SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES ACT OF 1934
IP FACTORY, INC.
----------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 95-4737507
-------- ----------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
860 Via de la Paz, Suite E-1, Pacific Palisades, California 90272
-------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (310) 230-6100
Securities to be Registered Pursuant to Section 12(b) of the Act:
None
Securities to be Registered Pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
(Title of Class)
<PAGE>
IP FACTORY, INC.
FORM 10-SB
TABLE OF CONTENTS
PART I
Page
Item 1. Description of Business............................................1
Item 2. Management's Discussion and Analysis or Plan of Operation..........3
Item 3. Description of Property............................................5
Item 4. Security Ownership of Certain Beneficial Owners and Management.....5
Item 5. Executive Officers, Promoters and Control Persons..................6
Item 6. Executive Compensation.............................................7
Item 7. Certain Relationships and Related Transactions.....................7
Item 8. Description of Securities..........................................7
PART II
Item 1. Market Price of and Dividends on the Registrants Common
Equity and Other Shareholder Matters.............................8
Item 2. Legal Proceedings..................................................9
Item 3. Changes in and Disagreements with Accountants......................9
Item 4. Recent Sales of Unregistered Securities............................9
Item 5. Indemnification of Directors and Officers..........................9
PART F/S
Financial Statements.........................................................11
PART III
Item 1. Index to Exhibits.................................................12
Item 2. Description of Exhibits...........................................12
Signatures...................................................................13
i.
<PAGE>
PART I
Item 1. Business
IP FACTORY, Inc. will provide leading worldwide enterprises with
optimizedsolutions for integrating network and Internet design, implementation,
security, maintenance and management. IP FACTORY has assembled a group of
experts and professionals in areas such as Internet Protocol uniformity, Network
Design, Security, Software Applications, and System Integration, each of which
has a strong customer base. The IP FACTORY group will work in synergy to provide
complete enterprise solutions to Global 2000 firms and government institutions
worldwide while enhancing growth of its potential subsidiaries.
Rapidly Expanding Trillion Dollar Corporate Network Market
The dominating trend in today's global economy is the ability to
communicate efficiently, as industry leaders continue the quest to find better
ways to deliver information in a timely manner. A Business Research Group report
entitled: "Web Server and the Rise of the Corporate Internet" [1997] showed that
an increasing number of companies are now turning to the Web as a way to
organize their internal communications. The report surveys 170 decision makers
at large and medium-size companies, and shows that 23% of the sites have
implemented or plan to implement the Web internally, with an additional 20%
studying the option. A study by IDC examining Intranet technology concludes,
"Typical implementations (of Intranets) are achieving ROI's (Return on
Investment) well over 1,000 percent."
According to 1999 IBM company reports, The Information Technology industry
is on target to generate $1.2 trillion in worldwide revenues by the year 2001.
Networking will contribute 50%, or $600 billion by the year 2001 worldwide and
will claim a 75% share of the IT market by 2003. This market is expected to
continue growing at a 25% compounded rate.
The average business maintains at least 7-10 different vendors for their
network/Internet needs, with each supplying only a piece of the total solution.
The end result has consistently been a technology bottleneck that can often lead
to massive losses in productivity, customer service deficiencies, and financial
losses in the tens of millions of dollars.
1
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A Robust Business Model
Effective communication management may be the single most important element
for success in business today. Advances in technology have increased
productivity, improved performance and enhanced communications by enabling
people to send and receive messages quickly and effectively, when and how they
want. As a result, we are also faced with the daily challenge of utilizing voice
mail, personal computer, e-mail, cellular phone, PDA, fax and pager messages as
tools to assist in the efficient performance of business responsibilities, as
opposed to interruptions that effectively extend the time required to get work
done. In our personal lives as well, the efficiency of our communication
capabilities is vital to fulfilling our routine obligations in order to allow
the time and ability to enjoy elective activities. IP Factory, recognizing the
increasing demand and largely untapped market for integrating solutions, will
address the complete range of customer needs, all under a single source of
comprehensive customer support. These include:
_ A well-orchestrated e-business solution approach of network design
combined with integration of an optimum combination of software
applications, hardware components and systems support, tailored to fit
the business needs of the enterprise.
_ Integration of data, voice, fax, graphical, image and video
communications within the organization's network.
_ Unified messaging utilizing effective and efficient communication
among e-mail, fax, pager and voice mediums, via the Internet.
_ Highly flexible accounting system designed around the Oracle database
and which is capable of handling pre-paid monthly billing, pre-paid
transaction-based billing, and the traditional post-paid monthly
billing systems.
