<PAGE> 1
As Filed with the Securities and Exchange Commission on November 23, 1999
- --------------------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB/A
AMENDMENT NO. 1
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES ACT OF 1934
CENTRACK INTERNATIONAL, INC.
-------------------------------------------------------------
(Name of Small Business Issuer in Its Charter)
<TABLE>
<CAPTION>
<S> <C>
STATE OF DELAWARE 11-3342926
------------------------------- ---------------------------------
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
21045 COMMERCIAL TRAIL, BOCA RATON, FLORIDA 33486
- ------------------------------------------- ---------------------------------
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
(561) 362-9444
---------------------------
(Issuer's Telephone Number)
COPIES TO:
STEVEN J. SERLING, ESQ.
GUNSTER, YOAKLEY, VALDES-FAULI & STEWART, P.A.
777 SOUTH FLAGLER DRIVE, SUITE 500-EAST
WEST PALM BEACH, FLORIDA 33301
(561) 650-0577
FACSIMILE (561) 655-5677
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
------------------- ------------------------------
None.
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.0001 par value per share
----------------------------------------
(Title of Class)
----------------------------------------
(Title of Class)
<PAGE> 2
The Financial Statements heretofore filed in part F/S are deleted and
replaced with the following:
<PAGE> 3
CENTRACK INTERNATIONAL, INC.
(A Company in the Development Stage)
FINANCIAL STATEMENTS
Balance Sheets as of May 31, 1999 and 1998 and
August 31, 1999 (unaudited)
Statements of Operations, Statements of Changes in Stockholders'
Equity and Statements of Cash Flows for the Years Ended
May 31, 1999, 1998 and 1997 and for the
Period April 4, 1996 (inception) to May 31, 1999, the Three Months
Ended August 31, 1999 and 1998 (unaudited),
and for the Period April 4, 1996 (inception) to August 31, 1999
(unaudited)
TABLE OF CONTENTS
Page
----
Report of Independent Auditors .................................. F-2
Balance Sheets
As of May 31, 1999 and 1998 and
August 31, 1999 (unaudited)............................. F-3
Statements of Operations
For the years Ended May 31, 1999, 1998 and 1997,
for the Period From April 4, 1996 (inception) to
May 31, 1999, for the three months ended
August 31, 1999 and 1998 (unaudited) and
for the period from April 4, 1996 (inception) to
August 31, 1999 (unaudited) ............................ F-4
Statements of Changes of in Stockholders' Equity
For the period from April 4, 1996 (inception) to
May 31, 1999 and for the three months ended
August 31, 1999 (unaudited) ............................ F-5
Statements of Cash Flows
For the years ended May 31, 1999, 1998 and 1997,
for the period from April 4, 1996 (inception) to
May 31, 1999, for the three months ended
August 31, 1999 and 1998 (unaudited) and
for the period from April 4, 1996 (inception) to
August 31, 1999 (unaudited) ............................ F-6
Notes to the Financial Statements ............................... F-7 - F-13
F-1
<PAGE> 4
CARUSO & CARUSO
Certified Public Accountants, P.A.
================================================================================
6971 N. Federal Highway o Suite 402 o Boca Raton, Florida 33487
Tel: (561) 995-1070 o Fax: (561) 994-5506
To the Board of Directors and Stockholders
Centrack International Inc., a Delaware corporation
We have audited the accompanying balance sheets of Centrack International, Inc.
(a company in the development stage) as of May 31, 1999 and 1998, and the
related statements of operations, changes in stockholders' equity, and cash
flows for each of the three years in the period ended May 31, 1999 and for the
period April 4, 1996 (inception) through May 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In the opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Centrack International, Inc.
