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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
August 30, 2000
Date of Report
(Date of Earliest Event Reported)
TELKONET, INC.
(formerly known as Comstock Coal Company, Inc.)
(Exact Name of Registrant as Specified in its Charter)
670 Ritchie Highway, 2nd Floor
Severna Park, Maryland 21146
(Address of principal executive offices)
410/544-1044
Registrant's telephone number
Utah 87-0627421
(State of Incorporation) (IRS Employer Identification No.)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
(a) Pursuant to an Agreement and Plan of Reorganization (the
"Agreement") dated as of August 30, 2000 by and among Comstock Coal Company,
Inc. (the "Company"), a Utah corporation, Comstock Acquisition Corporation
("CAC"), a Utah corporation and a wholly-owned subsidiary of the Company, and
Telkonet Communications, Inc. ("TCI"), a Delaware corporation, CAC merged with
and into TCI, with TCI emerging as the surviving corporation. In consideration
of such merger transaction, the common stock of TCI's shareholders was converted
into and exchanged for 19,795,337 shares of Company common stock and outstanding
warrants of various holders for TCI common stock were converted into warrants
for an additional 1,397,098 shares of Company common stock. In addition, by
operation of law, CAC's common stock was converted into TCI common stock.
Furthermore, as of the effective date of the Agreement the Company changed its
name to "Telkonet, Inc." As a result of the execution of the transactions set
forth in the Agreement, TCI has become a wholly-owned subsidiary of the Company.
The Agreement was adopted by the unanimous consent of the Board of
Directors of the Company on August 30, 2000. The Agreement was adopted by the
unanimous consent of the Board of Directors of CAC and approved by consent of
the sole shareholder of CAC on August 30, 2000. The Agreement was adopted by the
unanimous consent of the Board of Directors of TCI and by the consent of a
majority of the shareholders of TCI on August 30, 2000.
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Upon effectiveness of the Agreement, the Company had an aggregate of
21,775,337 shares of common stock outstanding. Immediately prior to the
effectiveness of the Agreement (I.E, the moment before the effective date of the
Agreement) the Company had 1,980,000 shares of common stock outstanding. By
virtue of the merger, and their receipt of 19,795,337 shares of the Company
common stock, TCI's shareholders acquired 90.90% of the issued and outstanding
common stock of the Company.
The directors of the Company, prior to the effectiveness of the
Agreement, have, as part of and as a result of the reorganization, elected new
officers and directors of the Company and immediately thereafter (upon the
effectiveness of the Agreement) resigned as directors of the Company. As a
result, the pre-merger shareholders of TCI, who acquired 90.90% of the issued
and outstanding common stock of Company in the reorganization, control the
Company and TCI's officers and directors have become the officers and directors
of the Company. See "Management" below.
The officers and directors of TCI shall remain and be the officers and
directors of TCI after the effective date of the Agreement.
A copy of the Agreement is filed as an exhibit to this Form 8-K and is
incorporated in its entirety herein, with the exception of the schedules to the
Agreement. The foregoing description is modified by such reference.
(b) The following table contains information regarding the
shareholdings of the 3 (three) current directors and executive officers and
those persons or entities who beneficially own more than 5% of its common stock
(giving effect to the exercise of the warrants held by each such person or
entity):
Amount of Percent of
Common Stock Common Stock
Beneficially Beneficially
Name Owned (1) Owned
Officers and Directors
David W. Grimes 4,971,917 21.5%
Chairman and Chief Technology Officer
670 Ritchie Highway, 2nd Floor
Severna Park, Maryland 21146
L. Peter Larson 1,505,285 6.5%
President and Chief Executive Officer
670 Ritchie Highway, 2nd Floor
Severna Park, Maryland 21146
Stephen L. Sadle 5,722,694 24.7%
Chief Operating Officer
670 Ritchie Highway, 2nd Floor
Severna Park, Maryland 21146
Others
Donald Erat 2,861,347 12.3%
670 Ritchie Highway, 2nd Floor
Severna Park, Maryland 21146
Ronald Pickett 2,658,964 11.5%
2321 Ocean Point Drive
Wilmington, NC 28405
FERST for St. Mary's, Inc. 1,958,549* 8.5%
P.O. Box 167
Mechanicsville, MD 20658
* Includes 652,850 immediately exercisable warrants to purchase shares of common
stock at $1.00 per share
(1) Based upon 21,775,337 outstanding shares of common stock (subsequent to the
effectiveness of the reorganization) plus 1,397,098 immediately exercisable
warrants to purchase shares of common stock.
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(c) The holders of restricted "legended" shares of the Company's common
stock, prior to the effectiveness of the Agreement, are entitled pursuant to an
agreement entered into with the Company (the "Registration Rights Agreement") to
piggyback registration rights with other substantially similar securities
registered by the Company during a 2 year period following the effectiveness of
the Agreement. A copy of the Registration Rights Agreement is filed as an
exhibit to this Form 8-K and is incorporated in its entirety herein. The
foregoing description is modified by such reference.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 30, 2000, a 90.90% interest in Company was acquired by the
shareholders of TCI by way of a reorganization involving a reverse triangular
merger (through CAC) by and with TCI, a Delaware corporation. The Company's
Board of Directors approved the reorganization set forth in the Agreement. As a
result of this reorganization transaction TCI is a wholly-owned subsidiary of
Company.
CURRENT OPERATIONS
The Company had no independent business operations prior to the
effectiveness of the reorganization. Subsequent to the effectiveness of the
reorganization, the Company's only business operation was a holding company for
its wholly-owned subsidiary, TCI. TCI is actively engaged in the telephone and
Internet businesses. TCI has developed working prototypes for two products
designed to provide Internet and telephone service through power line
transmission. TCI has developed and applied for patents which cover the
technology developed and plans to utilize recently announced advancements in
transmission speed to build next generation hardware for field test and
marketing demonstrations. TCI intends to expand its design team to produce and
deliver a variety of telephony products to provide complete solution sets for
its customers.
