<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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)
May 31, 2000
___________________________________
Universe2U Inc.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its chapter)
Nevada
-------------------------
(State or other jurisdiction of incorporation)
333-86331
-------------------------
(Commission File Number)
88-0433489
-------------------
(IRS Employer Identification No.)
30 West Beaver Creek Rd. - Suite 109
Richmond Hill, Ontario, Canada
-----------------------------
(Address of principal executive offices)
L4B 3K1
------------------------------
(Zip Code)
(905) 881-3284
-----------------
(Registrant's telephone number, including area code)
PAXTON MINING CORPORATION
------------------------------
(Former name)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
On July 24, 2000, Universe2U Inc. ("Universe2U")(formerly known as Paxton Mining
Corporation) filed a Form 8-K with the Securities and Exchange Commission
disclosing the acquisition on May 31, 2000 of all of the shares of CableTec
Communications Inc. (formerly known as Bernie Tan Investments Inc. and referred
to as "CableTec").
For accounting purposes, the acquisition of CableTec has been treated as a
purchase. The purchase method of accounting allocates the aggregate purchase
price to the assets acquired and liabilities assumed based upon their respective
fair values. The excess of the purchase price over the fair value of assets and
liabilities acquired of approximately $622,937 was allocated to capital assets.
The accompanying unaudited pro forma balance sheet presents the financial
position of Universe2U and CableTec as of March 31, 2000, assuming the
acquisition was completed as of the balance sheet date. The pro forma
statements of operations for the three month period ended March 31, 2000 and the
year ended December 31, 1999 reflect the acquisition, as if the acquisition had
occurred on January 1, 1999, the first day of the earliest fiscal year
presented. These pro forma financial statements also take into effect certain
events that occurred subsequent to the periods presented.
The Company hereby amends the Form 8-K filed on July 24, 2000, pursuant to an
undertaking made by the Company under paragraph (4) of Item 7(a) of Form 8-K,
with respect to the disclosure set forth herein of the pro forma financial
statements reflecting the acquisition. The Company herein incorporates by
reference the disclosures made on such Form 8-K filed with the Securities and
Exchange Commission and amends such filing with the addition of the exhibits
contained herein. The financial information does not purport to be indicative
of future results.
<TABLE>
<CAPTION>
Financial Statements Page
-------------------- ----
<S> <C>
Bernie Tan Investments Inc. o/a CableTec
Financial Statements (audited)
December 31, 1999 and 1998 F-1
Bernie Tan Investments Inc. o/a CableTec
Interim Financial Statements (unaudited)
March 31, 2000 and 1999 F-11
Universe2U Inc.
Pro Forma Consolidated Financial Statements (unaudited)
March 31, 2000 and December 31, 1999 F-22
</TABLE>
<PAGE>
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.
UNIVERSE2U INC.
Date: August 14, 2000 By: /s/ R. John Slattery
----------------------------
R. John Slattery
Executive Vice President, Finance
and Chief Financial Officer
<PAGE>
Bernie Tan Investments Inc. o/a CableTec
Financial Statements
December 31, 1999
(expressed in U.S. dollars)
F-1
<PAGE>
[LETTERHEAD OF MOORE STEPHENS COOPER MOLYNEUX LLP]
Auditors' Report
To the Shareholders of
Bernie Tan Investments Inc. o/a CableTec
We have audited the balance sheet of Bernie Tan Investments Inc. o/a CableTec
as at December 31, 1999 and the statements of operations and retained earnings
and cash flows for the years ended December 31, 1999 and 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 audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance 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.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 1999, and the
results of its operations and cash flows for the years ended December 31, 1999
and 1998 in accordance with generally accepted accounting principles in Canada.
Accounting principles generally accepted in Canada vary in certain significant
respects from accounting principles generally accepted in the United States.
Application of accounting principles generally accepted in the United States
would have affected shareholders' equity as at December 31, 1999 and 1998, to
the extent summarized in Note 8 to the accompanying financial statements.
Signed: "Moore Stephens Cooper Molyneux LLP"
Chartered Accountants
Toronto, Ontario
August 11, 2000
F-2
<PAGE>
Bernie Tan Investments Inc. o/a CableTec
--------------------------------------------------------------------------------
Balance Sheet
December 31, 1999
(expressed in U.S. dollars)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets
Current assets
Cash $ 142,437
Accounts receivable 110,728
Note receivable (note 2) 90,071
Prepaid expenses 981
Inventory 12,339
Due from shareholder (note 2) 41,607
------------------------------------------------------------- ---------
398,163
Capital assets (note 3) 164,377
------------------------------------------------------------- ---------
$ 562,540
============================================================= =========
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 116,340
Income taxes payable 58,412
Current portion of vehicle loan (note 4) 5,430
------------------------------------------------------------- ---------
180,182
Vehicle loan payable (note 4) 11,174
------------------------------------------------------------- ---------
191,356
------------------------------------------------------------- ---------
Shareholders' equity
Share capital
Authorized:
Unlimited number of Common shares
Issued and outstanding:
120 Common shares 1
Retained earnings 371,183
------------------------------------------------------------- ---------
371,184
------------------------------------------------------------- ---------
$ 562,540
============================================================= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Approved on behalf of the Board
__________________________
Bernard Tanunagara
F-3
<PAGE>
Bernie Tan Investments Inc. o/a CableTec
--------------------------------------------------------------------------------
Statement of Retained Earnings
for the years ended December 31, 1999 and 1998
(expressed in U.S. dollars)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
-------------------------------------------------------------- --------
<S> <C> <C>
Retained earnings, beginning of years $264,395 $249,804
Net income for the years 87,719 32,400
-------------------------------------------------------------- --------
352,114 282,204
Effect of exchange differences 19,069 (17,809)
-------------------------------------------------------------- --------
Retained earnings, end of years $371,183 $264,395
============================================================== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
Bernie Tan Investments Inc. o/a CableTec
--------------------------------------------------------------------------------
Statement of Operations
for the years ended December 31, 1999 and 1998
(expressed in U.S. dollars)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
-------------------------------------------------------------- --------
<S> <C> <C>
Sales $863,014 $674,437