(a company in the development stage) as of May 31, 1999 and 1998, and the
results of its operations and its cash flows for each of the three years in the
period ended May 31, 1999 and for the period April 4, 1996 (inception) through
May 31, 1999 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 discussed in Note 8 to the
financial statements, the Company has incurred significant operating losses
during the development stage. Although the Company is negotiating financing
arrangements that will provide additional working capital until revenues from
full scale operations are sufficient, the Company cannot predict what the
outcome of the negotiations will be. These conditions raise substantial doubt
about the Company's ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Caruso & Caruso, CPA's, P.A.
----------------------------------
Caruso & Caruso, CPA's, P.A.
Boca Raton, Florida
August 31, 1999
F-2
<PAGE> 5
CENTRACK INTERNATIONAL, INC.
(A Company in the Development Stage)
BALANCE SHEETS
<TABLE>
<CAPTION>
MAY 31, 1998 MAY 31, 1999 AUGUST 31, 1999
------------ ------------ ---------------
unaudited
<S> <C> <C> <C>
Assets
Current Assets
Cash and Cash Equivalents $ 4,801 $ 281,318 $ 145,600
Loan Receivable - related party Note (2) 48,329 65,028 65,028
Prepaid and Other Assets 200 2,138 38,981
--------- --------- -----------
Total Current Assets 53,330 348,484 249,609
--------- --------- -----------
Fixed Assets
--------- --------- -----------
Web site Development 15,836 139,245 224,230
Furniture & Fixtures -- 48,803 98,854
Leasehold Improvements -- 3,384 19,627
Computer Hardware -- 51,882 79,771
Telephone System -- 4,404 17,981
--------- --------- -----------
15,836 247,718 440,463
Less: Accumulated Depreciation & Amortization -- (21,694) (51,218)
--------- --------- -----------
Fixed Assets, net 15,836 226,024 389,245
Other Assets
Deposits 100 14,100 19,287
--------- --------- -----------
Total Assets $ 69,266 $ 588,608 $ 658,141
========= ========= ===========
Liabilities & Stockholders' Equity
Current Liabilities
Accounts Payable and Accrued Expenses $ -- $ 240,318 $ 310,719
Loan Payable - Related Parties Note (2) 12,500 -- --
Loan Payable Note (4) -- 250,000 --
--------- --------- -----------
Total Current Liabilities 12,500 490,318 310,719
Long Term Liabilities
Commitments and Contingencies Note (3)
--------- --------- -----------
Total Liabilities 12,500 490,318 310,719
--------- --------- -----------
Stockholders' Equity
Common Stock, .0001 par, 100,000,000
shares authorized, 62,500 issued and
outstanding at 5/31/98, 21,402,034 issued
and outstanding at 5/31/99, 23,055,623
issued and outstanding at 8/31/99 7 2,140 2,305
Additional Paid in Capital 111,663 736,405 1,656,691
Deficit Accumulated During the
Development Stage (54,904) (640,255) (1,311,574)
--------- --------- -----------
Total Stockholders' Equity 56,766 98,290 347,422
--------- --------- -----------
Total Liabilities & Stockholders' Equity $ 69,266 $ 588,608 $ 658,141
========= ========= ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
F-3
<PAGE> 6
CENTRACK INTERNATIONAL, INC.
