UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
February 22, 2000
Commission File Number: 0-27161
-----------------------------------
PAYFORVIEW.COM CORP.
(Exact name of registrant as specified in its charter)
Nevada, U.S.A. 91-1976310
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
509 Madison Avenue, 16th Floor, New York, New York 10022
(Address of principal executive offices)
(212) 605-0150
(Issuer's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
<PAGE>
Item 7. Financial Statements and Exhibits.
On February 25, 2000, the Company filed an 8-K describing a
change in control resulting from a Stock Exchange Agreement
entered into as of February 22, 2000, between MRC Legal Services
Corporation, a California corporation, which entity is the
controlling shareholder of MAS Acquisition XVI Corp. ("MAS XVI"),
an Indiana corporation, and PayForView.com Corp. ("PayForView" or
the "Company"), a Nevada corporation. Filed herewith are the
financial statements, as required by the Securities Exchange Act
of 1934. Such financial statements consist of the consolidated
balance sheets of Payforview.com Corp. and Subsidiaries (formerly
Sierra Gold Corporation) as of December 31, 1999 and 1998, and
the related consolidated statements of operations, stockholders'
equity, and cash flows for the year ended December 31, 1999 and
the period April 6, 1998 (inception) to December 31, 1998, and
the cumulative consolidated statement of operations and cash
flows for the period April 6, 1998 (inception) through December
31, 1999. The Company has also included its unaudited interim
consolidated financial statements as of March 31, 2000 and for
the three months ended March 31, 2000 and 1999.
Item 8. Change in Fiscal Year.
After further consultation with the Company's auditors and
advisors, the Company has decided that it should return to its
original fiscal year end, prior to the merger with MAS XVI, of
December 31. Accordingly, the company has adopted December 31 as
its fiscal year.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
Dated: August 7, 2000
PAYFORVIEW.COM CORP.
/s/ Marc A. Pitcher
Marc A. Pitcher,
President and Director
<PAGE>
C O N T E N T S
Page
Report of Independent Certified Public Accountants
- Grant Thornton LLP F-2
Independent Auditors' Report - Davidson & Company F-3
Financial Statements
Consolidated Balance Sheets F-4
Consolidated Statements of Operations F-5
Consolidated Statement of Changes
in Stockholders' Equity F-6 - F-7
Consolidated Statements of Cash Flows F-8
Notes to Consolidated Financial Statements F- 9 -
F-29
<PAGE> F-1
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Shareholders
Payforview.com Corp. and Subsidiaries
We have audited the accompanying consolidated balance sheet of
Payforview.com Corp. and Subsidiaries (formerly Sierra Gold
Corporation) (a development stage company) as of December 31,
1999, and the related consolidated statements of operations,
stockholders' equity, and cash flows for the year then ended and
the cumulative consolidated statement of operations and cash
flows for the period April 6, 1998 (inception) through 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 did
not audit the financial statements of the Company for the period
from April 6, 1998 (inception) through December 31, 1998 which
represents 2.8% of the cumulative net loss for the period from
April 6, 1998 (inception) through December 31, 1999. These
statements were audited by other auditors whose report thereon
has been furnished to us, and in our opinion, insofar as it
related to the 1998 results, is based solely on the report of the
other auditors.
We conducted our audit in accordance with auditing standards
generally accepted in the United States of America. 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, based on our audit and the report of the other
auditors, the financial statements referred to above present
fairly, in all material respects, the consolidated financial
position of Payforview.com Corp. and Subsidiaries as of December
31, 1999, and the consolidated results of their operations and
their consolidated cash flows for the year then ended and the
cumulative results of operations and cash flows for the period
from April 6, 1998 through December 31, 1999, in conformity with
accounting principles generally accepted in the United States of
America.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed
in Note B, the Company has experienced recurring net losses, has
an accumulated deficit and is experiencing difficulty in
generating sufficient cash flow to meet its obligations and
sustain its operations, which raises substantial doubt about its
ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note B. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
GRANT THORNTON LLP
New York, New York
July 7, 2000
<PAGE> F-2
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Directors of Payforview.com Corp. and
Subsidiaries
(formerly Voyager International Entertainment Inc.)
(A Development Stage Company)
We have audited the accompanying consolidated balance sheet of
Payforview.com Corp. and Subsidiaries (formerly Voyager
International Entertainment Inc.) as of December 31, 1998 and the
related consolidated statements of operations, changes in
stockholders' equity, and cash flows for the period from
incorporation on April 6, 1998 to 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 auditing standards
generally accepted in the United States of America. 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 consolidated
financial position of Payforview.com Corp. and Subsidiaries
(formerly Voyager International Entertainment Inc.) as of
December 31, 1998, and the consolidated results of its
operations, its consolidated changes in stockholders' equity and
its consolidated cash flows for the period from incorporation on
April 6, 1998 to December 31, 1998 in conformity with accounting
principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been
prepared assuming that Payforview.com Corp. and Subsidiaries
(formerly Voyager International Entertainment Inc.) will continue
as a going concern. As discussed in Note B to the consolidated
financial statements, unless the Company attains future
profitable operations and/or obtains additional financing, there
is substantial doubt about the Company's ability to continue as a
going concern. Management's plans in regard to these matters are
discussed in Note B. The consolidated financial statements do
not include any adjustments that might result from the outcome of
this uncertainty.