-------------------------------------------------------------- --------
Cost of goods sold
Subcontracting 232,442 146,302
Wages and benefits 205,940 140,392
Equipment rental and maintenance 78,074 72,572
Materials 45,145 54,213
Amortization 50,046 39,315
--------------------------------------------------------------- --------
611,647 452,794
-------------------------------------------------------------- --------
Gross profit 251,367 221,643
-------------------------------------------------------------- --------
Expenses
Professional fees 17,059 2,646
Vehicles and travel 40,617 37,089
Rent and realty taxes 36,170 34,286
Advertising and promotion 35,083 24,371
Insurance 16,705 5,907
Office and general 8,045 5,956
Bank charges and interest 4,864 8,631
Bad debt expense (10,191) 22,010
-------------------------------------------------------------- --------
148,352 140,896
-------------------------------------------------------------- --------
Income from continuing operations 103,015 80,747
Income from discontinued operations (note 6) 15,724 (27,464)
-------------------------------------------------------------- --------
Income before provision for income taxes 118,739 53,283
Provision for income taxes 31,020 20,883
-------------------------------------------------------------- --------
Net income for the years $ 87,719 $ 32,400
============================================================== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
Bernie Tan Investments Inc. o/a CableTec
--------------------------------------------------------------------------------
Statement of Cash Flows
for the years ended December 31, 1999 and 1998
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
1999 1998
------------------------------------------------------------------------------ -------------
<S> <C> <C>
Cash flow from operating activities
Net income for the years $ 87,719 $ 32,400
Items not affecting cash
Amortization 50,046 39,315
Gain on disposal of capital assets (18,476) -
------------------------------------------------------------------------------ ------------
119,289 71,715
Other sources (uses) of cash from operations
Decrease in accounts receivable 31,258 79,639
Decrease (increase) in prepaid expenses 1,515 (248)
Decrease in inventory 2,981 24,029
(Decrease) increase in accounts payable and accrued liabilities (61,737) 41,671
Increase (decrease) in income taxes payable 32,728 (57,896)
------------------------------------------------------------------------------ ------------
126,034 158,910
------------------------------------------------------------------------------ ------------
Cash flow from investing activities
Purchase of capital assets (60,536) (65,617)
Proceeds on disposal of capital assets 27,436 -
------------------------------------------------------------------------------ ------------
(33,100) (65,617)
------------------------------------------------------------------------------ ------------
Cash flow from financing activities
(Repayments) proceeds on long-term debt (3,626) 20,232
Increase in note receivable (90,071) -
Increase in due from employee (69,420) (3,274)
------------------------------------------------------------------------------ ------------
(163,117) 16,958
------------------------------------------------------------------------------ ------------
Effect of exchange rate differences 10,389 (5,414)
------------------------------------------------------------------------------ ------------
(Decrease) increase in cash (59,794) 104,837
Cash, beginning of years 202,231 97,394
------------------------------------------------------------------------------ ------------
Cash, end of years $ 142,437 $ 202,231
============================================================================== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
Bernie Tan Investments Inc. o/a CableTec
--------------------------------------------------------------------------------
Notes to Financial Statements
December 31, 1999
(expressed in U.S. dollars)
--------------------------------------------------------------------------------
1. Significant Accounting Policies
--------------------------------------------------------------------------------
Cash and cash equivalents
Cash and cash equivalents consist of cash on deposit and highly liquid
short-term interest bearing securities with maturity at the date of
purchase of three months or less.
Inventory
Raw materials are valued at the lower of cost and replacement cost.
Finished goods are valued at the lower of cost and net realizable value.
Cost is determined on the first-in, first-out basis.
Capital assets
Capital assets are recorded at cost. Amortization is provided over the
assets' estimated useful lives at the following rates:
Furniture and fixtures - 20% declining balance
Computers - 30% declining balance
Tools and equipment - 20% declining balance
Vehicles and trucks - 30% declining balance
Leasehold improvements - 5 year straight line
Revenue recognition
Revenue for services provided is recognized in the period the services are
performed based on the costs incurred.
Foreign exchange
The Company's operations are self-sustaining and therefore their assets and
liabilities are translated into U.S. dollars, the basis of presentation of
these financial statements, using the year end rate of exchange, and
revenue and expenses of such operations are translated using the average
rate of exchange for the year. The related foreign exchange gains and
losses arising on translation of the Company's operations are included in
shareholders' equity until realized.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Fair value
The carrying amount of accounts receivable, bank loans, accounts payable
accrued liabilities approximates their fair value because of the short-term
maturities of these items. The fair value of the note receivable from a
related company is not determinable, as this amount is due on demand
without interest, and, accordingly, cannot be ascertained with reference to
similar debt with non-related parties.
F-7
<PAGE>
Bernie Tan Investments Inc. o/a CableTec
--------------------------------------------------------------------------------
Notes to Financial Statements
December 31, 1999
(expressed in U.S. dollars)
--------------------------------------------------------------------------------
1. Significant Accounting Policies - continued
--------------------------------------------------------------------------------
Future income taxes
The Company adopted the asset/liability method of accounting for future
income taxes in fiscal 1999, whereby future income tax liabilities are
determined by applying the tax rate at the end of the fiscal year to
temporary differences between the accounting and tax bases of the assets
and the liabilities of the Company. The future income tax liability results
from differences between the tax base and carrying values of capital and
other assets, differences in the accounting and tax treatment of certain
costs.
2. Related Party Transactions
--------------------------------------------------------------------------------
During the year, the Company sold the net assets of its cellular division
to 1375270 Ontario Limited, a corporation controlled by the shareholders of
the Company. The purchase price was satisfied by a note receivable of
$90,071 which is non-interest bearing, unsecured, and repayable by May 31,
2000. The sale resulted in a gain on disposal of $18,476 (see note 6).
Amounts due to shareholders are non-interest bearing with no fixed
repayment terms.
