FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(g) of The Securities Exchange Act of 1934
GOTHINK.COM, INCORPORATED
State of Incorporation: Nevada IRS Employer I.D. Number: 87-6121862
Authorized to do business in Texas
6250 Westpark, Suite 300
Houston, Texas 77057
(713) 975-7900
(713) 266-4467 Telecopier
Securities to be registered:
Common Stock NASDAQ OTC:BB
Symbol: TNKC
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TABLE OF CONTENTS
Item 101 Description of Business
Item 102 Description of Property
Item 103 Legal Proceedings
Item 201 Market for Common Stock and Related Stock Matters
Item 202 Description of Securities
Item 303 Management's Discussion and Analysis or Plan of Operation
Item 304 Changes In and Disagreements With Accountants on Accounting
and Financial Disclosure
Item 310 Financial Statements
Item 401 Directors, Executive Officers, Promoters and Control Persons
Item 402 Executive Compensation
Item 403 Security Ownership of Certain Beneficial Owners and Management
Item 404 Certain Relationships and Related Transactions
Item 405 Compliance with Section 16(a) of the Exchange Act
Item 501 Front of Registration Statement and Outside Front Cover of
Prospectus
Item 502 Inside Front and Outside Back Cover Pages of Prospectus
Item 503 Summary Information and Risk Factors
Item 504 Use of Proceeds
Item 505 Determination of Offering Price
Item 506 Dilution
Item 507 Selling Security Holders
Item 508 Plan of Distribution
Item 509 Interest of Named Experts and Counsel
Item 510 Disclosure of Commission Position on Indemnification for
Securities Act Liabilities
Item 511 Other Expenses of Issuance and Distribution
Item 512 Undertakings
Item 601 Exhibits
Item 701 Recent Sales of Unregistered Securities; Use of Proceeds from
Registered Securities
Item 702 Indemnification of Directors and Officers
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Item 101 Description of Business
The present management of the Company has no personal knowledge of
operations of the Company prior to February, 1999.1 However, Company records and
other materials are relied on to disclose the general history of the Company for
the time period before February, 1999. Present management has knowledge of the
operation of the primary operating subsidiary of the Company prior to February,
1999, but was not present during operations prior to February, 1999.
The Company has operated at a loss during 1999, and anticipates
continuing to operate at a loss through the second quarter of 2000. Except for
the influx of working capital in exchange for common stock, as described below
(the "Blue Ridge Agreement"), the Company would not have been able to continue
operations.
At present, the Company is engaged in the follow business operations:
web page design, web page hosting, vocational training for web masters and
designers, and vocational training for medical assistants, home health aides,
medication aides, and certified nurse's aides. The length of course in the
vocational training range from six to fourteen weeks. The Company also resells
T-1, T-3 and DSL phone lines and access as a licensee of Landmark
Communications.
"Medical assistants, home health aides, medication aides, and certified
nurse's aides" are health care workers who normally work in a non-intensive home
or facility environment, under the supervision of a registered nurse or a
doctor. These workers assist patients in a variety of ways, including
administering therapy, medications, and assisting the patient in daily life
functions. These workers are certified by the State of Texas and are required to
obtain a level of certification appropriate to their vocation before being
employed by private home health care companies, hospitals, nursing home
facilities, or other health care providers.
"T-1, T-3, and DSL" telephone lines are those designed especially for
the high-density and high-speed transmission of data in a computer environment.
Functioning like modems, except at greatly increased rates of data transmission,
these lines and their attendant equipment allow high-speed access to the
Internet for both residential and commercial users.
The Company is one of the country's first accredited educational
institutions for web master and design programs. According to statistics
compiled by the National Association of Webmasters, the Company is one of two
accredited vocational institutions offering web master and design programs in
the country. The State of Texas has accredited the Company for all of its'
vocational training programs.
The market for training web designers is extremely competitive, even in
this growing field. There are a number of local, regional, and national
providers of web design courses and training. Courses in programming and web
design are common at every educational level throughout most of the United
States. However, the market for workers in this area continues to grow.
According to a report in the December 3, 1999, Wall Street Journal, Forrester
Research, a research firm in
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1"The Company" refers to GoThink.Com, Incorporated, the present name of
the Company; prior to its' current name, the Company's name was EFO, Inc. The
name changes are explained in the text of this Item.
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Cambridge, Massachusetts, forecasts that the market for
electronic-commerce-consulting services is expected to grow to $64.8 billion by
2003 from approximately $10.6 billion this year. "Electronic-
commerce-consulting" includes web site design, web site production, promotion,
and operations.
If demand for these services continues as forecast, and if the
"build-out" of the Internet continues as predicted in the popular and financial
press, the demand for web designers and webmasters will continue, and possibly
grow, for the foreseeable future. The Company's operations and revenues depend
on students seeking vocational training in web-based design and operations and,
if the number of students grow, then the Company's revenues will grow.
However, because of start-up costs and the costs of expansion into new
facilities as discussed herein, the Company anticipates operating at a loss for
at lease the next three calendar quarters. Depending largely on new school
openings and the operating success of those new facilities, along with the
availability of capital for marketing the school's vocational training services
in existing and new markets, the Company may not be profitable for the next
calendar year. The Company does enjoy the advantage of other vocational training
facilities and operations, however, in that as "fixed costs" are met, the number
of students serviced by the facilities adds to the profitability of operations
without a substantial increase in those costs. In other words, the Company's
capacity for students presently, and for the foreseeable future (at least the
next calendar year) exceeds the number of students enrolled or realistically
expected to enroll.
The Company was originally organized on July 30, 1954, pursuant to the
laws of the State of Utah, with the original charter issued to Bapco Uranium and
Oil, Inc. The Company was known as Southwest Border Corporation from 1988
through 1993 and, in 1993, combined with EFO Technologies, Inc. As a result of
the combination, the Company changed its' name to EFO, Inc. and changed its'
state of incorporation from Utah to Nevada. Present management has no personal
knowledge of the Company's operations prior to February, 1999.
Formerly, through March, 1997, EFO, Inc. developed fiber-optic
technology systems for high-volume direct-to-plate image transfer for commercial
printing and publishing applications. The Company also developed application and
system software which transfers images to film to be used in the graphic arts
industry. The Company is no longer in those businesses and hasn't been since the
February, 1999, transaction explained below. No revenue is anticipated from
these discontinued operations. These operations were discontinued prior to
present management joining the Company. Management has no reason to believe that
the Company records on which it relies for its' rendition of the "history of
operations" is incorrect. No historical financial information is available to
present management regarding the Company's operations prior to February, 1999.
On February 16, 1999, EFO Inc. agreed to issue 2,650,000 shares of its'
common stock to acquire two corporations as subsidiaries: Southern Educational
Alliance, Inc. (SEA) and Internet Presentations, Inc. (IPI). At the time of the
transaction, Mr. and Mrs. Ron Daniels were the sole shareholders and directors
of SEA and Mr. and Mrs. Frank Mulcahy were the sole shareholders and directors
of IPI. At the time of the February, 1999, transaction, EFO, Inc. had ceased
revenue producing operations. As explained below, while IPI was initially
included as a subsidiary of the Company, it has since been severed from the
Company and no revenues have been recorded in the Company's financial filings
with this Form 10SB nor are any revenues anticipated from any prior
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or future operations of IPI. Except for a loss resulting from unreimbursed
expenditures on IPI operations as noted, the Company's operations will have no
contribution from IPI in the future.
The stock in the Company was issued on April, 8, 1999, along with
350,000 shares for fees for professionals and promoters related to the
transaction. Mr. and Mrs. Ron Daniels received 1,325,000 shares in the Company
and the Company became the sole shareholder of SEA. Mr. and Mrs. Frank Mulcahy
received 1,325,000 shares in the Company and the Company became the sole
shareholder of IPI.
The professionals and promoters involved in the offering and the number
of shares they received in the offering are: James Skalko (100,000 shares); Blue
Ridge Finance Company, Inc. (100,000 shares); Douglas Hackett (100,000 shares);
Phil Tannenbaum (30,000 shares); Tom Edwards (20,000 shares); Michelle K. Kain
[attorney involved in the preparation of the offering materials] (20,000
shares). Additionally, the Daniels and the Mulcahys, as noted above, would be
considered "promoters" of the offering.
SEA was incorporated on December 10, 1998, in Texas, with Mr. and Mrs.
Ron Daniels as the sole shareholders and directors. Prior to the acquisition by
the Company, Southern Education Alliance, Inc. (SEA) purchased all of the
authority, licenses, equipment, inventory, and personnel of "Southwest Medical
Academy" (SMA) effective February 12, 1999. "Southwest Medical Academy" was a
sole proprietorship owned by Mr. and Mrs. Ron Daniels and they received their
stock in SEA in exchange for the transfer.
SEA also accepted all of the liabilities of SMA and thereafter
conducted the business of the corporation under the trade name "GoThink Tech."
EFO changed its' name to Think!.Com, Inc. and, thereafter, changed its'
name to GoThink.Com Incorporated on June 15, 1999, according to the records of
the Secretary of State of the State of Nevada. SEA remained a wholly-owned
subsidiary of GoThink.Com, Inc. and continues to do business as "GoThink Tech."
Think!.Com Incorporated obtained a Certificate of Authority to do
business as a foreign corporation in the State of Texas (Charter Number
00125622) on March 15, 1999, and, thereafter, the Texas Secretary of State
issued an Amended Certificate of Authority for GoThink.Com, Incorporated, (the
new name of the corporation) on June 23, 1999. SEA d/b/a "GoThink Tech" remains
a wholly-owned subsidiary of GoThink.Com, Inc. after the amended certificate of
authority.
The Company, through its wholly owned subsidiary Southern Educational
Alliance, Inc. doing business as "GoThink Tech," operates the only state
accredited proprietary school for web page design in the State of Texas. Though
the school also offers training for nurses aides and medical assistants, Go
Think Tech is now focusing on web page design and technical training for
networks and trying to gain approval to become a Microsoft network training
affiliate. The proposal to become an approved provider of the MCSE ["Microsoft
Certified Software Engineer"] has not yet been completed for submission to
Microsoft. That proposal is scheduled to be completed by June 1, 2000.