TCI BUSINESS
TCI was formed to develop applications for emerging power-line carrier
technologies. Technology developed will be licensed or sold to companies with
vertical markets who could build on TCI's basic expertise to construct power
line carrier based systems that enhance their business base and capability. TCI
can be characterized as a high technology systems application developer with
primary focus on applications in Internet distribution worldwide and telephony
systems in developing countries around the globe, where local communications
infrastructures are not providing cost-effective service. TCI intends to be a
key global supplier of communications products through the development of
strategic joint venture and licensing relationships, which will enhance
long-term growth and provide a stable platform for market penetration. TCI has
developed proprietary products, which are the first of their kind to provide
telephony communications solutions.
The first involves the use of the power line infrastructure to
distribute telephony using a hybrid system. The central office of a public
service telephone network may choose to provide the wide band line for
interconnectivity to the TCI power line carrier telephony system. This approach
greatly reduces the cost and time required to bring telecommunications services
to communities that do not have such services. Alternatively, V-sat connectivity
can also be used for distribution to an access point of a public service
telephone network.
TCI's second proprietary product provides Internet service via power
lines to end users through interfaces with available high-speed landlines or
geosynchronous satellite to a Vsat terminal. Use of power lines substantially
improves the cost effectiveness of this Internet delivery system, and when used
in conjunction with satellite access may avoid the traditional per minute
telecom charges that are incurred by users throughout Europe. Using power lines
for distribution could make the Internet economically viable for a large
population of potential customers. TCI's system avoids the disruption and high
cost of new wiring.
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PERCEIVED BENEFITS
There are certain perceived benefits to being a reporting company with
a class of publicly traded securities. These are commonly thought to include the
following:
* the ability to use registered securities to make acquisitions
of assets or businesses;
* increased visibility in the financial community;
* the facilitation of borrowing from financial institutions;
* improved trading efficiency;
* shareholder liquidity;
* greater ease in subsequently raising capital;
* compensation of key employees through stock options;
* enhanced corporate image;
* a presence in the United States capital markets.
PROPERTY AND OFFICES
The Company's principal executive office is located at 670 Ritchie
Highway, 2nd Floor, Severna Park, Maryland 21146. The Company's registered
office in Utah is c/o Richard Lawrence, Suite 1200, Beneficial Life Tower, 36
South State Street, Salt Lake City, Utah 84111. TCI currently has approximately
1000 sq. ft. of office space rented at 670 Ritchie Highway, 2nd Floor, Severna
Park, Maryland 21146 and shares laboratory facilities with Space-port access at
Windermere Information Technology Systems in Annapolis. The Company is in
negotiation for a leased facility that would allow for planned increases in
operating activities.
LITIGATION
There is no known litigation pending against either the Company or TCI.
MARKET FOR THE COMPANY SECURITIES
The Company has been a reporting public company. The Company's common
stock is listed on the OTC Bulletin Board operated by Nasdaq under the symbol
CKCC.OB, but has never been publicly traded. Due to this lack of public trading,
there is no established market price for the Company's common stock. Following
the effectiveness of the Agreement, the Company's common stock will be listed on
the OTC Bulletin Board operated by Nasdaq under the symbol TLKO.
MANAGEMENT
Name Age Title
--- --- -----
David W. Grimes 63 Chairman & Chief
Technology Officer
L. Peter Larson 50 President & Chief
Executive Officer
Kevin L. Miller 47 Chief Financial Officer
Stephen L. Sadle 54 Chief Operating Officer
Robert P. Crabb 53 Secretary
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DAVID W. GRIMES is the co-founder of TCI. He is also the founder and
CEO of Transpace Carriers, Inc., a venture to commercialize the Delta Launch
Vehicle. Grimes was the former Senior Executive for the Delta Program at NASA,
heading the $200M per annum program. He was most recently Chief Engineer of
Final Analysis, Inc. and led the design and development of the Low Earth Orbit
constellation of 38 satellites for use in global store and forward
communications. Grimes is a recognized expert in space and ground communications
systems and brings this expertise to bear on the implementation of the hybrid
telephony technology described herein.
L. PETER LARSON has an extensive background in engineering and finance.
After completing his BSEE and MS in Operations Research at Rensselaer
Polytechnic, he began his career with General Dynamics Corporation. During his
20+ year career at General Dynamics, he served in various executive positions
including Vice President and Controller of their International Services Company
and Senior Vice President Finance and CFO for the Cessna Aircraft Company. Mr.
Larson was a consultant and has recently served as CFO or COO in several
start-up and turn-around assignments in electronics manufacturing, software,
Internet application development and telecommunications.
KEVIN L. MILLER has over twenty-six years of experience in finance and
business development of which twenty-three years were spent at General Electric
Company ("GE"). At GE, he held executive-level positions in such diverse
businesses as GE Capital, Information Services, Power Systems, Engineered
Materials, Healthcare, Corporate Finance and GE Investments. Mr. Miller began
his career at GE on its prestigious three-year Financial Management Program
which he completed with honors. Mr. Miller left GE to become a founding partner
of the Strategic Ventures Group (SVG), a success-fee based consulting firm to
both early-stage technology companies and established global companies. Prior to
joining Telkonet, he was the Chief Financial Officer of Internos Corporation, a
Dulles, Virginia based Internet company providing electronic commerce services
to companies focused in industries such as construction, property management,
railroad contracting, and toy manufacturing.
STEPHEN L. SADLE is a co-founder of the company. Mr. Sadle was
previously employed as Senior Vice President and General Sales Manager of
Internos, a provider of Web based vertical extranet applications and has
developed operating extranets in the construction and transportation industries.