Davidson & Company
Vancouver, Canada
July 21, 1999
<PAGE> F-3
<TABLE>
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
CONSOLIDATED BALANCE SHEETS
<S> <C> <C> <C>
December 31, March 31,
ASSETS 1998 1999 2000
(unaudited)
Current assets
Cash and cash equivalents $ - $ 342,004 $ 4,155,271
Prepaid expenses 2,802 63,602 152,826
Due from related parties 7,648 - 18,078
--------- ----------- ------------
10,450 405,606 4,326,175
Fixed assets, net 7,025 351,780 381,776
Investment in Street Solid Records - 10,000 10,000
Intangible assets, net - 39,169 34,274
Capitalized website development costs 86,898
Other assets - - 177,840
--------- ----------- ------------
$ 17,475 $ 806,555 $ 5,016,963
========= =========== ============
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIENCY)
Current liabilities
Accounts payable $ 82,893 $ 261,368 $ 86,507
Liabilities from discontinued
operations - 256,000 198,000
Loan payable 59,418 1,050,151 1,050,151
--------- ----------- ------------
142,311 1,567,519 1,334,658
--------- ----------- ------------
Other Liabilities - 222,500 -
2% Series a Senior Convertible
Redeemable Debentures - 172,500 -
Stockholders' equity (deficiency)
Common stock
Authorized, 100,000,000 common
shares with a par value of $0.0001;
issued and outstanding, 4,327,131
and 43,397,727 and 57,577,727
Shares, respectively 433 4,340 5,759
Additional paid-in capital 150,259 8,594,637 17,694,449
Deficit, accumulated during the
development stage (275,528) (9,754,941) (14,017,903)
--------- ----------- ------------
(124,836) (1,155,964) 3,682,305
--------- ----------- ------------
$ 17,475 $ 806,555 $ 5,016,963
========= =========== ============
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> F-4
<TABLE>
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS
<S> <C> <C> <C>
Period from Cumulative
incorporation amounts from
on April 6, April 6, 1998
1998 to Year ended (inception) to
December 31, December 31, December 31,
1998 1999 1999
------------ ------------ -------------
Costs and expenses
Selling, general and administrative
Expenses $ 275,528 $ 2,240,097 $ 2,515,625
Amortization of licenses and
Goodwill - 362,303 362,303
Loss on impairment - 4,247,022 4,247,022
Interest expense - 348,631 348,631
Interest income - - -
----------- ----------- -----------
Total costs and expenses 275,528 7,198,053 7,473,581
----------- ----------- -----------
Loss from continuing
operations (275,528) (7,198,053) (7,473,581)
----------- ----------- -----------
Discontinued operations (Street
Solid Records)
Loss from operations (1,056,167) (1,056,167)
Loss on disposal - (1,225,193) (1,225,193)
----------- ----------- -----------
NET LOSS $ (275,528) $(9,479,413) $(9,754,941)
=========== =========== ===========
Basic and diluted loss per share:
Continuing operations $ (.03) $ (.39) $ (.49)
Discontinued operations - (.13) (.15)
----------- ----------- -----------
Basic and diluted loss per share $ (.03) $ (.52) $ (.64)
=========== =========== ===========
Weighted-average shares outstanding 8,424,087 18,284,185 15,321,804
=========== =========== ===========
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
<S> <C> <C> <C>
Cumulative
amounts from
April 6, 1998
March 31, (inception) to
--------------------------- March 31,
1999 2000 2000
------------ ------------ -------------
(unaudited) (unaudited)
Costs and expenses
Selling, general and administrative
Expenses $ 310,433 $ 4,289,458 $ 6,805,083
Amortization of licenses and
Goodwill 120,534 6,799 369,102
Loss on impairment 2,821,500 - 4,247,022
Interest expense 1,462 - 348,631
Interest income - (33,295) (33,295)
----------- ----------- ------------
Total costs and expenses 3,253,929 4,262,962 11,736,543
----------- ----------- ------------
Loss from continuing operations (3,253,929) (4,262,962) (11,736,543)
----------- ----------- ------------
Discontinued operations (Street
Solid Records)
Loss from operations (140,401) - (1,056,167)
Loss on disposal - - (1,225,193)
----------- ----------- ------------
NET LOSS $(3,394,330) $(4,262,962) $(14,017,903)
=========== =========== ============
Basic and diluted loss per share:
Continuing operations $ (.23) $ (.08) $ (.58)
Discontinued operations (.01) - (.12)
----------- ----------- ------------
Basic and diluted loss per share $ (.24) $ (.08) $ (.70)
=========== =========== ============
Weighted-average shares outstanding 14,206,121 53,780,254 20,142,353
=========== =========== ============
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> F-5
<TABLE>
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Years ended December 31, 1999 and 1998 and three months ended March 31, 2000 (unaudited)
<S> <C> <C> <C> <C> <C>
Deficit,
accumulated
Common Stock issued Additional during the
--------------------- paid-in development
Number Amount capital stage Total
---------- ------ ---------- ----------- -----------
Balance,
April 6, 1998 - $ - $ - $ - $ -
Capital stock of Voyager
International
Entertainment Inc.
issued for services 3,800,000 380 37,620 - 38,000
Capital stock of Voyager
International
Entertainment Inc.
issued for acquisition
of Voyager Film
Sales Inc. 200,000 20 180 - 200
Capital stock of Voyager
International Entertainment
Inc. issued for cash 327,131 33 112,459 - 112,492
Net loss (275,528) (275,528)
---------- ------ ---------- ----------- -----------
Balance,
December 31, 1998 4,327,131 433 150,259 (275,528) (124,836)
Capital stock of
Payforview.com Corp.