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SEA, Inc.'s board of directors intends to change the name of the
corporation to "GoThink Tech, Inc." before the end of 1999.
The Company is preparing to enter the highly competitive industry of
telecommunications. The Company has recently signed a contract with LandMark
Communications (a partner of Level 3) to become a retailer of T-1, T-3 and DSL
phone lines. The Company can now expand the communications division into 26
cities nationwide, along with the expansion of the vocational training schools.
However, the operations involving the retailing of high-speed data and voice
communications transmission lines is currently suspended until operational
revenues from vocational training increase. The retail operation involved in the
agreement with LandMark will require a substantial outlay in terms of additional
telemarketing personnel and marketing expenses. Until the vocational training
operations are self-sufficient, and until the retail operation can be funded
from internal revenues, the Company anticipates holding the retail operation
involving telecommunications lines in suspense. The Company does not anticipate
entering that market actively until sometime during the third quarter of 2000.
While the Company is engaged in an extremely competitive business in
its' vocational training areas, it enjoys an advantage as being the only
accredited institution in Texas offering web page design training. Students
enrolling in the training programs are allowed to take advantage of various
education loans and grants offered by the government and private institutions
and the Company is able to take advantage of the steady income stream afforded
by those types of students with that type of financial aid.
In the more traditional vocational training areas (the medical arts
areas), the Company is able to compete vigorously in its' market and is
benefitting from the current shortage of these types of workers, the elevated
need for training to fill current positions in the medical and home health
industries, and is able to rely on its' management's historical experience in
the industry.
Vocational training schools are under the jurisdiction of the Texas
Education Agency. The Company is currently accredited and in good standing with
that agency.
Vocational training schools are subject to governmental regulations
regarding course content, instructor certification, and use of financial aid.
Management has experience with this regulatory framework and no problems are
anticipated with conducting the Company's vocational training school business
within that framework.
The Company has historically operated with twenty or less full-time
employees, though that number will continue to grow as more campuses are opened
in accordance with the Company's expansion plan. Additionally, full or part-time
telemarketers may be utilized to market the Company's telecommunications
business and to reach the potential pool of vocational trainees.
Telemarketers are persons who are employed by the Company to use
telephone communications to supplement or replace traditional marketing efforts.
Telemarketers call prospective students and customers and attempt to educate
them on the Company's services and enroll them in the Company's programs or sell
them the Company's services. At the present time, the Company does not undertake
a full-time telemarketing effort.
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Subsequent to acquiring IPI, the Company reached an agreement with Mr.
and Mrs. Frank Mulcahy to divest itself of that subsidiary. Mr. Frank Mulcahy
has retained 200,000 shares of common stock in the Company, with the balance of
1,125,000 being canceled or converted to options for future purchase. (See Note
2 to Consolidated Financial Statements. Mr. Mulcahy retains options to purchase
up to 200,000 shares of common stock in the Company, in 50,000 increments
beginning August 1, 2000, and extending through February 1, 2002, expiring no
later than August 1, 2002.)
IPI is not now an operating subsidiary of the Company.
The Company determined that IPI's operations were not complementary to
the main business plan to be pursued by the Company, as outlined above.
Basically, the IPI transaction as regards the Company was reversed and treated
as not affecting the Company's operations, except for the recording of the
expenses associated with IPI during the period IPI was associated with the
Company. Mr. Mulcahy surrendered 1,125,000 shares of stock to the Company and
retained the options outlined above. No operations of IPI are included in the
statement of operations so "discontinued operations" is not an applicable item
for disclosure.
The Mulcahy stock returned to the Company was not treated as treasury
stock, as the Company did not anticipate holding it long-term. As described
below, the stock formerly held by Mulcahy (1,125,000 shares) is now held by
another officer of the Company, Tom Edwards.
On or about October 29, 1999, the Company, along with its Chief
Executive Officer, Ron Daniels, entered into an Agreement with Blue Ridge
Finance Company, Inc. (hereinafter referred to as the "Agreement.") In that
Agreement, Blue Ridge agreed to make an additional capital investment in the
Company of $200,000.00, in two installments of $100,000.00 each, the second
installment to be made on or before January 30, 2000. The additional capital
contribution was necessary for the Company's continued operations.
In the Agreement with Blue Ridge, the Company agreed to issue
additional stock to Blue Ridge in such amount so that Blue Ridge would have
fifty one percent (51%) of all outstanding common stock of the Company.
Additionally, the Company agreed that Blue Ridge would have the ability and the
right to appoint a majority of the Board of Directors. Mr. Daniels was
guaranteed a salary of $5,000.00 per month, as was Mr. Edwards, the Chief
Operating Officer. Mr. Daniels was also assigned the right to recover his
business-related expenses and thirty percent (30%) of the net profits of the
subsidiary, payable quarterly in stock or cash, at the discretion of the
Company. Mr. Daniels was also awarded a ten year employment contract with the
Company, on the terms set out above, with a provision that he would not be
terminated from employment except for "cause." ("Cause" was defined to mean
"criminal acts, fraud, gross negligence, or breach of fiduciary duty.)
Additionally, the Agreement with Blue Ridge provided that Mr. Daniels would
receive "restricted stock" in such amount so that Mr. Daniels would own, after
the Agreement, a total of 2,500,000 shares in the Company. Further, Mr. Daniels
obtained an option in the Agreement to purchase all of the outstanding stock in
the subsidiary and obtain sole ownership of the subsidiary by returning to the
Company ninety percent (90%) of the shares of the Company owned by him. The
Agreement with Blue Ridge provided that the additional capital funds provided by
it would be used by the Company for payment of corporate expenses and future
operations. The Company agreed to pay Blue Ridge a monthly consulting fee of
$5,000.00 for a period of three years from the date of the Agreement. The
Agreement also provided that the executive offices of the Company would be
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moved to Florida, at the pleasure of the Board of Directors. The Agreement with
Blue Ridge was made under Florida law.
On October 29, 1999, the Company's Board of Directors approved a
resolution approving the Agreement with Blue Ridge, and issuing stock as
follows:
Ron Daniels 1,175,000
Tom Edwards 875,000
Jennifer Brenner 500,000
Blue Ridge Finance Co., Inc. 10,000,000
Also on October 29, 1999, the Board approved a resolution electing Ms.
Jennifer Brenner to the Board of Directors of the Company, where she joined Mr.
Edwards and Mr. Daniels as directors.
The Board of the Company also approved a resolution on October 29,
1999, approving the transfer of the shares of stock previously owned by Frank
Mulcahy represented by treasury certificate number 10157 (1,125,000 shares) to
Tom Edwards. Mr. Edwards, as a result of that Board action, now owns 2,000,000
shares of the Company.
Finally, on October 29, 1999, the Board also approved the issuance of
150,000 shares of common stock to Mr. Ernest Zepeda.
Mr. Zepeda, Mr. Daniels, Mr. Edwards, Ms. Brenner, and Mr. Zepeda were
all issued stock to compensate them in lieu of cash for services rendered and to
be rendered to the Company and to ensure their continued association with and
employment by the Company. Mr. Daniels' additional stock was also issued to
ensure his tenure as an officer of the Company and as part of his employment
agreement with the Company, described above.
The Company is not required by its' by-laws to prepare or deliver
regular annual reports or annual audited financial statements to security
holders or shareholders of any type and the Company has no plans to send those
reports in the future unless required by law or regulation. Financial
information is available to shareholders from the Company at its' offices.
The Company will continue to file required reports with the Securities
and Exchange Commission, as required, and those reports will be available to the
public and to shareholders at the SEC offices and from the Company.
Item 102 Description of Property
Property Location
The Company maintains an office at 6250 Westpark, Suite 300,
Houston, Texas, 77057. The Company's property consists of general office
equipment, telephone and computer systems, and office furniture. The property is
periodically updated, replaced, or repaired.
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Investment Policies
The Company has no "investment policy" and does not invest
available funds, instead using all available funds for operations. Further, the
Company does not invest in real estate or securities of any type. The Company's
business plan does not provide for any investments in any securities or real
property for investment purposes. For the foreseeable future, all Company funds
will be used for operations and expansion.
Item 103 Legal Proceedings
The company currently has no ongoing legal proceedings
Item 201 Market for Common Stock and Related Stock Matters
The principal market for the Company's securities is the general public
market maintained by the NASDAQ "Over the Counter Bulletin Board" system
("OTC:BB"). The symbol for the Company's stock is "TNKC."
The high bid and low bid range since March 22, 1999, through September
27, 1999, is as follows:
High bid: 5.00000
Low bid: 0.01200
Historical high bid and low bid range (last two years):
High Low
1st quarter 1997 $ .1875 $ .00
2nd quarter 1997 .03120 .03120
3rd quarter 1997 .03120 .02
4th quarter 1997 .02 .01
1st quarter 1998 .02 .01
2nd quarter 1998 .02 .00781
3rd quarter 1998 .01 .01
4th quarter 1998 .01 .006
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The source of high bid and low bid information are from
over-the-counter market quotations and those quotations likely reflect
inter-dealer prices, without retail mark-up, mark-down, or commission and may
not reflect actual transactions. The actual figures represented herein are taken
from INVESTools as of September 27, 1999.
There are approximately 1,120 holders of common stock in the Company.
There are no holders of preferred stock.
There are 19,346,016 shares of common stock outstanding. There are
926,887 free-trading shares of common stock. Three (3) shareholders hold five
percent (5%) or more of the outstanding common stock of the Company:
Blue Ridge Finance Company, Inc. 10,000,000 51.69%
Tom Edwards 2,000,000 10.34%
Ronnie Daniels and Sheila Daniels 2,500,000 12.92%
No cash dividends have been declared by the Company and none are
anticipated. The Company's policy for the foreseeable future is to use any
available funds for expansion and operations.
Item 202 Description of Securities
GoThink.Com, Inc. is authorized to issue up to 50,000,000 shares of
common stock. The holders of common stock are entitled to one vote per share for
the election of directors and with respect to all other matters submitted to a
vote of stockholders. Shares of common stock do not have cumulative voting
rights, which means that the holders of more than 50% of such shares voting for
the election of directors can elect 100% of the directors if they choose to do
so and, in such event, the holders of the remaining shares so voting will not be
able to elect any directors. At present, by agreement with the Company and in
exchange for the payment of additional capital as described herein, Blue Ridge
Finance Company, Inc. controls a majority of the outstanding stock of the
Company and is entitled to control the election of a majority of the Board of
Directors.
