 31, 2000, for the Year Ended June 30, 1999, and from
Inception on July 10, 1996 through January 31, 2000
Notes to Financial Statements F-13
</TABLE>
(b) Pro forma financial information is not required, as the transaction
described in Item 2 was a reverse acquisition under applicable accounting
literature.
(c) Exhibits
16.1 Letter from Pritchett, Siler & Hardy, P.C. regarding Change in
Certifying Accountants.
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.
DIGITAL BRIDGE, INC.
Date: April 12, 2000 By: /s/ Charles Bronitsky
----------------------------
Charles Bronitsky, President
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
DIGITAL BRIDGE, INC.
BOARD OF DIRECTORS
DIGITAL BRIDGE, INC.
Burlingame, California
We have audited the accompanying balance sheet of DIGITAL BRIDGE, INC. as of
January 31, 2000 and May 31, 1999 and the related statements of operations,
stockholders' equity and cash flows for the eight-month period ended January 31,
2000, and the period from June 17, 1998 (inception date) to May 31, 1999. These
financial statements are the responsibility of Digital Bridge, Inc.'s
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Digital Bridge, Inc. as of
January 31, 2000 and May 31, 1999, and the results of its operations and its
cash flows for the eight-month period ended January 31, 2000 and the period from
June 17, 1998 (inception date) to May 31, 1999, in conformity with generally
accepted accounting principles.
The Company has a limited operating history and its prospects are subject to the
risks, expenses and uncertainties frequently encountered by companies in new and
rapidly evolving markets for internet products and services. As discussed in
Note 8 to the financial statements, the Company was only recently formed, and
has not generated sufficient revenues to achieve profitability. Failure to
secure financing or its ability to generate sufficient cash flows through
operations may have a material adverse impact on the Company's operations and
financial position. Management's plans in regards to these matters are also
described in Note 8. The financial statements do not include any adjustments
that might result from the outcome of these uncertainties.
Hood & Strong LLP
/s/ Hood & Strong LLP
San Francisco, California
March 24, 2000
F-1
<PAGE> 4
DIGITAL BRIDGE, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
January 31, 2000 May 31, 1999
------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 14,337 $ 32,077
Receivables 52,759
Prepaid expenses 12,071
-------- --------
79,167 32,077
-------- --------
FURNITURE AND EQUIPMENT, NET 17,095 1,104
OTHER ASSETS 17,217
-------- --------
$113,479 $ 33,181
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables $ 52,850
-------- --------
52,850
-------- --------
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value, 500,000 shares
authorized, no shares issued and outstanding
Common stock, $.001 par value, 20,000,000 shares
authorized, 13,250,000 shares issued and outstanding 13,250 $ 13,250
Additional paid-in capital 212,142 36,750
Accumulated deficit -164,763 -16,819
-------- --------
60,629 33,181
-------- --------
$113,479 $ 33,181
======== ========
</TABLE>
F-2
<PAGE> 5
DIGITAL BRIDGE, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Eight For the Period
Months Ended from June 17,
January 31, 1998 Through
2000 May 31, 1999
================================================================================
<S> <C> <C>
REVENUE $380,467 $ 1,000
COST OF SALES 202,193
- --------------------------------------------------------------------------------
GROSS PROFIT 178,274 1,000
- --------------------------------------------------------------------------------
OPERATING EXPENSES:
Salaries and benefits 252,085 17,361
Office expenses 31,405
Other 41,318 410
Depreciation 1,458 48
- --------------------------------------------------------------------------------
326,266 17,819
- --------------------------------------------------------------------------------
NET LOSS $147,992 $ 16,819
================================================================================
</TABLE>
F-3
<PAGE> 6
DIGITAL BRIDGE, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
From date of inception on June 17, 1998 through January 31, 2000
====================================================================================================================
Number Additional Total
of Shares Common Paid-In Accumulated Stockholders'
Outstanding Stock Capital Deficit Equity
<S> <C> <C> <C> <C> <C>
BALANCES - JUNE 17, 1998
Common stock issued 13,250,000 $ 13,250 $ 36,750 $ 50,000
Net loss $ -16,771 -16,771
- --------------------------------------------------------------------------------------------------------------------
BALANCES - MAY 31, 1999 13,250,000 13,250 36,750 -16,771 33,229
Additional paid-in capital 175,392 175,392
Net loss -147,992 -147,992
- --------------------------------------------------------------------------------------------------------------------
BALANCES - JANUARY 31, 2000 13,250,000 $ 13,250 $ 212,142 $-164,763 $ 60,629
====================================================================================================================
</TABLE>
F-4
<PAGE> 7
DIGITAL BRIDGE, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the Eight For the Period
Months Ended from June 17,
January 31, 1998 Through
2000 May 31, 1999
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $-147,992 $-16,819
Adjustments to reconcile net loss to
net cash used by operations:
Depreciation 1,458 48
Increase in:
Receivables -52,759
Prepaid expenses -12,071
Other assets -17,217
Accounts payable 52,850
--------- --------
Net cash used by operating activities -175,731 -16,771
--------- -------
INVESTING ACTIVITIES:
Purchase of furniture and equipment -17,401 -1,152
--------- --------
Net cash used by investing activities -17,401 -1,152
--------- --------
FINANCING ACTIVITIES:
Issuance of common stock 13,250
Additional paid-in capital 175,392 36,750
--------- --------
Net cash provided by financing activities 175,392 50,000
--------- --------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS -17,740 32,077
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 32,077
--------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 14,337 $ 32,077
========= ========
</TABLE>
F-5
<PAGE> 8
NOTES TO FINANCIAL STATEMENTS
DIGITAL BRIDGE, INC.