For 15 years prior, Sadle was Vice President of Business Development and Sales
for The Driggs Corporation, a major heavy and infrastructure contracting firm
interfacing with government and the private sectors. Also, he was president and
founder of a successful construction company and was awarded Small Businessman
of the Year Award for the Washington Metropolitan Area. Mr. Sadle brings
significant management, contracting and entrepreneurial skills to the company.
ROBERT P. CRABB has over 30 years of sales, marketing and public and
private corporate management experience, including 15 years with the
Metropolitan Life Insurance Company where he assisted in the development of
marketing and training programs. His entrepreneurial expertise includes
marketing and financial consulting and commercial and residential real estate
development. Mr. Crabb is the President of Susquehanna Development L.L.C., a
marketing and business development consulting company. Mr. Crabb serves on the
Board of Directors of Medical Advisory Systems, Inc. (AMEX:"DOC"). As a
consultant, Mr. Crabb will provide marketing and public company administration
services to Telkonet.
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EXECUTIVE COMPENSATION
L. PETER LARSON is employed as the TCI's President and Chief Executive
Officer and has assumed such positions with the Company. Pursuant to a three (3)
year employment agreement by and between Mr. Larsen and TCI, in compensation for
the performance of his executive duties, Mr. Larsen shall be compensated in the
amount of One Hundred Thirty Thousand Dollars ($130,000) per annum. Such annual
compensation may be increased at TCI's discretion and Mr. Larsen is eligible for
yearly bonuses also at TCI's discretion. The base term of Mr. Larsen's
employment contract expires on June 18, 2003.
STEPHEN L. SADLE is employed as the TCI's Executive Vice-President,
Secretary, Treasurer and Chief Operating Officer and has assumed such positions
with the Company. Pursuant to a three (3) year employment agreement by and
between Mr. Sadle and TCI, in compensation for the performance of his executive
duties, Mr. Sadle shall be compensated in the amount of One Hundred Thirty
Thousand Dollars ($130,000) per annum. Such annual compensation may be increased
at TCI's discretion and Mr. Sadle is eligible for yearly bonuses also at TCI's
discretion. The base term of Mr. Sadle's employment contract expires on June 18,
2003.
DAVID W. GRIMES is employed as TCI's Chairman and has assumed such
position with the Company. He has no employment contract with TCI, being an
employee at-will, and he is compensated for the performance of his executive
duties in the amount of Forty-Eight Thousand Dollars ($48,000) per annum
KEVIN L. MILLER is employed as TCI's Chief Financial Officer and has
assumed such position with the Company. He has no employment contract with TCI,
being an employee at-will, and he is compensated for the performance of his
executive duties in the amount of Ninety-Six Thousand Dollars ($96,000) per
annum
RELATED TRANSACTIONS
NOT APPLICABLE
RISK FACTORS
The Company, its business plan and any offering of its securities are
subject to numerous risk factors which prospective investors should carefully
consider, including the following:
TAXATION. The business combination described herein has been structured
so as to minimize the federal and state tax consequences to the Company, TCI and
their respective shareholders. No rulings have been requested from the Internal
Revenue Service regarding this reorganization and, therefore, there can be no
absolute assurance that such business combination have met the statutory
requirements of a tax-free reorganization or that the parties will obtain the
intended tax-free treatment. A non-qualifying reorganization could result in the
imposition of both federal and state taxes, which might have an adverse effect
on the parties to the transaction.
POSSIBLE PRICE VOLATILITY. Although it is impossible to predict the
nature of any secondary trading market for the Company's common stock in the
future, the market prices for securities of emerging companies historically have
been highly volatile. Future announcements concerning the Company or its
competitors, including the results of testing, technological innovations or new
commercial products, government regulations and developments concerning
proprietary rights or litigation may have a significant impact on the price of
the Company's securities in any such secondary trading.
NO DIVIDENDS ANTICIPATED. The Company has never paid any dividends on
its securities and does not anticipate the payment of dividends in the
foreseeable future.
CURRENT TRADING MARKET FOR THE COMPANY'S SECURITIES. The Company's
common stock is listed on the OTC Bulletin Board operated by Nasdaq under the
symbol CKCC.OB. There has been no previous open market trading of the Company's
Common Stock.
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PENNY STOCK REGULATION. Upon commencement of trading in the Company's
stock, if such continues (of which there can be no assurance) the Company's
common stock may be deemed a penny stock. Penny stocks generally are equity
securities with a price of less than $5.00 per share other than securities
registered on certain national securities exchanges or quoted on the Nasdaq
Stock Market, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or system. The
Company's securities may be subject to "penny stock rules" that impose
additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors
(generally those with assets in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 together with their spouse). For transactions covered by
these rules, the broker-dealer must make a special suitability determination for
the purchase of such securities and have received the purchaser's written
consent to the transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the "penny stock rules"
require the delivery, prior to the transaction, of a disclosure schedule
prescribed by the Commission relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements must be sent disclosing recent price
information on the limited market in penny stocks. Consequently, the "penny
stock rules" may restrict the ability of broker-dealers to sell the Company's
securities. The foregoing required penny stock restrictions will not apply to
the Company's securities if such securities maintain a market price of $5.00 or
greater. There can be no assurance that the price of the Company's securities
will reach or maintain such a level.
DEVELOPMENT STAGE COMPANY. Subsequent to the reorganization the Company
has become a development stage company, the business of which is subject to all
of the risks and uncertainties normally associated with business ventures in the
development stage, which historically have a high failure rate. Although members
of the management team of the Company have substantial experience in technology
development, there can be no assurance that the Company effectively market such
developments and that the Company will be profitable in the future.
UNPROVED MARKET ACCEPTANCE. Although the Company believes there is a
substantial need for the technologies and products proposed to be offered by the
Company, its management is unable to guarantee the level of market acceptance
for these products or their performance compared to other existing or future
technologies. Furthermore the Company cannot guarantee the level of revenues
that will ultimately be generated by these products.