Holders of GoThink.Com, Inc. common stock are entitled to receive such
dividends as the Board of Directors may from time to time declare to be paid in
accordance with Nevada law and if the company has sufficient surplus or net
earnings. GoThink.Com, Inc. has never paid cash dividends and seeks growth and
expansion of its business through the reinvestment of profits, if any, and does
not anticipate that it will pay dividends in the foreseeable future.
Go Think. Com is authorized to issue up to 5,000,000 shares of
preferred stock to be issued with such rights, preferences and designations and
in such series as determined by the Board of Directors.
As described in Item 101, on or about October 29, 1999, the Company,
along with its Chief Executive Officer, Ron Daniels, entered into an Agreement
with Blue Ridge Finance Company, Inc. (hereinafter referred to as the
"Agreement.") In that Agreement, Blue Ridge agreed to make an additional capital
investment in the Company of $200,000.00, in two installments of $100,000.00
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each, the second installment to be made on or before January 30, 2000. The
additional capital contribution was necessary for the Company's continued
operations. This infusion of operating capital was necessary to continue
operations. In the Agreement with Blue Ridge, the Company agreed to issue
additional stock to Blue Ridge in such amount so that Blue Ridge would have
fifty one percent (51%) of all outstanding common stock of the Company.
Additionally, the Company agreed that Blue Ridge would have the ability and the
right to appoint a majority of the Board of Directors. By action of the Board of
Directors on October 29, 1999, Blue Ridge was issued 10,000,000 shares of common
stock in the Company. Other persons, as described in Item 101, were also issued
substantial shares of common stock in the Company at the same meeting of the
Board of Directors.
Item 303 Management's Discussion and Analysis or Plan of Operation
The Company has operated at a loss during 1999, and anticipates
continuing to operate at a loss through the second quarter of 2000. Except for
the influx of working capital in exchange for common stock, as described above
(the "Blue Ridge Agreement" detailed in Item 101), the Company would not have
been able to continue operations.
Management currently has expansion plans for the operating subsidiary.
Although the plan is to expand steadily, if the current laws governing
proprietary schools change this could impede the Company's progress. No change
in the current regulatory or statutory environment in Texas is anticipated for
the foreseeable future. The Texas legislature meets once every two years, the
next such session not being scheduled until the year 2001.
The Company is currently operating a school only in Houston, Texas.
However, the Company has acquired lease space and some office equipment for a
second campus in the Dallas, Texas, area. The Dallas campus is currently being
organized. The Company is currently scouting locations for a possible campus in
the McAllen, Texas, area. The Company is currently attempting to maintain an
expansion schedule of one school a quarter. The telecommunications division of
the operating subsidiary is currently not operating in the retail resale of
high-speed voice and data lines under its' agreement with LandMark.
In the short-term, the expansion of the vocational training campuses
will allow the Company to enjoy an increased cash flow. Failure to bring
campuses online in a timely fashion will adversely affect cash flow and could
impede operations and the expansion plan. Expansion is planned to be funded from
operations, with no infusion of capital, either equity or loaned funds,
anticipated, after the completion of the infusion of capital by Blue Ridge
Finance Company, Inc. Blue Ridge's financial obligation to the Company is capped
at $200,000.00. The Company has no available line of credit from any financial
institution and operates only from earned revenues.
The Company has not operated at a profit since current operations
commenced in February, 1999.
As described in Item 101, on or about October 29, 1999, the Company,
along with its Chief Executive Officer, Ron Daniels, entered into an Agreement
with Blue Ridge Finance Company, Inc. (hereinafter referred to as the
"Agreement.") In that Agreement, Blue Ridge agreed to make an
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additional capital investment in the Company of $200,000.00, in two installments
of $100,000.00 each, the second installment to be made on or before January 30,
2000. The additional capital contribution was necessary for the Company's
continued operations. This infusion of operating capital was necessary to
continue operations.
If the employment trend in the medical arts community and home health
care industry declines drastically in Texas, the Company would experience a
downturn in demand for those vocational courses. Likewise, if the employment
trend in web design and related industries declines, the Company's vocational
offerings in those areas would likewise decline.
Currently, there is strong demand in Texas and nationwide for
vocational training in the areas in which the Company is accredited. Its' main
operation is located in Houston, Texas, the nation's fourth largest city, with a
concentration of medical and Internet activity.
The main challenges facing the Company with respect to revenues,
earnings, and liquidity would be in the areas of general employment trends,
problems with vocational accreditation, and problems with the administration of
financial aid for student tuition. The Company anticipates no problems in these
areas in the short term.
The Company has a working capital deficit of $5,246 at September 30,
1999. For the nine months ended September 30, 1999 the Company recorded a
consolidated net loss of $454,621. The Company recorded net income of $228,681
and the subsidiary had a net loss of $683,302 for a total net loss of $454,621.
Included in the subsidiary's loss is a one-time acquisition cost of $619,121
related to the reverse acquisition between the Company and SEA. Assets of the
Company at September 30, 1999 (excluding intercompany items) are $125,292 and
the subsidiary's assets are $113,570 for total consolidated assets of $238,862.
Liabilities of the Company at September 30, 1999 are $76,860 and the
subsidiary's liabilities (excluding intercompany items) are $68,131 for total
consolidated liabilities of $144,991.
The Company recorded a loss (bad-debt related party expense) of
$210,181 for funds advanced to and expenses paid on behalf of its' former
subsidiary, IPI. Those funds will not be repaid or recovered by or from IPI.
Frank Mulcahy, who received all of the stock in the IPI subsidiary from the
Company when the Company divested itself of that entity, will not be required to
refund or repay any of the funds previously advanced or paid on behalf of IPI by
the Company. Mr. Mulcahy was, as part of the transaction, and as explained in
Item 101, required to relinquish most of his shares in the Company in exchange
for the subsidiary stock.
As noted in Item 101, Mr. Mulcahy was awarded options to purchase
common stock in the Company in the future. The Company considered SFAS 123 and
is aware of the disclosure requirements relating to options and warrants in
future filings. The options to Mr. Mulcahy were granted in August, 1999. Using
the Black-Sholes model, the options have an estimated value of approximately
$102,000.00.
Net revenue for 1998 was $200,357 compared with $205,888 for 1997.
Operating expenses for 1998 were $205,415 compared with $177,424 for 1997. The
increase for 1998 related mainly to higher labor costs and higher supply costs.
(All revenue and expense comparisons are with the
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prior operations of the subsidiary of the Company and do not include any
operations of either EFO, Inc. or IPI.)
The increase in accounts receivable in 1999 is due to expanded sales
activity with many of the sales taking place near September, 1999; these
accounts were not paid prior to September 30, 1999, thus explaining the
relatively large receivables balances. The increase in allowance is a function
of total accounts receivable. Increase in prepaid items is a result of
advertising items that the Company is utilizing to attract students and expand
operations. Accounts payable have increased due to expanded operations and
assuming some liabilities related to the "reverse acquisition" involving EFO. PP
& E has increased as the Company has purchased more equipment to expand the
training operations into Dallas and other future locations. Deferred revenue has
increased due to many sales taking place near September, 1999, and thus revenue
is not yet earned.
The expansion plan undertaken by the Company will be executed on a
"funds available" basis, meaning that if the Company cannot generate revenues to
sustain expansion, the expansion will likely not take place. If revenues do not
provide sufficient cash flow to sustain expanded operations, the expansion plans
will not materialize to generate additional revenue for the Company. The change
in the Company's financial fortunes are directly tied to expansion and the
ability to internally finance that expansion. Blue Ridge Finance Company, Inc.
has indicated it will not finance further operations beyond its' current
contractual obligation to do so. (See explanation of transaction with Blue Ridge
in Item 101.)
The Company believes that an increase in student enrollment and
continued cost-savings in fixed expenses will allow it to finance expansion from
internal revenues. However, if enrollment does not increase to a level
sufficient to generate the required revenue for expansion, then expansion will
not take place.
There are no formal acquisition agreements or contracts with third
parties regarding the Company's plan to attempt to expand at the rate of one
school per quarter.
The Company does not anticipate any problem arising from its' software
or hardware, or any of its' internal operating systems maintained by it, as a
result of the Y2K problem. All of the Company's computer systems have been
checked for Y2K compliance, as has the retail software which is run on them. The
Company keeps current with all updates and revisions with all software that the
Company currently uses. The Company has a policy of continuing to monitor this
situation and will coordinate its' operations and remedial measures, if any,
with its' software vendors to assure Y2K compliance.
The Company has expended no funds on Y2K compliance, as all of its'
software and hardware is compliant or was fixed without charge by its' vendors.
Company employees, as part of their regular duties, monitored and continue to
monitor Y2K compliance of all Company software and hardware. The Company expects
to expend no funds on Y2K compliance outside normal employee salaries.
- 13 -
<PAGE>
Item 304 Changes In and Disagreements With Accountants on Accounting
and Financial Disclosure
The Company's accountants have been Smith & Company. No change in
accountants has occurred since February, 1999. Current management is unaware of
the identity of former accountants of the Company prior to that time.
The Company has no proposed changes to the audited financial statements
prepared by its' accountants and has no disagreements with its' accountants or
with any former accountants employed or engaged by the Company. No accountant
has been dismissed or has resigned from employment or engagement by the Company
since current management assumed control of operations in February, 1999.
Item 310 Financial Statements
See attached.
The Company had working capital of $202,448 at June 30, 1999. For the
six months ended June 30, 1999 the Company recorded a consolidated net loss of
$246,182. The Company recorded net income of $379,221 and the subsidiary had a
net loss of $625,403 for a total net loss of $246,182. Included in the
subsidiary's loss is a one-time acquisition cost of $619,121 related to the
reverse acquisition between the Company and SEA. Assets of the Company at June
30, 1999 (excluding intercompany items) are $293,146 and the subsidiary's assets
are $150,537 for total consolidated assets of $443,683. Liabilities of the
Company at June 30, 1999 are $82,208 and the subsidiary's liabilities (excluding
intercompany items) are $60,703 for total consolidated liabilities of $142,911.