at January 5, 1999 3,750,000 375 625 - 1,000
Issuance of shares for
acquisition of
Voyager International
Entertainment Inc. 7,788,840 779 781 1,560
Issuance of shares for
acquisition of
Voyager International
Entertainment, Inc. for
potential commission 1,500,000 150 (150) -
Cancellation of
Voyager shares (4,327,131) (433) 433 -
Issuance of shares for
acquisition of Squadron
One Records and creation
of Street Solid
Records, Inc. 1,173,509 117 1,598,163 1,598,280
Issuance of shares for
acquisition of
licenses and rights 1,102,500 110 3,067,290 3,067,400
Issuance of shares for
services 122,000 12 77,824 77,836
Issuance of shares for
consulting services 1,800,000 180 652,320 652,500
Issuance of shares for
consulting services 333,333 33 49,967 50,000
Issuance of shares for
financial advisor
services 1,800,000 180 1,386,696 1,386,876
Issuance of shares for
acquisition of Software 200,000 20 291,980 292,000
Issuance of shares for
advertising 200,000 20 59,980 60,000
Issuance of shares upon
conversion of debt 22,837,005 2,284 825,216 827,500
Allocation of proceeds
of convertible debt to
additional paid-in capital 333,333 333,333
Issuance of shares
for cash 540,540 55 99,945 100,000
Shares held in escrow
with attorney relating
to debentures 250,000 25 (25)
Net loss (9,479,413) (9,479,413)
---------- ------ ---------- ----------- -----------
Balance,
December 31, 1999 43,397,727 $4,340 $8,594,637 $(9,754,941) $(1,155,964)
========== ====== ========== =========== ===========
</TABLE>
<PAGE> F-6
<TABLE>
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (continued)
Years ended December 31, 1999 and 1998 and three months ended March 31, 2000 (unaudited)
<S> <C> <C> <C> <C> <C>
Deficit,
accumulated
Common Stock issued Additional during the
--------------------- paid-in development
Number Amount capital stage Total
---------- ------ ---------- ----------- -----------
Issuance of shares for
cash, net of share
issuance costs
(unaudited) 2,800,000 $ 280 $4,166,220 $ - $ 4,166,500
Issuance of shares for
cash (unaudited) 810,000 81 1,214,919 - 1,215,000
Issuance of shares for
convertible debt
(unaudited) 6,900,000 690 171,810 - 172,500
Shares issued to
officers and consultants
for services (unaudited) 3,000,000 300 2,933,700 - 2,934,000
Shares issued for
acquisition of MAS
Acquisition Corporation
(unaudited) 335,000 34 (3) - 31
Shares issued for
transaction costs for MAS
Acquisition Corporation
(unaudited) 335,000 34 375,166 - 375,200
To record additional
expense for services
performed in current year
(unaudited) - - 238,000 - 238,000
Net loss for the three
months ended March 31, 2000
(unaudited) - - - (4,262,962) (4,262,962)
---------- ------ ---------- ----------- -----------
Balance,
March 31, 2000
(unaudited) 57,577,727 $5,759 $17,694,449 $(14,017,903) $ 3,682,305
========== ====== ========== =========== ===========
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE> F-7
<TABLE>
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<S> <C> <C> <C>
Period from Cumulative
incorporation amounts from
on April 6, April 6, 1998
1998 to Year ended (inception) to
December 31, December 31, December 31,
1998 1999 1999
------------ ------------ -------------
Cash flows from operating activities
Loss from continuing operations $ (275,528) $(7,198,053) $(7,473,581)
Adjustments to reconcile net loss
to cash used in operating activities
Depreciation 1,899 4,536 6,435
Amortization of licenses and goodwill - 362,303 362,303
Issuance of common stock for services 38,000 4,865,700 4,903,700
Noncash interest expense - 333,333 333,333
Changes in other operating assets
and liabilities
Prepaid expenses (2,802) (60,800) (63,602)
Due from related party (7,648) 7,648
Other assets 200 200
Increase in accounts payable 82,893 128,475 211,368
----------- ----------- -----------
Net cash used in operating
activities of continuing
operations (162,986) (1,556,858) (1,719,844)
----------- ----------- -----------
Net cash used in operating
activities of discontinued
operations - ( 657,080) (657,080)
----------- ----------- -----------
Cash flows from investing activities
Payments for website costs - - -
Payment of settlement costs
relating to discontinued operations - - -
Proceeds from sale of discontinued
operations - 250,000 250,000
Acquisition of fixed assets (8,924) (7,291) (16,215)
----------- ----------- -----------
Net cash (used in) provided
by investing activities (8,924) 242,709 233,785
----------- ----------- -----------
Cash flows from financing activities
Issuance of common stock 112,492 100,000 212,492
Advances for common stock - 222,500 222,500
Proceeds from loan payable 59,418 1,050,151 1,050,151
Repayment of loan payable - (59,418) -
Proceeds from convertible debenture - 1,000,000 1,000,000
----------- ----------- -----------
Net cash provided by
financing activities 171,910 2,313,233 2,485,143
----------- ----------- -----------
Net change in cash and
cash equivalents
during the period - 342,004 342,004
Cash and cash equivalents,
beginning of period - - -
----------- ----------- -----------
Cash and cash equivalents,
end of period $ - $ 342,004 $ 342,004
=========== =========== ===========
Supplemental disclosures
of cash flow information:
Cash paid during the period for
Interest $ - $ 15,298 $ 15,298
Supplemental disclosures of noncash,
financing and investing activities (Note L)
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
<S> <C> <C> <C>
Cumulative
amounts from
Three months ended April 6, 1998
March 31, (inception) to
--------------------------- March 31,
1999 2000 2000
------------ ------------ -------------
(unaudited) (unaudited)
Cash flows from operating activities
Loss from continuing operations $(3,253,929) $(4,262,962) $(11,736,543)
Adjustments to reconcile net loss
to cash used in operating activities
Depreciation 475 3,420 9,855
Amortization of licenses
and goodwill 120,494 4,895 367,198
Issuance of common stock
for services 2,831,119 3,547,231 8,450,931
Noncash interest expense - - 333,333
Changes in other operating
assets and liabilities
Prepaid expenses (11,083) (89,224) (152,826)
Due from related party 7,648 (18,077) (18,077)
Other assets (177,840) (177,640)
Increase in accounts payable 245,693 (174,861) 36,507
----------- ----------- ------------
Net cash used in operating
activities of continuing
operations (59,583) (1,167,418) (2,887,262)
----------- ----------- ------------
Net cash used in operating
activities of discontinued
operations (140,401) - (657,080)
----------- ----------- ------------
Cash flows from investing activities
Payments for website costs - (86,898) (86,898)
Payment of settlement costs relating
to discontinued operations - (58,000) (58,000)
Proceeds from sale of discontinued
operations - - 250,000
Acquisition of fixed assets (3,948) (33,416) (49,631)
----------- ----------- ------------
Net cash (used in) provided
by investing activities (3,948) (178,314) 55,471
----------- ----------- ------------
Cash flows from financing activities
Issuance of common stock - 5,159,000 5,593,992
Advances for common stock - - -
Proceeds from loan payable 204,246 - 1,050,151
Repayment of loan payable - - -
Proceeds from convertible debenture - - 1,000,000
----------- ----------- ------------
Net cash provided by
financing activities 204,246 5,159,000 7,644,143
----------- ----------- ------------
Net change in cash and
cash equivalents
during the period 314 3,813,268 4,155,272
Cash and cash equivalents,
beginning of period - 342,004 -
----------- ----------- ------------
Cash and cash equivalents,
end of period $ 314 $ 4,155,272 $ 4,155,272
=========== =========== ============
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> F-8
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998,
year ended December 31, 1999 and three months
ended March 31, 1999 and 2000
NOTE A - ORGANIZATION OF THE COMPANY AND
NATURE OF BUSINESS
Sierra Gold Corporation was incorporated on August 26, 1988. On
January 4, 1999, Sierra Gold Corporation changed its name to
Payforview.com Corp. (the "Company"). On January 5, 1999, the
Company issued 7,788,840 common shares (plus 1,500,000 shares
held in trust as commission) (see Note H), in exchange for the
issued and outstanding shares of Voyager International
Entertainment Inc. ("Voyager"). Voyager was incorporated on
April 6, 1998 in Nevada. As a result of the share exchange,
control of the combined companies passed to the former
shareholders of Voyager. This type of share exchange has been
accounted for as a capital transaction accompanied by a
recapitalization of Voyager. Recapitalization accounting results
in consolidated financial statements of Voyager being issued
under the name of Payforview.com Corp. and Subsidiaries, but are
considered a continuation of Voyager. No goodwill or other
intangible assets were recognized in connection with such
recapitalization. (See Note D.)
