FORM 10-KSB
ANNUAL REPORT
UNDER SECTION 13 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
GoThink.Com, Inc.
Executive Offices
230 Lookout Place, Suite 200
Maitland, Florida 32751
Telephone: (407) 468-0599
Securities registered under Section 12(g) of the Exchange Act:
Common Stock NASDAQ OTC:BB
Symbol: TNKC
Yes [*] No [ ] The Company has filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during calendar year 1999 and was not subject to
such filing requirements for the past ninety days (during 1999). (Registration
became effective during 1st quarter 2000.)
[ * ] Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S- B, is not contained in this form, and no disclosure will be
contained, to the best of the Company's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.
Company's revenues for its most recent fiscal year: (1999) $116,617.00.
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The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity, as of a
specified date within the past sixty (60) days: As of December 31, 1999,
19,196,016 outstanding shares of common stock at $0.15 per share (average bid
and asked price), resulting in $2,879,402.40 aggregate market value.
Number of shares outstanding of each of the Company's classes of common equity,
as of December 31, 1999: One class of common stock, 19,196,016.
Transitional Small Business Disclosure Format: Yes [ ] No [ * ]
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TABLE OF CONTENTS
Part I
Item 1 Description of Business
Item 2 Description of Property
Item 3 Legal Proceedings
Item 4 Submission of Matters to a Vote of Security Holders
Part II
Item 5 Market for Common Equity and Related Stockholder Matters
Item 6 Management's Discussion and Analysis or Plan of Operations
Item 7 Financial Statements
Item 8 Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
Item 9 Directors, Executive Officers, Promoters, and Control Persons; Compliance
with Section 16(a) of the Exchange Act
Item 10 Executive Compensation
Item 11 Security Ownership of Certain Beneficial Owners and Management
Item 12 Certain Relationships and Related Transactions
Item 13 Exhibits and Reports on Form 8-K
Part III
Index to Exhibits
Description of Exhibits
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Item 1 Description of Business
This document contains forward-looking statements that relate to future
events or future financial performance. In some cases, forward-looking
statements can be identified by terminology such as "may," "will," "should,"
"expects," "plans," "anticipates," "believes," "estimates," "predicts,"
"intend," "potential," or "continue" or the negative of such terms or other
comparable terminology. These statements are only predictions. Although the
Company believes that the expectations reflected in the forward-looking
statements are reasonable, it cannot guarantee future results, levels of
activity, performance, or achievements. Actual results could differ materially
from those anticipated in these forward-looking statements as a result of
various factors, including the risks outlined elsewhere in this document. All
forward-looking statements included in this document are based on information
available to the Company on the date hereof.
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.
There is a substantial doubt concerning the Company's ability to
continue as a going concern, as indicated by the losses incurred by the Company
revealed by the accompanying financial information in this disclosure document
and as noted herein. The Company has operated at a loss during 1999, and
anticipates continuing to operate at a loss through the calendar year 2000.
There is currently no prospect for profitability from current operations. 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.
The Company experienced accelerating losses from at least mid-1998
through third quarter 1999, and there is no indication in current operations
that those losses will not continue, albeit at a slower rate. There is a clear
trend in the Company's financial condition which indicates continued losses
through the foreseeable future based on current operations. Currently, there is
no prospect for profitability from current operations, although the Company does
anticipate being able to continue drastically scaled-down operations through the
end of calendar year 2000. The scope of the Company's business has been
drastically curtailed starting in mid- 1998, as more fully explained below.
Currently, the Company has no subsidiary operations. As described
below, the Company sold its remaining subsidiary, effective September 30, 1999,
by an agreement with its former owners and officers.
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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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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.
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 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. Cain
[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,
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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 did 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" was a
wholly-owned subsidiary of GoThink.Com, Inc. after the amended certificate of
authority, until the transaction between Blue Ridge Financial, Inc., the
Company, and Mr. Ron Daniels, more fully explained below.
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 December 31, 2000. The additional capital
contribution was necessary for the Company's continued operations. Blue Ridge
made an initial payment of $39,400.00 to support the Company's operations.
In the Agreement with Blue Ridge, agreed by the parties to be effective
as of September 30, 1999, 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. The Agreement provided that Mr. Daniels would
be the Chief Operating Officer of the Company and that Mr. Edwards, by future
Board action, would be elected Chief Executive Officer. 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
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"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 and that the subsidiary operations
would be separate from the Company's. 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 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, would own 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, and Ms. Brenner 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.
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.
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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.