3. Capital Assets
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
1999 1998
----------------------------------------------------------------------------------- -------------
Accumulated Net Book Net Book
Cost Amortization Value Value
----------------------------------------------------------------------------------- -------------
<S> <C> <C> <C> <C>
Furniture and fixtures $ - $ - $ - $ 2,964
Computers - - - 3,907
Tools and equipment 172,598 91,854 80,744 66,789
Vehicles and trucks 193,948 110,315 83,633 78,821
Leasehold improvements - - - 1,052
----------------------------------------------------------------------------------- -------------
$ 366,546 $ 202,169 $164,377 $ 153,533
=================================================================================== =============
</TABLE>
4. Vehicle Loan
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
1999 1998
----------------------------------------------------------------------------------- -------------
<S> <C> <C>
The loan is secured by the vehicle, bears interest at 1.9% per
annum, is repayable at $475 monthly principal and interest
and matures November 2002. $ 16,604 $ 20,231
----------------------------------------------------------------------------------- -------------
Less: Current portion 5,430 5,023
----------------------------------------------------------------------------------- -------------
$ 11,174 $ 15,208
=================================================================================== =============
</TABLE>
F-8
<PAGE>
Bernie Tan Investments Inc. o/a CableTec
--------------------------------------------------------------------------------
Notes to Financial Statements
December 31, 1999
(expressed in U.S. dollars)
--------------------------------------------------------------------------------
4. Vehicle Loan - continued
--------------------------------------------------------------------------------
Principal payments on long-term debt are as follows:
2000 $ 5,430
2001 5,534
2002 5,640
---------------------------------------------------
$16,604
5. Interest and Income Taxes Paid
--------------------------------------------------------------------------------
During the year, the Company had cash flows arising from interest and income
taxes paid as follows:
--------------------------------------------------------------------------------
1999 1998
-------------------------------------------------------------- ----------
Interest paid $ 4,991 $ 9,056
Income taxes paid $ 6,843 $ 71,158
============================================================== ==========
6. Discontinued Operations
--------------------------------------------------------------------------------
On November 30, 1999, the Company completed an agreement with 1375270 Ontario
Limited, a related corporation, to sell the net assets of its cellular
division. The sale closed on November 30, 1999. Accordingly, the cellular
operations have been treated as discontinued operations in the 1999 financial
statements and the comparative balances for 1998 have been restated.
The operating results of discontinued operations are as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
1999 1998
----------------------------------------------------------------- -----------
<S> <C> <C>
Sales $ 441,515 $ 508,752
Gain on sale of assets 18,476 -
----------------------------------------------------------------- -----------
459,991 508,752
Cost of sales 368,185 461,778
----------------------------------------------------------------- -----------
Gross profit 91,806 46,974
----------------------------------------------------------------- -----------
Expenses
Operating expenses 65,264 75,449
Interest expense 4,759 4,986
Amortization - 3,584
----------------------------------------------------------------- -----------
70,023 84,019
----------------------------------------------------------------- -----------
Income before provision for income taxes 21,783 (37,045)
Provision for income taxes 6,059 (9,581)
----------------------------------------------------------------- -----------
Net income (loss) from discontinued operations $ 15,724 $ (27,464)
================================================================= ===========
</TABLE>
F-9
<PAGE>
Bernie Tan Investments Inc. o/a CableTec
--------------------------------------------------------------------------------
Notes to Financial Statements
December 31, 1999
(expressed in U.S. dollars)
--------------------------------------------------------------------------------
7. Commitments and Contingencies
--------------------------------------------------------------------------------
At December 31, 1999, the Company's total obligation, under an operating
lease for equipment is as follows:
<TABLE>
<S> <C>
2000 $ 48,591
2001 48,591
2002 28,345
--------------------------------------------------------
$125,527
========================================================
</TABLE>
8. Reconciliation of Results Reported in Accordance with Generally Accepted
Accounting Principles (GAAP) in Canada with United States ("U.S.") GAAP
--------------------------------------------------------------------------------
Significant adjustments
There are no significant differences between Canadian GAAP and U.S. GAAP that
would have a material effect on the reported net income of the Company.
U.S. GAAP does require the presentation of a statement of comprehensive
income to report the non-shareholder related transactions which have impacted
shareholders' equity during the year:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
1999 1998
----------------------------------------------------------------------- ------------
<S> <C> <C>
Net income in accordance with U.S. GAAP $ 87,719 $ 32,400
Other comprehensive expense item before tax
Foreign currency translation adjustment 19,069 (17,809)
----------------------------------------------------------------------- ------------
Comprehensive income before tax 106,788 14,591
Tax effect on other comprehensive expense item at 23.0% 4,386 (4,096)
----------------------------------------------------------------------- ------------
Comprehensive income in accordance with U.S. GAAP $ 102,402 $ 18,687
======================================================================= ============
</TABLE>
9. Subsequent Events
--------------------------------------------------------------------------------
Subsequent to the year end, 100% of the issued and outstanding shares of the
Company were acquired by Universe2U Inc., a Canadian subsidiary of Universe2U
Inc., a publicly traded Nevada Corporation.
F-10
<PAGE>
Bernie Tan Investments Inc. o/a CableTec
Unaudited Financial Statements
March 31, 2000
(expressed in U.S. dollars)
F-11
<PAGE>
[LETTERHEAD OF MOORE STEPHENS COOPER MOLYNEUX LLP]
Review Engagement Report
To the Shareholders of
Bernie Tan Investments Inc. o/a CableTec
We have reviewed the interim balance sheet of Bernie Tan Investments Inc. o/a
CableTec as at March 31, 2000 and the interim statements of operations and
retained earnings and cash flows for the three month period then ended. Our
review was made in accordance with generally accepted standards for review
engagements and accordingly consisted primarily of enquiry, analytical
procedures and discussion related to information supplied to us by the Company.
A review does not constitute an audit and consequently we do not express an
audit opinion on these financial statements.
Based on our review nothing has come to our attention that causes us to believe
that these financial statements are not, in all material respects, in accordance
with generally accepted accounting principles.
Accounting principles generally accepted in Canada vary in certain significant
respects from accounting principles generally accepted in the United States.
Application of accounting principles generally accepted in the United States
would have affected shareholders' equity as at March 31, 2000 to the extent
summarized in Note 8 to the accompanying financial statements.