_ Solutions for the myriad of security concerns which arise in all
aspects of data transmission, storage, access and management.
_ Solutions for the full range of electronic business and commerce
needs, including sales transactions, billing and collections,
marketing, shipping and inventory control.
2
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Item 2. Management's Discussion and Analysis or Plan of Operation.
PLAN OF OPERATIONS
IP Factory will function like the "old days" movie studios. There will be a
team of creatives and a team of business management. The entirety of these teams
will work on each and every project together. Together, they will all be known
collectively as the Talent. As was the case with the old film studios, each
project will assemble a team from within the group, having a team leader
(director or producer) and the creative and business backup. This will be the
case whether it is a client side project or an internal one. If you think of it
like day jobs and jobs of passion, this will be good. The day job will be the
client projects.
EXAMPLE: Cisco Systems hires IP Factory (IPF) to produce a show for Broadband
distribution, they will pay IPF a fee. After salaries and other company
expenses, the net will be put back into the company and be applied to internal
projects. The internal talent will pitch show concepts to management on a
frequent basis. Though we will definitely start with a "slate" of internal
shows, we plan to enlarge that slate form year to year. We may even adjust the
initial slate depending on what our talent initially pitches.
By following this model, we will secure equity in all projects we produce
whether they are client side applications or self-produced projects (this is
because we will provide the means of distribution similar to the way the old
studios did it). In the above example, we will retain a small percentage of
equity in the client product and, ideally through our relationship with Fusebox
and Webcasts.com, we will also provide the hosting facility and the means of
distribution, respectively. Additionally, our investors will be appeased by the
client side as that will be the thing, at first, that keeps the cash flowing in
and gives us the ability to commit to a reasonable ROI. It follows that the
talent we bring in will all be established professionals in their respective
fields and have their own contacts that can be made to be clients or strategic
relationships or both.
Another important factor of the company is the uniqueness from which it is
being sprung. Contrary to traditional start-ups that create a business plan and
see it through, we will be creating a show and forming the business plan from
the actual success of the proprietary side products. Of course, we will be
earning money through the client side, but our real agenda will be to form the
internal production side of the company through proven successes on that front.
Once we are seeing a high and steady stream of revenue from our own projects, we
may spin off the client side into another company or drop it all together
depending on the resources available at that time. If we do spin it off, we may
be able to acquire investment at that time for the spin off company and see that
one through to IPO. The value will then be the clients and the equity we retain
in the shows we produce for them. The internal side would remain private and
continue to reap extensive profits and build equity through intellectual
property. In the long term, the company will continue to collect additional
revenue streams through continued residual distribution paid by performing
rights societies, guilds, etc.
3
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Lastly and a potentially very lucrative prong to the revenue model,
additional revenue streams include merchandising, both traditional and online,
e-commerce, advertising, singular show sponsorships, licensing, publishing
residuals, cross media platform applications, proprietary software, product
placement, etc.
Shows within the Shows - Advertising Model
Client. We proposed approaching the investor relations departments at some
of the fortune 500 companies and building ad campaigns for them for the next
century type thing. For example, we could build a high-speed show (really an ad)
for Coke that would be the first of its kind for Broadband. If we have the
shows, we have to have the ads. However, the ads don't have to be 30, 60 and
1:30 spots like traditional TV. They could and should be shows within the shows.
Most of the upper management team cannot be formally named at this time due
to their current positions. They are involved in employment contracts and cannot
afford to jeopardize their positions, stock, etc. with their current companies
until we are funded and ready to roll out. This is why we cannot utilize bios,
info on them. What Internet producers call rich media (the best in web
broadcast), television execs simply call TV. The market is wide open for high
speed "rich media" and IP FACTORY intends to be the providers.
The Company has registered a dot.com name and has determined it can begin
conducting its business with limited financing that it has arranged.
LIQUIDITY AND CAPITAL RESOURCES
For the period since inception (November 20, 1998) through December 31,
1999, during the Company's development stage, the Company has a positive cash
balance of $200.00, and has generated a net loss of ($6,389.00). Since its
organization, IP Factory has satisfied its cash requirements through sales of
Common Stock and cash advances from its current stockholders. Our uses of cash
have been professional fees, printing costs, postage expenses and similar
disbursements relating to the organization of IP Factory, filing of its
registration statement on Form 10-SB and the costs of filing periodic reports
with the Securities and Exchange Commission. Certain current stockholders have
agreed, in their discretion, to make advances, if need be, to fund IP Factory's
immediate cash needs. The Company will also seek funding through private
placements of its securities and may seek a suitable business combination.