UNCERTAIN MARKETING PARTNERSHIPS. Subsequent to the reorganization, the
Company has not yet finalized a contract with any partner to guarantee a minimum
level of revenue generation. As such, the Company is unable to gauge the level
of acceptance of its technologies. Failure of the Company to establish or retain
customer acceptance would have a material adverse effect on the operations of
the Company and profits of the Company.
TECHNOLOGICAL FEASIBILITY UNDETERMINED. While the Company is in the
process of evaluating its technologies, important specific applications have not
yet been designed nor tested for their final intended use. Thus, there is no
assurance that the technologies will function as predicted. Failure of the
technologies to function as predicted or any delay in the development of the
technologies will have a material adverse effect on the Company.
DEPENDENCE ON MANAGEMENT AND LIMITED STAFF. The Company's ability to
achieve its objectives is largely dependent upon the services of its key
employees. The loss of services of any of those could have a material adverse
impact on the Company. The Company has no business interruption insurance or
keyman life insurance on any of its employees. The death or disability of any
key employees or key independent contractors or the occurrence of any other
uninsured event would likely have a material adverse impact on the Company. The
Company's future success also depends on its continuing ability to attract and
retain highly qualified technical, sales and marketing, customer support,
financial and accounting, and managerial personnel. Competition for such
personnel in the technology industry is intense, and there can be no assurance
that the Company will be able to retain its key personnel or that it can
attract, assimilate or retain other highly qualified personnel in the future.
<PAGE>
PATENT AND TRADE SECRET PROTECTION. Subsequent to the reorganization,
no patent has been issued on the technology to be utilized by the Company, nor
has any trademark for the use of the name "Telkonet" been issued to the Company.
No assurance can be given that the Company will be able to successfully utilize
the name Telkonet nor can any assurance be made that the Company will procure
trademark rights to same. Additionally, if the Company proceeds with its product
and services under the Telkonet name, the Company may be exposed to liability
for the use of the names. As a result of the above, use and/or protection of the
Company's products and services from competitors may be limited. There is no
assurance that the Company can prevent others from offering similar products or
that the Company has or will have sufficient resources to prosecute and defend
litigation involving such intellectual property. Although the Company plans to
register the appropriate trademarks, there is no assurance that the Company will
obtain these trademarks, nor prevent others from using said names.
NEED FOR ADDITIONAL FUNDS - FUTURE DILUTION. The Company will not be
able to adequately fund the development, implementation and marketing of its
technology without the infusion of additional funds. Acquisition of such funding
may occur through the issuance of additional shares of the Company, the effect
of which may be the dilution of the ownership interests of its shareholders
subsequent to the reorganization. There is no assurance that the Company will be
able to continue development and fully implement its marketing plan as currently
contemplated without such future issuances.
COMPETITION IN THE INDUSTRY. Competition is intense in the technology
field. Moreover, other companies, who may be substantially larger than the
Company and with other competitive advantages such as name recognition, an
established market presence, legal services, and/or sales organizations, could
develop technologies that would provide identical features to the Company's
proposed technologies, or products that are broader in scope or more
technologically advanced than those of the Company.
PARTICIPATION OF OTHER CORPORATIONS. A key to success of the Telkonet
technologies is the participation of other corporations and sponsors. Subsequent
to the reorganization, the Company has not yet signed any participation or
sponsor agreements which would generate revenue for the Company. Failure of the
Company to establish and retain these sources of revenue would have a material
adverse effect on the Company.
CONTROL OF THE COMPANY. Current executive officers and directors of the
Company hold stock representing 53.9% of the Common Stock of the Company. These
shareholders will continue to determine the outcome of corporate actions
requiring shareholder approval, including the election of directors until such
time as their shares are diluted through subsequent offerings.
RISKS ASSOCIATED WITH TECHNOLOGICAL CHANGE. The market in which the
Company competes is characterized by rapidly changing technology, evolving
industry standards, frequent new product announcements, introductions and
enhancements, and changing customer demands. Accordingly, the Company's future
success will depend on its ability to rapidly adapt to new ideas or scientific
findings, its ability to rapidly adapt its solutions to meet evolving industry
standards and its ability to continually improve the performance, features and
reliability of its product to both changing customer demands and competitive
product offerings. The failure of the Company to successfully adapt to such
changes in a timely manner could have material adverse effect on the Company's
business, results of operations and financial condition. Furthermore, there can
be no assurance that the Company will not experience difficulties that could
delay or prevent the successful design, development, testing, introduction or
marketing of new technologies, or that any new solutions or enhancements to
existing technologies will adequately meet the requirements of its prospective
customers and achieve any degree of significant market acceptance.
<PAGE>
LITIGATION AND LIABILITY INSURANCE. The Company intends to secure
general professional liability insurance. However, there can be no guarantee
that clients of the Company will not enter into litigation against the Company
as a result of information received from the Company. In the event that the
Company is in fact sued, the Company may not be adequately insured.
BROAD DISCRETION OF MANAGEMENT. Management will have broad discretion
with respect to the expenditure of the Company's funds and the overall operation
of the Company. Though each of the members of the senior management team has had
broad experience in the technology field their exposure to start-up companies
and start-up telephony companies in particular has been limited.
UNCERTAIN VALUE OF STOCK OF COMPANY. There have been no professional
opinions concerning the value of the stock of the Company or the net worth of
the Company.
GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES. Due to concerns arising
in connection with the increasing popularity and use of the Internet, laws and
regulations, in the United States and abroad, may be adopted covering issues
such as user privacy, acceptable content, or taxation for services. Such
legislation could affect the growth in use of the Internet generally or the
Company, either of which could have a material adverse effect on the Company's
business, results of operations and financial condition.
