SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended December 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to _______________.
Commission File No. 0-27929
SKREEM.COM, CORPORATION
----------------------------------------------
(Name of small business issuer in its charter)
Nevada 62-1655508
- -------------------------------- --------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
200 S. Knowles Avenue, Winter Park, Florida 32790
---------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Include Area Code: 407-645-1704
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
-------------------- -----------------------------------------
None None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
------------------------------
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past twelve (12) months (or
for such shorter period that the registrant was required to file such reports);
and (2) has been subject to such filing requirements for the past ninety (90)
days. Yes X No
--- ----
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
The issuer's revenues for its most recent fiscal year were $0.
As of March 31, 2000, 13,545,315 shares of common stock of the Registrant
were outstanding. As of such date, the aggregate market value of the common
stock held by non-affiliates, based on the closing bid price on the NASD
Bulletin Board, was approximately $0.
DOCUMENTS INCORPORATED BY REFERENCE
Transitional Small Business Disclosure Format: Yes No X
--- ----
<PAGE>
TABLE OF CONTENTS
Page
------
PART I
ITEM 1. DESCRIPTION OF BUSINESS................................ 3
ITEM 2. DESCRIPTION OF PROPERTIES.............................. 5
ITEM 3. LEGAL PROCEEDINGS ..................................... 5
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS.................................... 5
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS............................ 6
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS................... 6
ITEM 7. FINANCIAL STATEMENTS................................... 7
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE................. 7
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS; COMPLIANCE WITH
SECTION 16(a) OF THE EXCHANGE ACT...................... 7
ITEM 10. EXECUTIVE
COMPENSATION........................................... 8
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT.................................. 9
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS........................................... 9
ITEM 13. EXHIBITS AND REPORTS OF FORM
8-K.................................................... 9
SIGNATURES............................................. 10
FINANCIAL STATEMENTS................................... F-1
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Corporate History
Skreem.com Corporation a Delaware corporation (the "Company") formerly
Commerce Centers Corporation was formed in May 1989 but did not have any
operations until it acquired Skreem.com Corporation, a Nevada corporation
("Skreem") in March 1999. Upon the acquisition of Skreem, the Company changed
its name from Commerce Centers Corporation to "Skreem.com Corporation". The
Company acquired all of Skreem's issued and outstanding shares of common stock
making Skreem a wholly-owned subsidiary of the Company. The business of Skreem
has become the only operating business of the Company and the officers and
directors of Skreem have assumed the officers and director positions of the
Company. When used herein the term "Company" refers to the combined entity
unless the context otherwise indicate.
Skreem was formed in 1999 to develop and market computer and Internet
related software. In February 1999, Skreem acquired R&R Marketing Group, Inc.
which had the rights to a series of computer software known as Skreem System
Acceleration. The Skreem software attempts to accelerate the speed of a computer
in relation to various computer programs' operating abilities. The initial
concept was aimed at allowing individuals to purchase this software to
accelerate a computer's operating speeds. The software was designed to be
flexible and work with any computer that is a 486DX or superior and runs either
the Windows 95 or 98 operating systems.
Skreem has only recently been formed and has not had the time or financing
to exploit its software. Previously, the efforts of R&R Marketing Group, Inc.
the prior owners of the software, were on the development of the software and
not on its commercialization. Accordingly, the future market acceptability of
the Skreem software is still unknown.
If the Company is successful in exploiting the Skreem software, the Company
intends to develop other computer and Internet related software and potentially
acquire other hi-tech, Internet or software business. In an effort to fund the
development and marketing of the "Skreem System Acceleration," the Company
raised over $999,000 through the sale of shares of its common stock in a private
placement. These funds will be used to complete Beta versions of its products
and commence marketing efforts.
Operations
Products and Services
The Company's first product is called Skreem System Acceleration, which is
a comprehensive software tool aimed at increasing operating speeds of computers.
The goal of the software is to accelerate the speed in which computers perform
their functions and decrease Internet download and upload times. Additionally,
the software attempts to stabilize Microsoft Windows(tm), run graphics faster
and makes it easier to navigate through toolbars.
The Company recently completed benchmark testing using WinTune98, an
industry-standard testing program. All tested variables showed marked increases
in performance. Skreem.com owns 100% of all rights to the acceleration
methodology as well as all pending trademarks.
Skreem System Acceleration has two versions: Skreem for Windows 95 and
Skreem for Windows 98. These main Skreem acceleration software products have
also been partitioned into several distinct products. The Skreem acceleration
tool has been divided into: Skreem Internet, Skreem Windows and Skreem Graphics.
These products are sold separately from the comprehensive Skreem accelerator
tool, providing consumers the ability to choose the specific Skreem tool to fit
their needs.
All of the Company's products and services will be available for licensing
and purchase on the Company's website. The Company anticipates including
extensive technical support options that will reduce the traditional high cost
of customer assistance. Initially, the website will be the main venue for
purchasing the Company's products. In a marketing move, the site is planned to
have Java-based "cookies" (invisible applications that automatically download
and run on a user's computer) that will profile the computer being used by the
person viewing the website. The website will then customize the viewable
information to the visitor's computer settings. For example, a "cookie" will
automatically download to a visitor who is using a 486dx computer running
Windows 95. That information about the visitor's computer is sent back to the
Company's site within seconds. From then on, the visitor will see performance
charts and graphs showing how the Company's acceleration software will boost the
visitor's specific computer configuration. Sales efforts are hopefully made
easier since potential customers don't have to search around for details about
the Company's products for their specific computer.