Net revenue for 1998 was $200,357 compared with $205,888 for 1997.
Operating expenses for 1998 were $205,415 compared with $177,424 for 1997. The
increase for 1998 related mainly to higher labor costs and higher supply costs.
(All revenue and expense comparisons are with the prior operations of the
subsidiary of the Company and do not include any operations of either EFO, Inc.
or IPI.)
Item 401 Directors, Executive Officers, Promoters and Control Persons
GoThink.Com, Inc.
Directors: Ron Daniels, age 38
Thomas Edwards, age 31
Jennifer Brenner, age 24
Executive Officers: C.E.O. and President Ron Daniels
Chief Operations Officer Thomas Edwards
- 14 -
<PAGE>
Southern Educational Alliance, Inc. (subsidiary) d/b/a "GoThink Tech"
Directors: Ron Daniels
Thomas Edwards
Executive Officers: C.E.O. and President Ron Daniels
Chief Operations Officer Thomas Edwards
The terms of office for the officers and directors of the Company and
its' subsidiary are annually for directors and at the pleasure of the Board of
Directors for officers. Blue Ridge Finance Company, Inc. controls a majority of
voting common shares in the Company and will control the composition of the
Board and the election of its' members by virtue of the agreement between the
Company and Blue Ridge, as detailed in Item 101.
Mr. Daniels and Mr. Edwards will, after January 1, 2000, exchange
titles in the Company, with Mr. Edwards becoming CEO and Mr. Daniels becoming
COO. The officers of the subsidiary will remain the same.
Frank Mulcahy was formerly an officer of GoThink.Com, Inc. and was a
director of that entity. When IPI was divested by the Company, Mr. Mulcahy
ceased serving as an officer or director of GoThink.Com, Inc. Mr. Mulcahy was
never an officer or director of the other subsidiary, SEA.
There are no other "significant employees" whom the Company expects to
make a significant contribution to the business and there are no family
relationships between Mr. Edwards and Mr.
Daniels.
Mr. Daniels has been involved as senior executive officer of Southern
Educational Alliance, Inc. and its predecessor, Southwest Medical Academy, since
their inception. He has experience in the vocational training environment as an
executive, owner, and manager. Mr. Edwards is an independent businessman with a
variety of experience in small public and private companies.
Neither Mr. Edwards nor Mr. Daniels have filed for bankruptcy relief
within the last five years. Neither Mr. Edwards nor Mr. Daniels have been sued
in the last five years, and have not been the subject of any enforcement or
regulatory enforcement action by any state or federal agency within the last
five years, and are not now involved in any such proceedings. Neither Mr.
Daniels or Mr. Edwards have ever been convicted of a felony or a crime involving
moral turpitude and are not now involved in any such proceeding. Neither Mr.
Edwards nor Mr. Daniels have ever been subject to any order, judgment, or decree
of any court of competent jurisdiction permanently or temporarily enjoining,
barring, suspending or otherwise limiting their involvement in any type of
business, securities or banking activities. Neither Mr. Daniels nor Mr. Edwards
have ever been accused or found by a court of competent jurisdiction, the SEC,
or the Commodity Futures Trading Commission to have violated a federal or state
securities or commodities law.
- 15 -
<PAGE>
Item 402 Executive Compensation
The Company has two executive officers: Ron Daniels and Tom Edwards.
Mr. Daniels is the CEO. These two comprise the Company's most highly compensated
executives. There are no other individuals who are executive officers.
There is no stock appreciation plan (SAR) in place in the Company.
There is no long term compensation plan in place in the Company. The executive
officers do not hold and are not compensated by warrants or options in the stock
of the Company.
The executive officers receive compensation only in the form of annual
monetary compensation and reimbursement of expenses, however, both Mr. Daniels
and Mr. Edwards have been awarded additional shares of stock in the Company to
ensure their continued employment and affiliation with the Company. Those
transactions are detailed above. The executive officers receive no bonuses and
no bonus plan is in place in the Company.
Since February, 1999, the executive officers of the Company received
the following compensation:
Salary Reimbursement for Expenses
Ron Daniels $10,000 --
Tom Edwards $20,450 --
Further, Mr. Daniels and Mr. Edwards have been awarded additional
shares of stock in the Company to ensure their continued employment and
affiliation with the Company. Those transactions are detailed above in Item 101
and below in this Item.
The directors of the Company are not compensated except for
reimbursement of expenses for attending meetings.
Mr. Edwards does not have an employment contract or agreement with the
Company, except for certain terms contained in the Agreement with Blue Ridge
Finance Company, Inc., as explained in Item 101 and below.
Mr. Daniels has an employment agreement with the Company. That
employment agreement was reached as part of the October 29, 1999, Agreement with
Blue Ridge Finance Company, Inc. Mr. Daniels was guaranteed a salary of
$5,000.00 per month, as was Mr. Edwards, the Chief Operating Officer. Mr.
Daniels was also assigned the right to recover his business-related expenses and
thirty percent (30%) of the net profits of the subsidiary, payable quarterly in
stock or cash, at the discretion of the Company. Mr. Daniels was also awarded a
ten year employment contract with the Company, on the terms set out above, with
a provision that he would not be terminated from employment except for "cause."
("Cause" was defined to mean "criminal acts, fraud, gross negligence, or breach
of fiduciary duty.) Additionally, the Agreement with Blue Ridge provided that
- 16 -
<PAGE>
Mr. Daniels would receive "restricted stock" in such amount so that Mr. Daniels
would own, after the Agreement, a total of 2,500,000 shares in the Company.
Further, Mr. Daniels obtained an option in the Agreement to purchase all of the
outstanding stock in the subsidiary and obtain sole ownership of the subsidiary
by returning to the Company ninety percent (90%) of the shares of the Company
owned by him. The Company agreed to pay Blue Ridge a monthly consulting fee of
$5,000.00 for a period of three years from the date of the Agreement.
There is no "buy-sell" agreement in place with respect to any officers
or any other shareholders and the Company, except to the extent that Mr. Daniels
has the option outlined above regarding the ownership of the subsidiary.
The Company has no policy regarding severance pay or benefits or
compensation for retirement or longevity of service.
Item 403 Security Ownership of Certain Beneficial Owners and Management
Blue Ridge Finance Company, Inc. 10,000,000
Tom Edwards 2,000,000
Ronnie Daniels and Sheila Daniels 2,500,000
Jennifer Brenner 500,000
There are no agreements or arrangements that may lead to a change in
control of the Company. The Company is controlled by its' majority stockholder,
Blue Ridge Finance Company, Inc. No holder listed above has been granted or owns
any warrants, options, or conversion privileges to purchase additional shares or
convert its' shares to any other class or for additional stock in the Company.
Frank Mulcahy does own options to purchase shares of common stock in the
Company, but those total less than one percent of the outstanding stock of the
Company and are described above.
The Company is effectively controlled by Blue Ridge Finance Company,
Inc., the holder of a majority of outstanding common stock. That control was
granted in exchange for the infusion of capital for operations in an Agreement
dated on or about October 29, 1999, as detailed in Item 101.
tem 404 Certain Relationships and Related Transactions
The only covered transactions involving the Company and its' officers,
directors, nominees, or beneficial interest holders or stockholders are as noted
above (and described again below) involving the transfer of SEA stock to the
Company and the issuance of shares to StockPlayer.Com, Inc. for its' services.
As noted above, on February 16, 1999, EFO Inc. agreed to issue
2,650,000 shares of its' common stock to acquire two corporations as
subsidiaries: Southern Educational Alliance, Inc. (SEA) and Internet
Presentations, Inc. (IPI). At the time of the transaction, Mr. and Mrs. Ron
Daniels were the sole shareholders and directors of SEA and Mr. and Mrs. Frank
Mulcahy were the sole shareholders and directors of IPI.
- 17 -
<PAGE>
The stock in the Company was issued on April, 8, 1999, along with
350,000 shares for fees for professionals and promoters related to the
transaction. Mr. and Mrs. Ron Daniels received 1,325,000 shares in the Company
and the Company became the sole shareholder of SEA. Mr. and Mrs. Frank Mulcahy
received 1,325,000 shares in the Company and the Company became the sole
shareholder of IPI.
The professionals and promoters involved in the offering and the number
of shares they received in the offering are: James Skalko (100,000 shares); Blue
Ridge Finance Company, Inc. (100,000 shares); Douglas Hackett (100,000 shares);
Phil Tannenbaum (30,000 shares); Tom Edwards (20,000 shares); Michelle K. Kain
[attorney involved in the preparation of the offering materials] (20,000
shares). Additionally, the Daniels and the Mulcahys, as noted above, would be
considered "promoters" of the offering.
The professionals involved were Ms. Kain, who provided legal services.
Shares were issued to her based on the fair market value of those services.
Blue Ridge Finance Company, Inc., Mr. Hackett, and Mr. Edwards were
issued shares for commercial services relating to the organization of the
offering and the shares issued to them initially were based on the fair market
value of those services.
The holdings of StockPlayer.Com, Inc. were issued by the Company in
exchange for anticipated services pursuant to a written contract and the shares
issued to itinitially were based on the fair market value of those services.
However, that contract has been terminated by the Company and the shares to be
transferred to StockPlayer.Com, Inc. have been put on hold pending a decision by
the board of directors regarding the disposition of that stock and further legal
action by the Company.
In the case of shares issued to officers, promoters, and professionals,
the liability for compensation expense was recorded based on fair market value
of the services rendered. The stock issued at the time of the reorganization
transaction (February, 1999) was issued to retire the liability in the amount of
approximately $215,000.00. The Company considered SFAS 123, Accounting for Stock
Based Compensation, when it compensated certain owners of EFO, Inc. to finalize
the reorganization of the Company as well as the officers, promoters, and
professionals. The shares issued to Mr. Daniels and Mr. Mulcahy, as described
above, was for the exchange of stock in their companies.
There are no other transactions, or proposed transactions, to which the
Company was or is to be a party in which any officer, director, or nominee for
officer or director, or any security holder, or any immediate family member of
any of those classes of persons, was to be involved, except as noted.