NO OPERATING History or Revenue and Minimal Assets. Prior to the
effectiveness of the Agreement the Company had no operating history nor revenues
or earnings from operations nor significant assets or financial resources. TCI
also had insignificant operation and minimal revenues prior to the effectiveness
of the Agreement and had only minor amounts of assets.
LACK OF DIVERSIFICATION. The Company's proposed operations, even if
successful, will in all likelihood result in the Company engaging in a single
line of business. The Company's inability to diversify its activities into a
number of areas may subject the Company to economic fluctuations within a
particular business or industry and therefore increase the risks associated with
the Company's operations.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
On August 29, 2000, the Company dismissed its certifying public
accountants, H J & Associates, LLC (formerly Jones, Jensen & Company)
("HJ"). HJ's report on the financial statements for the period as of December
31, 1999 and the related statements of operations, stockholders' equity
(deficit) and cash flows for the years ended December 31, 1999 and 1998 and from
the beginning of the development stage on July 28, 1997 through December 31,
1999 did not contain an adverse opinion or disclaimer of opinion, and was not
qualified or modified as to uncertainty, audit scope or accounting principles,
except that their report for the year ended December 31, 1999 contained an
explanatory paragraph regarding the substantial doubt about the Company's
ability to continue as a going concern. The decision to dismiss HJ was approved
by the Company's Board of Directors. During the period of July 28, 1997
(beginning of the development stage) through December 31, 1999 and subsequent
interim period through August 29, 2000, the Company has not had any
disagreements with HJ on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure. The Company has
engaged Stefanou & Company, LLP ("Stefanou") as its certifying accountant as of
August 29, 2000 for the Company's fiscal year ending December 31, 2000.
The Company has not consulted Stefanou previously. HJ's letter, which
is required pursuant to Item 304(a)(3) of Regulation S-B, is attached.
<PAGE>
The Company has not consulted Stefanou previously. Jones, Jensen's
letter, which is required pursuant to Item 304(a)(3) of Regulation S-B, is
attached.
ITEM 5. OTHER EVENTS
Not applicable.
ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company serving prior to
the effectiveness of the Agreement, have, as part of and as a result of the
reorganization, resigned as officers and directors of Company. New directors and
executive officers of the Company were elected or selected immediately prior to
the effectiveness of the Agreement. These newly elected or selected directors
and executive officers are the prior directors and executive officers of TCI.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial statements of business acquired.
The required financial statements of the business acquired are set
forth below
TELKONET, INC.
Index to Financial Statements
Page
Audit Report of Independent Certified Public Accountants F-3
Financial Statements
Balance Sheet F-4
Statements of Losses F-5
Statements of Deficiency in Stockholders' Equity F-6
Statements of Cash Flows F-7
Notes to Financial Statements F-8 to F-13
Interim Financial Statements (Unaudited)
Balance Sheet as of December 31, 1999 F-13
Statement of Losses for the six months ended
December 31, 1999 F-14
Notes to Financial Statements at December 31, 1999 F-15
<PAGE>
STEFANOU & COMPANY, LLP
CERTIFIED PUBLIC ACCOUNTANTS
1360 Beverly Road
Suite 305
McLean, VA 22101-3621
703-448-9200
703-448-3515 (fax)
Philadelphia, PA
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Telkonet Communications, Inc.
Severna Park, Maryland
We have audited the accompanying balance sheet of Telkonet
Communications, Inc. (a development stage company) as of June 30, 2000 and the
related statements of losses, stockholders' equity, and cash flows for the
period November 3, 1999 (date of inception) to June 30, 2000. These financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based upon
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
misstatements. 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 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 Telkonet
Communications, Inc. as of June 30, 2000, and the results of its operations and
its cash flows from November 3, 1999 (date of inception), to June 30, 2000, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As shown in the financial
statements, the Company has incurred net losses since its inception. This raises
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to this matter are described in Note H. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ STEFANOU & COMPANY, LLP
Stefanou & Company, LLP
Certified Public Accountants
McLean, Virginia
August 16, 2000
F-3
<PAGE>
TELKONET COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
JUNE 30, 2000
ASSETS
------
CURRENT ASSETS:
Cash and equivalent $ 8,232
Marketable securities, at cost which approximates market 525,000
----------
Total current assets 533,232
PROPERTY AND EQUIPMENT-AT COST:
Furniture, equipment and leasehold improvements 74,646
Less accumulated depreciation 10,505
----------
64,141
----------
$ 597,373
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 70,070
Note payable (Note B) 235,000
----------
Total current liabilities 305,070
COMMITMENTS AND CONTINGENCIES (Note E)
STOCKHOLDERS' EQUITY (Note C)
Common stock, par value $.01 per share; 25,000 shares
authorized; 21,035 issued at June 30, 2000 210
Additional paid in capital 656,985
Deficit accumulated during development stage (364,892)
----------
Total stockholders' equity 292,303
----------
$ 597,373
==========
F-4
<PAGE>
TELKONET COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY )
STATEMENT OF LOSSES FOR THE PERIOD NOVEMBER 3, 1999
(DATE OF INCEPTION) THROUGH JUNE 30, 2000
For the Period
November 3, 1999,
(Date of Inception) to
June 30, 2000
-------------
Cost and expenses:
Research and development $ 51,138
General and administrative 295,958
Interest 7,564
Depreciation and amortization 10,232
----------
364,892
Loss before income taxes (364,892)
Income (taxes) benefit -
----------
Net loss $(364,892)
==========
F-5
<PAGE>
<TABLE>
TELKONET COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF IN STOCKHOLDERS' EQUITY
FOR THE PERIOD NOVEMBER 3, 1999 (DATE OF INCEPTION) TO JUNE 30, 2000
<CAPTION>
Deficit accumulated
Common Stock Additional During Development
Shares Amount Paid-in-Capital Stage Total
-------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Issuance of common stock to founders 19,300 $ 193 $ 11,377 $ - $ 11,570
Sale of stock issued pursuant to private
placement, net of costs 1,735 17 645,608 - 645,625
Net loss - - - (364,892) (364,892)
-------- ---------- ---------- ---------- ----------
Balance at June 30, 2000 21,035 $ 210 $ 656,985 $(364,892) $ 292,303
</TABLE>
F-6
<PAGE>
<TABLE>
TELKONET COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE PERIOD NOVEMBER 3, 1999 (DATE OF INCEPTION) TO JUNE 30, 2000
<CAPTION>
For the Period
November 3, 1999,
(Date of
Inception) to
June 30, 2000
----------
<S> <C>
INCREASE (DECREASE) IN CASH AND EQUIVALENTS
Cash flows from operating activities
Net loss from development stage operations $(364,892)
Adjustments to reconcile net loss from development stage
Operations to cash used for operating activities:
Depreciation and amortization 10,232
(Increase) decrease in:
Increase in marketable securities (525,000)
Prepaid and other 273
Increase (decrease) in:
Accounts payable and accrued expenses, net 70,070
----------
Net cash used by operating activities (809,317)
Cash flows used in investing activities:
Capital expenditures, net of disposals (74,646)
----------
Net cash used in investing activities (74,646)
Cash flows used in financing activities:
Proceeds from sale of common stock, net of costs 657,195
Proceeds from loans 235,000
----------
Net cash, provided (used) in financing activities 892,195
----------
Net (decrease) increase in cash and equivalents 8,232
Cash and equivalents at beginning of period 0
----------
Cash and equivalents at end of period $ 8,232
==========
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for interest $ -
Income taxes paid -
</TABLE>
F-7
<PAGE>
NOTE A-SUMMARY OF ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation of
the accompanying consolidated financial statements follows.