Note 1 - Organization:
Digital Bridge, Inc. (the Company) is a corporation organized under the
laws of the State of Nevada for the purpose of doing business as a
provider of website development and management services.
Note 2 - Summary of Significant Accounting Policies:
a. Basis of Presentation:
The Company maintains its accounts on the accrual basis of accounting.
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 amount of revenues
and expenses during the reported period. Actual results could differ
from those estimates.
b. Cash and Cash Equivalents:
For purposes of the statement of cash flows, the Company considers all
highly liquid instruments purchased with a maturity of three months or
less to be cash equivalents (of which there are none as of January 31,
2000 and May 31, 1999).
c. Depreciation:
Fixed assets are recorded at cost. Property and equipment is
depreciated on a straight-line basis over estimated useful lives
ranging from five to seven years.
d. Revenue Recognition:
The Company records revenue based upon specific contract rates for
website development and management services rendered.
Note 3 - Furniture and Equipment:
Furniture and equipment, at cost, is summarized as follows as of
January 31, 2000 and May 31, 1999:
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
Office equipment $ 16,559 $ 1,152
Furniture and fixtures 1,994
----------------------------------------------------------------------------
18,553 1,152
Less accumulated depreciation (1,458) (48)
$ 17,095 $ 1,104
</TABLE>
Depreciation expense amounted to $1,458 and $48 for the periods ended
January 31, 2000 and May 31, 1999, respectively.
Note 4 - Lease Commitments:
The Company leases office space under an operating lease which expires
December 31, 2002. Rent expense approximated $7,360 and $0 for the
periods ended January 31, 2000 and May 31, 1999, respectively. As of
January 31, 2000, future minimum lease payments, by fiscal year, are as
follows:
<TABLE>
<CAPTION>
Year ended May 31,
<S> <C>
2000 $ 22,560
2001 90,000
2002 94,000
2003 53,000
--------------------------------
$ 259,000
</TABLE>
F-6
<PAGE> 9
Note 5 - Income Taxes:
No provision for federal and state income taxes has been recorded
because the Company has incurred net operating losses since inception.
The net operating loss carry-forwards as of January 31, 2000
approximate $164,000. These carry-forwards will be available to offset
future taxable income and expire beginning in 2014. Deferred income tax
assets arising from such loss carry forwards have been fully reserved
as of January 31, 2000 and May 31, 1999.
Note 6 - Stock Incentive Plan:
The Company has drafted a stock incentive plan for directors, officers,
employees and consultants of the Company and affiliated companies which
provides for nonqualified and incentive stock options. The maximum
number of shares of common stock reserved and available for issuance
under this plan is two million. As of January 31, 2000, options granted
aggregated 305,000 with a strike price of $2 per share. An additional
60,000 options were granted subsequent to January 31, 2000. These
options generally vest over a three-month period and expire five years
from the date of grant.
The Company follows Accounting Principles Board Opinion 25, Accounting
for Stock Issued to Employees, to account for the stock incentive plan,
recognizing compensation expense to the extent of the difference
between the fair value of the underlying stock at the measurement date
less the amount the employee is required to pay. There were no charges
to compensation expense during the periods ended January 31, 2000 and
May 31, 1999.