On January 15, 1999, the Company implemented a two-for-one
forward stock split. On April 9, 1999, the Company implemented a
three-for-two forward stock split. All share and per share
amounts in the financial statements have been retroactively
restated to give effect to the above splits. Loss per share
information reflects the recapitalization.
The Company is considered a development stage company as its
planned principal operations have not yet commenced. Presently,
the Company is developing an internet-based website to distribute
movies, music, live events and sports events direct to consumers
on a pay-for-view basis.
NOTE B - BASIS OF PRESENTATION
The accompanying financial statements have been prepared on a
going concern basis, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of
business. The Company has not generated any revenue from its
planned businesses and has generated losses from continuing
operations, net losses and an accumulated deficit for all periods
presented. As shown in the financial statements during the
period from April 6, 1998 (inception) to December 31, 1998 and
the year ended December 31, 1999, the Company incurred losses of
<PAGE> F-9
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998,
year ended December 31, 1999 and three months
ended March 31, 1999 and 2000
NOTE B (continued)
$275,528 and $9,479,413, respectively. As of December 31, 1999
and 1998, the Company had deficits accumulated in the development
stage of $9,754,941 and $275,528, respectively. These factors,
among others, raise substantial doubt about the Company's ability
to continue as a going concern for a reasonable period of time.
These financial statements do not include any adjustments that
might result from this uncertainty.
Management has obtained additional equity financing in the amount
of $5,415,000 (Note O.1) in the first quarter of 2000 and the
Company intends to file a shelf registration in the future
through private placements of shares. As of June 30, 2000, the
Company had approximately $2.0 million in cash. Management
believes this will be adequate for at least the next twelve
months.
NOTE C - SIGNIFICANT ACCOUNTING POLICIES
1. Principles of Consolidation
These consolidated financial statements include the accounts
of Payforview.com Corp. and Subsidiaries (formerly Sierra
Gold Corporation) and its wholly-owned subsidiaries, from
their respective dates of acquisition (see Notes A and D).
All significant intercompany balances and transactions have
been eliminated.
As discussed more thoroughly in Note D, Street Solid is
presented as discontinued operations.
2. Cash Equivalents
Cash equivalents consist of highly liquid investments with a
maturity of three months or less when purchased.
<PAGE> F-10
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998,
year ended December 31, 1999 and three months
ended March 31, 1999 and 2000
NOTE C (continued)
3. Stock-based Compensation
The Company has adopted Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation"
("SFAS No. 123"). As permitted under SFAS No. 123, the
Company has elected to follow Accounting Principles Board
Opinion No. 25 ("APB No. 25"), "Accounting for Stock Issued
to Employees," and related interpretations in accounting for
its employee stock options. Under APB No. 25, when the
exercise price of employee stock options equals or exceeds
the market price of the underlying stock on the date of
grant, no compensation expense is recorded. However, with
respect to common stock and options granted to nonemployees,
the Company records expense equal to the fair value of the
common stock or option on the measurement date, which
generally is the date of completion of services. Expenses
relating to such options or stock are estimated based upon
fair value as of the end of each reporting period prior to
the measurement date.
4. Income Taxes
Income taxes are provided in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for
Income Taxes." A deferred tax asset or liability is
recorded for temporary differences between financial and tax
reporting and net operating loss carryforwards.
Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than
not that some portion or all of the deferred tax assets will
not be realized. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on
the date of enactment.
5. Use of Estimates
The preparation of consolidated 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
<PAGE> F-11
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998,
year ended December 31, 1999 and three months
ended March 31, 1999 and 2000
NOTE C (continued)
the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the period.
Actual results could differ from those estimates.
6. Financial Instruments
The Company's financial instruments consist of cash and cash
equivalents, accounts payable, loans payable and convertible
debentures. The fair values of these financial instruments
approximate their carrying values, due to the short-term
maturities of such items.
7. Reporting on Costs of Start-up Activities
Effective January 1, 1999, the Company adopted Statement of
Position 98-5 ("SOP 98-5"), "Reporting on the Costs of
Start-Up Activities," which requires costs of start-up
activities and organization costs to be expensed as
incurred. The cumulative effect of adopting this principle
was immaterial.
8. Foreign Currency Transactions
Transaction amounts denominated in foreign currencies are
converted into United States currency at exchange rates
prevailing at transaction dates. Gains and losses from
foreign currency transactions are recorded as operating
expenses and are immaterial.
9. Revenue Recognition
The Company is currently in the development stage and
therefore has no revenues. Revenues from services will be
recognized at the time the services are provided to the
customer.
<PAGE> F-12
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998,
year ended December 31, 1999 and three months
ended March 31, 1999 and 2000
NOTE C (continued)
10. Fixed Assets
Fixed assets are stated at cost. Depreciation is based on
the estimated useful lives of the assets and is computed
using the straight-line method as follows:
Computer equipment 3 years
Furniture and office equipment 5 years
Software 3 years
11. Intangible Assets
Intangible assets consist of goodwill, licenses and rights.
Goodwill represents the excess of acquisition costs over the
fair market value of the net assets of businesses acquired
and is being amortized on a straight-line basis over its
estimated useful life of five years. Costs of licenses and
rights are deferred and amortized on a straight-line basis
over their estimated useful lives, which are generally one
to five years.
12. Long-lived Assets and Impairment of Long-lived Assets
The Company's policy is to review all long-lived assets,
including goodwill, for impairment whenever events or
changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. In such circumstances,
the Company will estimate the future cash flows expected to
result from the use of the asset and its eventual
disposition. Future cash flows are the future cash inflows
expected to be generated by an asset less the future cash
outflows expected to be necessary to obtain those inflows.
If the sum of the expected future cash flows (undiscounted
and without interest charges) is less than the carrying
amount of the asset, the Company would recognize an
impairment loss to adjust to the fair value of the asset.