Mr. Daniels, effective September 30, 1999, in accordance with the terms
of the Agreement between himself, the Company, and Blue Ridge, tendered the
required stock to the Company and received all of the outstanding stock in the
subsidiary, Southern Educational Alliance, Inc. Daniels and the Company
negotiated the final settlement of the purchase of the subsidiary and Daniels
retained 800,000 shares of stock, tendering the balance of his holding for the
purchase of the subsidiary. The parties agreed to apportion the debts and
obligations of the subsidiary, thus making the transfer of the subsidiary
effective September 30, 1999. The Company was relieved of all financial
obligations in the name of the subsidiary as of September 30, 1999, Daniels
agreeing to make that arrangement retroactive.
In its agreement with Mr. Daniels, the Company also received a release
from Mr. Daniels as to his employment contract, and Mr. Daniels and Southern
Educational Alliance, Inc. severed all connections with the Company. Mr. Daniels
resigned as Chief Executive Officer and Director as part of the agreement with
the Company, though he remains a shareholder.
Tom Edwards resigned his directorship with the Company May 1, 2000, and
no longer has any connection with the Company. Mr. Edwards also surrendered all
of his shares to the Company as part of the cancellation and termination of his
employment agreement and resignation.
Ms. Brenner is the only full-time employee of the Company, acting as
President and Director.
The loss from operations for the six months ended June 30, 1999, was
approximately $93,000.00 as operating expenses exceeded revenue for that period.
At mid-year, 1999, the main components of operating expenses were salaries and
payroll taxes and benefits of $67,000.00, contract instructor fees of
$19,000.00, bad debts of $8,500.00, legal fees of $11,000.00, rent
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expense of $39,000.00, depreciation of $8,000.00, and supplies expense of
$10,000.00.
At year end, as of December 31, 1999, the loss from operations for the
year was approximately $358,362.00, as operating expenses continued to exceed
revenue for the entire year.
The trend of losses has accelerated from 1997 through year-end 1999.
The loss from operations for the twelve month period ended December 31, 1998,
was approximately $11,858.00.
The trend of losses also affects the Company's assets. After bargaining
away the subsidiary, Southern Educational Alliance, the assets of the Company at
year-end 1999 total $319.00. The total assets of the Company at June 30, 1999,
were $443,683.00, with the primary assets situated in the subsidiary being cash
of $202,000.00, accounts receivable of $96,000.00, and net value of property and
equipment of $98,000.00.
The Company has a plan to increase revenues and stem losses, but there
is no indication that the Company can maintain present levels of operations
beyond the end of calendar year 2000.
Currently, the Company intends to continue in an Internet-related
business, mainly consisting of consulting with potential clients regarding
Internet business applications and assisting companies in doing business on the
Internet.
The Company currently has no marketing program, no products, one
customer, (a related party, Blue Ridge Finance Company), no clients, no
advertising program, and only one employee, the CEO, Jennifer L. Brenner. Ms.
Brenner does not devote all of her time to the Company, and receives no salary
or benefits. Ms. Brenner is also the sole director of the Company, Mr. Daniels
and Mr. Edwards having resigned.
The Company does not presently engage in any business operations in
connection with its' former subsidiaries, Internet Presentations, Inc. or
Southern Education Alliance, Inc., f/d/b/a GoThink Tech, and has no plans to do
so in the future.
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.
The public may read and copy any materials the Company files with the
SEC at the
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SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
The public may obtain information on the operation of the Public Reference Room
by calling the SEC at 1- 800-SEC-0330. The Company is an electronic filer and
the SEC maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC at http://www.sec.gov. Currently, the Company does not maintain a
website on the Internet.
Item 2 Description of Property
Property Location
The Company maintains an office at 230 Lookout Place, Suite
200 Maitland, Florida 32751, with its mailing address of Post Office Box 953754,
Lake Mary, Florida 32795-3754. The Company's property consists of minimal
general office equipment, telephone and computer systems, and office furniture.
The property is periodically updated, replaced, or repaired.
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 3 Legal Proceedings
The company currently has no ongoing legal proceedings
Item 4 Submission of Matters to a Vote of Security Holders
During calender year 1999, no matter was submitted to a vote of
security holders, through the solicitation of proxies or otherwise.
Item 5 Market for Common Equity and Related Stockholder 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 Company's stock
was "de-listed" during June, 2000, for failure to timely file required reports,
including this Form 10-KSB, with the Securities and Exchange Commission. As of
the date the Company stock was "de-listed," there is no public market for the
stock.
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The high bid and low bid range since March 22, 1999, through September
27, 1999, was 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
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.