Signed: "Moore Stephens Cooper Molyneux LLP"
Chartered Accountants
Toronto, Ontario
August 11, 2000
F-12
<PAGE>
Bernie Tan Investments Inc. o/a CableTec
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Unaudited Balance Sheet
March 31, 2000
(expressed in U.S. dollars)
--------------------------------------------------------------------------------
2000 1999
------------------------------------------------------------------- ----------
<S> <C> <C>
Assets
Current assets
Cash and short-term deposits $ 25,802 $ 187,905
Accounts receivable 182,613 111,810
Note receivable (note 2) 89,692 -
Prepaid expenses 977 2,537
Inventory - 70,724
Due from employees (note 2) 84,097 -
-------------------------------------------------------------------- ----------
383,181 372,976
Capital assets (note 3) 168,975 147,778
Incorporation costs - 643
-------------------------------------------------------------------- ----------
$ 552,156 $ 521,397
==================================================================== ==========
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 53,411 $ 144,614
Income taxes payable 70,150 32,554
Due to related parties - 28,090
Current portion of vehicle loan (note 4) 5,433 5,130
-------------------------------------------------------------------- ----------
128,994 210,388
Vehicle loan payable (note 4) 9,759 13,767
-------------------------------------------------------------------- ----------
138,753 224,155
-------------------------------------------------------------------- ----------
Shareholders' equity
Share capital
Authorized:
Unlimited number of Common shares
Issued and outstanding:
120 Common shares 1 1
Retained earnings 413,402 297,241
-------------------------------------------------------------------- ----------
413,403 297,242
-------------------------------------------------------------------- ----------
$ 552,156 $ 521,397
==================================================================== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Approved on behalf of the Board
______________________
Bernard Tanunagara
F-13
<PAGE>
Bernie Tan Investments Inc. o/a CableTec
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Unaudited Statement of Retained Earnings
for the three month period ended March 31, 2000
(expressed in U.S. dollars)
--------------------------------------------------------------------------------
2000 1999
------------------------------------------------------------------- --------
<S> <C> <C>
Retained earnings, beginning of period $371,183 $264,395
Net income for the period 43,657 28,485
------------------------------------------------------------------- --------
414,840 292,880
Effect of exchange rate differences (1,438) 4,361
------------------------------------------------------------------- --------
Retained earnings, end of period $413,402 $297,241
=================================================================== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-14
<PAGE>
Bernie Tan Investments Inc. o/a CableTec
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Unaudited Statement of Operations
for the three month period ended March 31, 2000
(expressed in U.S. dollars)
--------------------------------------------------------------------------------
2000 1999
------------------------------------------------------------------- ---------
<S> <C> <C>
Sales $244,839 $107,368
------------------------------------------------------------------- --------
Cost of goods sold
Subcontracting 46,334 28,334
Wages and benefits 32,637 31,475
Equipment rental and maintenance 20,572 6,662
Materials 11,146 12,363
Amortization 10,863 7,842
------------------------------------------------------------------- --------
121,552 86,676
------------------------------------------------------------------- --------
Gross profit 123,287 20,692
------------------------------------------------------------------- --------
Expenses
Vehicles and travel 29,729 11,998
Advertising and promotion 14,082 9,824
Rent and realty taxes 10,308 7,548
Professional fees 6,693 -
Insurance 4,363 5,255
Office and general 1,946 1,895
Bank charges and interest 557 -
------------------------------------------------------------------- --------
67,678 36,520
------------------------------------------------------------------- --------
Income from continuing operations 55,609 (15,828)
Income from discontinued operations (note 6) - 40,891
------------------------------------------------------------------- --------
Income before provision for income taxes 55,609 25,063
Provision for income taxes 11,952 (3,422)
------------------------------------------------------------------- --------
Net income for the period $ 43,657 $ 28,485
=================================================================== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-15
<PAGE>
Bernie Tan Investments Inc. o/a CableTec
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Unaudited Statement of Cash Flows
for the three month period ended March 31, 2000
(expressed in U.S. dollars)
--------------------------------------------------------------------------------
2000 1999
------------------------------------------------------------------- ----------
<S> <C> <C>
Cash flow from operating activities
Net income for the period $ 43,657 $ 28,485
Items not affecting cash
Amortization 10,863 7,842
------------------------------------------------------------------- --------
54,520 36,327
Other sources (uses) of cash from operations
(Increase) decrease in accounts receivable (71,885) 30,177
Decrease (increase) in inventory 12,339 (55,403)
Decrease in accounts payable and accrued liabilities (62,929) (33,460)
Increase in income taxes payable 11,738 6,870
------------------------------------------------------------------- --------
(56,217) (15,489)
------------------------------------------------------------------- --------
Cash flow from investing activities
Purchase of capital assets (16,185) -
------------------------------------------------------------------- --------
Cash flow from financing activities
Repayments on long-term debt (1,412) (1,335)
(Increase) decrease in due from employee (42,490) 277
------------------------------------------------------------------- --------
(43,902) (1,058)
------------------------------------------------------------------- --------
Effect of exchange rate changes on cash (331) 2,221
------------------------------------------------------------------- --------
Decrease in cash (116,635) (14,326)
Cash, beginning of period 142,437 202,231
------------------------------------------------------------------- --------
Cash, end of period $ 25,802 $187,905
=================================================================== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-16
<PAGE>
Bernie Tan Investments Inc. o/a CableTec
--------------------------------------------------------------------------------
Notes to Unaudited Statement
March 31, 2000
(expressed in U.S. dollars)
--------------------------------------------------------------------------------
1. Significant Accounting Policies
--------------------------------------------------------------------------------
Unaudited interim statements
The financial statements as of March 31, 2000 and for the three months ended
March 31, 2000 are unaudited, however, in the opinion of management all
adjustments necessary to a fair presentation of the financial statements for
this interim period have been made. The results for the interim period ended
March 31, 2000 are not necessarily indicative of the results to be obtained
for a full fiscal year.
Cash and cash equivalents
Cash and cash equivalents consist of cash on deposit and highly liquid short-
term interest bearing securities with maturity at the date of purchase of
three months or less.
Capital assets
Capital assets are recorded at cost. Amortization is provided over the
assets' estimated useful lives at the following rates:
Tools and equipment - 20 % declining balance
Vehicles and trucks - 30 % declining balance
Revenue recognition
Revenue for services provided is recognized in the period the services are
performed based on the costs incurred.
Foreign exchange
The Company's operations are self-sustaining and therefore their assets and
liabilities are translated into U.S. dollars, the basis of presentation of
these financial statements, using the period end rate of exchange, and
revenue and expenses of such operations are translated using the average rate
of exchange for the period. The related foreign exchange gains and losses
arising on translation of the Company's operations are included in
shareholders' equity until realized.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Fair value
The carrying amount of accounts receivable, bank loans, accounts payable
accrued liabilities approximates their fair value because of the short-term
maturities of these items. The fair value of the note receivable from a
related company is not determinable, as this amount is due on demand without
interest, and, accordingly, cannot be ascertained with reference to similar
debt with non-related parties.