<PAGE> F-13
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998,
year ended December 31, 1999 and three months
ended March 31, 1999 and 2000
NOTE C (continued)
13. Loss per Share
The Company computes net loss per share in accordance with
Statement of Financial Accounting Standards No. 128 ("SFAS
No. 128"), "Earnings Per Share." Under the provisions of
SFAS No. 128, basic net loss per share is computed by
dividing the net loss for the period by the weighted-average
number of common shares outstanding during the period.
Diluted net loss per share is computed by dividing the net
loss for the period by the weighted-average number of common
and common equivalent shares outstanding during the period.
However, as the Company generated net losses in all periods
presented, common equivalent shares, composed of incremental
common shares issuable upon the conversion of debentures,
are not reflected in diluted net loss per share because such
shares are antidilutive. As of December 31, 1999, $172,500
of debentures were not yet converted. Such debentures were
converted into 6,900,000 shares of common stock in January
and February 2000. There were no outstanding options or
warrants as of December 31, 1998 or 1999, or as of March 31,
1999 or 2000.
All per share amounts are calculated to reflect the
Company's change in capital structure for all periods
presented.
14. Comprehensive Income
The Company has adopted Statement of Financial Accounting
Standards No. 130 ("SFAS No. 130"), "Reporting Comprehensive
Income." This statement establishes rules for the reporting
of comprehensive income and its components. The Company has
no transactions that are required to be reported as other
comprehensive income.
15. New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards
No. 133 ("SFAS No. 133"), "Accounting for Derivative
<PAGE> F-14
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998,
year ended December 31, 1999 and three months
ended March 31, 1999 and 2000
NOTE C (continued)
Instruments and Hedging Activities," which establishes
accounting and reporting standards for derivative
instruments and for hedging activities. SFAS No. 133, as
amended by SFAS No. 137, is effective for all fiscal
quarters of fiscal years beginning after June 15, 2000. The
Company does not anticipate that the adoption of the
statement will have a material impact on its financial
statements.
16. Interim Financial Information (Unaudited)
Information in the accompanying condensed consolidated
financial statements for the three months ended March 31,
1999 and 2000 and the cumulative information from April 6,
1998 (inception) through March 31, 2000 is unaudited. The
condensed consolidated financial statements as of March 31,
2000 and for the three months ended March 31, 1999 and 2000
and the cumulative amounts from April 6, 1998 (inception)
through March 31, 2000 have been prepared in accordance with
generally accepted accounting principles applicable to
interim financial information and the rules and regulations
promulgated by the Securities and Exchange Commission. In
the opinion of the Company's management, the March 31, 1999
and 2000 unaudited condensed consolidated interim financial
statements include all adjustments, consisting of normal
recurring adjustments necessary for a fair presentation of
such financial statements. The results of operations for
the three months ended March 31, 1999 and 2000 are not
necessarily indicative of the results to be expected for the
entire year.
17. Reclassifications
Certain 1998 information has been reclassified to conform
with the current year's presentation.
<PAGE> F-15
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998,
year ended December 31, 1999 and three months
ended March 31, 1999 and 2000
NOTE D - ACQUISITIONS
1. Voyager Acquisition (Note A)
On January 5, 1999, Payforview acquired all the issued and
outstanding shares of Voyager in exchange for 7,788,840 of
its shares (plus 1,500,000 shares held in trust as a
commission, see Note H). This transaction has been
accounted for as a capital transaction accompanied by a
recapitalization of Voyager rather than a business
combination. Therefore, the total cost of the acquisition
represents the net book value of the acquired liabilities.
No goodwill or other intangibles have been recognized in
connection with this transaction. The consolidated
financial statements include the assets, liabilities and
operations of Voyager for all periods presented.
Liabilities acquired were $1,450, which pertained to
accounts payable and accrued expenses.
2. Street Solid Acquisition and Disposition
On January 6, 1999, Payforview acquired all the issued and
outstanding shares of Street Solid Records Inc. ("Street
Solid"), a Nevada corporation. As consideration, Payforview
issued 1,173,509 common shares. The acquisition was
accounted for using the purchase method. The operations of
Street Solid are included in the consolidated financial
statements subsequent to the date of acquisition and through
the date of disposition. The purchase price was determined
based on the fair market value of the Company's common
stock.
The total purchase price was allocated as follows:
Total purchase price $1,598,280
Liabilities assumed in business combination 198,000
----------
Excess purchase price $1,796,280
==========
The Company has allocated excess purchase price to
intangible assets, including record contracts and goodwill.
Intangible assets and goodwill are being amortized over five
years.
Pro forma information has not been provided as the
acquisition is not significant.
<PAGE> F-16
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998,
year ended December 31, 1999 and three months
ended March 31, 1999 and 2000
NOTE D (continued)
On October 29, 1999, the Company sold an aggregate of 81% of
Street Solid in two separate transactions. In the first
transaction, the Company sold 70% of Street Solid for
aggregate consideration of $192,000 (net of an additional
$58,000 paid by the Company to them in 2000). In the second
transaction, the Company sold 11% of Street Solid, in
exchange for a note receivable of $39,000. Since there was
doubt about the collectibility of such note, the Company
wrote-off such note at December 31, 1999. The operations of
Street Solid have been reported as a discontinued operation
for the period from January 6, 1999 through October 29,
1999, which was the date of disposal. Additionally, a loss
on disposal of operations, which included the write-off of
intangible assets and goodwill of $1,225,193, was recognized
in connection with the disposal of Street Solid.
Summarized financial information for Street Solid was as
follows:
Period from
January 6, 1999
through
October 29, 1999
----------------
Net revenues $ 169,000
============
Net loss $ (1,056,167)
============
As of December 31, 1999, the following liabilities relating
to Street Solid remained on the books of the Company.
Amounts due to Destiny Music pursuant to
contract assumed by Payforview $ 198,000
Settlement amounts paid to purchaser of
Street Solid in 2000 58,000
----------
$ 256,000
==========
The liability for $198,000 arises from a transaction
occurring prior to Payforview's acquisition of Street Solid.
The Company is currently a defendant in a lawsuit from
Destiny seeking to recover the full $198,000.
