UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
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 7, 2000
MERLIN SOFTWARE TECHNOLOGIES INTERNATIONAL, INC.
(FORMERLY AUSTIN LAND & DEVELOPMENT, INC.)
(Exact name of registrant as specified in its charter)
Nevada 000-27189 88-0398103
(State of (Commission (I.R.S. Employer
organization) File Number) Identification No.)
(Address of principal executive offices)
Registrant's telephone number, including area code ()
Registrant's Attorney: Daniel G. Chapman, Esq., 2080 E. Flamingo
Rd., Suite 112, Las Vegas, (702) 650-5660
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On January 14, 2000, the Company signed a Letter of Intent to
acquire all the issued and outstanding shares of Merlin Software
Technologies, Inc. (MST), a developer of Linux software. Under
the terms of the Letter of Intent, which was approved by the
Company's Board of Directors on January 12, 2000, the Company
will issue 7,900,000 shares of its common stock to the
shareholders of MST in exchange for all of the issued and
outstanding shares of MST. The agreement is contingent upon
approval by the shareholders of MST. Management anticipates
receiving approval by mid-April, at which time the acquisition
will close.
ITEM 5. OTHER EVENTS
On January 7, 2000, the Company changed its name to Merlin
Software Technologies International, Inc.
On January 10, 2000, the Company's common stock underwent a
forward stock split on a 1.23468:1 basis for all record
shareholders, increasing the then-issued and outstanding shares
from 6,000,000 common shares to 7,408,080 common shares.
ITEM 6. RESIGNATIONS OF REGISTRANTS' DIRECTORS
On January 12, 2000, the Company accepted the resignation of
Eugene F. Koppenhaver as a member of the board of directors,
effective immediately. Mr. Martin Holt was appointed to fill the
vacancy left by Mr. Koppenhaver's resignation.
On January 12, 2000, the Company also accepted the resignations
of Messrs. Douglas Ansell and Bruce N. Barton as member of the
board of the directors, effective immediately. The remaining
board member did not immediately fill the vacancies left by the
resignation of Messrs. Ansell and Barton. Mr. Holt was also
elected as President, Secretary, and Treasurer.
On January 19, 2000, Martin Holt appointed Messrs. Robert and
Gary Heller to fill the vacancies previously left. The Company
also decided to expand the board to a 4 member board and Ms.
Shelley Montgomery was appointed to the board of directors to
fill the vacancy created by the expansion of the board. Mr. Holt
remained as a member of the board of directors.
On January 19, 2000, the Company accepted the resignation of Mr.
Martin Holt as its President, Secretary and Treasurer, effective
immediately. Mr. Robert Heller was elected as President, Mr. Gary
Heller as Secretary and Ms. Shelley Montgomery as Treasurer.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
a) Financial Statements of Merlin Software Technologies, Inc.
are attached as an exhibit to this Form 8-K
b) Prior to the acquisition of Merlin Software Technologies,
Inc., the Company was not operating and had no assets and no
revenue during 1999. The pro-forma financial statements, which
serve to state the results of 1999 as if the two companies had
combined operations during 1999, therefore, will not differ in
any material way from the audited financial statements of MST
which are included as an exhibit to this Form 8-K. The Company
has not, therefore, included separate pro-forma financial
statements.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly
authorized.
Merlin Software Technologies
International, Inc.
By:
Robert Heller, President
Date:
Merlin Software Technologies Inc.
(A Development Stage Company)
Financial Statements
For the period from June 25, 1999
(incorporation) to December 31, 1999
Merlin Software Technologies Inc.
(A Development Stage Company)
Financial Statements
For the period from June 25, 1999
(incorporation) to December 31, 1999
Contents
<TABLE>
<S> <C>
Auditors' Report 2
Comments by Auditors for U.S. Readers On Canada-U.S.