4
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Item 3. Description of Property
The Company's executive and administrative offices are located at 860 Via
De La Paz, Suite E-1, Pacific Palisades, California 90272. In 1999, the Company
neither owned nor leased any real or personal property. A shareholder provided
office space and services at no charge.
Item 4. Security Ownership of Certain Beneficial
Owners and Management.
The following table sets forth as of December 31, 1999 certain information
relating to the ownership of the common stock.
Name and Address of Amount and Nature of Percent of
Beneficial Owner (1) Beneficial Ownership (2) Class (2)
- -------------------- ------------------------ ----------
Appletree Investment Company, Ltd 1,019,000(3) 100.0%
PageOne Business Productions, LLC 109,500 10.7%
George Todt 109,500(4) 10.7%
James Walters 109,500(4) 10.7%
Besty Rowbottom 109,500(4) 10.7%
All officers and directors as a group 109,500(4) 10.7%
(3 persons)
- ------------------------
(1) Unless otherwise indicated, the address of each beneficial owner is in the
care of IP Factory, Inc., 860 Via de la Paz, Suite E-1, Pacific Palisades,
California 90272.
(2) Unless otherwise indicated, IP Factory believes that all persons named in
the table have sole voting and investment power with respect to all shares
of common stock beneficially owned by them. A person is deemed to be the
beneficial owner of securities which may be acquired by such person within
60 days from the date of this registration statement upon the exercise of
options, warrants or convertible securities. Each beneficial owner's
percentage of ownership is determined by assuming all options, warrants or
convertible securities that are held by such person (but not held by any
other person) and which are exercisable or convertible within 60 days of
this registration statement have been exercised or converted.
5
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(2) Percent of Class assumes a base of 1,019,000 shares of common stock
outstanding as of December 31, 1999. (3) Consists of 909,500 shares held of
record by Appletree Investment Company, Ltd., an Isle of Man corporation,
and 109,500 shares held of record by PageOne Business Productions, LLC, a
Delaware limited liability company, of which Appletree is a managing
member. (4) Consists solely of 109,500 shares of common stock held by
PageOne Business Productions, LLC, a Delaware limited liability company, of
which Mr. Todt and Mr. Walters are managing members and Ms. Rowbottom is
Vice President.
Item 5. Directors, Executive Officers, Promoters and Control persons.
The following table sets forth certain information with respect to the directors
and executive officers of IP Factory.
Name Age(1) Position
- ---- ------ --------
George Todt 46 President and Director
James Walters 47 Vice President and Treasurer
Betsy Rowbottom 28 Secretary
(1) The ages of Messrs. Todt and Walters and Ms. Rowbottom are listed as of
December 31, 1999.
Our director and executive officers devote such time and attention tothe
affairs of IP Factory as they believe reasonable and necessary. Set forth below
is a description of the background of our director and executive officers.
George A. Todt has been the sole director and our President since
theinception of IP Factory. Since 1996, Mr. Todt has been a managing member
ofPageOne Business Productions, LLC, a Delaware limited liability company. From
1990 to 1995, Mr. Todt was the chief executive officer of REPCO, Inc., a
worldwide designer and builder of environmental facilities.
James Walters has been the Vice President and the Treasurer of IP Factory
since its inception. For more than 20 years, Mr. Walters has been engaged as a
certified public accountant with the Los Angeles, California-based firm of
Kellogg & Andelson.
6
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Besty Rowbottom became Secretary of IP Factory in June 1999. She hasbeen
employed by PageOne since 1997 and has served as its Vice President since March
1999. From 1994 to 1997, Ms. Rowbottom served as a talent agent at HSI
Productions, a Chicago, Illinois-based video production company.
Our board of directors currently consists of one member, who serves in such
capacity for a one-year term or until his successor has been elected and
qualified, subject to earlier resignation, removal or death. The number of
directors constituting the board of directors may be increased or decreased (but
not below the minimum number required by applicable law) from time to time by
resolution of the board of directors. Our officers serve at the discretion of
the board of directors, subject to any effective contractual arrangements.
Item 6. Executive Compensation.
Consistent with our present policy, no director or executive officer of IP
Factory receives compensation for services rendered to the company. However,
these persons are entitled to be reimbursed for expenses incurred by them in
pursuit of our business objectives.