Certain owners of EFO, Inc. stock at the time of the acquisition of SEA
were given stock in the Company to reflect the reorganization of the Company
under its current business plan. Those persons were given stock by virtue of
their position as directors, officer, creditors, or shareholders of EFO, Inc.
The Company issued 215,731 shares of common stock to those persons for this
purpose.
- 18 -
<PAGE>
Item 405 Compliance with Section 16(a) of the Exchange Act
Not applicable to the Company.
Item 501 Front of Registration Statement and Outside Front Cover of
Prospectus
See attached.
Item 502 Inside Front and Outside Back Cover Pages of Prospectus
See attached.
Item 503 Summary Information and Risk Factors
"Risk factors" are the following: (i) development stage company with
limited operating history and unpredictability of future revenues; (ii)
dependence upon current management with no assurances of management successfully
executing the Company's business objectives or sustaining any growth; (iii)
voting control by management with no ability of investors to effect a change of
the Company's Board of Directors or management; (iv) no assurances of the
Company's profitability or of the payment of any dividends; (v) no reliance upon
and no reliability of the projected financial information, and specifically,
that there can be no assurance that the projected results can or will be
realized or that actual results will not be materially different therefrom; (vi)
no audited financial statements at the time of the offering; (vii) possible
inability to repay any outstanding obligations when due; (viii) no escrow of
offering proceeds; (ix) need for additional capital to achieve long-term goals
with no assurances that any such capital will be available or, if available,
upon terms acceptable to the company; (x) uncertainty of governmental regulation
of the Internet and the company's business; (xi) limited marketing and related
experience; (xii) potential conflicts of interest between members of management
and the Company with no policy established for conflict resolution; reliance
upon judgment of management to resolve conflicts, and such conflicts include the
personal interest in ownership of the subsidiary as set out in and involving the
Agreement between the Company, Ron Daniels, and Blue Ridge Finance Company, Inc.
and, further, the financial interest of the executive officers, directors, and
current shareholders in Company operations as reflected by the share ownership
and related degree of control of the operations of the Company; (xiii) majority
of financial risk to investors; (xiv) possible illiquidity of investment in the
Common Shares; and (xv) no assurances of the Company ever successfully effecting
another private placement or any public offering of its securities or that an
active public market for its securities will ever be sustained.
Additionally, the Year 2000 issue may interfere with the Company's
ability to perform major business functions in its' web design and web hosting
businesses, as well as interfere with administrative functions in the vocational
school and telecommunications divisions. The Company does not anticipate any
problem with its' computers or software arising from the Y2K issue, but cannot
anticipate whether its' vendors, students, customers, or the government will be
Y2K problem- free. Specifically, government financial aid for students, web
server operations, line communications and availability, and banking functions
may be deficient and adversely impact the
- 19 -
<PAGE>
Company's ability to do business and be timely compensated because third parties
responsible for those operations are not Y2K compliant.
As a result of third party failure to be Y2K compliant, the Company
could lose revenues, (up to seventy percent (70%)) for a term longer than six
months, or permanently, lose its' ability to timely pay outstanding invoices
from suppliers, lose students and customers, and suffer an interruption in its'
operations that would threaten the viability of the Company as a going concern.
(See the Company's position on Y2K issues, supra, Item 303.)
Summary Financial Information and Key Ratios
<TABLE>
<CAPTION>
9/99 12/98 12/97 12/96
---- ----- ----- -----
<S> <C> <C> <C> <C>
Total Revenue 200 200 206 79
Operating Income (Loss) (292) (5) 28 3
Income (Loss) before income
taxes and Extraordinary Item (1,122) (12) 15 3
Net Income (Loss) (455) (12) 15 3
Income (Loss) per share ($.09) ($.00) $.00 $.00
Total Assets 239 73 70 23
Current Portion of Notes
Payable and Long-Term Debt 15 40 40 4
Notes Payable and Long-Term
Debt, Less Current Portion 0 0 0 0
Total Stockholders' Equity
(Deficit) 94 (7) 4 8
Dividends Declared and Paid 0 0 19 0
</TABLE>
***All amounts in thousands, except per share amounts.***
Item 504 Use of Proceeds
See attached. The private offering circular is incorporated
herein.
Item 505 Determination of Offering Price
See attached. The private offering circular is incorporated
herein.
Item 506 Dilution
See attached. The private offering circular is incorporated
herein.
Item 507 Selling Security Holders
See attached. The private offering circular is incorporated
herein.
- 20 -
<PAGE>
Item 508 Plan of Distribution
See attached. The private offering circular is incorporated
herein.
Item 509 Interest of Named Experts and Counsel
See attached. The private offering circular is incorporated herein. No
expert or counsel as defined in the applicable regulations received shares or
other compensation in excess of fifty thousand dollars ($50,000.00) for services
involved in the offering of the stock of the Company.
Item 510 Disclosure of Commission Position on Indemnification for
Securities Act Liabilities
The Company has made no agreement with any officer, director, or
"control person" providing for indemnification against liability under the
Securities Act.
Item 511 Other Expenses of Issuance and Distribution
See attached. The private offering circular is incorporated
herein.
Item 512 Undertakings
Not applicable to the Company.
Item 601 Exhibits
See attached list.
Item 701 Recent Sales of Unregistered Securities; Use of Proceeds from
Registered Securities
The Company has made no sale of unregistered securities outside the
offering described herein except for the transfer of shares to Blue Ridge
Finance Company, Inc., and certain officers and directors as described herein.
The Company does not believe that the October, 1999, transactions with Mr.
Daniels, Mr. Edwards, or Ms. Brenner constitute "sales" for the purposes of this
Item, but, rather, reflect compensation for past, current, and future services.
Item 702 Indemnification of Directors and Officers
The Company has no charter provision, by-law, contract, or other
arrangement that insures or indemnifies a controlling person, director, or
officer of the Company against liability for actions taken in their capacity
with the Company, except that the by-laws of the Company may be construed so as
to protect the directors and officers of the Company against liability taken on
behalf of the Company pursuant to the "business judgment rule."
- 21 -
<PAGE>
Exhibit List
Plan of Reorganization
Articles of Incorporation
By-Laws
Agreement with LandMark
Agreement with Blue Ridge Finance Company, Inc.
Computation of Earnings Per Share
Subsidiary of the Registrant
Financial Data Schedule
Accountants' Consent Regarding Opinion on Financial Statements
Additional Exhibits
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant, GoThink.Com, Incorporated, has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized.
December 8, 1999
Ron Daniels
Chief Executive Officer
GoThink.Com, Incorporated
- 22 -
<PAGE>
Smith
&
Company
A Professional Corporation of Certified Public Accountants
INDEPENDENT AUDITOR'S REPORT
Board of Directors
GoThink.Com Incorporated
(formerly Think!.Com Incorporated)
We have audited the accompanying consolidated balance sheets of GoThink.Com
Incorporated and subsidiary as of June 30, 1999 and December 31, 1998 and the
related consolidated statements of operations, changes in stockholders' equity
(deficit), and cash flows for the period ended June 30, 1999 and the years ended
December 31, 1998 and 1997 and for the period of September 1, 1996 (inception of
subsidiary) to June 30, 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 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 consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of GoThink.Com
Incorporated and subsidiary as of June 30, 1999 and December 31, 1998, and the
results of their operations, changes in stockholders' equity (deficit), and
their cash flows for the period ended June 30, 1999 and the years ended December
31, 1998 and 1997 and for the period of September 1, 1996 (inception of
subsidiary) to June 30, 1999, in conformity with generally accepted accounting
principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As shown in the consolidated
financial statements, the Company has at June 30, 1999 a retained deficit of
$259,543. The Company has suffered losses from operations and has a substantial
need for working capital. This raises substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
described in Note 9 to the consolidated financial statements. The accompanying
consolidated financial statements do not include any adjustment that may result
from the outcome of this uncertainty.
Smith & Company
CERTIFIED PUBLIC ACCOUNTANTS
Salt Lake City, Utah
September 17, 1999
10 West 100 South, Suite 700 o Salt Lake City, Utah 84101-1554
Telephone: (801) 575-8297 o Facsimile: (801) 575-8306
E-mail: [email protected]
Members: American Institute of Certified Public Accountants o
Utah Association of Certified Public Accountants
F-1
<PAGE>
GOTHINK.COM INCORPORATED AND SUBSIDIARY
(formerly Think!.Com Incorporated)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31
1999 1998
----------------- ------------------
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash in bank $ 201,966 $ (872)
Accounts receivable (net of allowance of $11,000
and $2,500 at 6/99 and 12/98 respectively) 95,893 22,400
Prepaid expenses 47,500 0
----------------- ------------------
TOTAL CURRENT ASSETS 345,359 21,528
PROPERTY, PLANT, & EQUIPMENT (Note 4) 98,324 51,501
----------------- ------------------
$ 443,683 $ 73,029
================= ==================
LIABILITIES & EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 83,911 $ 30,710
Deferred revenue 44,000 10,000
Loans payable (Note 5) 15,000 40,000
----------------- ------------------
TOTAL CURRENT LIABILITIES 142,911 80,710
STOCKHOLDERS' EQUITY (DEFICIT) (Note 8)
Preferred stock $.001 par value:
Authorized 5,000,000 shares
Issued and outstanding 0 shares 0 0
Common Stock $.01 par value:
Authorized - 50,000,000 shares
Issued and outstanding 6,646,016 shares (3,285,385
in 1998) 66,460 32,854
Additional paid-in capital 492,352 (28,677)
Deficit accumulated during development stage (258,040) (11,858)
----------------- ------------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 300,772 (7,681)
----------------- ------------------
$ 443,683 $ 73,029
================= ==================
</TABLE>
See Notes to Consolidated Financial Statements.