F-17
<PAGE>
Bernie Tan Investments Inc. o/a CableTec
--------------------------------------------------------------------------------
Notes to Unaudited Statement
March 31, 2000
(expressed in U.S. dollars)
--------------------------------------------------------------------------------
1. Significant Accounting Policies - continued
--------------------------------------------------------------------------------
Future income taxes
The Company adopted the asset/liability method of accounting for future
income taxes in fiscal 1999 whereby future income tax liabilities are
determined by applying the tax rate at the end of the fiscal year to
temporary differences between the accounting and tax bases of the assets and
the liabilities of the Company. The future income tax liability results from
differences between the tax base and carrying values of capital and other
assets, differences in the accounting and tax treatment of certain costs.
2. Related Party Transactions
--------------------------------------------------------------------------------
During the prior year, the Company sold the net assets of its cellular
division to 1375270 Ontario Limited, a corporation controlled by the
shareholders of the Company. The purchase price was satisfied by the
assumption of liabilities related to the cellular division and a note
receivable of $89,692 which is non-interest bearing, unsecured, and repayable
by May 31, 2000. The sale resulted in a gain on disposal of $18,476.
Amounts due to and from shareholders are non-interest bearing with no fixed
repayment terms.
3. Capital Assets
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
2000 1999
-------------------------------------------------------------------- --------
Accumulated Net Book Net Book
Cost Amortization Value Value
-------------------------------------------------------------------- --------
<S> <C> <C> <C> <C>
Furniture and fixtures $ - $ - $ - $ 2,861
Computers - - - 3,772
Tools and equipment 178,183 95,745 82,438 64,028
Vehicles and trucks 203,005 116,468 86,537 76,101
Leasehold improvements - - - 1,016
-------------------------------------------------------------------- --------
$381,188 $212,213 $168,975 $147,778
==================================================================== ========
</TABLE>
F-18
<PAGE>
Bernie Tan Investments Inc. o/a CableTec
--------------------------------------------------------------------------------
Notes to Unaudited Statement
March 31, 2000
(expressed in U.S. dollars)
--------------------------------------------------------------------------------
4. Vehicle Loan
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
2000 1999
-------------------------------------------------------------------- --------
<S> <C> <C>
The loan is secured by the vehicle, bears interest at
1.9% per annum, is repayable at $473 monthly principal
and interest and matures November 2002. $15,192 $18,896
Less: Current portion 5,433 5,130
-------------------------------------------------------------------- --------
$ 9,759 $13,766
==================================================================== =======
Principal payments on long-term debt are as follows:
2001 $ 5,433
2002 5,537
2003 4,222
--------------------------------------------------------------------
$15,192
====================================================================
</TABLE>
5. Interest and Income Taxes Paid
--------------------------------------------------------------------------------
During the year, the Company had cash flows arising from interest and income
taxes paid as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
2000 1999
-------------------------------------------------------------------- --------
<S> <C> <C>
Interest paid $ 557 $ 1,382
Income taxes paid $ - $ 1,417
==================================================================== ========
</TABLE>
F-19
<PAGE>
Bernie Tan Investments Inc. o/a CableTec
--------------------------------------------------------------------------------
Notes to Unaudited Statement
March 31, 2000
(expressed in U.S. dollars)
--------------------------------------------------------------------------------
6. Discontinued Operations
--------------------------------------------------------------------------------
On November 30, 1999 the Corporation completed an agreement with 1375270
Ontario Limited, a related corporation, to sell the net assets of its
cellular division. The sale closed on November 30, 1999. Accordingly, the
cellular operations have been treated as discontinued operations in the 1999
financial statements.
The operating results of discontinued operations are as follows:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999
-------------------------------------------------------------------- --------
<S> <C> <C>
Sales $ - $117,990
Cost of sales - 40,564
-------------------------------------------------------------------- --------
Gross profit - 77,426
-------------------------------------------------------------------- --------
Expenses
Operating expenses - 23,471
Interest expense - 1,382
Amortization - 402
-------------------------------------------------------------------- --------
- 25,255
Income before provision for income taxes - 52,171
Provision for income taxes - 11,280
-------------------------------------------------------------------- --------
Net income from discontinued operations $ - $ 40,891
==================================================================== ========
</TABLE>
7. Commitments and Contingencies
--------------------------------------------------------------------------------
At March 31, 2000, the Company's total obligation, under an operating lease
for equipment is as follows:
<TABLE>
<S> <C>
2000 $36,289
2001 48,386
2002 28,225
-------------------------------------------------------------------
$112,900
===================================================================
</TABLE>
F-20
<PAGE>
Bernie Tan Investments Inc. o/a CableTec
--------------------------------------------------------------------------------
Notes to Unaudited Statement
March 31, 2000
(expressed in U.S. dollars)
--------------------------------------------------------------------------------
8. Reconciliation of Results Reported in Accordance with Generally Accepted
Accounting Principles (GAAP) in Canada with United States ("U.S.") GAAP
--------------------------------------------------------------------------------
Significant adjustments
There are no significant differences between Canadian GAAP and U.S. GAAP that
would have a material effect on the reported net income of the Company.
U.S. GAAP does require the presentation of a statement of comprehensive
income to report the non-shareholder related transactions which have impacted
shareholders' equity during the period:
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Net income in accordance with U.S. GAAP $43,657 $28,485
Other comprehensive expense item before tax:
Foreign currency translation adjustment (1,438) 4,361
-------------------------------------------------------------------- -------
Comprehensive income before tax 42,219 32,846
Tax effect of other comprehensive expense item at 23.0% 331 (1,003)
-------------------------------------------------------------------- -------
Comprehensive income in accordance with U.S. GAAP $42,550 $31,843
==================================================================== =======
</TABLE>
9. Subsequent Event
--------------------------------------------------------------------------------
Subsequent to the period end, 100% of the issued and outstanding shares of
the Company were acquired by Universe2U Inc., a Canadian subsidiary of
Universe2U Inc., a publicly traded Nevada Corporation.