Item 7. Certain Relationships and Related Transactions.
In March 1999, IP Factory issued 100,000 shares of common stock to Page
One, of which George Todt and James Walters are managing member and Ms.
Rowbottom is Vice President. The purchase price for these shares was $0.001 per
share.
Item 8. Description of Securities.
Common Stock
- -------------
IP Factory is authorized to issue 100,000,000 shares of common stock, par
value $0.001 per share. Holders of common stock are entitled to one vote for
each share held of record on all matters on which the holders of common stock
are entitled to vote. There are no redemption or sinking fund provisions
applicable to the common stock. The outstanding shares of common stock are, and
the common stock issuable pursuant to this prospectus will be, when issued,
fully paid and nonassessable.
7
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Preferred Stock
- -----------------
IP Factory is authorized to issue 8,000,000 shares of "blank check"
preferred stock, par value $0.001 per share, in one or more series from time to
time with such designations, rights and preferences as may be determined from
time to time by the Board of Directors, including, but not limited to (i) the
designation of such series; (ii) the dividend rate of such series, the
conditions and dates upon which such dividends shall be payable, the relation
which such dividends shall bear to the dividends payable on any other class or
classes or series of IP Factory's capital stock and whether such dividends shall
be cumulative or non-cumulative; (iii) whether the shares of such series shall
be subject to redemption for cash, property or rights, including securities of
any other corporation, by IP Factory or upon the happening of a specified event
and, if made subject to any such redemption, the times or events, prices, rates,
adjustments and other terms and conditions of such redemptions; (iv) the terms
and amount of any sinking fund provided for the purchase or redemption of the
shares of such series (v) whether or not the shares of such series shall be
convertible into, or exchangeable for, at the option of either the holder or IP
Factory or upon the happening of a specified event, shares of any other class or
classes or of any other series of the same class of IP Factory's capital stock
and, if provision be made for the conversion or exchange, the times or events,
prices, rates, adjustments and other terms and conditions of such conversions or
exchanges; (vi) the restrictions, if any, on the issue or reissue of any
additional preferred stock; (vii) the rights of the holders of the shares of
such series upon the voluntary or involuntary liquidation, dissolution or
winding up of IP Factory; and (viii) the provisions as to voting, optional
and/or other special rights and preferences, if any, including, without
limitation, the right to elect one or more directors. Accordingly, the Board of
Directors is empowered, without stockholder approval, to issue preferred stock
with dividend, liquidation, conversion, voting or other rights which adversely
affect the voting power or other rights of the holders of the common stock. In
the event of issuance, the preferred stock could be utilized, under certain
circumstances, as a way of discouraging, delaying or preventing an acquisition
or change in control of IP Factory. IP Factory does not currently intend to
issue any shares of its preferred stock.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters.
There is currently no market for IP Factory's securities. IP Factory has
never paid cash dividends on its common stock. Payment of future dividends will
be within the discretion of IP Factory's Board of Directors and will depend on,
among other factors, retained earnings, capital requirements and the operating
and financial condition of IP Factory.
8
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Item 2. Legal Proceedings.
IP Factory is not currently a party to any pending legal proceedings.
Item 3. Changes in and Disagreements with Accountants.
Not Applicable.
Item 4. Recent Sales of Unregistered Securities.
In November 1998, IP Factory issued to each of PageOne and Appletree 9,500
shares of common stock in consideration of services rendered to IP Factory
valued at $19.00 in the aggregate. There was no underwriter or placement agent
involved in the offer or sale of these securities and there was no public
solicitation or advertisement by IP Factory in connection with the offer or sale
of these securities. The foregoing issuances of common stock were exempt from
registration under of the Securities Act of 1933, as amended, pursuant to
Section 4(2) thereof.
In March 1999, IP Factory issued 900,000 shares of common stock to
Appletree and 100,000 shares of common stock to Page One. The purchase price for
these shares was $0.001 per share. There was no underwriter or placement agent
involved in the offer or sale of these securities and there was no public
solicitation or advertisement by IP Factory in connection with the offer or sale
of these securities. The foregoing issuances of common stock were exempt from
registration under of the Securities Act of 1933, as amended, pursuant to
Section 4(2) thereof.
Item 5. Indemnification of Directors and Officers.
IP Factory's Restated Certificate of Incorporation limits the liability of
its directors to IP Factory or IP Factory's stockholders for monetary damages
arising from a breach of fiduciary duty owned to IP Factory or IP Factory's
stockholders to the fullest extent permitted by the Delaware General Corporation
Law.