Business and Basis of Presentation
----------------------------------
Telkonet Communications, Inc. ("Company") was formed on November 3, 1999 under
the laws of the State of Delaware. The Company is a development stage
enterprise, as defined by Statement of Financial Accounting Standards No. 7
("SFAS No. 7") and is seeking to develop, produce and market proprietary
equipment enabling the transmission of voice and data over electric utility
lines. From its inception through the date of these financial statements the
Company has recognized no revenues and has incurred significant operating
expenses.
Advertising
-----------
The Company follows the policy of charging the costs of advertising to expenses
incurred.
Property and Equipment
----------------------
For financial statement purposes, property and equipment are depreciated using
the straight-line method over their estimated useful lives (three to five years
for furniture, fixtures and equipment). The straight-line method of depreciation
is also used for tax purposes.
Marketable Securities
---------------------
Marketable securities consist primarily of corporate equity securities. The
Company's marketable securities are considered to be "available for sale" and
accordingly, are carried on the balance sheet at fair market value, which
approximates cost. Gains/losses from securities have not been material.
Income Taxes
------------
Income taxes are provided based on the liability method for financial reporting
purposes in accordance with the provisions of Statements of Financial Standards
No. 109, "Accounting for Income Taxes". Under this method 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 are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be removed or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the consolidated statements of operations
in the period that includes the enactment date.
Cash Equivalents
----------------
For purposes of the Statements of Cash Flows, the Company considers all highly
liquid debt instruments purchased with a maturity date of three months or less
to be cash equivalents.
Impairment of Long-Lived Assets
-------------------------------
The Company has adopted Statement of Financial Accounting Standards No. 121
(SFAS 121). The Statement requires that long-lived assets and certain
identifiable intangibles held and used by the Company be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. SFAS No.121 also requires assets to be disposed
of be reported at the lower of the carrying amount or the fair value less costs
to sell.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly actual results
could differ from those estimates.
F-8
<PAGE>
Research and Development
------------------------
Company-sponsored research and development costs related to both present and
future products are expended in the period incurred. Total expenditures on
research and product development for the November 3, 1999 (inception of Company)
through June 30, 2000 were $ 51,138.
Concentrations of Credit Risk
-----------------------------
Financial instruments and related items which potentially subject the Company to
concentrations of credit risk consist primarily of cash, cash equivalents and
trade receivables. The Company places its cash and temporary cash investments
with credit quality institutions. At times, such investments may be in excess of
the FDIC insurance limit. The Company currently has no customers.
STOCK BASED COMPENSATION
The Company accounts for stock transactions in accordance with APB Opinion 25,
"Accounting for Stock Issued to Employees." In accordance with statement of
Financial Accounting Standards No. 123, "Accounting for Stock Based
Compensation," the Company has adopted the proforma disclosure requirements.
Liquidity
---------
As shown in the accompanying financial statements, the Company incurred a net
loss of $364,892 from November 3, 1999 (inception of the Company) through June
30, 2000.
Comprehensive Income
--------------------
The Company does not have any items of comprehensive income in any of the
periods presented.
Segment Information
-------------------
The Company adopted Statement of Financial Accounting Standards No. 131,
Disclosures about Segments of an Enterprise and Related Information ("SFAS 131")
in the year ended December 31, 1998. SAFAS establishes standards for reporting
information regarding operating segments in annual financial statements and
requires selected information for those segments to be presented in interim
financial reports issued to stockholders. SFAS 131 also establishes standards
for related disclosures about products and services and geographic areas.
Operating segments are identified as components of an enterprise about which
separate discrete financial information is available for evaluation by the chief
operating decision maker, or decision making group, in making decisions how to
allocate resources and assess performance. The information disclosed herein,
materially represents all of the financial information related to the Company's
principal operating segment.