F-21
<PAGE>
Universe2U Inc.
(formerly Paxton Mining Corporation)
Unaudited Pro Forma Consolidated Financial Statements
March 31, 2000 and December 31, 1999
(expressed in U.S. dollars)
F-22
<PAGE>
Basis of Presentation
These unaudited pro forma financial statements give effect to the acquisition by
Universe2U Inc. ("Universe2U") of Bernie Tan Investments Inc. ("CableTec") in a
transaction to be accounted for as a purchase. The unaudited pro forma
consolidated balance sheet is based on the individual unaudited historical
balance sheets of Universe2U and CableTec, and has been prepared to reflect the
acquisition by Universe2U of CableTec as of March 31, 2000. The unaudited pro
forma consolidated statements of operations and deficit are based on the
individual historical statements of operations and deficit of Universe2U and
CableTec and combine the results of the operations for the period ended March
31, 2000 and the year ended December 31, 1999 as if the acquisition occurred on
January 1, 1999. The historical balance sheet of Universe2U has been adjusted to
retroactively give effect to the combined results of Universe2U Inc. (formerly
known as Paxton Mining Corporation)("Paxton") and Universe2U Inc. ("Universe2U")
as a result of the reverse acquisition by Universe2U of Paxton accounted for as
a recapitalization. The effects of the recapitalization are included as
Universe2U in the unaudited pro forma consolidated balance sheet.
The unaudited pro forma consolidated balance sheet and consolidated statements
of operations and deficit have been prepared by management in accordance with
generally accepted accounting principles in the United States ("U.S. GAAP") and
the pro forma assumptions and adjustments described in notes 1, 4 and 5 attached
hereto.
The unaudited pro forma consolidated balance sheet and consolidated statements
of operations and deficit as at March 31, 2000 and for the period ended March
31, 2000 and the year ended December 31, 1999 are based on the unaudited
historical combined financial statements of Paxton for the period ended March
31, 2000, the unaudited historical combined financial statements of Universe2U
for the period ended March 31, 2000, the audited historical combined financial
statements of Universe2U for the year ended December 31, 1999, the unaudited
historical financial statements of CableTec for the period ended March 31,
2000, and the audited historical financial statements of CableTec for the year
ended December 31, 1999. All significant adjustments required in accordance with
U.S. GAAP have been reflected in these pro forma figures.
The unaudited pro forma consolidated financial statements are not necessarily
indicative of the results that actually would have resulted if the transactions
reflected herein had been completed on the dates indicated or the results which
may be obtained in the future. The unaudited pro forma consolidated financial
statements should be read in conjunction with the financial statements of
CableTec, including the respective notes thereto, included elsewhere herein.
F-23
<PAGE>
Universe2U Inc. (formerly Paxton Mining Corporation) Exhibit A
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Unaudited Pro Forma Consolidated Balance Sheet
as at March 31, 2000
(expressed in U.S. dollars)
----------------------------------------------------------------------------------------------------------------
Pro forma Pro forma
Universe2U CableTec Adjustments Consolidated
(from Schedule 1)
------------------------------------------------------------------------------------------- ------------------
<S> <C> <C> <C> <C>
Assets
Current assets
Cash $ 302,886 $ 25,802 $ - $ 328,688
Accounts receivable 791,970 182,613 - 974,583
Note receivable - 89,692 - 89,692
Subscription receivable - - 1,100,000 4d 1,100,000
Prepaid expenses 99,487 977 (68,995) 4b 31,469
Due from employee - 84,097 - 84,097
------------------------------------------------------------------------------------------- ------------------
1,194,343 383,181 1,031,005 2,608,529
Future income taxes 135,848 - - 135,848
Capital assets 504,739 168,975 622,937 4b 1,296,651
Mining claims 262 - - 262
------------------------------------------------------------------------------------------- ------------------
$ 1,835,192 $ 552,156 $ 1,653,942 $ 4,041,290
=========================================================================================== ==================
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 877,280 $ 53,411 $ - $ 930,691
Income taxes payable 29,400 70,150 - 99,550
Current portion of capital lease obligation 14,265 - - 14,265
Current portion of long-term debt 54,756 5,433 - 60,189
Note payable - - 967,345 4b 967,345
------------------------------------------------------------------------------------------- ------------------
975,701 128,994 967,345 2,072,040
Due to related parties 348,626 - (498,857) 4c (150,231)
Obligation under capital lease 10,356 - - 10,356
Long-term debt 253,842 9,759 - 263,601
Convertible debenture 689,941 - (689,941) 4a -
------------------------------------------------------------------------------------------- ------------------
2,278,466 138,753 (221,453) 2,195,766
------------------------------------------------------------------------------------------- ------------------
Shareholders' equity
Share capital 7,868 1 689,941 4a 2,296,666
(1) 4b
498,857 4c
1,100,000 4d
Additional paid in capital 1,787 - - 1,787
Deficit (452,929) 413,402 (413,402) 4b (452,929)
------------------------------------------------------------------------------------------- ------------------
(443,274) 413,403 1,875,395 1,845,524
------------------------------------------------------------------------------------------- ------------------
$ 1,835,192 $ 552,156 $ 1,653,942 $ 4,041,290
=========================================================================================== ==================
</TABLE>
Reference is made to the accompanying "Notes to Unaudited Pro Forma Financial
Statements".