Reporting Difference
Financial Statements
Balance Sheet 4
Statement of Changes in Capital Deficit 5
Statement of Operations 6
Statement of Cash Flows 7
Summary of Significant Accounting Policies 8 - 11
Notes to the Financial Statements 12 - 15
</TABLE>
Auditors' Report
To the Directors and Stockholders of
Merlin Software Technologies Inc.
(A Development Stage Company)
We have audited the Balance Sheet of Merlin Software Technologies
Inc. (a development stage company) as at December 31, 1999, the
Statements of Changes in Capital Deficit, Operations and Cash
Flows for the period from June 25, 1999 (incorporation) 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 Canada. Those standards require that we
plan and perform an audit to obtain reasonable assurance 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.
In our opinion, these financial statements present fairly, in all
material respects, the financial position of the Company as at
December 31, 1999 and the results of its operations and its cash
flows for the period from June 25, 1999 (incorporation) to
December 31, 1999 in accordance with accounting principles
generally accepted in the United States.
/s/ BDO Dunwoody LLP
Chartered Accountants
Vancouver, Canada
February 18, 2000
Comments by Auditors for U.S. Readers
On Canada-U.S. Reporting Differences
To the Directors and Stockholders of
Merlin Software Technologies Inc.
(A Development Stage Company)
In the United States, reporting standards for auditors require
the addition of an explanatory paragraph (following the opinion
paragraph) when the financial statements are affected by
conditions and events that cast substantial doubt on the
Company's ability to continue as a going concern, such as those
described in Note 1 to the financial statements. Our report to
the stockholders dated February 18, 2000 is expressed in
accordance with Canadian reporting standards which do not permit
a reference to such events and conditions in the auditors' report
when these are adequately disclosed in the financial statements.
/s/ BDO Dunwoody LLP
Chartered Accountants
Vancouver, Canada
February 18, 2000
Merlin Software Technologies Inc.
(A Development Stage Company)
Balance Sheet
<TABLE>
<S> <C>
December 31 1999
Assets
Current
Cash $717,19
5
Sales taxes recoverable 18,667
Prepaid expenses 8,948
744,810
Fixed assets (Note 3) 86,564
$831,37
4
Liabilities and Capital Deficit
Liabilities
Current
Accounts payable and accrued liabilities $136,98
0
Demand loans payable (Note 4) 210,000
346,980
Due to Merlin Software Technologies 675,000
International, Inc. (Note 5)
Loans payable (Note 6) 130,000
1,151,9
80
Capital deficit
Share capital Authorized 7,900
1,000,000 Preferred shares, par value $0.01
50,000,000 Common shares, par value $0.001
Issued 7,900,000 Common shares
Additional paid-in capital 292,122
Deficit accumulated during the development stage (616,62
8)
Reduction for initial contribution of (4,000)
intellectual property
(320,60
6)
$831,37
4
</TABLE>
The accompanying summary of significant accounting policies and
notes are an integral part of these financial statements.
Merlin Software Technologies Inc.
(A Development Stage Company)
Statement of Changes in Capital Deficit
For the period from June 25, 1999 (incorporation) to December 31,
1999
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Common Stock Addition Reduction Deficit Total
Shares Amoun al for Accumulat Capital
t Paid-in Initial ed During Deficit
Capital Contributi the
on of Developme
Intellectu nt Stage
al
Property
Initial 4,000,0 $4,00 $- $(4,000) $- $-
contributi 00 0
on of
intellectu
al
property
in July
1999
Private 3,400,0 3,400 30,600 - - 34,000
placement 00
for cash
in July
1999at
$0.01 per
share
Private 500,000 500 249,500 - - 250,000
placement
for cash
in August
1999 at
$0.50 per
share
Stock - - 12,022 - - 12,022
option
compensati
on (Note
7)
Net loss - - - - (616,628) (616,628
for the )
period
Balance, 7,900,0 $7,90 $292,122 $(4,000) $(616,628 $(320,60
end of 00 0 ) 6)
period
</TABLE>
The accompanying summary of significant accounting policies and
notes are an integral part of these financial statements.