As of December 31, 1999, the stock had a high-low bid/ask range of $.12
to $.15 per share, per J. Alexander Securities, a market maker in the stock.
There are approximately 1120 holders of common stock in the Company.
There are no holders of preferred stock.
There are 19,196,016 shares of common stock outstanding. There are
1,462,487 free- trading shares of common stock.
There are two (2) shareholders which hold five percent (5%) or more of
the outstanding common stock of the Company:
Blue Ridge Finance Company, Inc. 10,310,000 53.7%
John S. Schoene 5,000,000 26%
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.
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Item 6 Management's Discussion and Analysis for Plan of Operations
The Company is a "small business issuer" that has had revenues from
operations in the last fiscal (calendar) year and has furnished financial
statements in conjunction with this filing. In its Form 10-SB filing, the
Company elected to provide all information regarding its plan of operation for
the next twelve (12) months in narrative form and included "Management's
Discussion and Analysis or Plan of Operation" pursuant to Regulation ss.228.303.
Pursuant to alternative 3, Part I, "General Instructions" regarding the
use of Form 10SB, the Company chose the "disclosure model" which includes the
information required by Items 101, 102, 202, 303, 401, 402, 403, and 404 in the
Form 10SB. That information is incorporated in this document for historical
reference and contrast only.
The Company has operated at a loss during 1999, and anticipates
continuing to operate at a loss through 2000. Except for the influx of working
capital in exchange for common stock, as described above (the "Blue Ridge
Agreement" detailed above), the Company would not have been able to continue
operations.
All of the information from Item 1 above is incorporated herein.
The Company's operations and plan of business have altered drastically
after the sale of the subsidiary, Southern Educational Alliance, Inc. That
subsidiary was the Company's only source of revenue from operations or any other
source.
Currently, the Company intends to continue in an Internet-related
business, mainly consisting of consulting with potential clients regarding
Internet business applications and assisting companies in doing business on the
Internet. No specific plan of business has yet been adopted by the Company, and
no potential markets or customers have been identified.
The Company has no revenues and no prospects for revenues at the
present.
The Company currently has no marketing program, no products, no
customers, no clients, no advertising program, and only one employee, the CEO,
Jennifer L. Brenner. Ms. Brenner does not devote all of her time to the Company,
and receives no salary or benefits. Ms. Brenner is also the sole director of the
Company, Mr. Daniels and Mr. Edwards having resigned. Ms. Brenner has no
relevant experience in the Company's intended Internet consulting operations.
The Company does not plan to add staff or contract labor to implement its
intended plan of operations.
The Company has a minimum of available funds as shown in the financial
statements, and intends to use Ms. Brenner, in her capacity as an unpaid
officer, as its contact with potential clients and customers. It is uncertain
whether the Company can generate revenue with an uncertain business plan and
only one part-time employee. The Company has no lines of credit or ability to
obtain credit, and no property for collateralizing any loan.
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The Company's prior revenue history is not an indication of the
Company's future revenues, as the subsidiary that provided those revenues has
been sold and the Company has no present operations beyond the intent to consult
and contract with, on a fee basis, clients and customers in an attempt to assist
them in utilizing the Internet in their businesses.
The Company does not presently engage in any business operations in
connection with its' former subsidiaries, Internet Presentations, Inc. or
Southern Education Alliance, Inc., f/d/b/a GoThink Tech, and has no plans to do
so in the future.
Item 7 Financial Statements
See attached.
The Company had working capital of $202,448 at June 30, 1999. As of
December 31, 1999, the Company had no working capital, a negative balance of
$40,008.00, in that category. For the six months ended June 30, 1999 the Company
recorded a consolidated net loss of $246,182. At year end, as of December 31,
1999, the Company recorded a net loss of $358,362.00.
At June 30, 1999, included in the subsidiary's loss was 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. As of December 31, 1999, the subsidiary had
been sold as described above and the Company's assets totaled $319.00.
Liabilities of the Company at June 30, 1999 were $82,208 and the subsidiary's
liabilities (excluding intercompany items) were $60,703 for total consolidated
liabilities of $142,911. As of December 31, 1999, the Company's liabilities were
$40,327.00.
Net revenue for 1998 was $200,357 compared with $205,888 for 1997. Net
revenue for 1999 was $116,617.00. The sale of the subsidiary, Southern
Educational Alliance, Inc., will mean that the Company will have no revenues
from operations or any other sources for the foreseeable future.
Item 8 Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure
The Company's accountants have been Smith & Company since February,
1999, with that firm being asked to withdraw as of May 23, 2000. The Company's
accountants have, therefore, changed as reported in the Company Form 8-K filing
dated May 23, 2000. Current management is unaware of the identity of former
accountants of the Company prior to February, 1999.