Approved on behalf of the Board
_____________________________________ ________________________________
Director Director
F-24
<PAGE>
Universe2U Inc. (formerly Paxton Mining Corporation) Schedule 1
-------------------------------------------------------------------------------
Unaudited Combined Balance Sheet
as at March 31, 2000
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Paxton Universe2U Adjustments Combined
(to Exhibit A)
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Current assets
Cash $ 6,984 $ 295,902 $ - $ 302,886
Accounts receivable - 791,970 - 791,970
Prepaid expenses - 99,487 - 99,487
-------------------------------------------------------------------------------------------- ------------
6,984 1,187,359 - $ 1,194,343
Future income taxes - 135,848 - 135,848
Capital assets 7,890 496,849 - 504,739
Mining claims 262 - - 262
-------------------------------------------------------------------------------------------- ------------
$ 15,136 $ 1,820,056 $ - $ 1,835,192
============================================================================================ ============
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 5,495 $ 871,785 $ - $ 877,280
Income taxes payable - 29,400 - 29,400
Current portion of capital lease obligation - 14,265 - 14,265
Current portion of long-term debt - 54,756 - 54,756
-------------------------------------------------------------------------------------------- ------------
5,495 970,206 - $ 975,701
Due to related parties - 348,626 - 348,626
Obligation under capital lease - 10,356 - 10,356
Long-term debt - 253,842 - 253,842
Convertible debenture - 689,941 - 689,941
-------------------------------------------------------------------------------------------- ------------
5,495 2,272,971 - 2,278,466
-------------------------------------------------------------------------------------------- ------------
Shareholders' equity
Share capital 55 14 (14) 3b 7,868
- - (7,813) 3c
Additional paid in capital 325,965 - (316,365) 1,787
- - (7,813) 3c
Deficit (316,379) (452,929) 316,379 3a (452,929)
-------------------------------------------------------------------------------------------- ------------
9,641 (452,915) - (443,274)
-------------------------------------------------------------------------------------------- ------------
$ 15,136 $1,820,056 $ - $ 1,835,192
============================================================================================ ============
</TABLE>
Reference is made to the accompanying "Notes to Unaudited Pro Forma Financial
Statements".
Approved on behalf of the Board
________________________________ ___________________________________
Director Director
F-25
<PAGE>
Universe2U Inc. (formerly Paxton Mining Corporation)
--------------------------------------------------------------------------------
Unaudited Pro Forma Consolidated Statement of Operations
for the period ended March 31, 2000
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
Pro forma Pro forma
Universe2U CableTec Adjustments Consolidated
-------------------------------------------------------------------------------------- ------------
<S> <C> <C> <C> <C>
Sales $ 1,510,519 $ 244,839 $ - $ 1,755,358
-------------------------------------------------------------------------------------- ------------
Cost of goods sold
Subcontracting 384,813 46,334 - 431,147
Wages and benefits 7,869 32,637 - 40,506
Materials 443,589 11,146 - 454,735
Equipment rental and maintenance 34,449 20,572 - 55,021
Amortization 12,607 10,863 - 23,470
-------------------------------------------------------------------------------------- ------------
883,327 121,552 - 1,004,879
-------------------------------------------------------------------------------------- ------------
Gross profit 627,192 123,287 - 750,479
-------------------------------------------------------------------------------------- ------------
Expenses
Salaries and wages 180,264 - - 180,264
Professional fees 63,084 6,693 - 69,777
Consulting fees 108,585 - - 108,585
Management fees 44,652 - - 44,652
Interest and bank charges 19,324 557 - 19,881
Auto and travel 48,973 29,729 - 78,702
Rent and utilities 35,602 10,308 - 45,910
Advertising and promotion 13,369 14,082 - 27,451
Insurance 12,309 4,363 - 16,672
Telephone 21,170 - - 21,170
Office and general 38,503 1,946 - 40,449
Stock based compensation 4,670 - - 4,670
Employee benefits 10,882 - - 10,882
Repairs and maintenance 1,626 - - 1,626
Amortization of capital assets 17,038 - 30,914 5a 47,952
-------------------------------------------------------------------------------------- ------------
620,051 67,678 30,914 718,643
-------------------------------------------------------------------------------------- ------------
Income before provision for income taxes 7,141 55,609 (30,914) 31,836
Provision for income taxes 17,560 11,952 - 29,512
-------------------------------------------------------------------------------------- ------------
Net income for the period $ (10,419) $ 43,657 $(30,914) $ 2,324
====================================================================================== ============
Net income per share
Basic and fully diluted $ (0.00) $ 0.00
====================================================================================== ============
Weighted average number of shares outstanding
Basic and fully diluted 35,204,000 36,357,000
====================================================================================== ============
</TABLE>
Reference is made to the accompanying "Notes to Unaudited Pro Forma Financial
Statements".
F-26
<PAGE>
Universe2U Inc. (formerly Paxton Mining Corporation)
--------------------------------------------------------------------------------
Unaudited Pro Forma Consolidated Statement of Operations
for the year ended December 31, 1999
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
Pro forma Pro forma
Universe2U CableTec Adjustments Consolidated
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $ 1,614,496 $ 863,014 $ - $ 2,477,510
------------------------------------------------------------------------------------------ ------------
Cost of goods sold
Subcontracting 353,554 232,442 - 585,996
Wages and benefits 296,217 205,940 - 502,157
Materials 287,481 45,145 - 332,626
Equipment rental and maintenance 80,148 78,074 - 158,222
Amortization 62,461 50,046 - 112,507
------------------------------------------------------------------------------------------ ------------
1,079,861 611,647 - 1,691,508
------------------------------------------------------------------------------------------ ------------
Gross profit 534,635 251,367 - 786,002
------------------------------------------------------------------------------------------ ------------
Expenses
Salaries and wages 223,296 - - 223,296
Professional fees 113,677 17,059 - 130,736
Consulting fees 145,052 - - 145,052
Management fees 138,827 - - 138,827
Interest and bank charges 129,250 4,864 - 134,114
Auto and travel 71,000 40,617 - 111,617
Rent and utilities 64,419 36,170 - 100,589
Advertising and promotion 31,584 35,083 - 66,667
Insurance 21,395 16,705 - 38,100
Telephone 33,753 - - 33,753
Office and general 21,232 8,045 - 29,277
Stock based compensation 20,267 - - 20,267
Employee benefits 13,529 - - 13,529
Repairs and maintenance 2,764 - - 2,764
Loss on foreign exchange 749 - - 749
Bad debts - (10,191) - (10,191)
Amortization of capital assets 41,559 - 154,571 5a 196,130
------------------------------------------------------------------------------------------ ------------
1,072,353 148,352 154,571 1,375,276
------------------------------------------------------------------------------------------ ------------
Income from continuing operations (537,718) 103,015 (154,571) (589,274)
Income from discontinued operations - 15,724 (15,724) 5a -
------------------------------------------------------------------------------------------ ------------
Income before provision for income taxes (537,718) 118,739 (170,295) (589,274)
Provision for income taxes (110,995) 31,020 - (79,975)
------------------------------------------------------------------------------------------ ------------
Net income for the year $ (426,723) $ 87,719 $ (170,295) $ (509,299)
========================================================================================== ============
Net income per share
Basic and fully diluted $ (0.01) $ (0.01)
========================================================================================== ============
Weighted average number of shares outstanding
Basic and fully diluted 35,204,000 36,357,000
========================================================================================== ============
</TABLE>
Reference is made to the accompanying "Notes to Unaudited Pro Forma Financial
Statements".