Merlin Software Technologies Inc.
(A Development Stage Company)
Statement of Operations
<TABLE>
<S> <C>
For the period from June 25, 1999 (incorporation) 1999
to December 31
Expenses
Depreciation $7,964
General and administration 268,042
Professional fees 64,907
Promotion and advertising 180,312
Research and development 98,329
619,554
Interest and other income (2,926)
Net loss for the period $616,628
Loss per share - basic and diluted $0.09
Weighted average shares outstanding 7,166,666
</TABLE>
The accompanying summary of significant accounting policies and
notes are an integral part of these financial statements.
Merlin Software Technologies Inc.
(A Development Stage Company)
Statement of Cash Flows
<TABLE>
<S> <C>
For the period from June 25, 1999 (incorporation) 1999
to December 31
Cash provided by (used in)
Operating activities
Net loss for the period $(616,628)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities
Depreciation 7,964
(Increase) decrease in assets
Sales taxes recoverable (18,667)
Prepaid expenses and deposits (8,948)
Increase (decrease) in liabilities
Accounts payable and accrued liabilities 136,980
(487,277)
Financing activities
Proceeds on demand loans 210,000
Issuance of common stock 284,000
Advances from Merlin Software Technologies 675,000
International, Inc.
Proceeds on loans payable 130,000
1,299,000
Investing activity
Purchase of fixed assets (94,528)
Increase in cash during the period and cash, end $717,195
of period
</TABLE>
The accompanying summary of significant accounting policies and
notes are an integral part of these financial statements.
Merlin Software Technologies Inc.
(A Development Stage Company)
Summary of Significant Accounting Policies
December 31, 1999
<TABLE>
<S> <C>
Basis of These financial statements are
Presentation expressed in US dollars and are
prepared in accordance with accounting
principles generally accepted in the
United States.
The Company has selected December 31 as its
fiscal year end.
Fixed Assets Fixed assets are carried at cost less
accumulated depreciation. Computers
are depreciated using the straight-line
method over their estimated useful life
of three years. Furniture and fixtures
and trademarks are depreciated over
their estimated useful lives of five
years. Acquired internal use software
is capitalized and depreciated over its
estimated useful life of one year.
One half period's depreciation is taken
in the period of acquisition.
Financial The Company's financial instruments
Instruments consist of cash, sales taxes
recoverable, accounts payable and
accrued liabilities and loans payable.
Unless otherwise noted, it is
management's opinion that the Company
is not exposed to significant interest,
currency or credit risks arising from
these financial instruments. The fair
value of cash, sales taxes recoverable
and accounts payable and accrued
liabilities approximates their carrying
value, unless otherwise noted, since
they are short-term in nature or they
are receivable or payable on demand.
It is not practicable to determine the
fair value of amounts advanced by
Merlin Software Technologies
International, Inc. and other long-term
loans.
Income Taxes The Company follows the provisions of
Statement of Financial Accounting
Standards ("SFAS") No. 109, "Accounting
for Income Taxes", which requires the
Company to recognize deferred tax
liabilities and assets for the expected
future tax consequences of events that
have been recognized in the Company's
financial statements or tax returns
using the liability method. Under this
method, deferred tax liabilities and
assets are determined based on the
temporary differences between the
financial statement carrying amounts
and tax bases of assets and liabilities
using enacted rates in effect in the
years in which the differences are
expected to reverse.
</TABLE>
Merlin Software Technologies Inc.
(A Development Stage Company)
Summary of Significant Accounting Policies
December 31, 1999
<TABLE>
<S> <C>
Foreign Currency Transactions undertaken in currencies
Transactions other than the US dollar are translated
to US dollars using the exchange rate
in effect as of the transaction date.
Monetary assets and liabilities
denominated in foreign currencies are
then translated to US dollars using the
period end rate. Any exchange gains
and losses are included in the
Statement of Operations.