(A Company in the Development Stage)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR YEAR YEAR PERIOD FROM
ENDED ENDED ENDED APRIL 4, 1996
MAY 31, MAY 31, MAY 31, (INCEPTION) TO
1997 1998 1999 MAY 31, 1999
------------ ------------ ------------ --------------
<S> <C> <C> <C> <C>
Revenues
Listing Fees $ -- $ 2,619 $ 10,342 $ 12,961
Value Added Partner Fees -- 1,000 -- 1,000
------------ ------------ ------------ ------------
Total Revenues -- 3,619 10,342 13,961
------------ ------------ ------------ ------------
Operating Expenses
Marketing & Sales -- 1,663 39,390 41,053
General, Administrative and Development 11,661 36,770 552,600 606,011
------------ ------------ ------------ ------------
Total Operating Expenses 11,661 38,433 591,990 647,064
------------ ------------ ------------ ------------
Net Loss Before Other Income (Expense) (11,661) (34,814) (581,648) (633,103)
Other Income (Expense)
Interest Expense (449) (3,000) (6,444) (9,893)
Interest Income -- -- 2,741 2,741
------------ ------------ ------------ ------------
Net Loss $ (12,110) $ (37,814) $ (585,351) $ (640,255)
============ ============ ============ ============
Earnings (Loss) per share of common stock
basic (Note 1) $ (0.001) $ (0.002) $ (0.035) $ (0.040)
============ ============ ============ ============
Earnings (Loss) per share of common stock -
assuming dilution (Note 1) $ (0.001) $ (0.002) $ (0.035) $ (0.040)
============ ============ ============ ============
Weighted average shares 15,699,454 15,699,454 16,621,241 15,991,513
============ ============ ============ ============
Fully diluted weighted average shares 15,699,454 15,699,454 16,949,247 16,095,438
============ ============ ============ ============
<CAPTION>
THREE MONTHS THREE MONTHS PERIOD FROM
ENDED ENDED APRIL 4, 1996
AUGUST 31, AUGUST 31, (INCEPTION) TO
1998 1999 AUGUST 31, 1999
------------ ------------ ----------------
UNAUDITED UNAUDITED UNAUDITED
<S> <C> <C> <C>
Revenues
Listing Fees $ -- $ -- $ 12,961
Value Added Partner Fees -- -- 1,000
------------ ------------ ------------
Total Revenues -- -- 13,961
------------ ------------ ------------
Operating Expenses
Marketing & Sales -- 161,846 202,899
General, Administrative and Development 14,702 496,460 1,102,471
------------ ------------ ------------
Total Operating Expenses 14,702 658,306 1,305,370
------------ ------------ ------------
Net Loss Before Other Income (Expense) (14,702) (658,306) (1,291,409)
Other Income (Expense)
Interest Expense -- (13,013) (22,906)
Interest Income -- -- 2,741
------------ ------------ ------------
Net Loss $ (14,702) $ (671,319) $ (1,311,574)
============ ============ ============
Earnings (Loss) per share of common stock
basic (Note 1) $ (0.001) $ (0.030) $ (0.080)
============ ============ ============
Earnings (Loss) per share of common stock -
assuming dilution (Note 1) $ (0.001) $ (0.028) $ (0.079)
============ ============ ============
Weighted average shares 15,699,454 22,718,147 16,488,981
============ ============ ============
Fully diluted weighted average shares 15,699,454 24,329,274 16,608,132
============ ============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
F-4
<PAGE> 7
CENTRACK INTERNATIONAL, INC.
(A Company in the Development Stage)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
DURING THE
COMMON STOCK ADDITIONAL DEVELOPMENT
SHARES AMOUNT PAID IN CAPITAL STAGE
--------------------------------------------------------
<S> <C> <C> <C> <C>
Inception, April 4, 1996, initial capitalization of 100 $ -- $ 496 $ --
Centrack International, Inc., a Florida Corp.