F-27
<PAGE>
Universe2U Inc. (formerly Paxton Mining Corporation)
--------------------------------------------------------------------------------
Notes to Unaudited Pro Forma Financial Statements
March 31, 2000
(expressed in U.S. dollars)
--------------------------------------------------------------------------------
1. Nature and Purpose of Pro Forma Financial Information
--------------------------------------------------------------------------------
The pro forma consolidated balance sheet of Universe2U Inc. as at March 31,
2000 assumes the following transactions occurred on March 31, 2000:
(a) the conversion of debentures into common shares
(b) the Company's acquisition of Bernie Tan Investments Inc. (o/a Cable
Tec Communications) ("CableTec")
(c) the conversion of shareholder advances into common shares
(d) the completion of a portion of a private placement
The pro forma consolidated statement of operations and deficit of the
Company for the period ended March 31, 2000 and the year ended December 31,
1999 assumes that the following transactions occurred on January 1, 1999:
(a) the Company's acquisition of CableTec
2. Significant Accounting Policies
--------------------------------------------------------------------------------
The significant accounting policies used in the preparation of the pro
forma consolidated balance sheet and statement of operations and deficit
include those disclosed in the financial statements of Paxton, Universe2U,
and CableTec.
3. Combined Balance Sheet Assumptions and Adjustments as at March 31, 2000
--------------------------------------------------------------------------------
The combined balance sheet of Universe2U Inc. as at March 31, 2000 combines
the financial position of Universe2U Inc. (formerly Paxton Mining
Corporation)("Paxton") and Universe2U Inc. ("Universe2U") as a result of
the reverse acquisition by Universe2U of Paxton accounted for as a
recapitalization in May 2000. The effects of the recapitalization include:
(a) the elimination of Paxton's deficit of $316,379
(b) the elimination of Universe2U's share capital of $14
(c) the issuance of 250,000 common shares by Paxton to Universe2U
shareholders
4. Pro Forma Balance Sheet Assumptions and Adjustments as at March 31, 2000
--------------------------------------------------------------------------------
(a) Conversion of debenture
This adjustment records the issuance of 833,000 common shares of
Universe2U upon conversion of $689,941 of debentures. The adjustment
assumes the conversion occurred on March 31, 2000.
F-28
<PAGE>
Universe2U Inc. (formerly Paxton Mining Corporation)
--------------------------------------------------------------------------------
Notes to Unaudited Pro Forma Financial Statements
March 31, 2000
(expressed in U.S. dollars)
--------------------------------------------------------------------------------
4. Pro Forma Balance Sheet Assumptions and Adjustments as at March 31, 2000
- continued
--------------------------------------------------------------------------------
(b) Acquisition of CableTec
The pro forma balance sheet has been prepared to reflect the Company's
acquisition of CableTec for consideration of $1,036,340 comprised of
notes payable of $967,345 and deposits paid of $68,995. This
acquisition has been accounted for under the purchase method of
accounting. Pro forma adjustments and assumptions are made to reflect:
- the reduction of deposits paid of $68,995
- the issuance of a note payable of $967,345
- the elimination of CableTec's share capital of $1
- the elimination of CableTec's retained earnings of $413,402
- the allocation of the purchase price is as follows:
<TABLE>
<S> <C>
-----------------------------------------------------------------------------------------------
Purchase price $ 1,036,340
Less: book value of net assets acquired 413,403
-----------------------------------------------------------------------------------------------
Excess of cost over book value of net assets acquired $ 622,937
-----------------------------------------------------------------------------------------------
Allocation of excess of cost over book value of net assets acquired:
Capital assets - tools and equipment $ 622,937
-----------------------------------------------------------------------------------------------
</TABLE>
Tools and equipment will be amortized over their estimated useful
lives on a declining balance basis at a rate of 20% per annum. The
purchase price allocation assumes the transaction closed on March 31,
2000. The actual allocation will be based on the value of the net
assets acquired on the closing date of the transaction being May 31,
2000.
(c) Conversion of shareholder advances
This adjustment records the issuance of 100,000 common shares of
Universe2U upon the conversion of $498,857 of shareholder advances.
(d) Private placement
This adjustment records the issuance of 220,000 common shares of
Universe2U at a subscription price of $5 per share and 220,000 share
purchase warrants exercisable at $5 per share.
F-29
<PAGE>
Universe2U Inc. (formerly Paxton Mining Corporation)
--------------------------------------------------------------------------------
Notes to Unaudited Pro Forma Financial Statements
March 31, 2000
(expressed in U.S. dollars)
--------------------------------------------------------------------------------
5. Pro Forma Statement of Operations Assumptions and Adjustments for the
Period Ended March 31, 2000 and the Year Ended December 31, 1999
--------------------------------------------------------------------------------
(a) Acquisition of CableTec
The pro forma statements of operations have been prepared to reflect
the acquisition as if it occurred on January 1, 1999 and the following
adjustments and assumptions resulting from the acquisition of Cable
Tec:
- the elimination of the results of discontinued operations of
$15,429 for the year ended December 31, 1999
- the additional amortization of capital assets of $30,914 for the
period ended March 31, 2000 and $154,571 for the year ended
December 31, 1999
(b) Pro forma basic and fully diluted loss per share
The weighted average number of shares used to compute pro forma basic
and fully diluted loss per share is determined as follows:
<TABLE>
<S> <C>
---------------------------------------------------------------------------------------
Weighted average number of shares used to compute historical
basic and fully diluted loss per share 5,510,200
Shares tendered for cancellation (4,000,000)
Acquisition of Universe2U 250,000
Stock dividend 33,443,800
--------------------------------------------------------------------------------------
Weighted average number of shares after giving effect to the
recapitalization of Universe2U 35,204,000
Conversion of debenture 833,000
Conversion of shareholder advances 100,000
Private placement 220,000
--------------------------------------------------------------------------------------
36,357,000
======================================================================================
</TABLE>
F-30