Loss Per Share Loss per share is computed in accordance
with SFAS No. 128, "Earnings Per Share".
Basic loss per share is calculated by
dividing the net loss available to common
stockholders by the weighted average number
of common shares outstanding for the
period. Diluted earnings per share
reflects the potential dilution of
securities that could share in earnings of
an entity. In loss periods, dilutive
common equivalent shares are excluded as
the effect would be anti-dilutive. Basic
and diluted earnings per share are the same
for the periods presented.
For the period from June 25, 1999
(incorporation) to December 31, 1999,
total stock options of 761,000 were not
included in the computation of diluted
earnings per share because the effect
was anti-dilutive.
Stock Based The Company applies Accounting
Compensation Principles Board ("APB") Opinion No.
25, "Accounting for Stock Issued to
Employees", and related interpretations
in accounting for stock option plans.
Under APB 25, compensation cost is
recognized for stock options granted at
prices below the market price of the
underlying common stock on the date of
grant.
SFAS No. 123, "Accounting for
Stock-Based Compensation", requires the
Company to provide pro-forma
information regarding net income as if
compensation cost for the Company's
stock option plan had been determined
in accordance with the fair value based
method prescribed in SFAS No. 123.
</TABLE>
Merlin Software Technologies Inc.
(A Development Stage Company)
Summary of Significant Accounting Policies
December 31, 1999
<TABLE>
<S> <C>
Software Development
Costs In accordance with SFAS No. 86, "Accounting
for the Cost of Computer Software to be
Sold, Leased, or Otherwise Marketed",
development costs incurred in the research
and development of new software products
are expensed as incurred until
technological feasibility in the form of a
working model has been established. To
December 31, 1999, the Company's software
development is in progress and commercial
feasibility had not yet been established.
Accordingly, all software development costs
(consisting of amounts paid or payable to
consultants) have been charged to the
accompanying statement of operations.
Revenue Recognition Product revenues from the sale of
Linux-based software is to be
recognized upon shipment, except that
an amount representing the value of
future services including upgrades and
customer support will be deferred and
recognized on a pro-rata basis over the
terms of the contracts. In absence of
revenue history providing information
as to the extent of services provided
beyond the point of sale, the Company
will defer half of sales proceeds on
such arrangements and recognize the
revenue over the term of the contracts.
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 period. Actual results could
differ from those estimates.
Comprehensive Income SFAS No. 130, "Reporting Comprehensive
Income", establishes standards for
reporting and presentation of
comprehensive income (loss). This
standard defines comprehensive income
as the changes in equity of an
enterprise except those resulting from
stockholder transactions.
Comprehensive loss for the period from
June 25, 1999 (incorporation) to
December 31, 1999 equalled the net loss
for the period.
</TABLE>
Merlin Software Technologies Inc.
(A Development Stage Company)
Summary of Significant Accounting Policies
December 31, 1999
<TABLE>
<S> <C>
New Accounting
Pronouncements In June 1998, SFAS No. 133, "Accounting for
Derivative Instruments and Hedging
Activities", was issued. SFAS No. 133
required companies to recognize all
derivatives contracts as either assets or
liabilities on the balance sheet and to
measure them at fair value. If certain
conditions are met, a derivative may be
specifically designated as a hedge, the
objective of which is to match the timing
of gain or loss recognition on the hedging
derivative with the recognition of (i) the
changes in the fair value of the hedged
asset or liability that are attributable to
the hedged risk or (ii) the earnings effect
of the hedged forecasted transaction. For
a derivative not designated as a hedging
instrument, the gain or loss is recognized
in income in the period of change. SFAS
No. 133 is effective for all fiscal
quarters of fiscal years beginning after
June 15, 2000.
Historically, the Company has not
entered into derivatives contracts
either to hedge existing risks or for
speculative purposes. Accordingly, the
Company does not expect adoption of the
new standards on January 1, 2001 to
affect its financial statements.