Net Loss -- -- -- (4,980)
--------------------------------------------------------
Balance, May 31, 1996 100 -- 496 (4,980)
Additional Capital Contributions -- -- 4,031 --
Net Loss -- -- -- (12,110)
--------------------------------------------------------
Balance, May 31, 1997 100 -- 4,527 (17,090)
Centrack International, Inc., a Florida Corp
Common Stock cancelled (100) -- -- --
Issuance of Centrack International, Inc., a -- -- 107,136 --
Florida Corp. Class A Common 47,500 5 -- --
Class B Common Stock 15,000 2 -- --
Net Loss -- -- -- (37,814)
--------------------------------------------------------
Balance, May 31, 1998 62,500 7 111,663 (54,904)
Issuance of Centrack International, Inc., a -- -- 124,742 --
Florida Corp. Class A Common 789,125 79 -- --
Class B Common Stock 735,000 74 -- --
Reverse Acquisition, April 2, 1999 (Note 1)
Exchange of Centrack International, Inc. a
Florida Corp. Class A Common (851,625) (85) -- --
Class B Common Stock (735,000) (74) -- --
Issuance of Common Stock of Centrack
International, Inc., a Delaware Corp. to owners
of Centrack International, Inc., a Florida Corp. 15,699,454 1,570 500,000 --
Outstanding Common Stock of Centrack
International, Inc., a Delaware Corp., formerly
Hudson Valley Industries, Inc. 5,702,580 569 -- --
Net Loss -- -- -- (585,351)
--------------------------------------------------------
Balance at May 31, 1999 21,402,034 2,140 736,405 (640,255)
Issuance of Common Stock (unaudited) 543,892 54 357,300 --
Issuance of Common Stock of Centrack
International, Inc., a Delaware Corp. to owners
of Centrack International, Inc.,
a Florida Corp. (unaudited) 1,109,697 111 -- --
Conversion of Outstanding
Debt to Equity (Note 4) (unaudited) -- -- 562,986 --
Net Loss (unaudited) -- -- -- (671,319)
--------------------------------------------------------
Balance, August 31, 1999 (unaudited) 23,055,623 $ 2,305 $ 1,656,691 $(1,311,574)
========================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
F-5
<PAGE> 8
CENTRACK INTERNATIONAL, INC.
(A Company in the Development Stage)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR YEAR YEAR PERIOD FROM
ENDED ENDED ENDED APRIL 4, 1996
MAY 31, MAY 31, MAY 31, (INCEPTION) TO
1997 1998 1999 MAY 31, 1999
------------ ------------ ------------ ------------
UNAUDITED
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities
Net Loss $ (12,110) $ (37,814) $ (585,351) $ (640,255)
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation & Amortization -- -- 21,694 21,694
(Increase) Decrease in
Prepaid & Other Assets -- (200) (1,938) (2,138)
Deposits (100) -- (14,000) (14,100)
Increase (Decrease) in Accounts
Payable & Accrued Expenses 1,587 (1,204) 240,318 240,318
----------- ----------- ----------- -----------
Net Cash Used in Operating Activities (10,623) (39,218) (339,277) (394,481)
----------- ----------- ----------- -----------
Cash Flows from Investing Activities
Loan Receivable & Interest -- (48,329) (16,699) (65,028)
Acquisition of Fixed Assets &
Web site Development (908) (14,928) (231,882) (247,718)
----------- ----------- ----------- -----------
Net Cash Used in Investing Activities (908) (63,257) (248,581) (312,746)
----------- ----------- ----------- -----------
Cash Flows from Financing Activities
Reductions in Debt & Interest Income -- (12,367) (12,500) (24,867)
Proceeds from Debt & Interest Expense 7,500 12,500 250,000 274,867
Conversion of Outstanding Debt to
Contributed Capital -- -- -- --
Equity Contributions 4,031 107,136 624,742 736,405
Issuance of Common Stock -- 7 2,133 2,140
----------- ----------- ----------- -----------
Net Cash Provided by Financing Activities 11,531 107,276 864,375 988,545
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH -- 4,801 276,517 281,318
CASH - BEGINNING -- -- 4,801 --
----------- ----------- ----------- -----------
CASH - ENDING $ -- $ 4,801 $ 281,318 $ 281,318
=========== =========== =========== ===========
<CAPTION>
THREE MONTH THREE MONTHS PERIOD FROM
ENDED ENDED APRIL 4, 1996
AUGUST 31, AUGUST 31, (INCEPTION) TO
1998 1999 AUGUST 31, 1999
------------ ----------- ------------
UNAUDITED UNAUDITED
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net Loss $ (14,702) $ (671,319) $(1,311,574)
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation & Amortization -- 29,524 51,218
(Increase) Decrease in
Prepaid & Other Assets 200 (36,843) (38,981)
Deposits (50) (5,187) (19,287)
Increase (Decrease) in Accounts