New Accounting Pronouncements
-----------------------------
The Company adopted Statement of Financial Accounting Standards No. 132,
Employers' Disclosures about Pension and Other -Post Employment Benefits ("SFAS
132") in the six months ended June 30, 2000. SFAS No. 132 establishes disclosure
requirements regarding pension and post employment obligations. SFAS No. 132
does not effect the Company as of June 30, 2000. In March 1998, Statement of
Position No. 98-1 was issued, which specifies the appropriate accounting for
costs incurred to develop or obtain computer software for internal use. The new
pronouncement provides guidance on which costs should be capitalized, and over
what period such costs should be amortized and what disclosures should be made
regarding such costs. This pronouncement is effective for fiscal years beginning
after December 15, 1998, but earlier application is acceptable. Previously
capitalized costs will not be adjusted. The Company believes that it is already
in substantial compliance with the accounting requirements as set forth in this
new pronouncement, and therefore believes that adoption will not have a material
effect on financial condition or operating results.
F-9
<PAGE>
In April 1998, Statement of Position No. 98-5 was issued which requires that
companies expense defined previously capitalized start-up costs including
organization costs and expense future start-up costs as incurred. Adoption of
this statement does not have an effect on financial condition or operating
results.
The Company adopted Statement of Financial Standards No. 133, Accounting for
Derivative Instruments and for Hedging Activities ("SFAS No. 133") in the six
months ended June 30, 2000. SFAS No. 133 requires that certain derivative
instruments be recognized in balance sheets at fair value and for changes in
fair value to be recognized in operations. Additional guidance is also provided
to determine when hedge accounting treatment is appropriate whereby hedging
gains and losses are offset by losses and gains related directly to the hedged
item. SFAS No. 133's impact on the Company's consolidated financial statements
is not expected to be material as the Company has not historically used
derivative and hedge instruments.
In December, 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 (" SAB 101"), Revenue Recognition in Financial
Statements, which will become effective December 31, 2000. The Company does not
expect the standard to have a material effect on its results.
NOTE B-NOTE PAYABLE
Note payable at June 30, 2000 consists of the following:
Margin loan payable secured by common stock; interest at
broker call rate (8.98% at June 30, 2000) payable monthly $ 235,000
==========
NOTE C - CAPITAL STOCK
The Company was incorporated under the laws of the State of Delaware on November
3, 1999 under the name of Telkonet Communications, Inc. The Company is a
successor to Telkonet Communications, Inc., a company formed under the laws of
the State of Maryland ("Predecessor"). The Predecessor was an inactive
corporation entity with no significant assets or operations.
The Company has authorized 25,000 shares of common stock , with a par value of
$.01 per share.
In June, the Company issued a Private Offering Memorandum for the sale of common
stock at a purchase price of $ 375.00 per share. As of June 30, 2000, the
Company had received $ 650,625, net of costs, for 1,735 shares sold under this
offering (see Note G).
As of June 30, 2000, the Company had the following outstanding warrants to
purchase the Company's common stock.
Number of Shares Exercise Price per Share Date of Expiration
---------------- ------------------------ ------------------
50 $375 June 1, 2001
50 $935 June 1, 2001
F-10
<PAGE>
NOTE D-INCOME TAXES
The Company has adopted Financial Accounting Standard number 109 which requires
the recognition of deferred tax liabilities and assets for the expected future
tax consequences of events that have been included in the financial statement or
tax returns. Under this method, deferred tax liabilities and assets are
determined based on the difference between financial statements and tax bases of
assets and liabilities using enacted tax rates in effect for the year in which
the differences are expected to reverse. Temporary differences between taxable
income reported for financial reporting purposes and income tax purposes are
insignificant.
For income tax reporting purposes, the Company's aggregate unused net operating
losses approximate $364,892, which expire through 2020, subject to limitations
of Section 382 of the Internal Revenue Code, as amended. The deferred tax asset
related to the carryforward is approximately $124,000. The Company has provided
a valuation reserve against the full amount of the net operating loss benefit,
since in the opinion of management based upon the earning history of the
Company, it is likely that the benefits will not be realized.
Components of deferred tax assets as of June 30, 2000 are as follows:
Non Current:
Net operating loss carryforward $ 124,000
Valuation allowance 124,000
----------
Net deferred tax asset $ -
==========
F-11
<PAGE>
NOTE E-COMMITMENTS AND CONTINGENCIES
Lease Commitments
-----------------
The Company leases office space on a month to month basis in Severna Park,
Maryland for its Corporate offices. Rental expense for the period November 3,
1999 (date of inception) through June 30, 2000 was $2,970.
Employment and Consulting Agreements
------------------------------------
The Company has an employment agreement with the Company's Chief Executive
Officer and Chief Operating Officer. In addition to salary and benefit
provisions, the agreement includes defined commitments should the employee
terminate the employment with or without cause.
The Company has consulting agreements with outside contractors to provide
marketing and financial advisory services. The Agreements are generally for a
term of 12 months from inception and renewable automatically from year to year
unless either the Company or Consultant terminates such engagement by written
notice.
NOTE F-RELATED PARTY TRANSACTIONS
Included in accounts payable and accrued expenses is $16,856 at June 30, 2000
which represents advances from stockholders or officers of the Company. No
formal agreements or repayment terms exist.
NOTE G-SUBSEQUENT EVENTS
Subsequent to the date of the financial statements, the Company had received $
71,250.00, net of costs, for the sale of common stock under the Private
Placement Memorandum (see Note C).
Subsequent to the date of the financial statements, the Company issued warrants
to purchase Company common stock to certain consulting firms as partial
consideration for services being rendered to the Company. The terms of the
warrants are as follows:
Exercise
Price Number Date of
Per Share Outstanding Expiration
--------- ----------- ----------
$375.00 263 July 31, 2001
375.00 135 July 31, 2001
935.00 250 June 30, 2001
935.00 750 July 31, 2001
NOTE H-GOING CONCERN MATTERS
The accompanying 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. As shown in the financial statements from
November 3, 1999 (date of inception of Company), the Company incurred losses
from operations of $364,892. This factor among others may indicate that the
Company will be unable to continue as a going concern for a reasonable period of
time.