An alternative method of accounting for stock options is Statement of
Financial Accounting Standards (SFAS) No. 123, Accounting for
Stock-Based Compensation. Under SFAS 123, employee stock options are
valued at grant date using the Black-Scholes valuation model, and
compensation cost is recognized ratably over the vesting period. Had
the Company followed SFAS 123, no significant adjustment would have
been made to the statement of operations during the period ended
January 31, 2000. No options were exercised or canceled during the
period ended January 31, 2000. No options were granted or exercised
during the period ended May 31, 1999.
Note 7 - Economic Dependence and Related Party Transactions:
Through January 31, 2000, the Company generates the majority of its
revenues from services provided to affiliated companies. Sales to these
companies for the periods ended January 31, 2000 and May 31, 1999,
represent 98% and 100%, respectively, of total revenues.
As of January 31, 2000 and May 31, 1999, accounts receivable from these
affiliated companies totaled $51,264 and $0, respectively.
Note 7 - Economic Dependence and Related Party Transactions (Continued):
During the periods ended January 31, 2000 and May 31, 1999, certain
expenses incurred by an affiliated company were not charged to the
Company.
Note 8 - Business Risks:
The Company's failure to secure financing or its ability to generate
sufficient cash flows through operations may have a material adverse
impact on the Company's future operations and financial position.
Subsequent to January 31, 2000, the Company entered into several stock
purchase agreements whereby it has agreed to issue 140,000 shares of
unregistered common stock at the aggregate price of $700,000. The
Company may need to raise additional funds to develop or enhance their
service offerings and to fund expansion; failure to do so could affect
the Company's ability to pursue future growth.
Note 9 - Reorganization and Stock Purchase Agreement:
Effective January 31, 2000, the Company and its shareholders entered
into a Reorganization and Stock Purchase Agreement with Black Stallion
Management, Inc. (Black Stallion), a Nevada corporation. Under the
terms of the agreement, the Company's shareholders agreed to exchange
100% of their common stock for 20 million shares of common stock of
Black Stallion. In addition, Black Stallion agreed to a post-closing
split of 1.25 to 1 forward stock split on its authorized, issued and
outstanding stock, resulting in 27,750,000 post-closing shares of
common stock issued and outstanding and 31,250,000 shares of common
stock authorized. The Company's financial statements reflect the
balances and activity immediately prior to the above transactions.
F-7
<PAGE> 10
INDEPENDENT AUDITORS' REPORT
BLACK STALLION MANAGEMENT, INC.
(A Development Stage Company)
BOARD OF DIRECTORS
BLACK STALLION MANAGEMENT, INC.
Salt Lake City, Utah
We have audited the accompanying balance sheet of BLACK STALLION MANAGEMENT,
INC. (A Development Stage Company) as of January 31, 2000, and the related
statements of operations, stockholders' equity and cash flows for the
seven-month period then ended. 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. The financial statements of Black
Stallion Management, Inc. as of June 30, 1999, were audited by Pritchett, Siler
& Hardy, P.C. whose report dated July 8, 1999, on those statements included an
explanatory paragraph that described that the Company was only recently formed,
has incurred losses since its inception and has not yet been successful in
establishing profitable operations, raising doubt about its ability to continue
as a going concern, as discussed in Note 8 to those financial statements.
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 Black Stallion Management, Inc.
as of January 31, 2000, and the results of its operations and its cash flows for
the seven-month period then ended 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 8 to the financial
statements, the Company was only recently formed, has incurred losses since its
inception and has not yet been successful in establishing profitable operations,
raising doubt about its ability to continue as a going concern. Management's
plans in regards to these matters are also described in Note 8. The financial
statements do not include any adjustments that might result from the outcome of
these uncertainties.
Hood & Strong LLP
/s/ Hood & Strong LLP
San Francisco, California
March 24, 2000
F-8
<PAGE> 11
BLACK STALLION MANAGEMENT, INC.