Payable & Accrued Expenses 1,200 70,401 310,719
----------- ----------- -----------
Net Cash Used in Operating Activities (13,352) (613,424) (1,007,905)
----------- ----------- -----------
Cash Flows from Investing Activities
Loan Receivable & Interest (8,000) -- (65,028)
Acquisition of Fixed Assets &
Web site Development -- (192,745) (440,463)
----------- ----------- -----------
Net Cash Used in Investing Activities (8,000) (192,745) (505,491)
----------- ----------- -----------
Cash Flows from Financing Activities
Reductions in Debt & Interest Income -- -- (24,867)
Proceeds from Debt & Interest Expense -- 312,986 587,853
Conversion of Outstanding Debt to
Contributed Capital -- (562,986) (562,986)
Equity Contributions 17,349 920,286 1,656,691
Issuance of Common Stock 2 165 2,305
----------- ----------- -----------
Net Cash Provided by Financing Activities 17,351 670,451 1,658,996
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH (4,001) (135,718) 145,600
CASH - BEGINNING 4,801 281,318 --
----------- ----------- -----------
CASH - ENDING $ 800 $ 145,600 $ 145,600
=========== =========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
F-6
<PAGE> 9
CENTRACK INTERNATIONAL, INC
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
For the Years Ended May 31, 1999, 1998 and 1997 and for the
Period from April 4, 1996 (inception) to May 31, 1999: and
For the Three Months Ended August 31, 1999 and 1998
(unaudited)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Centrack International, Inc. (The Company) is a profit corporation organized
under the laws of the State of Delaware. The Company was incorporated on October
1, 1996 as Hudson Valley Industries, Inc. (HUVI). On April 2, 1999, the Company,
an OTC Bulletin Board publicly traded company, with no substantial assets or
liabilities, merged with Centrack International, Inc. (the predecessor company),
a Florida corporation, which maintained an internet based business involving
listing fees, advertising, sourcing and information services for the heavy
equipment industry. Shareholders of the predecessor company received 10.561
shares of Hudson Valley stock for each share of the predecessor company; a total
of 16,809,151 shares, in exchange for 100% of the outstanding stock of the
predecessor company and the conversion of a $500,000 bridge loan to capital. Of
the 16,809,151 shares authorized per the merger agreement, 15,699,454 shares had
been issued as of May 31, 1999, the balance of which has been issued as of
August 31, 1999. In connection with the merger Hudson Valley changed its name to
Centrack International, Inc. The merger was accounted for as a capital
transaction with no recognition of goodwill or other intangible assets.
Subsequent to the merger, the owners of the predecessor company owned 75% of the
Company. Since the transaction was, in substance, a recapitalization of Centrack
International, Inc. (the predecessor company) and not a business combination,
pro forma information is not presented. Accordingly, the historical data
contained in the financial statements is that of the predecessor company.
DEVELOPMENT STAGE
The Company's principal operations, comprised of services of listings on its Web
site, advertising, sourcing, information and auctions of used heavy equipment,
have not commenced as of August 31, 1999. Although some nominal advertising and
listing revenues have been earned as of the date of these financial statements,
substantially all the efforts of the Company have been focused on the
establishment of its Web site, internal infrastructure, and beta testing of the
Company's auction services. Accordingly, the Company is in the Development
Stage.
INTERIM FINANCIAL INFORMATION
The accompanying unaudited financial statements as of August 31, 1999 and for
the three months ended August 31, 1999 and 1998 have been prepared by the
Company and do not include all disclosures
F-7
<PAGE> 10
CENTRACK INTERNATIONAL, INC
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
For the Years Ended May 31, 1999, 1998 and 1997 and for the
Period from April 4, 1996 (inception) to May 31, 1999: and
For the Three Months Ended August 31, 1999 and 1998
(unaudited)
provided in the annual financial statements. These interim financial statements
are the representation of management and should be read in conjunction with the
accompanying annual audited financial statements and the footnotes thereto.