<PAGE> F-17
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998,
year ended December 31, 1999 and three months
ended March 31, 1999 and 2000
NOTE D (continued)
The $58,000 arose from a settlement agreement signed in
March 2000 between Payforview and the purchaser of Street
Solid. In March 2000, the Company remitted $58,000 to the
purchaser of Street Solid.
As of October 29, 1999, the Company began accounting for its
investment in Street Solid under the cost method of
accounting.
NOTE E - LICENSES AND RIGHTS
1. Reel Media - In February 1999, the Company entered into an
agreement with Reel Media International to acquire the
license and internet broadcast rights to a 750-film library.
As consideration for the license rights, the Company issued
52,500 common shares at a value of $101,150, determined
based on the market price of the common stock of the
Company. The term of the agreement is for four years. As
of December 31, 1999, the Company's website was not
completed. At the same time, it became apparent to the
Company that the technology for showing such movies on the
internet is not yet widely available in the mass market.
Therefore, management determined that an event has occurred
that indicates that such asset may be impaired. Management
determined that the expected future cash flows from the
license agreement, on an undiscounted basis, will not exceed
the carrying value of the license. The Company reviewed the
expected future cash flows on a discounted basis and
determined that the fair value of the licenses was
approximately $40,000. Accordingly, the Company recorded an
impairment loss of approximately $40,000 as of December 31,
1999.
2. Bacchus - In March 1999, the Company issued 1,012,500 common
shares to Bacchus Entertainment Ltd. at a value of
$2,821,500, as determined by the market price of shares of
the Company's common stock, as consideration for the
purchase of various rights and interests in feature films
and motion picture productions. Management determined that
the rights it purchased did not exist, and believes that the
seller misrepresented the items available and breached the
contract. Therefore, the full value of the consideration
issued to Bacchus has been recorded as an impairment loss as
of December 31, 1999. (See Note P.)
<PAGE> F-18
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998,
year ended December 31, 1999 and three months
ended March 31, 1999 and 2000
NOTE E (continued)
3. Sportsworld - In April 1999, the Company entered into an
agreement with Sportsworld Network (Australia) Pty. Limited
to acquire the nonexclusive, worldwide license rights to
broadcast various sports-related filmclips and highlights.
As consideration for the license rights, the Company issued
37,500 common shares at a value of $144,750, as determined
by the market price of shares of the Company's common stock.
The agreement also provides for a royalty of 8% of gross
revenues to be paid by the Company. As of December 31,
1999, the Company's website was not yet ready for use.
Because of the delay in completion of the website and the
short-term nature of the agreement, the Company believes
that an event has occurred that would indicate impairment.
The license agreement expired July 1, 2000. The Company
charged the unamortized balance at December 31, 1999 of
$72,375 to selling, general and administrative expenses
since the Company was not able to broadcast these programs
prior to expiration of the licenses.
NOTE F - FIXED ASSETS
Fixed assets consist of the following:
December 31,
1998 1999
Computer equipment $ 856 $ 856
Furniture and office equipment 8,068 13,460
Software licenses (websites) - 342,000
-------- --------
8,924 356,316
Accumulated depreciation
and amortization 1,899 4,536
-------- --------
$ 7,025 $351,780
======== ========
<PAGE> F-19
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998,
year ended December 31, 1999 and three months
ended March 31, 1999 and 2000
NOTE G - INTANGIBLE ASSETS
Intangible assets consist of the following at
December 31, 1999:
Licenses $134,052
Accumulated amortization (94,883)
--------
$ 39,169
========
NOTE H - LOAN PAYABLE
Amounts due under the loans payable represent advances
during 1999 from a third party to cover certain operating
expenses. The advances are noninterest-bearing and payable
on demand.
In May 2000, the Company settled this obligation through
liquidation of approximately 1,280,000 shares of the
1,500,000 shares held by the trustee in connection with the
Voyager acquisition (Note D). Such shares were sold to
unrelated third-parties for aggregate proceeds of $899,602,
of which $850,000 were distributed to the holders of the
loan payable and in payment of transaction costs. On the
date of the transaction, the Company recorded a gain on
extinguishment of debt of approximately $250,000 which will
be reflected as an extraordinary item during the second
quarter of 2000. The remaining 220,000 shares held in trust
are the property of the Company and the remaining proceeds
from the sale of the shares of $49,602 became property of
the Company. The proceeds of the sale of such shares were
included in additional paid-in capital during the second
quarter of 2000.
NOTE I - CONVERTIBLE DEBENTURES
In June 1999, the Company entered into a Debenture Agreement
and Securities Subscription Agreement with BSD Holdings
L.L.C. ("BSD").
Under the agreement, the Company can issue up to $1,000,000
of 2% Series A senior subordinated convertible redeemable
debentures. The principal sum outstanding plus accrued
interest calculated at a rate of 2% per annum is due at
maturity on June 25, 2001.
<PAGE> F-20
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998,
year ended December 31, 1999 and three months
ended March 31, 1999 and 2000
NOTE I (continued)
Each $10,000 debenture is convertible immediately upon
issuance into common shares of the Company at the option of
the holder at a conversion price equal to 75% of the closing
bid price of the Company's common stock on the OTC Bulletin
Board for the day immediately preceding the date of the
notice of conversion.
Payforview has the option to redeem the debentures at 125%
of the principal amount to the extent conversion has not
occurred.
Under the agreement, Payforview has issued $1,000,000 of
debentures to BSD at various dates during 1999. An
aggregate of $827,500 of the outstanding debentures were
converted during 1999, resulting in the issuance of
22,837,005 common shares of Payforview. As of December 31,
1999, $172,500 of debentures remained outstanding which were
converted into 6,900,000 shares of common stock in January
2000.
Because the debentures contained a beneficial conversion
feature, the Company recorded a charge to interest expense
(with a credit to additional paid-in capital) for $333,333
during 1999. Since the debt was convertible immediately
upon issuance, a charge to operations for the entire
beneficial conversion feature was recorded in 1999.
NOTE J - CAPITAL STOCK
1. Common Stock
The Company has one series of common shares with a par value
of $.0001 per share. Each share is entitled to one vote.
2. Cash Received in Advance of Stock Issuance
In December 1999, the Company received $222,500 in advance
of a subscription agreement dated January 15, 2000 (see Note
O.1). These advance payments have been reflected as other
liabilities as of December 31, 1999.
<PAGE> F-21
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998,
year ended December 31, 1999 and three months
ended March 31, 1999 and 2000
NOTE J (continued)
3. Other Common Share Issuances
a. The Company issued an aggregate of 200,000 shares in
payments for the license and rights for website software.