The Company appointed the firm of Parks, Tschopp, Whitcomb & Orr, 2600
Maitland
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Center Pkwy, Maitland, Florida 32751-7221, as its Independent Accountants,
effective as of May 23, 2000. Smith & Company, the Company's prior Independent
Accountants, who are located in Salt Lake City, Utah, were dismissed effective
as of May 23, 2000. There were no disagreements between the Company and Smith &
Company. The change was made by the Board of Directors who felt it made sense to
have their auditor located in Florida, which is the location of the corporate
headquarters.
The report of Smith & Company on the financial statements of the
Company for each of the two calendar years in the period ended December 31, 1998
and for the six months ended June 30, 1999, did not contain any adverse opinion
or disclaimer of opinion and were not qualified or modified as to audit scope or
accounting principles. The report did contain a going concern paragraph.
During the Company's most two recent fiscal years and all subsequent
interim periods preceding the change in auditors, there was no disagreement with
Smith & Company on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which if not resolved to
the satisfaction of Smith & Company, would have caused them to make a reference
to the subject matter of the disagreements in connection with their report; nor
has Smith & Company ever presented a written report, or otherwise communicated
in writing to the Registrant or its Board of Directors the existence of any
"disagreement" or "reportable event" within the meaning of Item 304 of
Regulation S-K.
Likewise, there has been and is no disagreement with Parks, Tschopp,
Whitcomb & Orr on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which if not resolved to
the satisfaction of that firm, would have caused them to make a reference to the
subject matter of the disagreements in connection with their report; nor has
that firm ever presented a written report, or otherwise communicated in writing
to the Company or its Board of Directors the existence of any "disagreement" or
"reportable event" within the meaning of Item 304 of Regulation S-K.
The Company has authorized Smith and Company to respond fully to the
inquiries of the successor firm concerning the subject matter of the financial
affairs of the Company, including any possible disagreements, without
limitation.
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. Other than the
change from Smith and Company as reported above, 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.
The current accountants have expressed their opinion in the financial
statements that the Company may be unable to continue as a going concern.
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Item 9 Directors, Executive Officers, Promoters and Control Persons
GoThink.Com, Inc. (Currently)
Directors: Jennifer L. Brenner, (Date of Birth 06/20/75), age 25.
Executive Officers: C.E.O. and President Jennifer L. Brenner
GoThink.Com, Inc. (Through December 31, 1999)
Directors: Ron Daniels, age 38
Thomas Edwards, age 31
Jennifer Brenner, age 25
Executive Officers: C.E.O. and President Ron Daniels
Chief Operations Officer Thomas Edwards
Southern Educational Alliance, Inc. (subsidiary) d/b/a "GoThink Tech"
(Effective through September 30, 1999)
Directors: Ron Daniels
Thomas Edwards
Executive Officers: C.E.O. and President Ron Daniels
Chief Operations Officer Thomas Edwards
Frank Mulcahy was formerly an officer of GoThink.Com, Inc. and was a
director of that entity through August, 1999. 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 were no other "significant employees" whom the Company expected
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. Mr. Daniels severed
his relationship with the Company, as set out in Item 1, effective September 30,
1999.
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
- 14 -
<PAGE>
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.
The terms of office for the officer and director of the Company 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, above.
Ms. Brenner is currently the only employee of the Company. There are no
other "significant employees" whom the Company expects to make a significant
contribution to the business.
Ms. Brenner's has been employed as a Vice President of Blue Ridge
Finance Company, Inc., from 1997 to present. She holds no other directorships
with publicly-traded or reporting companies.
Ms. Brenner has not filed for bankruptcy relief within the last five
years. Ms. Brenner has not been sued in the last five years, and has not been
the subject of any enforcement or regulatory enforcement action by any state or
federal agency within the last five years, and is not now involved in any such
proceedings. Ms. Brenner has never been convicted of a felony or a crime
involving moral turpitude and is not now involved in any such proceeding. Ms.
Brenner has never been subject to any order, judgment, or decree of any court of
competent jurisdiction permanently or temporarily enjoining, barring, suspending
or otherwise limiting her involvement in any type of business, securities or
banking activities. Ms. Brenner has never 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.
Compliance with Section 16(a) of the Exchange Act.