IP Factory's Restated Certificate of Incorporation and its Bylaws provide
for the indemnification by IP Factory of each person (including the heirs,
executors, administrators, or estate of such person) who is or was a director or
officer of IP Factory to the fullest extent permitted or authorized by law,
including attorneys' fees. Section 145 of the Delaware General Corporation Law
provides in relevant part that a corporation may indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
9
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reason of the fact that such person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
such person's conduct was unlawful.
In addition, Section 145 provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or settlement
of such action or suit if such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Delaware Court
of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Delaware Court of Chancery or
such other court shall deem proper. Delaware law further provides that nothing
in the above-described provisions shall be deemed exclusive of any other rights
to indemnification or advancement of expenses to which any person may be
entitled under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of IP Factory
pursuant to the above statutory provisions or otherwise, IP Factory has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
10
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PART F/S
The following financial statements of IP Factory, Inc., a development stage
company, are contained on Pages F-1 through F-7:
REPORT OF INDEPENDENT AUDITORS WEINBERG & COMPANY, P.A., CERTIFIED PUBLIC
ACCOUNTANTS, DATED APRIL 6, 2000.
BALANCE SHEET AS OF DECEMBER 31, 1999
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999 AND FOR
THE PERIOD FROM NOVEMBER 20, 1998 (INCEPTION) TO DECEMBER 31, 1999
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY FOR THE PERIOD FROM
NOVEMBER 20, 1998 (INCEPTION) TO DECEMBER 31, 1999
STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1999 AND FOR
THE PERIOD FROM NOVEMBER 20, 1998 (INCEPTION) TO DECEMBER 31, 1999
NOTES TO FINANCIAL STATEMENTS AS OF DECEMBER 31, 1999 .
11
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors of:
IP Factory, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheet of IP Factory, Inc. (a
development stage company) as of December 31, 1999 and the related statements of
operations, changes in stockholders' deficiency and cash flows for the year then
ended and for the period from November 20, 1998 (inception) to December 31,
1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly in all
material respects, the financial position of IP Factory, Inc. (a development
stage company) as of December 31, 1999, and the results of its operations and
its cash flows for the year then ended and for the period from November 20, 1998
(inception) to December 31, 1999, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a growing concern. As discussed in Note 4 to the
financial statements, the Company is a development stage company without
operations and has had accumulated losses of $6,389 since inception and a
working capital deficiency of $5,370. These factors raise substantial doubt
about its ability to continue as a going concern. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
WEINBERG & COMPANY, P.A.
Boca Raton, Florida
April 6, 2000
F-1
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IP FACTORY, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
AS OF DECEMBER 31, 1999
ASSETS
Cash $ 200
-------
TOTAL ASSETS $ 200
=======
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
LIABILITIES
Loan payable - related party $ 5,570
-------
TOTAL LIABILITIES 5,570
-------
STOCKHOLDERS' DEFICIENCY
Preferred stock, $.001 par value, 8,000,000 shares
authorized, none issued and outstanding -
Common stock, $.001 par value, 100,000,000 shares
authorized, 1,019,000 issued and outstanding 1,019
Accumulated deficit during development stage (6,389)
-------
TOTAL STOCKHOLDERS' DEFICIENCY (5,370)
-------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 200
=======
See accompanying notes to financial statements.
F-2
<PAGE>
IP FACTORY, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
November 20, 1998
For the Year (Inception) to
Ended December December
31, 1999 31, 1999
------------- ---------------
INCOME $ - $ -
------------- -------------
EXPENSES
Accounting fees 500 500
Bank service charge 120 120
Consulting fees 750 769
Legal fees 5,000 5,000
------------- -------------
NET LOSS $ (6,370) $ (6,389)
- -------- ============= =============
NET LOSS PER SHARE
BASIC AND DILUTED $ (0.0085) $ (0.0094)
============= =============
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING DURING THE PERIOD
BASIC AND DILUTED 753,247 677,477
============= =============
See accompanying notes to financial statements.