(A Development Stage Company)
BALANCE SHEET
<TABLE>
<CAPTION>
January 31, 2000 June 30, 1999
=================================================================================================
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,660
------- -------
$ -- $ 4,660
------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable - related party $ 5,500
Accrued interest - related party 123
------- -------
5,623
------- -------
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value, 5,000,000 shares
authorized, no shares issued and outstanding
Common stock, $.001 par value, 25,000,000 shares
authorized, 2,200,000 shares issued and outstanding $ 2,200 2,200
Deficit accumulated during the development stage -2,200 -3,163
------- -------
-963
------- -------
Total liabilities and stockholders' equity $ -- $ 4,660
------- -------
</TABLE>
F-9
<PAGE> 12
BLACK STALLION MANAGEMENT, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the From Inception
Seven-Month For the on July 10,
Period Ended Year Ended 1996 Through
January 31, June 30, January 31,
2000 1999 2000
======================================================================= ==============
<S> <C> <C> <C>
REVENUE
EXPENSES:
General and administrative $4,660 $ 840 $7,700
------ ------ ------
Loss before other income
(expense) 4,660 840 7,700
------ ------ ------
OTHER INCOME (EXPENSE):
Interest expense 290 123 413
Forgiveness of debt 5,913 5,913
------ ------ ------
5,623 123 5,500
------ ------ ------
NET INCOME (LOSS) $ 963 $ 963 $2,200
====== ====== ======
INCOME (LOSS) PER COMMON SHARE $ 0.00 $ 0.00 $ 0.00
====== ====== ======
</TABLE>
F-10
<PAGE> 13
BLACK STALLION MANAGEMENT, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
From the date of inception on July 10, 1996 through January 31, 2000
===============================================================================================
Deficit
Accumulated
Preferred Stock Common Stock During the
---------------- -------------------- Development
Shares Amount Shares Amount Stage
---------------- -------------------- -----------
<S> <C> <C> <C> <C> <C>
BALANCES - JULY 10, 1996
Issuance of 2,200,000 shares
common stock for services
at $.001 per share 2,200,000 $2,200
Net loss for the period ended
June 30, 1997 $-2,200
- -----------------------------------------------------------------------------------------------
BALANCES - JUNE 30, 1997 2,200,000 2,200 -2,200
Net loss for the year ended
June 30, 1998
- -----------------------------------------------------------------------------------------------
BALANCES - JUNE 30, 1998 2,200,000 2,200 -2,200
Net loss for the year ended
June 30, 1999 -963
- -----------------------------------------------------------------------------------------------
BALANCES - JUNE 30, 1999 2,200,000 2,200 -3,163
Net income for the period
ended January 31, 2000 963
- -----------------------------------------------------------------------------------------------
BALANCES - JANUARY 31, 2000 2,200,000 $2,200 $-2,200
===============================================================================================
</TABLE>
F-11
<PAGE> 14
BLACK STALLION MANAGEMENT, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the From Inception
Seven-Month For the on July 10,
Period Ended Year Ended 1996 Through
January 31, June 30, January 31,
2000 1999 2000
===================================================================================== =============
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ 963 $-963 $-2,200
Adjustments to reconcile net income (loss)
to net cash used by operating activities:
Stock issued for services 2,200
Forgiveness of debt -5,913 -5,913
Change in accrued interest 290 123 413
------- ------ -------
Net cash used by
operating activities -4,660 -840 -5,500
------- ------ -------
INVESTING ACTIVITIES:
Net cash provided by
investing activities 0 0 0
------- ------ -------
FINANCING ACTIVITIES:
Increase in notes payable - related party 5,500 5,500
------- ------ -------
Net cash provided by
financing activities 5,500 5,500
------- ------ -------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS -4,660 4,660 0
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 4,660
------- ------ -------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 0 $4,660 $ 0
======= ====== =======
</TABLE>
F-12
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS
BLACK STALLION MANAGEMENT, INC.
(A Development Stage Company)
Note 1 - Organization:
Black Stallion Management, Inc. (the Company) is a corporation
organized under the laws of the State of Nevada on July 10, 1996. As of
the report date, the Company has not commenced planned principal
operations and is considered a development stage company as defined in
SFAS No. 7. The Company is seeking potential business ventures. (See
Note 8) The Company has, at the present time, not paid any dividends
and any dividends that may be paid in the future will depend upon the
financial requirements of the Company and other relevant factors.
Note 2 - Summary of Significant Accounting Policies:
The Company's records are maintained on the accrual basis of
accounting. A summary of the Company's significant accounting policies
consistently applied in the preparation of the accompanying financial
statements follows.
a. Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions. These estimates and assumptions affect the reported
amount of assets and liabilities, and revenue and expenses, as well as,
contingent assets and liabilities. Actual results could differ from
those estimates.
b. Cash and Cash Equivalents:
For purposes of the statement of cash flows, the Company considers all
highly liquid instruments purchased with a maturity of three months or
less to be cash equivalents (of which there are none at January 31,
2000 and June 30, 1999).
d. Loss Per Share:
The computation of loss per share is based on the weighted average
number of shares outstanding during the period presented in accordance
with Statement of Financial Accounting Standards No. 128, "Earnings Per
Share". (See Note 7)
e. Recently Enacted Accounting Standards:
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income", SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information", SFAS No. 132, "Employer's
Disclosure about Pensions and Other Postretirement Benefits", SFAS No.