The Company's existence is dependent upon management's ability to develop
profitable operations and resolve it's liquidity problems. Management
anticipates the Company will attain profitable status and improve it liquidity
through the continued developing of its products, establishing a profitable
market for the Company's products and additional equity investment in the
Company. The accompanying financial statements do not include any adjustments
that might result should the Company be unable to continue as a going concern.
F-12
<PAGE>
In order to improve the Company's liquidity, the Company is actively pursing
additional equity financing through discussions with investment bankers and
private investors. There can be no assurance the Company will be successful in
its effort to secure additional equity financing.
If operations and cash flows continue to improve through these efforts,
management believes that the Company can continue to operate. However, no
assurance can be given that management's actions will result in profitable
operations or the resolution of its liquidity problems.
(b) Pro Forma Financial Information.
<TABLE>
COMSTOCK COAL COMPANY, INC.
CONSOLIDATED PRO FORMA UNAUDITED BALANCE SHEET
DECEMBER 31, 1999
ASSETS
<CAPTION>
Pro forma Pro forma
Comstock Telkonet Adjustments Consolidated
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash $ - $ 8,232 $ 8,232
Marketable securities - 525,000 525,000
---------- ---------- ----------
Total current assets - 533,232 533,232
PROPERTY AND EQUIPMENT, AT COST:
Furniture and equipment - 74,646 74,646
Less accumulated deprecation - 10,505 10,505
---------- ---------- ----------
- 64,141 64,141
---------- ---------- ----------
$ - $ 597,373 $ 597,373
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 2,642 $ 70,070 $ 72,712
Note payable - 235,000 235,000
---------- ---------- ----------
Total current liabilities 2,642 305,070 307,712
STOCKHOLDERS' EQUITY :
(210)(2)
(418)(3)
Common stock 2,398 210 19,618 (2) 21,598
(77,950)(1)
Additional paid in capital 77,950 656,985 (24,030)(1) 632,955
Deficit accumulated during development stage (82,990) (364,892) 82,990 (1) (364,892)
---------- ---------- ----------
(2,642) 292,303 289,661
---------- ---------- ----------
$ 0 $ 597,373 $ 597,373
========== ========== ==========
</TABLE>
F-13
<PAGE>
<TABLE>
COMSTOCK COAL COMPANY, INC.
CONSOLIDATED PRO FORMA CONSOLIDATED STATEMENT OF LOSSES
DECEMBER 31, 1999
<CAPTION>
Pro forma Pro forma
Comstock Telkonet Adjustments Consolidated
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Cost and expenses:
Research and development $ - $ 51,138 $ 51,138
General and administrative 4,940 295,958 300,898
Interest - 7,564 7,564
Depreciation and amortization - 10,232 10,232
---------- ---------- ----------
4,940 364,892 369,832
Loss before taxes (4,940) (364,892) (369,832)
Income (taxes) benefit - -
---------- ---------- ----------
- -
Net loss (4,940) (364,892) (369,832)
Loss per share:
Basic and diluted $ (.00) $ (.00) $ (.02)
========== ========== ==========
Weighted average shares outstanding:
Basic and diluted (restated and giving effect
of re-capitalization) 2,398,000 21,598,134
========== ===========
</TABLE>
F-14
<PAGE>
COMSTOCK COAL COMPANY, INC.
NOTES TO CONDENSED PROFORMA UNAUDITED FINANCIAL STATEMENTS
DECEMBER 31, 1999
The Proforma Unaudited Financial Statements have been prepared in order to
present consolidated financial position and results of operations of Comstock
Coal Company, Inc. ("Comstock") and Telkonet Communications, Inc. ("Telkonet")
as if the acquisition had occurred as of November 3, 1999 (date of Telkonet's
inception ).
On August 25, 2000, Telkonet completed an Agreement and Plan of Reorganization
("Agreement") with Comstock in a transaction accounted for using the purchase
method of accounting. The total purchase price and carrying value of net assets
acquired of the Comstock was $ 1. From Comstock's inception, until the date of
the merger, Comstock was an inactive corporation with no assets and liabilities.
Effective with the Agreement, all previously outstanding common stock, preferred
stock, options and warrants owned by Comstock stockholders were exchanged for an
aggregate of 1,980,000 shares of Telkonet common stock. The value of the stock
that was issued was the historical cost of Comstock's net tangible assets, which
did not differ materially from their fair value. In accordance with Accounting
Principles Opinion No. 16, Telkonet is the acquiring entity.
The following is a description of the pro forma adjustments that have been made
to the financial statements.
(1) To record the acquisition of Comstock for stock. The significant
components of this transaction are:
Stock issued $ 1,980
Excess of liabilities assumed over
assets acquired 2,642
-------
Total consideration paid $ 4,622
=======
(2) To record exchange of Telkonet common shares for Comstock shares
(3) To record cancellation of 418,000 shares of Comstock common stock
subsequent to December 31, 1999.
F-15
<PAGE>
(c) Exhibits
2.1 Agreement and Plan of Reorganization between Comstock Coal Company,
Inc. and Telkonet, Inc.
3.1 Articles of Incorporation of Company, Inc. and Articles of Amendment to
the Articles of Incorporation of Comstock Coal Company, Inc.
4.1 Registration Rights Agreement by Telkonet
10.1 Employment Agreement between Telkonet Communications, Inc, a wholly
owned subsidiary of Telkonet, Inc., and Stephen L. Sadle
10.2 Employment Agreement between Telkonet Communications, Inc., a wholly
owned subsidiary of Telkonet, Inc., and Lewis Peter Larson
16.1 Letter from Comstock Coal Company's former Certified Accountants
17.1 Letter of Resignation from James Doolin
17.2 Letter of Resignation from Jason Jenson
17.3 Letter of Resignation from Shane Thueson
21.1 Subsidiaries of Registrant
27.1 Financial Data Schedule
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.
TELKONET, INC.
Date: August 30, 2000