F-2
<PAGE>
GOTHINK.COM INCORPORATED AND SUBSIDIARY
(formerly Think!.Com Incorporated)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period
Six from
Months 9/1/96
Ended Years ended (Inception of
June 30, December 31, subsidiary) to
1999 1998 1997 6/30/99
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Net revenue $ 153,473 $ 200,357 $ 205,888 $ 638,609
Cost of revenue 0 0 0 1,976
------------- ------------- -------------- -------------
GROSS PROFIT 153,473 200,357 205,888 636,633
Operating expenses 246,402 205,415 177,424 703,576
------------- ------------- -------------- -------------
INCOME (LOSS) FROM OPERATIONS (92,929) (5,058) 28,464 (66,943)
Other Income (Expense)
Bad debt - related party (Note 3) (201,109) 0 0 (201,109)
Interest expense 0 (6,800) (13,352) (20,152)
Acquisition costs (Note 10) (619,121) 0 0 (619,121)
------------- ------------- -------------- -------------
(820,230) (6,800) (13,352) (840,382)
------------- ------------- -------------- -------------
NET INCOME (LOSS) BEFORE INCOME TAXES (913,159) (11,858) 15,112 (907,325)
Income tax expense 0 0 0 0
------------- ------------- -------------- -------------
Net income (loss) before extraordinary item (913,159) (11,858) 15,112 (907,325)
Extraordinary item - Gain on debt restructuring (no
applicable income taxes) (Note 3) 666,977 0 0 666,977
------------- ------------- -------------- -------------
NET INCOME (LOSS) $ (246,182) $ (11,858) $ 15,112 $ (240,348)
============= ============= ============== =============
Net income (loss) per weighted average share:
Ordinary $ (.21) $ (.00) $ .00
Extraordinary item .15 .00 .00
------------- ------------- --------------
$ (.06) $ (.00) $ .00
============= ============= ==============
Weighted average number of common shares used
to compute net (loss) per weighted average share 4,432,764 3,285,385 3,285,385
============= ============= ==============
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
GOTHINK.COM INCORPORATED AND SUBSIDIARY
(formerly Think!.Com Incorporated)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During
Par Value $0.01 Paid-in Development
Shares Amount Capital Stage
-------------- -------------- ----------------- --------------
<S> <C> <C> <C> <C>
Balances at 9/1/96 3,285,385 $ 32,854 $ (27,174) $ 0
Net income for period 2,580
-------------- -------------- ----------------- --------------
Balances at 12/31/96 3,285,385 32,854 (27,174) 2,580
Net income for year 15,112
Dividends paid (1,503) (17,692)
-------------- -------------- ----------------- --------------
Balances at 12/31/97 3,285,385 32,854 (28,677) 0
Net loss for year (11,858)
-------------- -------------- ----------------- --------------
Balances at 12/31/98 3,285,385 32,854 (28,677) (11,858)
Stock sold 504 offering 2,968,000 29,680 619,176
Acquisition of subsidiary items (275,385)
Stock issued for assets, services
and retire debt 392,631 3,926 177,238
Net loss for period (246,182)
-------------- -------------- ----------------- --------------
Balances at 6/30/99 6,646,016 $ 66,460 $ 492,352 $ (258,040)
============== ============== ================= ==============
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE>
GOTHINK.COM INCORPORATED AND SUBSIDIARY
(formerly Think!.Com Incorporated)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period
Six from
Months 9/1/96
Ended Years ended (Inception of
June 30, December 31, subsidiary) to
1999 1998 1997 6/30/99
------------- ------------- -------------- -------------
OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net income (loss) $ (246,182) $ (11,858) $ 15,112 $ (240,348)
Adjustments to reconcile net income (loss) to cash
provided (required) by operating activities:
Bad debts 8,500 700 1,800 11,000
Depreciation 8,369 12,064 8,353 28,786
Stock issued for expenses 4,225 0 0 4,225
Non-cash debt restructuring (666,977) 0 0 (666,977)
Non-cash acquisition costs 619,121 0 0 619,121
Changes in assets and liabilities:
Other assets 0 0 355 0
Prepaid expenses (47,500) 0 0 (47,500)
Accounts receivable (81,993) (6,181) 1,611 (95,893)
Deferred revenue 34,000 2,500 (3,500) 44,000
Accounts payable and accrued expenses 42,467 12,801 14,410 62,177
------------- ------------- -------------- -------------
NET CASH PROVIDED (REQUIRED)
BY OPERATING ACTIVITIES (325,970) 10,026 38,141 (281,409)
INVESTING ACTIVITIES
Purchase of equipment (55,192) (13,940) (54,322) (127,110)
------------- ------------- -------------- -------------
NET CASH USED BY INVESTING ACTIVITIES (55,192) (13,940) (54,322) (127,110)
FINANCING ACTIVITIES
Issuance of notes payable 0 0 40,000 40,000
Loan repayments (40,000) 0 0 (40,000)
Sale of common stock 624,000 0 0 629,680
Dividends paid 0 0 (19,195) (19,195)
------------- ------------- -------------- -------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 584,000 0 20,805 610,485
------------- ------------- -------------- -------------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 202,838 (3,914) 4,624 201,966
Cash and cash equivalents at beginning of year (872) 3,042 (1,582) 0
------------- ------------- -------------- -------------
CASH & CASH EQUIVALENTS
AT END OF PERIOD $ 201,966 $ (872) $ 3,042 $ 201,966
============= ============= ============== =============
SUPPLEMENTAL INFORMATION
Cash paid for interest $ 0 $ 4,000 $ 3,152 $ 7,152
</TABLE>
During 1999, 160,000 shares of common stock were issued for assets of $47,500
and 215,731 shares were issued to retire liabilities of $215,731.
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
GOTHINK.COM INCORPORATED AND SUBSIDIARY
(formerly Think!.Com Incorporated)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999 and December 31, 1998
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Accounting Methods
The Company recognizes income and expenses based on the accrual
method of accounting.
Principals of Consolidation and Basis of Presentation
The accompanying consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiary, Southern
Educational Alliance, Inc. ("SEA") d/b/a GoThink Tech
(collectively referred to as "the Company"). All significant
intercompany transactions have been eliminated on consolidation.
Effective February 16, 1999, the Company acquired 100% of the then
outstanding common stock of SEA for consideration of 1,325,000
newly issued common shares of the Company.
For accounting purposes, the acquisition of SEA was treated as a
reverse acquisition of the Company by SEA. In a reverse
acquisition, the historical shareholders' equity of the acquiror
prior to the merger is retroactively restated (a recapitalization)
for the equivalent number of shares received in the merger after
giving effect to any difference in par value of the issuer's and
acquiror's stock by an offset to additional paid-in capital. All
shares and per share information has been presented in the
accompanying consolidated financial statements as if the reverse
acquisition and recapitalization had occured on September 1, 1996,
the inception date of SEA and its predecessor entities.
Prior to its acquisition of SEA the Company had abandoned all
prior business operations. The accompanying consolidated
statements and notes reflect the operations of the Company
combined with the operations of SEA from September 1, 1996
(inception of SEA and its predecessor entities) to June 30, 1999.
Dividend Policy
The Company has not yet adopted any policy regarding payment of
dividends.
Revenue Recognition
Revenue is recognized as services are rendered.
Allowance for Uncollectible Accounts
The Company provides an allowance for uncollectible accounts based
upon prior experience and management's assessment of the
collectability of existing accounts.
Cash and Cash Equivalents
For financial statement purposes, the Company considers all highly
liquid investments with an original maturity of three months or
less when purchased to be cash equivalents.
Earnings (loss) per share
Earnings or loss per common and common equivalent share is
computed by dividing net earnings (loss) by the weighted average
common shares outstanding during each year. The shares of common
stock from the 504 offering are being distributed over a 13 month
period but the total shares to be distributed are treated as
outstanding at June 30, 1999. At June 30, 1999 there were
approximately 2,226,000 shares remaining to be issued related to
the 504 offering.
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, liabilities, revenues, and expenses during the reporting
period. Estimates also affect the disclosure of contingent assets
and liabilities at the date of the financial statements. Actual
results could differ from these estimates. Such estimates of
significant accounting sensitivity are allowance for doubtful
accounts.
Income Taxes
The Company records the income tax effect of transactions in the
same year that the transactions enter into the determination of
income, regardless of when the transactions are recognized for tax
purposes.
Tax credits are recorded in the year realized.
F-6
<PAGE>
GOTHINK.COM INCORPORATED AND SUBSIDIARY
(formerly Think!.Com Incorporated)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
June 30, 1999 and December 31, 1998
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (continued)
In February, 1992, the Financial Accounting Standards Board
adopted Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes, which supersedes substantially all
existing authoritative literature for accounting for income taxes
and requires deferred tax balances to be adjusted to reflect the
tax rates in effect when those amounts are expected to become
payable or refundable.
NOTE 2: ORGANIZATION AND HISTORY
The Company was originally organized on July 30, 1954 under the
laws of the State of Utah as Bapco Uranium and Oil, Inc. and was
known as Southwest Border Corporation from 1988 through 1993. In
1993, in connection with a business combination with EFO
Technologies, Inc., Southwest Border Corporation changed its name
to EFO, Inc. and changed its state of incorporation from Utah to
Nevada.
The Company thru March 1997 developed fiber-optic technology
systems for high-volume direct-to- plate image transfer for
commercial printing and publishing applications. The Company also
has developed application and system software which transfers
images to film to be used in the graphic arts industry.
On February 18, 1999, the Company sold EFO Technologies, Inc. for
a nominal amount. The buyer also received an option to purchase
20,000 shares of the Company's restricted stock within thirty days
of the agreement for $10.00. The Company also agreed to indemnify
the buyer from any and all claims or liabilities in connection
with the buyer's purchase of the stock of EFO Technologies, Inc.
On February 16, 1999, the Company agreed to issue 2,650,000 shares
of its common stock to acquire two subsidiaries, Internet
Presentations, Inc. ("IPI") and SEA. The stock was issued on April
8, 1999 along with 350,000 shares for fees related to the
transaction. SEA was incorporated on December 10, 1998 to continue
the activities of Southwest Medical Academy which had operated as
a sole proprietorship. SEA is in the process of changing its name
to GoThink Tech, Inc.
Subsequent to issuing the stock to acquire IPI, the Company
decided not to acquire IPI as a subsidiary. The Company is in the
process of canceling 1,325,000 shares issued in the transaction.
The shares are treated as outstanding at June 30, 1999. When the
certificate representing the 1,325,000 shares has been returned
for cancellation, the Company will issue 200,000 shares of its
stock to the principal of IPI. The principal of IPI will also
receive options to purchase the Company's common stock as follows:
Option Price
Exercise Date Shares per share
------------------------ ---------------- ------------------
August 1, 2000 50,000 $ 1.00
February 1, 2001 50,000 1.50
August 1, 2001 50,000 2.00
February 1, 2002 50,000 2.50
All options expire within one hundred eighty (180) days of the
last listed exercise date. The Company is in the process of
determining its future relationship with IPI.