</TABLE>
Merlin Software Technologies Inc.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
1. Nature of Business and Continued Operations
The Company was incorporated in the state of Nevada on June
25, 1999 for the purpose of the development of Linux-based
software utilities and other business management software. In
January 2000, the Company's principal stockholders entered
into a letter of intent with Merlin Software Technologies
International, Inc. ("Merlin Pubco", formerly Austin Land &
Development, Inc.) (Note 2), an inactive Nevada company, which
would result in the Company becoming a wholly-owned subsidiary
of Merlin Pubco. The common stock of Merlin Pubco is traded
on the National Association of Securities Dealers
Over-the-Counter Bulletin Board ("NASD OTC:BB") and was
registered with the Securities and Exchange Commission in the
United States.
These accompanying financial statements have been prepared on
a going concern basis, which contemplates the realization of
assets and the satisfaction of liabilities and commitments in
the normal course of business. As at December 31, 1999, the
Company has recognized no revenue and has accumulated
operating losses of $616,628 since incorporation. The
continuation of the Company is dependent upon the conclusion
of the share exchange with Merlin Pubco and the continuing
financial support of creditors and stockholders and obtaining
long-term financing as well as the successful development of
the Company's software and achieving a profitable level of
operations. Management plans to raise equity capital to
finance the operations and capital requirements of the
Company. It is management's intention to raise new equity
financing of approximately $25 million within the upcoming
year. Amounts raised will be used to further development of
the Company's product, to provide financing for the marketing
and promotion of its products, to secure products and for
other working capital purposes including hardware and software
upgrades. While the Company is expending its best efforts to
achieve the above plans, there is no assurance that any such
activity will generate funds that will be available for
operations.
These conditions raise substantial doubt about the Company's
ability to continue as a going concern. These financial
statements do not include any adjustments that might arise
from this uncertainty.
2. Reverse Acquisition of Merlin Pubco
On January 14, 2000, the Company's principal stockholders
signed a letter of intent with Merlin Pubco, an inactive
Nevada company whose common stock trades on the NASD OTC:BB.
The letter of intent will form the basis for a share exchange
agreement with the parties subject to the satisfaction of
certain specified conditions. Terms of the agreement have
Merlin Pubco acquiring all of the issued and outstanding
shares of the Company at the closing date in exchange for an
equal number of shares in Merlin Pubco. Merlin Pubco will
also exchange stock options and warrants outstanding in the
Company for commitments to issue its stock under similar terms
to those existing in the Company.
Merlin Software Technologies Inc.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
2. Reverse Acquisition of Merlin Pubco - Continued
The transaction will be accounted for as a recapitalization of
the Company using accounting principles applicable to reverse
acquisitions. Following reverse acquisition accounting,
financial statements subsequent to the closing date will be
presented as a continuation of the Company. The net book
value of the net assets of Merlin Pubco at December 31, 1999
was $Nil as Merlin Pubco has been inactive since its
incorporation in 1995. Accordingly, the value assigned to
common stock issued by Merlin Pubco for the acquisition of the
Company is expected to be $Nil.
3. Fixed Assets
<TABLE>
<S> <C> <C> <C>
Accumulate Net Book
d
Cost Depreciati Value
on
Computer hardware $46,567 $3,880 $42,687
Furniture and fixtures 36,516 1,826 34,690
Computer software 8,428 2,107 6,321
Trademarks 3,017 151 2,866
$94,528 $7,964 $86,564
</TABLE>
4. Demand Loans Payable
To December 31, 1999, the Company received unsecured,
non-interest bearing demand bridge loans totalling $210,000
from subscribers to a private placement in Merlin Pubco. On
January 5, 2000, a further $80,000 was advanced to the Company
by these subscribers. The demand loans were repaid later in
January 2000.
Merlin Software Technologies Inc.