133 (as amended by SFAS No. 137), "Accounting for Derivative
Instruments and Hedging Activities", SFAS No. 134, "Accounting for
Mortgage-Backed Securities...", and SFAS No. 135, "Rescission of FASB
Statement No. 75 and Technical Corrections" were recently issued. SFAS
No. 130, 131, 132, 133 (as amended), 134 and 135 have no current
applicability to the Company or their effect on the financial
statements would not have been significant.
Note 3 - Note Payable - Related Party:
As of June 30, 1999 the Company owed a related party $5,500. The note
was originally due in full on March 31, 2000 with interest accruing at
10% per annum beginning April 1, 1999. Interest expense of $290 and
$123 was recorded for the period ended January 31, 2000 and the year
ended June 30, 1999, respectively. As of January 31, 2000, this debt
has been forgiven and is reflected as other income in the Company's
financial statements.
Note 4 - Capital Stock:
a. Common Stock
During July 1996, in connection with its organization, the Company
issued 2,200,000 shares of its previously authorized, but unissued
common stock. The amount was issued for services rendered at $2,200 (or
$.001 per share).
b. Forward Stock Split
F-13
<PAGE> 16
On March 5, 1999 the Company approved a 100 for 1 forward stock split.
The forward stock split is reflected on a retroactive basis.
Note 5 - Income Taxes:
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes".
FASB 109 requires the Company to provide a net deferred tax
asset/liability equal to the expected future tax benefit/expense of
temporary reporting differences between book and tax accounting methods
and any available operating loss or tax credit carryforwards.
The Company has available as of January 31, 2000, unused operating loss
carryforwards of approximately $2,200 which are expected to be applied
against future taxable income and which expire in various years through
2018. Deferred income taxes arising from such loss carryforwards have
been fully reserved as of January 31, 2000 and June 30, 1999.
Note 6 - Related Party Transactions:
During the period ended January 31, 2000 and the year ended June 30,
1999, the Company paid fees of $500 and $1,080, respectively, to
officer/directors of the Company.
Through January 31, 2000, the Company has not had a need to rent office
space. An officer/shareholder of the Company is allowing the Company to
use his/her home as a mailing address, as needed, at no expense to the
Company.
Note 7 - Loss Per Share:
The following information reflects the amounts used in computing income
(loss) per share:
<TABLE>
<CAPTION>
For the From Inception
Seven-Month For the on July 10,
Period Ended Year Ended 1996 through
January 31, 2000 June 30, 1999 January 31, 2000
<S> <C> <C> <C>
Income (loss) from continuing operations available
to common shareholders (numerator) $ 963 ($ 963) ($ 2,200)
Weighted average number of common shares
outstanding used in loss per share for the period
(denominator) 2,200,000 2,200,000 2,200,000
</TABLE>
Note 8 - Going Concern:
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplate
continuation of the Company as a going concern. However, the Company
was only recently formed, has incurred losses since its inception and
has not yet been successful in establishing profitable operations.
Management's plan of operations was to seek out and acquire a new
business opportunity. Management was successful in seeking out such
opportunity and said transaction is outlined in Note 9.
Note 9 - Reorganization and Stock Purchase Agreement:
Effective January 31, 2000, the Company entered into a Reorganization
and Stock Purchase Agreement with Digital Bridge, Inc. (Digital Bridge)
and its shareholders. Under the terms of the agreement, the Company
agreed to issue an additional 20 million shares of common stock and
exchange these shares for 100% of the common stock held by Digital
Bridge's shareholders. In addition, the Company agreed to a
post-closing split of 1.25 to 1 forward stock split on its authorized,
issued and outstanding stock, resulting in 27,750,000 post-closing
shares of common stock issued and outstanding and 31,250,000 shares of
common stock authorized. The Company's financial statements reflect the
balances and activity immediately prior to the above transactions.
F-14
<PAGE> 17
EXHIBITS
Exhibit Description
No.
16.1 Letter from Pritchett, Siler & Hardy, P.C. re Change in Certifying
Accountant
<PAGE> 1
EXHIBIT 16.1
April 12, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
We have read the statements of Digital Bridge, Inc. (formerly Black Stallion
Management, Inc.) (the "Company") pertaining to our firm included under Item 4
of Form 8-K dated January 8, 2000 and to be filed on or about April 12, 2000 and
agree with such statements as they pertain to our firm. We have no basis to
agree or disagree with other statements of the registrant contained therein.
/s/ Pritchett, Siler & Hardy, P.C.
Pritchett, Siler & Hardy, P.C.