F-3
<PAGE>
IP FACTORY, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
FOR THE PERIOD FROM NOVEMBER 20, 1998
(INCEPTION) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock During
--------------------- Development
Shares Amount Stage Total
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Common stock issued for services 19,000 $ 19 $ - $ 19
Net loss for the year ended December 31, 1998 - - (19) (19)
--------- --------- --------- ---------
Balance at December 31, 1998 19,000 19 (19) -
Common stock issued for cash 1,000,000 1,000 - 1,000
Net loss for the year ended December 31, 1999 - - (6,370) (6,370)
--------- --------- --------- ---------
BALANCE AT DECEMBER 31, 1999 1,019,000 $ 1,019 $ (6,389) $ (5,370)
- --------------------------- ========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
IP FACTORY, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
November
For the Year 20, 1998
Ended (Inception)
December To December
31, 1999 31, 1999
---------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(6,370) $(6,389)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock issued for consulting services - 19
------- -------
Net cash used in operating activities (6,370) (6,370)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES: - -
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Loan payable - related party 5,570 5,570
Proceeds from issuance of common stock 1,000 1,000
------- -------
Net cash provided by financing activities 6,570 6,570
------- -------
INCREASE IN CASH AND CASH EQUIVALENTS
200 200
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD - -
------- -------
CASH AND CASH EQUIVALENTS - END OF PERIOD
$ 200 $ 200
======= =======
See accompanying notes to financial statements.
F-5
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IP FACTORY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) Organization and Business Operations
IP Factory, Inc. (a development stage company) ("the Company") was
incorporated in Delaware on November 20, 1998 to engage in an
internet-based business. At December 31, 1999, the Company had not yet
commenced any revenue-generating operations, and activity to date
relates to the Company's formation, proposed fund raising and business
plan development.
The Company's ability to commence revenue-generating operations is
contingent upon its ability to implement its business plan and raise
the capital it will require through the issuance of equity securities,
debt securities, bank borrowings or a combination thereof.
(B) Use of Estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
(C) Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid investments purchased with an original maturity of three
months or less to be cash equivalents.
(D) Income Taxes
The Company accounts for income taxes under the Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("Statement 109"). Under Statement 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax basis. 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. Under Statement 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. There were no current or
deferred income tax expense or benefits due to the Company not having
any material operations for the year ended December 31, 1999.
F-6
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IP FACTORY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(E) Loss Per Share
Net loss per common share for the year ended December 31, 1999 and for
the period from November 20, 1998 (inception) to December 31, 1999 is
computed based upon the weighted average common shares outstanding as
defined by Financial Accounting Standards No. 128 "Earnings Per Share".
There were no common stock equivalents outstanding at December 31,
1999.
NOTE 2 - LOAN PAYABLE - RELATED PARTY
The loan payable - related party is a non-interest-bearing loan payable
to PageOne Business Productions, LLC arising from funds advanced to the
Company. The amount is due and payable upon demand.
NOTE 3 - STOCKHOLDERS' DEFICIENCY
The Company was originally authorized to issue 100,000 shares of
preferred stock at $.01 par value, with such designations, preferences,
limitations and relative rights as may be determined from time to time
by the Board of Directors. In addition, the Company was originally
authorized to issue 10,000,000 shares of common stock at $.001 par
value. The Company issued 909,500 and 109,500 shares to Appletree
Investments Company, Ltd. and PageOne Business Productions, LC,
respectively.
Management filed a restated certificate of incorporation with the State
of Delaware which increased the number of authorized common shares to
100,000,000, increased the number of authorized preferred shares to
8,000,000 and decreased the par value of the preferred shares to $.001
per share. The financial statements at December 31, 1999 give effect to
common and preferred stock amounts and par values enumerated in the
restated certificate of incorporation.
NOTE 4 - GOING CONCERN
As reflected in the accompanying financial statements, the Company has
had accumulated losses of $6,389 since inception, a working capital
deficiency of $5,370 and has not generated any revenues since it does
not yet implemented its business plan. The ability of the Company to
continue as a going concern is dependent on the Company's ability to
raise additional capital and implement its business plan. The
financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a growing concern.
The Company intends to implement its business plan and is seeking
funding through the private placement of its equity or debt securities
or may seek a combination with another company already engaged in its
proposed business. Management believes that actions presently being
taken provide the opportunity for the Company to continue as a going
concern.
F-7
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PART III
ITEM 1. INDEX TO EXHIBITS
Number Description
- ------ -----------
3.1 Certificate of Incorporation *
3.3 Bylaws *
27 Financial Data Schedule (incorporated herein by reference to
Registrant's Annual Report on Form 10-KSB for the year ended December
31, 1999).
* previously filed
Item 2. Description of Exhibits
See Item 1 above.
12
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SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
IP FACTORY, INC.
(Registrant)
Amendment No. 1 /s/ George A. Topdt
Date: April 27, 2000 By: -------------------------
George Todt
President
13