(A Development Stage Company)
Notes to the Financial Notes
December 31, 1999
5. Due to Merlin Software Technologies International, Inc.
In December 1999, the Company received $675,000 from Merlin
Pubco out of the proceeds of a $1.275 million private
placement expected to be completed in 2000. The amounts were
advanced on an unsecured, non-interest bearing basis with no
specific terms of repayment. The remaining $600,000 from this
private placement was advanced to the Company by Merlin Pubco
in January 2000 under similar terms.
Merlin Software Technologies Inc.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
6. Loans Payable
Additional amounts advanced to the Company were loaned on a
non-interest bearing basis without security and with no
specific terms of repayment. The Company has agreed with the
lenders to settle the indebtedness with the issuance of 86,667
units of the Company. Each unit consists of one share of
common stock and a warrant to purchase one share of common
stock at a price of $2 per share until expiry in March 2002.
7. Stock Options
On November 1, 1999, the Company's Board of Directors approved
the Company's 1999 Stock Option Plan. The Plan provides for
the granting of stock options to key employees and consultants
to purchase up to 3,000,000 common shares of the Company.
Under the Plan, the granting of incentive and non-qualified
stock options, exercise prices and terms are determined by the
Company's Board of Directors. For incentive options, the
exercise price shall not be less than the fair market value of
the Company's common stock on the grant date. (In the case of
options issued to an employee who owns stock possessing more
than 10% of the voting power of all classes of the Company's
stock on the date of grant, the option price must not be less
than 110% of the fair market value of common stock on the
grant date.). Options granted are not to exceed terms beyond
ten years (5 years in the case of an incentive stock option
granted to a holder of 10 percent of the Company's common
stock). Unless otherwise specified by the Board of Directors,
stock-options shall vest at the rate of 25% per year starting
one year following the granting of options.
In 1999, the Company's Board of Directors approved the
granting of 931,000 stock options with an exercise price of $1
per share and expiring in 2001. At December 31, 1999, 761,000
stock options were granted and remained outstanding of which
387,800 were exercisable on that date. Subsequent to December
31, 1999, the Company granted a further 20,000 options under
the same terms and entered into an employment agreement
committing to grant 150,000 options under the same terms. The
options granted vest over periods from the date of grant to 12
months subsequent to commencement of services.
Pro-forma information regarding Net Loss and Loss per Share is
required under SFAS No. 123, and has been determined as if the
Company had accounted for its stock options under the fair value
method of SFAS No. 123. The fair value of options granted in the
period ended
Merlin Software Technologies Inc.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
December 31, 1999 was $0.08. The fair value of these options
was estimated at the date of the grant using a Black-Scholes
option pricing model with the following assumptions: no
dividends, a risk-free interest rate of 5.45%, volatility
factor of the expected market price of the Company's common
stock of 0.001 and a weighted average expected life of the
options of 18 months.
Under the accounting provisions of SFAS No. 123, the Company
recorded in general and administration expense for 1999 an
amount of $12,022 representing the value of options granted to
consultants during the period. Additionally, the Company's
Net Loss and Loss per Share on a pro-forma basis would be
approximately $659,000 and $0.09 for the period from June 25,
1999 (incorporation) to December 31, 1999.
Merlin Software Technologies Inc.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
8. Income Taxes
The tax effects of temporary differences that give rise to the
Company's deferred tax asset are as follows:
<TABLE>
<S> <C>
1999
Tax loss carryforwards $210,000
Valuation allowance (210,000)
$-
</TABLE>
The provision for income taxes differs from the amount
estimated using the federal statutory income tax rate as
follows:
<TABLE>
<S> <C>
1999
Provision (benefit) at federal statutory rate $(210,000
)
Increase in valuation allowance 210,000
$-
</TABLE>
The Company evaluates its valuation allowance requirements
based on projected future operations. When circumstances
change and this causes a change in management's judgement
about the recoverability of deferred tax assets, the impact of
the change on the valuation allowance is reflected in current
income.
At December 31, 1999, the Company had losses available for
income tax purposes of approximately $610,000 which will
expire in 2019.