Results for the interim period are not necessarily indicative of the results to
be expected for the year ended May 31, 2000. However, the accompanying interim
financial statements reflect all material adjustments, which are, in the opinion
of management, of a normal and recurring nature necessary for a fair
presentation of the financial position and results of operations of the Company.
Unless otherwise stated, all information subsequent to May 31, 1999 is
unaudited.
REVENUE RECOGNITION
Revenues are derived primarily from listing fees for used heavy equipment for
sale on the Company's Web site, success fees on auction transactions calculated
as a percentage of the final sales value and advertising revenues. Revenues
related to listing fees are recognized in the period when the item is listed.
Revenues related to success fees are recognized at the conclusion of the auction
when there is at least one bid above the seller's specified minimum price or
reserve price, whichever is higher. Advertising revenues are recognized in the
period they are earned.
EARNINGS PER SHARE
As per Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 128 (SFAS 128), Earnings Per Share, standards for computing and
presenting earnings per share (EPS) applies to publicly held common stock or
potential common stock. It requires dual presentation of basic and diluted EPS
on the face of the income statement for all entities with complex capital
structures. Basic EPS excludes dilution and is computed by dividing income
available to common stockholders by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in the earnings of the entity.
In computing EPS as a result of the reverse acquisition, the number of shares
outstanding for the period from June 1, 1998 until the date of the reverse
acquisition, April 2, 1999, is the number of shares issued by the Company to the
shareholders of the predecessor company. For the period subsequent to April 2,
1999 the number of shares considered to be outstanding is computed as actual
number of shares of the Company outstanding during that period. The average
number of shares outstanding for the full year being reported upon has been
computed by averaging these two amounts. Other appropriate adjustments have been
made to deal with changes in numbers of shares issued during the period. Diluted
EPS was
F-8
<PAGE> 11
CENTRACK INTERNATIONAL, INC
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
For the Years Ended May 31, 1999, 1998 and 1997 and for the
Period from April 4, 1996 (inception) to May 31, 1999: and
For the Three Months Ended August 31, 1999 and 1998
(unaudited)
computed assuming the conversion of all outstanding warrants to common stock.
EPS for periods prior to May 31, 1998 presented for comparative purposes is
computed using the number of shares issued by the Company to the shareholders of
the predecessor company in the reverse acquisition transaction.
ADVERTISING EXPENSE
The Company recognizes advertising expenses in accordance with Statement of
Position ("SOP") 93-7 "Reporting on Advertising Costs." As such, the company
expenses the costs of producing advertisements at the time production occurs,
and expenses the cost of communicating advertising in the period in which the
advertising space or airtime is used.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. Depreciation is computed using the
straight-line method based on the estimated useful lives of the assets, which
range from three to five years. Costs for routine repairs and maintenance are
expensed as incurred and gains and losses on the disposal of assets are
recognized in the period such disposals occur.
Depreciation expense for the three months ended August 31, 1999 and 1998 and for
the years ended May 31, 1999, 1998 and 1997 is $29,524, $0, $21,694, $0 and $0,
respectively.
SOFTWARE DEVELOPMENT COSTS
Internal and external costs incurred to develop internal-use software are
capitalized as incurred and such costs will be amortized over three years once
the software is placed into use or made available on the Web site.
INCOME TAXES
The Company files its tax return with the Internal Revenue Service as a "C"
Corporation. Deferred income taxes are recognized by applying statutory tax
rates to future years' differences between the tax bases and financial reporting
amounts of assets and liabilities. Due to the fact that the Company is in the
development stage, no deferred tax asset/valuation allowance has been recognized
as it is not determinable that the Company will realize any benefit from the
loss carryforwards before they expire. The Company has net operating loss
carryforwards for federal and State purposes at May 31, 1999 and August 31, 1999
of $139,860 that expire at varying times through fiscal year 2013.