Based solely upon a review of Forms 3 and 4, (17 C.F.R. 249.103 and
249.104), and Form 5, during the year-ended December 31, 1999, furnished to the
Company (of which there were none), and any written representations pertaining
thereto (of which there were none), the Company is not aware of any person who
was a director, officer, or beneficial owner of more than ten percent of any
class of equity securities of the Company ("reporting person") that failed
- 15 -
<PAGE>
to file, on a timely basis, reports required by Section 16(a) of the Exchange
Act during that or prior applicable fiscal (calendar) years. The Company
believes that Section 16(a) of the Exchange Act did not apply to the Company or
to any "reporting person" associated with the Company during 1999.
Item 10 Executive Compensation
The Company had two executive officers during 1999: Ron Daniels and Tom
Edwards. Mr. Daniels was the CEO through December 31, 1999, with his resignation
retroactive to September 30, 1999. These two comprised the Company's most highly
compensated executives. There were no other individuals who were executive
officers during 1999. Jennifer L. Brenner did not become an executive officer in
calendar year 1999.
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, except by contractual agreement as set out in Item 1 (the "Blue
Ridge Agreement").
The executive officers receive compensation only in the form of annual
monetary compensation and reimbursement of expenses, however, both Mr. Daniels
and Mr. Edwards had 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 $13,500 -
Further, Mr. Daniels and Mr. Edwards were 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 1 (the "Blue Ridge
Agreement"). Mr. Daniels' shares have been reduced, as set out above, and Mr.
Edwards has surrendered his shares to the Company, as set out above.
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 1. Mr. Edwards has resigned his
positions with the Company, surrendered his
- 16 -
<PAGE>
shares to the Company, and is no longer associated with the Company, as set out
above.
Mr. Daniels had 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. The Agreement provided that Mr.
Daniels would be the Chief Operating Officer of the Company and that Mr.
Edwards, by future Board action, would be elected Chief Executive Officer. 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
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.
As noted in Item 1, Mr. Daniels tendered the required stock to the
Company for the purchase of the subsidiary, Southern Educational Alliance, Inc.,
and severed his relationship with the Company.
Mr. Edwards continued to serve in his capacities as noted herein
through December 31, 1999. Mr. Edwards resigned his positions effective May 1,
2000, and his services were canceled. As noted above, Mr. Edwards surrendered
his shares to the Company.
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
had 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 11 Security Ownership of Certain Beneficial Owners and Management
Blue Ridge Finance Company, Inc. 10,310,000
John Schoene 5,000,000
Ronnie Daniels and Sheila Daniels 800,000
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
- 17 -
<PAGE>
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 were
described in the Company's Form 10-SB filing.
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 1.
Item 12 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 as detailed in the Company's Form 10-SB filing, 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.
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. Cain
[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. Cain, 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.
- 18 -
<PAGE>
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 initially 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.
Item 13 Exhibits and Reports on Form 8-K
The following Exhibits have been previously filed with the Commission
with the Company's Form 10-SB, and those Exhibits are incorporated herein by
reference:
Plan of Reorganization
Articles of Incorporation
By-Laws
Agreement with Blue Ridge Finance Company, Inc.
The Statement re: Computation of Per Share Earnings Accompanies this
filing.
The letter on change by certifying accountant was filed with the
Company's Form 8-K dated May 23, 2000, and is incorporated herein by reference.
The Power of Attorney executed by the Company accompanies this filing.
- 19 -
<PAGE>
Index of Exhibits
Plan of Reorganization (incorporated by reference; filed with Form
10-SB) Articles of Incorporation (incorporated by reference; filed with
Form 10-SB) By-Laws (incorporated by reference; filed with Form 10-SB)
Agreement with Blue Ridge Finance Company, Inc. (incorporated by
reference; filed with
Form 10-SB)
The Statement re: Computation of Per Share Earnings
The letter on change by certifying accountant (incorporated by
reference, filed with the Company's Form 8-K dated May 23,
2000)
Power of Attorney
SIGNATURE
In accordance with Section 13 of the Exchange Act, the Company has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GO THINK.COM, INCORPORATED
Jennifer L. Brenner
Chief Executive Officer
- 20 -
<PAGE>
GOTHINK.COM, INCORPORATED
AND SUBSIDIARY
Consolidated Financial Statements
December 31, 1999 and 1998
<PAGE>
GOTHINK.COM, INCORPORATED
AND SUBSIDIARY
Consolidated Financial Statements
December 31, 1999 and 1998
(With Independent Auditors' Report Thereon)
<PAGE>
GOTHINK.COM, INCORPORATED
AND SUBSIDIARY
Table of Contents
Independent Auditors' Report 1
Financial Statements:
Consolidated Balance Sheet 2
Consolidated Statements of Operations 3
Consolidated Statements of Stockholders' Deficit 4
Consolidated Statements of Cash Flows 5
Notes to Financial Statements 6
<PAGE>
Independent Auditors' Report
The Board of Directors
GoThink.Com, Incorporated and Subsidiary
We have audited the accompanying consolidated balance sheet of GoThink.Com,
Incorporated and Subsidiary as of December 31, 1999 and the related consolidated
statements of operations, stockholders' equity, and cash flows for the year then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides 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 December 31, 1999, and the results of their
operations and their cash flows for the year then ended 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 discussed in note 3 to the
consolidated financial statements, the Company has experienced net losses of
$358,362 and $11,858 for the two years ending December 31, 1999 and 1998,
respectively. Sales have declined significantly in 1999, are minimal through May
31, 2000 and there is a stockholders' deficit of $40,008 at December 31, 1999.