The Company provides education, training, and certification for
web masters through SEA, one of the country's first accredited
educational institutes for web master programs.
The Company also provides training courses in the following areas:
medical assistant, phlebotomy, medication aide, and certified
nurse aide. The length of the courses range from six to fourteen
weeks.
On March 3, 1999, the Company changed its name to Think!.Com
Incorporated and on June 10, 1999 the name was changed to
GoThink.Com Incorporated.
F-7
<PAGE>
GOTHINK.COM INCORPORATED AND SUBSIDIARY
(formerly Think!.Com Incorporated)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
June 30, 1999 and December 31, 1998
NOTE 3: RELATED PARTY TRANSACTIONS
During the six months ended June 30, 1999, the Company recorded
$201,109 of bad debt expense to a shareholder. The amount
represents advances made to IPI which will not be repaid. As
discussed in Note 2, the acquisition of IPI as a subsidiary was
rescinded. In connection with the recission, the principal of IPI
was required to return his stock, but IPI was not required to
return the $201,109 it received in cash or as expenses paid on its
behalf. No operations of IPI are included in the financial
statements.
The Company also recorded debt cancellation income in the amount
of $666,977 which related to amounts due to several former
officers who accepted stock or forgave amounts due to them.
$580,704 of the income related to two former officers of EFO, Inc.
They had not been officers for at least two years prior to the
reverse acquisition. Subsequent to the reverse acquisition, the
two individuals sold all of their stock in the Company and
indicated they had no further interests or claims in the Company.
The individuals were Messrs. Lionetti and Rachwal. $86,193 of the
debt cancellation income involved four former officers/directors
of EFO, Inc. who were replaced at the time of the reverse
acquisition. The debt cancellation income was simply a result of
the stock price dropping between the time the parties agreed to
accept stock and the date the stock was actually received. The
four individuals received a total of 215,731 shares of stock in
exchange for $215,731 owed to them. The four individuals, Steve
Guarino, James Arch, Roger Tichenor, and Tom Guarino received
115,731, 10,000, 50,000, and 40,000 shares of stock respectively.
NOTE 4: PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment as of June 30, 1999 and December
31, 1998 are summarized as follows:
<TABLE>
<CAPTION>
Accumulated Net Book Value
Cost Depreciation 1999 1998
------------- -------------- -------- --------
<S> <C> <C> <C> <C>
Equipment and furniture
and fixtures $ 127,110 $ 28,786 $ 98,324 $ 51,501
============= ============== ======== ========
</TABLE>
Depreciation expense is calculated under the straight-line method
based on the estimated service lives of five to seven years.
Depreciation expense for the six months ended June 30, 1999
amounted to $8,369 ($12,064 and $8,353 for the years ended
December 31, 1998 and 1997 respectively).
NOTE 5: LOANS PAYABLE
Loans payable at June 30, 1999 and December 31, 1998 are as
follows:
<TABLE>
<CAPTION>
Principal Balances
1999 1998
Interest Long- Long-
Rate Current term Current term
---------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Prepress Solutions, Inc.(1) 12.0% $ 15,000 $ 0 $ 0 $ 0
Charles Kaczmarek 17.0% 0 0 40,000 0
------------- ------------- ------------- -------------
$ 15,000 $ 0 $ 40,000 $ 0
============= ============= ============= =============
</TABLE>
(1)This loan (owed by EFO, Inc.) was due April 1, 1997 and was
secured by all of the Company's fixed assets as of March 7,
1997 (recorded as result of reverse acquisition).
NOTE 6: INCOME TAXES
Income tax expense was $0 for the period ended June 30, 1999 and
the years ended December 31, 1998 and 1997. Such amounts differ
from the amounts computed by applying the United States Federal
income tax rate of 34% to loss before income taxes as a result of
the following:
<TABLE>
<CAPTION>
1999 1998 1997
---------- -------- --------
<S> <C> <C> <C>
Computed "expected" tax (benefit) $ (84,000) $ (4,000) $ 5,100
Decrease (increase) in income tax benefit resulting from:
Change in valuation allowance for deferred federal, state,
and local income tax assets 84,000 4,000 0
State income taxes and other, net 0 0 (5,100)
---------- -------- --------
$ 0 $ 0 $ 0
========== ======== ========
</TABLE>
F-8
<PAGE>
GOTHINK.COM INCORPORATED AND SUBSIDIARY
(formerly Think!.Com Incorporated)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
June 30, 1999 and December 31, 1998
NOTE 6: INCOME TAXES (continued)
The tax effects of temporary differences that give rise to a
substantial portion of the deferred income tax assets are
presented below:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
Net operating loss carryforwards $ 84,000 $ 0 $ 0
------------- ------------- -------------
Total gross deferred tax assets 84,000 0 0
Less valuation allowance (84,000) 0 0
------------- ------------- -------------
Net deferred tax assets $ 0 $ 0 $ 0
============= ============= =============
</TABLE>
During the years ended December 31, 1998 and 1997, the Company was
taxed as a sole proprietorship.
At June 30, 1998, the Company has approximately $1,510,000
available in net operating loss carryforwards for income tax
purposes. These carryforwards expire in 2007 through 2013. Due to
a change in control and business activity, the net operating loss
carryforwards will most likely never be realized. The Company's
tax year end is June. It is in the process of adopting the
calendar year end of its subsidiary.
NOTE 7: COMMITMENTS AND CONTINGENCIES
The Company has been presented with an invoice from Prepress
Solutions, Inc. and its president Mr. Nocera, which related to EFO
and EFO Technologies, Inc. Mr. Nocera was the Company's President
for a short time in 1997. Current management has disputed the
invoice of approximately $54,000 as to whether the services were
authorized to be performed and whether the salary claims were
properly authorized. The $54,000 has not been recorded as a
liability.
Management has conducted a diligent search for liabilities related
to prior operations. No liens or UCC filings have been discovered.
The Company currently leases space for its corporate office under
an operating lease which expires April 30, 2003 and its subsidiary
leases space for its operations under an operating lease which
expires August 31, 2002. Future minimum rental expense is expected
to be as follows:
Year ended December 31, 1999 $ 89,366
Year ended December 31, 2000 156,028
Year ended December 31, 2001 169,069
Year ended December 31, 2002 174,250
Year ended December 31, 2003 52,978
-------------
$ 641,691
=============
For the six months ended June 30, 1999 rent expense was $39,444.
Rent expense was $29,567 for the year ended December 31, 1998
($22,931 for the year ended December 31, 1997).
NOTE 8: REVERSE STOCK SPLIT
Effective March 24, 1999, the Company effected a 1:100 reverse
stock split. All references to stock prices, and numbers of shares
in these financial statements have been adjusted to reflect the
reverse split as if it were effective on the earliest date
reported.
NOTE 9: GOING CONCERN ITEMS
The Company's financial statements have been presented on the
basis that it is a going concern, which contemplates the
realization of assets and satisfaction of liabilities in the
normal course of business. The Company has incurred losses and has
a retained deficit of $258,040 at June 30, 1999.
F-9
<PAGE>
GOTHINK.COM INCORPORATED AND SUBSIDIARY
(formerly Think!.Com Incorporated)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
June 30, 1999 and December 31, 1998
NOTE 9: GOING CONCERN ITEMS (continued)
Management believes the Company will be able to continue as a
going concern for the following reasons:
The Company expects its subsidiary to generate working
capital. The Company intends to raise working capital by
selling more of its common stock.
NOTE 10: ACQUISITION COSTS
The Company recorded $619,121 of acquisition costs in connection
with the reverse acquisition with SEA. The Company feels there is
no goodwill involved in the acquisition and has charged the amount
directly to expense. The amount represents the excess of
liabilities assumed over assets received.