F-9
<PAGE> 12
CENTRACK INTERNATIONAL, INC
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
For the Years Ended May 31, 1999, 1998 and 1997 and for the
Period from April 4, 1996 (inception) to May 31, 1999: and
For the Three Months Ended August 31, 1999 and 1998
(unaudited)
USE OF ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in conformity with generally accepted
accounting principles requires that management 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 respective reporting
periods. Actual results could vary from these estimates and assumptions.
CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the Company to concentrations of
credit risk consist primarily of cash and cash equivalents. The Company
maintains its cash and cash equivalents in bank deposit accounts, the balances
of which, at times, may exceed federally insured limits.
RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board issued SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities effective for all fiscal quarters
of fiscal years beginning after June 15, 1999. The Company does not anticipate
the impact of this pronouncement will be material.
2. RELATED PARTY TRANSACTIONS
The Company's financing during its development stage has been provided by
non-interest bearing loans and capital contributions to the Company by its
shareholders and other third parties. Shareholders' contribution amounts
recorded as additional paid in capital as of August 31, 1999 and May 31, 1999
and 1998 were $1,656,770, $736,405 and $111,663, respectively. At May 31, 1998
the Company had liabilities to its shareholders of $12,500.
Additionally, the Company has loaned funds to the Chief Executive Officer from
time to time on open account with interest accrued at 6% per annum. The balance
of the amounts outstanding at August 31, 1999, May 31, 1999 and 1998, were
$65,028, $65,028 and $48,329, respectively. All amounts loaned including accrued
interest were paid in full in September, 1999.
F-10
<PAGE> 13
CENTRACK INTERNATIONAL, INC
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
For the Years Ended May 31, 1999, 1998 and 1997 and for the
Period from April 4, 1996 (inception) to May 31, 1999: and
For the Three Months Ended August 31, 1999 and 1998
(unaudited)
3. COMMITMENTS
The Company leases its corporate offices in South Florida under three lease
agreements. In March 1999, the initial lease was entered into for one year with
a monthly rent of $1,500 plus applicable sales tax. In May 1999 the Company
contracted for an additional 1,843 square feet of commercial space at the same
location to house future operations and current Web site development. The lease
term is for 37 months. Rent for the first year will be $3,302 per month plus
applicable sales tax and will increase 5% in each of the succeeding two years.
Additional space was leased in July 1999 for a 35-month period. Lease payments
are $4,894 per month. Future minimum requirements are:
At May 31, 1999:
FYE 5/31/00 $103,565
FYE 5/31/01 99,353
FYE 5/31/02 99,353
FYE 5/31/03 4,894
-----------
$307,165
===========
At August 31, 1999:
Twelve months ended 8/31/00 $109,589
Twelve months ended 8/31/01 104,044
Twelve months ended 8/31/02 81,323
-----------
$294,956
===========
In February 1999 the Company entered into a contract with a computer service
company to provide computer related and software related service and maintenance
for a contract period of one (1) year. The Company will pay a contract fee of
$16,500 plus $86 per hour for any service hours in excess of the 200 contract
hours provided for in the contract.
4. LOAN/DEBT
In August 1996, the Company borrowed $7,500 from an unrelated third party in the
form of a demand note. In April 1998, the Company borrowed $12,500 from another
unrelated third party. In December of 1998 the Company issued Centrack
International, Inc. Stock in exchange for the notes.