Additionally, the Company sold its operating subsidiary in September, 1999.
These matters raise substantial doubt about the Company's ability to continue as
a going concern. The accompanying consolidated financial statements do not
include any adjustments relating to the recoverability and classification of
asset carrying amounts or the amount and classification of liabilities that
might result should the Company be unable to continue as a going concern.
Parks, Tschopp, Whitcomb & Orr P.A.
Certified Public Accountants
June 22, 2000
<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 statements of operations, changes
in stockholders' (deficit), and cash flows of GoThink.Com Incorporated and
subsidiary for the year ended December 31, 1998. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the 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 audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the results of operations, changes in
stockholders' (deficit), and cash flows of GoThink.Com Incorporated and
subsidiary for the year ended December 31, 1998, 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. 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. The
accompanying consolidated financial statements do not include any adjustment
that may result from the outcome of this uncertainty.
CERTIFIED PUBLIC ACCOUNTANTS
Salt Lake City, Utah
September 17, 1999
10 West 100 South, Sutie 700, Salt Lake City, Utah 84101-1554
Telephone: (801) 575-8297 - Facsimile: (801) 575-8306
E-mail: [email protected]
Members: American Institute of Certified Public Accountants
Utah Association of Certified Public Accountants
<PAGE>
GOTHINK.COM, INCORPORATED AND SUBSIDIARY
Consolidated Balance Sheet
December 31, 1999
Assets
<TABLE>
<CAPTION>
Current assets:
<S> <C>
Cash $ 319
====================
Liabilities and Stockholder's Equity
Current
liabilities:
Accounts payable and accrued expenses $ 35,327
Advances from related party (note 5) 5000
--------------------
Total
current liablities 40327
--------------------
Stockholders'
deficit:
Common stock, $.01 par value authorized
50,000,000 shares,
issued and oustanding 19,196,016 191960
Treasury stock, 1,700,000 shares, at cost
(note 4) (319000)
Additional paid-in capital 617852
Stock subscription receivable (note 5) (160600)
Accumulated deficit (370220)
--------------------
Total (40008)
stockholders' deficit
--------------------
$ 319
====================
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
GOTHINK.COM, INCORPORATED AND SUBSIDIARY
Consolidated Statements of Operations
Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
-------------------- --------------------
<S> <C> <C>
Net sales $ 116,617 200357
Operating expenses 571866 205415
-------------------- --------------------
Operating loss (455249) (5058)
Other expense
Bad
debt - related party (note 5) (201109) 0
Gain from sale of subsidiary (note 4) 250140 0
Interest expense 0 (6800)
Acquisition costs (note 9) (619121) 0
-------------------- --------------------
Loss before income taxes and extraordinary item (1025339) (11858)
Income tax expense (note 6) 0 0
-------------------- --------------------
Loss before extraordinary item (1025339) (11858)
Extraordinary item: Gain from debt restructuring (note 5) 666977 0
-------------------- --------------------
Net
loss $ (358,362) (11858)
==================== ====================
Loss
per share of common stock $ (0.04) 0
==================== ====================
Weighted average number of shares outstanding 9787360 3285385
==================== ====================
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
GOTHINK.COM, INCORPORATED AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
Common
Stock Treasury Stock
Additional Stock
Number of Number of Paid-in Accumulated Subscription Stockholders'
Shares Par Value Shares Cost Capital Deficit Receivable Deficit
---------- --------- --------- -------- ---------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
December
31, 1997 3285385 32854 0 0 (28677) 0 0 4177
Net loss for
the year ended
December
31, 1998 0 0 0 0 0 (11858) 0 (11858)
---------- --------- --------- -------- ---------- ----------- ------------ -------------
Balance at
December
31, 1998 3285385 32854 0 0 (28677) (11858) 0 (7681)
Net loss for
the year ended
December
31, 1999 0 0 0 0 0 (358362) 0 (358362)
Shares
issued for cash 12968000 129680 0 0 744676 0 (160600) 713756
Shares issued for
assets, services
and debt retirement 2942631 29426 0 0 177238 0 0 206664
Acquisition
of subsidiary 0 0 0 0 (275385) 0 0 (275385)
Sale of
subsidiary 0 0 1700000 (319000) 0 0 0 (319000)