The value of these shares was determined to be $292,000
based on the market price of the Company's common stock on
the date of issuance. These software license costs are
included in fixed assets as of December 31, 1999.
b. The Company issued an aggregate of 1,800,000 shares to an
investment banker in exchange for financial advisory
services. This investment banker is the owner of the
company that purchased the 70% share of Street Solid Records
(see Note D). The shares were issued in anticipation of
services which were never received. The Company and the
investment banker signed a mutual release of liabilities and
obligations in March 2000. These shares were valued at
$1,386,876, based on the market value on the date of grant.
The value of these shares has been charged to expense as a
loss from impairment.
c. The Company issued an aggregate of 333,333 shares of common
stock to a consultant in exchange for services pursuant to a
contract which extends from July 1, 1999 through June 30,
2000. The value of the shares will not be determinable
until completion of the service period. These shares were
valued at $100,000, based on the market price as of December
31, 1999. One-half of the expense relating to such stock,
or $50,000, has been charged to operations and reflected in
selling, general and administrative expenses in 1999.
d. The Company on behalf of Street Solid issued 200,000 shares
to a Company in exchange for eight ads in their magazine.
These shares were valued at $60,000, based on the market
price on October 29, 1999, which is the date the services
had been completed. Upon the sale of Street Solid, the
Company forfeited future rights to these ads.
e. The Company issued an additional 122,000 shares to various
parties in exchange for services. These shares were valued
at $77,836, based on the market price of the Company's
common stock when services had been completed, or when
services had not yet been completed, as of December 31,
1999. The value of these shares has been charged to
selling, general and administrative expenses.
<PAGE> F-22
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998,
year ended December 31, 1999 and three months
ended March 31, 1999 and 2000
NOTE J (continued)
f. The Company issued 1,800,000 shares to a consultant pursuant
to a consulting agreement. Since the shares are not
contingent on future performance, the value of the shares is
determinable on the date of grant. The value of these
shares was calculated based upon the market value of the
Company's common stock on the date of the agreement. An
aggregate charge of $652,500 has been charged to selling,
general and administrative expenses. (See Note N-3.)
NOTE K - RELATED PARTY TRANSACTIONS
During the period from April 6, 1998 to December 31, 1998, the
Company (Voyager) issued 3,800,000 shares of common stock at a
value of $38,000 to the founders of the Company in order to
reimburse them for a like amount of incorporation costs. In
addition, the Company (Voyager) issued 200,000 shares of common
stock at a value of $200 to companies controlled by directors for
the acquisition of Voyager Film Sales Inc. (see Note A).
During 1999, the Company sold 11% of Street Solid to a related
party (see Note D).
NOTE L - SUPPLEMENTAL DISCLOSURES OF NONCASH OPERATING,
FINANCING AND INVESTING ACTIVITIES
The significant transactions for the three months ended March 31,
2000 were as follows:
1. In February 2000, the Company issued an aggregate of
3,000,000 shares of common stock valued at $2,934,000 to
officers and consultants. (See Note O-3)
2. In February 2000, the Company issued 335,000 shares in
payment of transaction costs relating to the MAS acquisition
discussed in Note O-4.
3. As of March 31, 2000, the Company recognized an aggregate of
$238,000 of additional compensation relating to stock awards
granted in 1999, for which services were still being
performed during the three months ended March 31, 2000.
The significant noncash transactions for the year ended December
31, 1999 were as follows:
1. In order to complete the acquisition of Voyager, the Company
issued 7,788,840 common shares, (and a commission of
1,500,000 shares) (see Note D).
2. The Company issued 1,173,509 common shares to acquire Street
Solid. The value of the shares issued was estimated to be
$1,598,280 (see Note H-2).
<PAGE> F-23
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998,
year ended December 31, 1999 and three months
ended March 31, 1999 and 2000
NOTE L (continued)
In connection with such acquisition, liabilities assumed were as
follows:
Fair value of liabilities assumed $(198,000)
Cash paid -
---------
Liabilities assumed $(198,000)
=========
3. The Company issued 1,102,500 common shares valued at
$3,067,400 towards the acquisition of licenses and rights
(see Note E-1 -3).
4. The Company issued 4,055,333 common shares valued at
$2,167,212 for services rendered. (See Note J-3b. - e.)
5. The Company issued 200,000 shares valued at $292,000 towards
the acquisition of software. (See Note J-3a.)
6. The Company issued 200,000 shares valued at $60,000 for fees
incurred for advertising. (See Note J-3d.)
7. The Company issued 22,837,005 common shares upon the
conversion of $827,500 of convertible debentures. In
connection with such financing, the Company placed 250,000
shares in escrow. (Note I.)
The significant noncash transactions for the period from April 6,
1998 to December 31, 1998 were as follows:
1. The Company issued 3,800,000 shares of common stock valued
at $38,000 for reimbursement of incorporation costs.
2. The Company issued 200,000 shares of common stock valued at
$200 to acquire all of the issued and outstanding common
stock of Voyager Film Sales Inc.
<PAGE> F-24
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998,
year ended December 31, 1999 and three months
ended March 31, 1999 and 2000
NOTE M - INCOME TAXES
The Company had net losses for tax purposes during the period
from April 6, 1998 (inception) to December 31, 1998 and the years
ended December 31, 1999 and 1998. Accordingly, no income tax
provision has been recorded in the financial statements.
The Company's total deferred tax asset is as follows:
December 31,
1999 1998
---------- ---------
Prepaid expenses $ 47,000 $ -
Net operating loss
carryforwards 2,008,000 104,701
Valuation allowance (2,055,000) (104,701)
---------- ---------
$ - $ -
========== =========
The Company has net operating loss carryforwards of approximately
$5,423,000. Pursuant to United States Federal income tax
regulations, the Company's ability to utilize this NOL may be
limited due to changes in ownership, as defined in the Internal
Revenue Code. The valuation allowance against the deferred tax
assets increased to $2,055,000 from $104,701 during the year
ended December 31, 1999, since the Company does not believe that
evidence is more likely than not that these benefits will be
realized.