F-11
<PAGE> 14
CENTRACK INTERNATIONAL, INC
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
For the Years Ended May 31, 1999, 1998 and 1997 and for the
Period from April 4, 1996 (inception) to May 31, 1999: and
For the Three Months Ended August 31, 1999 and 1998
(unaudited)
In May 1999 and during the quarter ended August 31, 1999, the Company borrowed
$250,000 and $300,000, respectively, from a third party supported by unsecured
promissory notes. The notes carried a six-month term at a stated rate of 10% per
annum. On August 31, 1999, the Company converted the $550,000, under the above
notes, plus accrued interest of $12,986 to equity for 350,000 common shares to
be issued upon receipt of the canceled notes.
5. OFFICERS' COMPENSATION
Prior to the reverse acquisition, the Company's day to day activities were
managed by certain officer/shareholders, who contributed their time on the
Company's behalf without compensation in either cash or stock. No value for
these services has been determined or recorded on the accompanying financial
statements. The Company currently employs these individuals and all other
employees through the services of an unrelated payroll leasing company. Certain
officers have received warrants to purchase common stock of the Company.
The Company has accrued salary expense due to the Chief Executive Officer and
the related payroll taxes as of August 31, 1999 and May 31, 1999 totaling
$69,250 and $49,000, respectively.
6. WARRANTS AND OPTIONS
The Company has issued warrants to purchase common stock to various employees,
shareholders and unrelated parties. The warrants are for a total of
approximately 1.4 million shares and have various exercise prices ranging from
$.095 per share to $.237 per share. The warrants expire at varying times through
February 2004.
7. YEAR 2000
Many currently installed computer systems and software products are coded to
accept only two-digit entries in the date code field and cannot reliably
distinguish dates beginning January 1, 2000 from dates prior to the year 2000.
Many companies' software and computer systems may need to be upgraded or
replaced in order to correctly process dates beginning in 2000 and to comply
with the "Year 2000" requirements. The Company has reviewed its internal
programs and has determined that there are no significant Year 2000 issues
within the Company's systems or services. The Company will complete
modifications to its internal systems to attempt to ensure Year 2000 compliance.
The costs of these modifications will not be material and involve a reallocation
of internal resources rather than incremental expenditures. In addition the
Company utilizes third party hardware, software and services that may not
F-12
<PAGE> 15
CENTRACK INTERNATIONAL, INC
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
For the Years Ended May 31, 1999, 1998 and 1997 and for the
Period from April 4, 1996 (inception) to May 31, 1999: and
For the Three Months Ended August 31, 1999 and 1998
(unaudited)
be Year 2000 compliant. Although the Company believes that its software and
software provided by third parties is Year 2000 compliant, the Company may be
wrong. If the Company is wrong, it could face unexpected expenses to resolve any
related issues. Further, any interruptions could negatively impact its business.
8. GOING CONCERN
The Company is in the development stage as defined by Generally Accepted
Accounting Principles. The Company's financing has been provided by capital
contributions from the shareholders and third party loans. The Company
anticipates that during the fiscal year ended May 31, 2000, revenues will begin
to increase as a result of full scale operations and capital will be increased
by the continued sale of its common stock. If either or both of these sources
fail to meet the Company's capital requirements, the Company's ability to
continue as a going concern would be in doubt. The financial statements do not
include any adjustments regarding the going concern and have been prepared with
the assumption that the Company will continue perpetually.
9. SUBSEQUENT EVENTS
In September 1999, the Company issued 529,050 shares of its common stock, and
warrants to purchase up to 1,059,100 additional shares for an equity
contribution of $700,000. The warrants expire over the next four years.
In October, 1999, the Company opened an office in Chicago, Illinois to aid in
furthering relationships with certain major manufacturers of heavy equipment.
The office is being rented under a short-term lease with monthly payments of
$780.
F-13
<PAGE> 16
In accordance with Section 12 of the Securities Exchange Act of 1934, as
amended, the registrant has caused this amendment to its registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized.
CENTRACK INTERNATIONAL, INC.
By: /s/ Kenneth Neeley
-----------------------------
Kenneth Neeley
Chief Financial Officer
Date: November 23, 1999