---------- --------- --------- -------- ---------- ----------- ------------ -------------
Balances at
December
31, 1999 19196016 $ 191,960 1700000* (319000) 617852 (370220) (160600) (40008)
========== ========= ========= ========== ========== =========== ============ =============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
GOTHINK.COM, INCORPORATED AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------------- -------------------
Cash
flows
from operating activities:
<S> <C> <C>
Net (358,362)
loss $ (11858)
Adjustme
nts to reconcile net loss to net cash
used
by operating activities:
Depreci
ation and amortization 7643 12064
Issuanc
e of common stock for services 206664 0
Acquisi
tion of subsidiary (275385) 0
Sale of
subsidiary (319000) 0
Cash
provided by (used for) changes in:
Accounts
receivable 22400 (5481)
Account
payables 77017 12801
Deferre
revenued (10000) 2500
Net cash
used in
operating activities (649023) 10026
------------------- -------------------
Cash
flows
from investing activities:
Purchase
of equipment (23542) (13940)
Net cash
used in
investing activities (23542) (13940)
------------------- -------------------
Cash
flows
for financing activities:
Loan
repayments (40000) 0
Proceeds
from issuance of common stock 713756 0
------------------- -------------------
Net cash
provided by financing activities 673756 0
------------------- -------------------
Net increase
(decrease)
in cash 1191 (3914)
Cash
at beginning of year (872) 3042
------------------- -------------------
Cash 319 (872)
at end of year $ $
=================== ===================
Supplemen
tal disclosures:
Cash
paid
during the year for:
0
Inter
est $ 4000
=================== ===================
0
Income taxes $ 0
=================== ===================
Supplemental schedule of non-cash investing activities:
47,500
Common stock issued for fixed assets $ 0
=================== ===================
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
GOTHINK.COM, INCORPORATED AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1999 and 1998
(1) Summary of Significant Accounting Policies
(a) Principles of Consolidation and Basis of Presentation
The accompanying consolidated financial statements include the
financial statements of GoThink.Com, Incorporated (the Company) and its wholly
owned subsidiary, Southern Educational Alliance, Inc. ("SEA") d/b/a GoThink Tech
(GTT). All significant intercompany balances and transactions have been
eliminated in consolidation.
Effective February 16, 1999, the Company acquired 100% of the
outstanding common stock of SEA for 1,325,000 newly issued common shares of the
Company. Effective September, 1999, the Company sold its interest in SEA. (See
note 4.)
The acquisition of SEA was treated as a reverse acquisition of the
Company by SEA. In a reverse acquisition, the shareholders' equity of the
acquirer prior to the merger is retroactively restated for the equivalent number
of shares received in the merger after giving effect to any difference in par
value of the issuer's and acquirer's stock recognized as additional paid-in
capital. All share and per share information has been presented in the
accompanying consolidated financial statements as if the reverse acquisition and
recapitalization has occurred on September 1, 1996, the inception date of SEA
and its predecessor entities.
(b) Dividend Policy
The Company has not yet adopted any policy regarding payment of
dividends.
(c) Revenue Recognition
Revenue is recognized as services are rendered.
(d) 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.
(e) Cash and Cash Equivalents
For financial statements purposes, the Company considers all highly
liquid investments with an original maturity of three months or less when
purchased to be cash equivalents. (Continued)
6
<PAGE>
GOTHINK.COM, INCORPORATED AND SUBSIDIARY
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies
(f) Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to temporary differences between the financial
statements carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. Changes in tax rates are recognized in the
period that includes the enactment date.
(g) Property and Equipment
Property and equipment are stated at cost. Furniture and equipment are
depreciated using the straight-line method over the estimated lives (five to
seven years) of the assets. Leasehold improvements are amortized on a
straight-line basis over the shorter of the lease term or the useful life of the
asset. Such depreciation and amortization is included in operating expenses on
the consolidated statements of operations.