F-10
<PAGE>
GOTHINK.COM INCORPORATED AND SUBSIDIARY
(formerly Think!.Com Incorporated)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
(Unaudited) (Audited)
----------------- ------------------
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash in bank $ 40,217 $ (872)
Accounts receivable (net of allowance of $7,100
and $2,500 at 9/99 and 12/98 respectively) 63,903 22,400
Prepaid expenses 35,625 0
----------------- ------------------
TOTAL CURRENT ASSETS 139,745 21,528
PROPERTY, PLANT, & EQUIPMENT 99,117 51,501
----------------- ------------------
$ 238,862 $ 73,029
================= ==================
LIABILITIES & EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 99,991 $ 30,710
Deferred revenue 30,000 10,000
Loans payable 15,000 40,000
----------------- ------------------
TOTAL CURRENT LIABILITIES 144,991 80,710
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock $.001 par value:
Authorized 5,000,000 shares
Issued and outstanding 0 shares 0 0
Common Stock $.01 par value:
Authorized - 50,000,000 shares
Issued and outstanding 6,652,166 shares (3,285,385
in 1998) 66,522 32,854
Additional paid-in capital 493,828 (28,677)
Deficit accumulated during development stage (466,479) (11,858)
----------------- ------------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 93,871 (7,681)
----------------- ------------------
$ 238,862 $ 73,029
================= ==================
</TABLE>
F-11
<PAGE>
GOTHINK.COM INCORPORATED AND SUBSIDIARY
(formerly Think!.Com Incorporated)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
9/1/96
Three Months Ended Nine Months Ended (Inception of
September 30, September 30, subsidiary) to
1999 1998 1999 1998 9/30/99
------------- -------------- ------------- ------------- ------------------
<S> <C> <C> <C> <C> <C>
Net sales $ 46,376 $ 58,699 $ 199,849 $ 166,235 $ 684,985
Cost of sales 0 0 0 0 1,976
------------- -------------- ------------- ------------- ------------------
GROSS PROFIT 46,376 58,699 199,849 166,235 683,009
Operating expenses 245,743 68,380 492,145 163,518 949,319
------------- -------------- ------------- ------------- ------------------
INCOME (LOSS)
FROM OPERATIONS (199,367) (9,681) (292,296) 2,717 (266,310)
Other Income (Expense)
Bad debt - related party (9,072) 0 (210,181) 0 (210,181)
Interest expense 0 (1,700) 0 (9,100) (20,152)
Acquisition costs 0 0 (619,121) 0 (619,121)
------------- -------------- ------------- ------------- ------------------
(9,072) (1,700) (829,302) (9,100) (849,454)
------------- -------------- ------------- ------------- ------------------
NET INCOME (LOSS)
BEFORE INCOME TAXES (208,439) (11,381) (1,121,598) (6,383) (1,115,764)
Income tax expense 0 0 0 0 0
------------- -------------- ------------- ------------- ------------------
Net income (loss) before
extraordinary item (208,439) (11,381) (1,121,598) (6,383) (1,115,764)
Extraordinary item - Gain on debt
restructuring (no applicable
income taxes) 0 0 666,977 0 666,977
------------- -------------- ------------- ------------- ------------------
NET LOSS $ (208,439) $ (11,381) $ (454,621) $ (6,383) $ (448,787)
============= ============== ============= ============= ==================
Net income (loss) per weighted average share:
Ordinary $ (.03) $ (.00) $ (.22) $ (.00)
Extraordinary item .00 .00 .13 .00
------------- -------------- ------------- -------------
$ (.03) $ .00 $ (.09) $ .00
============= ============== ============= =============
Weighted average number of common
shares used to compute net income
(loss) per weighted average share 6,651,141 3,285,385 5,172,734 3,285,385
============= ============== ============= =============
</TABLE>
F-12
<PAGE>
GOTHINK.COM INCORPORATED AND SUBSIDIARY
(formerly Think!.Com Incorporated)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
9/1/96
Nine Months Ended (Inception of
September 30, subsidiary) to
1999 1998 9/30/99
--------------- --------------- ---------------
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net (loss) $ (454,621) $ (6,383) $ (448,787)
Adjustments to reconcile net (loss) to cash provided (required)
by operating activities:
Bad debts 4,600 900 7,100
Depreciation 12,989 9,048 33,406
Stock issued for expenses 5,763 0 5,763
Non-cash debt restructuring (666,977) 0 (666,977)
Non-cash acquisition costs 619,121 0 619,121
Changes in assets and liabilities:
Prepaid expenses (35,625) 0 (35,625)
Accounts receivable (46,103) (8,621) (63,903)
Deferred revenue 20,000 3,400 30,000
Accounts payable and accrued expenses 58,547 12,266 82,157
--------------- --------------- ---------------
NET CASH PROVIDED (REQUIRED)
BY OPERATING ACTIVITIES (482,306) 10,610 (437,745)
INVESTING ACTIVITIES
Purchase of equipment (60,605) (13,940) (132,523)
--------------- --------------- ---------------
NET CASH (USED)
BY INVESTING ACTIVITIES (60,605) (13,940) (132,523)
FINANCING ACTIVITIES
Issuance of notes payable 0 0 40,000
Loan repayments (40,000) 0 (40,000)
Sale of common stock 624,000 0 629,680
Dividends paid 0 0 (19,195)
--------------- --------------- ---------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 584,000 0 610,485
--------------- --------------- ---------------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 41,809 (3,330) 40,217
Cash and cash equivalents at beginning of year (872) 3,043 0
--------------- --------------- ---------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 40,217 $ (287) $ 40,217
=============== =============== ===============
SUPPLEMENTAL INFORMATION
Cash paid for interest $ 0 $ 4,000 $ 7,152
</TABLE>
During 1999, 160,000 shares of common stock were issued for assets of $47,500
and 215,731 shares were issued to retire liabilities of $215,731.
F-13
<PAGE>
GOTHINK.COM INCORPORATED AND SUBSIDIARY
(formerly Think!.Com Incorporated)
UNAUDITED PRO FORMA
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Nine
Months
Ended Activity Prior
September 30, to Reverse Consolidated
1999 Acquisition(1) Pro Forma
----------------- ------------------ ------------------
<S> <C> <C> <C>
Net revenue $ 199,849 $ 0 $ 199,849
Cost of revenue 0 0 0
----------------- ------------------ ------------------
GROSS PROFIT 199,849 0 199,849
Operating expenses 492,145 228,646 720,791
----------------- ------------------ ------------------
INCOME (LOSS) FROM OPERATIONS (292,296) (228,646) (520,942)
Other Income (Expense)
Bad debt - related party (210,181) 0 (210,181)
Interest expense 0 0 0
Acquisition costs (619,121) 0 (619,121)
----------------- ------------------ ------------------
(829,302) 0 (829,302)
----------------- ------------------ ------------------
NET INCOME (LOSS) BEFORE INCOME TAXES (1,121,598) (228,646) (1,350,244)
Income tax expense 0 0 0
----------------- ------------------ ------------------
Net income (loss) before extraordinary item (1,121,598) (228,646) (1,350,244)
Extraordinary item - Gain on debt restructuring (no
applicable income taxes) 666,977 0 666,977
----------------- ------------------ ------------------
NET INCOME (LOSS) $ (454,621) $ (228,646) $ (683,267)
================= ================== ==================
Net income (loss) per weighted average share:
Ordinary $ (.22) $ (.26)
Extraordinary item .13 .13
----------------- ------------------
$ (.09) $ (.13)
================= ==================
Weighted average number of common shares used
to compute net (loss) per weighted average share 5,172,734 5,172,734
================= ==================
</TABLE>
(1) January 1, 1999 to February 18, 1999 for EFO, Inc.
The pro forma assumes the entities were consolidated as of January 1, 1999.
F-14
<PAGE>
GOTHINK.COM INCORPORATED AND SUBSIDIARY
(formerly Think!.Com Incorporated)
UNAUDITED PRO FORMA
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year
Ended Activity Prior
December 31, to Reverse Consolidated
1998 Acquisition(1) Pro Forma
----------------- ------------------ ------------------
<S> <C> <C> <C>
Net revenue $ 200,357 $ 0 $ 200,357
Cost of revenue 0 0 0
----------------- ------------------ ------------------
GROSS PROFIT 200,357 0 200,357
Operating expenses 205,415 170,090 375,505
----------------- ------------------ ------------------
INCOME (LOSS) FROM OPERATIONS (5,058) (170,090) (175,148)
Other Income (Expense)
Bad debt - related party 0 0 0
Interest expense (6,800) 0 (6,800)
Acquisition costs 0 0 0
----------------- ------------------ ------------------
(6,800) 0 (6,800)
----------------- ------------------ ------------------
NET INCOME (LOSS) BEFORE INCOME TAXES (11,858) (170,090) (181,948)
Income tax expense 0 0 0
----------------- ------------------ ------------------
Net income (loss) before extraordinary item (11,858) (170,090) (181,948)
Extraordinary item - Gain on debt restructuring (no
applicable income taxes) 0 0 0
----------------- ------------------ ------------------
NET INCOME (LOSS) $ (11,858) $ (170,090) $ (181,948)
================= ================== ==================
Net income (loss) per weighted average share:
Ordinary $ (.00) $ (.06)
Extraordinary item .00 .00
----------------- ------------------
$ (.00) $ (.06)
================= ==================
Weighted average number of common shares used
to compute net (loss) per weighted average share 3,285,385 3,285,385
================= ==================
</TABLE>
(1) Year ended December 31, 1998 for EFO, Inc.
The pro forma assumes the entities were consolidated as of January 1, 1998.
F-15
<PAGE>
GOTHINK.COM INCORPORATED EXHIBIT 11
CALCULATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Weighted
Common Months Average
Shares Outstanding Shares
----------------- ---------------- ------------------
Nine Months Ended September 30, 1999
<S> <C> <C> <C>
Balance at December 31, 1998 3,285,385 9 3,285,385
504 Stock offering 2,968,000 4.96 1,635,556
Issued for assets, services and retire debt 398,781 5.68 251,793
----------------- ------------------
Balance at September 30, 1999 6,652,166 5,172,734
Loss for nine months ended September 30, 1999 $ (454,621)
Loss per share $ (.09)
Six Months Ended June 30, 1999
Balance at December 31, 1998 3,285,385 6 3,285,385
504 Stock offering 2,968,000 1.96 969,333
Issued for assets, services and retire debt 392,631 2.72 178,046
----------------- ------------------
Balance at June 30, 1999 6,646,016 4,432,764
Loss for six months ended June 30, 1999 $ (246,182)
Loss per share $ (.06)
</TABLE>
<PAGE>
Smith
&
Company
A Professional Corporation of Certified Public Accountants
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this Form
10-SB registration statement of GOTHINK.COM INCORPORATED of our report dated
September 17, 1999 on the financial statements for the period ended June 30,
1999 and the years ended December 31, 1998 and 1997 and for the period of
September 1, 1996 to June 30, 1999.
Smith & Company
CERTIFIED PUBLIC ACCOUNTANTS
Salt Lake City, Utah
December 2, 1999
10 West 100 South, Suite 700 o Salt Lake City, Utah 84101-1554
Telephone: (801) 575-8297 o Facsimile: (801) 575-8306
E-mail: [email protected]
Members: American Institute of Certified Public Accountants o
Utah Association of Certified Public Accountants
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from GoThink.Com Incorporated September 30, 1999 financial
statements and is qualified in its entirety by reference to
such financial statements
</LEGEND>
<CIK> 0001092455
<NAME> GoThink.Com Incorporated
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1.00
<CASH> 40,217
<SECURITIES> 0
<RECEIVABLES> 71,003
<ALLOWANCES> (7,100)
<INVENTORY> 0
<CURRENT-ASSETS> 139,745
<PP&E> 132,523
<DEPRECIATION> (33,406)
<TOTAL-ASSETS> 238,862
<CURRENT-LIABILITIES> 144,991
<BONDS> 0
0
0
<COMMON> 66,522
<OTHER-SE> 27,349
<TOTAL-LIABILITY-AND-EQUITY> 238,862
<SALES> 199,849
<TOTAL-REVENUES> 199,849
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 492,145
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,121,598)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,121,598)
<DISCONTINUED> 0
<EXTRAORDINARY> 666,977
<CHANGES> 0
<NET-INCOME> (454,621)
<EPS-BASIC> (.09)
<EPS-DILUTED> (.09)
</TABLE>