The net operating loss carryforwards expire as follows:
2018 $ 275,000
2019 5,148,000
-----------
$ 5,423,000
===========
A reconciliation of income taxes computed at the Federal
statutory rate to the income taxes recorded in the Company's
financial statements is as follows:
<PAGE> F-25
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998,
year ended December 31, 1999 and three months
ended March 31, 1999 and 2000
NOTE M (continued)
<TABLE>
<S> <C> <C> <C>
Cumulative
amounts for
Period the period
April 6, 1998 April 6, 1998
(inception) to Year ended (inception) to
December 31, December 31, December 31,
1998 1999 1999
------------ ------------ -------------
Federal tax benefit
at statutory rate $(94,000) $(3,223,000) $(3,317,000)
State and local taxes (10,701) (263,000) (273,701)
Loss from Street Solid 359,000 359,000
Bacchus impairment loss 959,000 959,000
Interest charge for
beneficial conversion
feature in convertible debt 113,000 113,000
------------ ------------ -------------
Change in valuation
allowance 104,701 2,055,000 2,159,701
Income taxes per
financial statements $ - $ - $ -
============ ============ =============
</TABLE>
NOTE N - COMMITMENTS AND CONTINGENCIES
1. Leases
The Company leases office space in New York and Vancouver,
B.C. under noncancellable operating leases which expire
through 2000. Rent expense for the years ended December 31,
1999 and 1998 was $71,967 and $29,015, respectively. The
remaining commitment under such lease at December 31, 1999
was $17,480.
In March 2000, the Company entered into a new lease in New
York City, which began on June 1, 2000. The lease has a
term of five years. The Company provided a security deposit
equal to $177,480 in connection with such lease.
<PAGE> F-26
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period from April 6, 1998 (inception) to December 31, 1998,
year ended December 31, 1999 and three months
ended March 31, 1999 and 2000
NOTE N (continued)
Future minimum rent commitments under the above lease are as
follows:
Year ending December 31,
2000 $ 88,920
2001 180,354
2002 185,457
2003 190,713
2004 196,126
Thereafter 99,437
---------
$ 941,005
=========
2. Agreements With Officers
The Company signed one-year agreements dated January 5, 1999
with three of its officers, providing aggregate annual
compensation of $180,000. These agreements were renewed on
January 3, 2000 for a period of one year, increasing the
aggregate annual compensation to $330,000. The agreements
contain other customary provisions.
3. Consulting Agreement
On October 1, 1999, the Company entered into a consulting
agreement with an individual, which expires on December 31,
2002, which provides to such consultant aggregate annual
consulting fees (including minimum bonuses) of $375,000,
$437,500 and $500,000 and provides for additional bonuses if
certain targets are met. Additionally, the agreement
granted 1,800,000 shares of common stock to such consultant,
which were issued on October 1, 1999. The consultant is
required to act on a "best-efforts" basis to pursue certain
goals for the Company. (See Note J-3f.)
<PAGE> F-27
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Period from April 6, 1998 (inception) to December 31, 1998,
year ended December 31, 1999 and three months ended March 31,
1999 and 2000
NOTE O - SUBSEQUENT EVENTS
1. Sale of Common Stock - On January 15, 2000, the Company
entered into a stock subscription and option agreement with
three unrelated third-party shareholders. Pursuant to this
agreement, the Company sold 120,000 shares of stock to these
investors at a price of $1.50 per share and provided the
investors with an option to purchase up to a maximum of an
additional 690,000 shares. The investors purchased an
aggregate of 810,000 shares during 2000, for proceeds of
$1,215,000, of which $222,500 was paid in 1999. The shares
were issued in July 2000.
On January 21, 2000, the Company entered into a stock
subscription and option agreement with certain unrelated
third-party shareholders. Pursuant to this agreement, the
Company sold 1,000,000 shares of stock to these investors at
a price of $1.50 per share. Additionally, the agreement
provided the investors with an option to purchase up to a
maximum of an additional 2,000,000 shares. The investors
purchased an aggregate of 2,800,000 shares for net proceeds
of approximately $4,166,000 (net of $34,000 of transaction
costs). Such shares were issued during the first quarter of
2000.
2. Conversion to Debentures - During January and February 2000,
holders of $172,500 of convertible debentures exchanged such
debentures for 6,900,000 shares of common stock pursuant to
the debenture agreement dated June 25, 1999.
3. Stock Issuance - In February 2000, the Company granted an
aggregate of 3,000,000 shares to officers and consultants.
No additional services were required to be performed, and,
therefore, the Company recorded a charge to operations for
$2,934,000, which represented the market value of such
shares on the date of grant.
<PAGE> F-28
Payforview.com Corp. and Subsidiaries
(formerly Sierra Gold Corporation)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Period from April 6, 1998 (inception) to December 31, 1998,
year ended December 31, 1999 and three months ended March 31,
1999 and 2000
NOTE O (continued)
4. Acquisition - In February 2000, the Company acquired MAS
Acquisition Corporation, an inactive public shell
corporation in exchange for an aggregate of 335,000 shares
of its common stock. Additionally, the Company incurred
transaction costs relating to this acquisition, and settled
such cost by issuing 335,000 shares and paying cash of
$100,000, which resulted in an aggregate charge to expense
of $475,000 in the first quarter of 2000. This acquisition
was accounted for at the historical basis of the assets of
MAS (which were $31) since there was no business acquired.
No goodwill or other intangibles were acquired.
5. On May 10, 2000, the Company made a strategic investment of
$1,400,000 plus 2,000,000 shares of restricted common stock
to purchase a 25% interest in a company (controlled by a
consultant of the Company), that is developing an on-line
streaming media product that is synergistic with its core
business. The company has the right to participate in
future financings by the investee. The consultant discussed
in Note N-3 owns the remaining 75% of the investee.
NOTE P - SUBSEQUENT EVENTS (UNAUDITED)
1. On July 13, 2000, the Company's Board of Directors approved
a stock option plan ("the Plan") and reserved 4 million
shares of the Company's common stock to attract, motivate
and retain individuals upon whose continued efforts the
success of the Company in large measure depends. On July
25th 2000, the Company issued 1,675,000 options pursuant to
the Plan to certain employees, officers, directors and
consultants. The exercise price of such options was $0.25
per share, based, as per the terms of the plan, on the
closing price on the day immediately preceding the issue
date. These options vest over a three-year period and
expire in July 2003.
2. On August 3, 2000, the Company and Bacchus (and related
entities) signed an agreement whereby 487,200 (of the
aggregate of 1,012,500 shares originally issued) will be
returned to the Company for cancellation.
<PAGE> F-29