(h) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements. Estimates also affect the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
(i) Credit Risks
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of trade accounts and notes
receivable. The Company sells its products to customers, at times extending
credit for such sales. Exposure to losses on receivables is principally
dependent on each customer's financial condition and their ability to generate
revenue from the Company's products. The Company monitors its exposure for
credit losses and maintains allowances for anticipated losses.
(Continued)
7
<PAGE>
GOTHINK.COM, INCORPORATED AND SUBSIDIARY
Notes to Consolidated Financial Statements
(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.
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.
On February 16, 1999, the Company agreed in principal 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 in
addition to 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 subsequently
changed its name to GoThink Tech, Inc.
Subsequent to issuing the stock to acquire IPI, the company rescinded
the acquisition of IPI. The Company cancelled 1,325,000 shares issued in the
transaction and issued 200,000 shares of its stock to the principal of IPI. The
principal of IPI also received 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, 2000 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.
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.
(Continued)
8
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GOTHINK.COM, INCORPORATED AND SUBSIDIARY
Notes to Consolidated Financial Statements
(3) Going Concern
The Company's consolidated financial statements have been presented on
a going concern basis which contemplates the realization and the satisfaction of
liabilities in the normal course of business. As more fully described below, the
liquidity of the Company has been adversely affected by significant losses from
operations. The Company reported net losses of $358,362 and $11,858 for the
years ended December 31, 1999 and 1998, respectively. Additionally, revenues
have decreased approximately 25 percent in 1999 compared to 1998, sales through
May, 2000 are minimal and there is a stockholders' deficit of $40,008 at
December 31, 1999.
These conditions, in addition to the sale of SEA (See note 4), the
Company's operating subsidiary, raise substantial doubt about the Company's
ability to continue as a going concern without additional capital contributions
and/or achieving profitable operations. Management's plans are to develop new
products or to acquire new products through acquisitions. There can be no
assurance that the Company will be successful in accomplishing its objectives.
(4) Sale of Subsidiary
Effective September 30, 1999, the Company sold all of its stock in
GoThink Tech to a former shareholder and officer. In exchange for its stock and
$10,000 cash, the Company received 1,700,000 shares of its common stock, which
has been recorded as treasury stock in the accompanying financial statements. On
the date of sale, GTT had little or no equity and the stock returned had a fair
value of approximately $319,000. The results of operations through September 30,
1999 of GTT have been included in the accompanying financial statements.
(5) Related Party Transactions
In 1999, the Company recorded bad debt expense of $201,109,
representing an uncollectible receivable from IPI, which represents cash
advances and expenses paid on its behalf by the Company prior to rescinding the
acquisition of IPI. (See note 2)
The Company recorded $666,977 as an extraordinary income item in the
accompanying financial statements. This was primarily as result of the
forgiveness of debt owed to former officers of EFO. Subsequent to the reverse
acquisition, they sold all of their stock in the Company to an unrelated party
and stated in separate agreements that they had no future claims or interest in
the Company. They had not been officers for at least two years prior to the
reverse acquisition.
At December 31, 1999, the Company recorded a subscription receivable of
$160,600 from the majority shareholder, resulting from the purchase by the
shareholder of an additional 10,000,000 shares of common stock in October, 1999
for $200,000. In 1999, the Company received $39,400, and the remainder is due on
or before December 31, 2000.
At December 31, 1999, the Company recorded advances from a related
party of $5,000, which represents fees due the majority shareholder. The
advances are non-interest bearing and due on demand.
(Continued)
9
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GOTHINK.COM,
INCORPORATED AND SUBSIDIARY
Notes to Consolidated Financial Statements
(6) Income Taxes
At December 31, 1999, the Company had approximately $2,000,000 of net
operating losses for financial statement and income tax purposes which will
expire in varying amounts commencing in 2007 through 2019. A valuation allowance
equal to the tax benefit of the net operating losses has been established since
it is uncertain that future taxable income will be realized during the
carryforward period. Accordingly, no income tax provision has been recognized in
the accompanying financial statements.
(7) Lease Obligation
At December 31, 1999, the Company had no lease obligations.
(8) Earnings (loss) per Share
Earnings (loss) per share of common stock in 1999 and 1998 were based
on the weighted average number of shares outstanding during those periods, after
giving effect to a 1:100 reverse stock split effective March 24, 1999 and
retroactively applied and assumed conversion of any stock options.
(9) Goodwill
The Company recorded goodwill in the amount of $619,121 as a result of
the reverse acquisition of SEA. Goodwill would ordinarily be capitalized and
amortized as expense over its estimated useful life. During 1999, management
determined that this asset had been impaired and ascribed no value to the
goodwill. Accordingly, the $619,121 was expensed entirely in 1999.
10