3
<PAGE>
The Company is working on providing web-based support resources that
provide front-line assistance for the Company's suite of applications. Four
types of self-help tools are planned:
Knowledge Base: Users can search a database for common solutions relating
to an issue.
Frequently Asked Questions: Users can review a list of answers to the most
frequent questions relating to Skreem.com software.
FTP download library: Users can download patches, software updates,
drivers, technical articles, bug fixes and enhancement.
Tech Support Software: Users can quickly download the software used by the
Company for its direct real-time customer support option.
Second-Stage Products and Services
The Company is developing products for the second phase of its evolution.
The second set of software products will expand the list of possible operating
systems with which the Skreem System Acceleration can operate including: Skreem
2000, Skreem Windows NT and Skreem Networks. The Company intends to update its
software with each new iteration of the Windows (tm) operating system. The
Company hopes to be able to eventually offer its Skreem software products in
multiple languages for international sale.
As funding permits, the Company hopes to be able to develop a strong
software team that not only works on the Skreem products but also will be able
to develop software for licensing to other software firms. Some of the first
projects being considered for development or licensing to other areas include a
software installation system that protects against software piracy, a data
encryption system and a proprietary customer service technology that allows
online real-time repair of customers' computers. All future development will be
dependant on the Company's first product, Skreem System Acceleration and
potentially upon the Company's ability to generate further investment capital
for expansion.
Although the Company has developed its product and performed initial test
along with Beta runs, management feels the product is several months from full
commercialization. The Beta results appear promising; however, the Company must
still complete its downloading technology to allow purchasers to access the
software on the Company's website. Until commercialization of the product is
commenced, there can be no assurance of future success. Additionally, although
Beta versions of the product do not show any operating problems, upon large
scale usage of the product, it would not be unusual for certain "bugs" to be
found which would require correction. This could slow further developments of
the software.
Market Strategy
The Company's short-term marketing strategy is to set up channel sales
through major distributors. The Company plans to promote its products and brand
names with the use of industry and consumer magazine advertising, co-operative
advertising campaigns with the dealers and distributors, as well as an
aggressive display and international trade show schedule.
Strategic alliances and licensing are a major plan of the Company's
long-term marketing strategy to enter new and existing markets making use of
established distribution and customer bases of the Company's partners and
licensees.
4
<PAGE>
Competition and Markets
The Company faces many challenges and competitors to its software. The
competition comes not only from other software products but from computer
hardware manufactures that continue to make faster computers at cheaper prices.
Additionally, other software companies offer products to improve computer
functions. The Company's operation is very vulnerable to competition because of
the Company's financial capabilities and the newness of its product. The
Company's present size and financial capabilities creates a situation where its
competitors are larger, better financed and have better name recognition than
the Company thus placing the Company at a competitive disadvantage.
Research and Development
The Company's programming and product development has been performed by two
of the Company's officers in the past. The Company intends to hire three or four
new programmers to assist in product development and improvements of current
products. If the Company's current software proves successful, the Company will
accelerate the addition of new programmers to reduce the time required to
develop new software.
Patents and Trademarks
The Company has filed for trademark registration on the name "Skreem.com
System Acceleration," and is in the process of filing trademark registrations on
product names. The Company has been granted Internet registration of the domain
name "Skreem.com."
Government Regulation
The Company is not subject to any government regulations other than those
that normally apply to other software manufactures, such as copyright and
trademarks laws.
Employees
The Company has three employees. (See "Directors and Executive Officers.")
ITEM 2. DESCRIPTION OF PROPERTIES
The Company does not own any real property. The Company's principal
executive offices are located at 200 S. Knowles Avenue, Winter Park, Florida
32789. These offices are provided, rent free, by the Company's president, Thomas
Tedrow. The Company believes that the above facilities are adequate for the
foreseeable needs of the Company; however, eventually as the Company expands its
employee base, it anticipates adding additional office space.
ITEM 3. LEGAL PROCEEDINGS
Management is not aware of any pending or threatened litigation against the
Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's stockholders through
the solicitation of proxies, or otherwise, during the fourth quarter of the
Company's fiscal year ended December 31, 1999.
5
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
There is currently no trading market for the Company's Common Stock. The
Company has filed its Form 211 with the NASD and is currently in the process of
clearing comments. However, there is no assurance that even if trading begins,
that a market will develop in the Company's stock.
Record Holders
As of March 31, 2000, there were approximately 178 record holders of the
Company's common stock.
Dividends
The Company has never declared or paid any cash dividend on its Common
Stock and does not expect to declare or pay any such dividend in the foreseeable
future.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
No comparative analysis of the Company's operations are provided, as the
Company was inactive during calendar year 1998, except for efforts in seeking a
company with which to merge or acquire and in keeping its corporate governance
current.
During calendar year 1999, the Company acquired all of the issued and
outstanding shares of Skreem.com Corporation, a software development company,
and raised $999,344 in equity through the limited offering exemption provisions
of Rule 504 promulgated under the Securities Act of 1933. Because these funds
were invested temporarily in money market accounts, the Company had interest
income of $25,035 for the year ended December 31, 1999. The Company also
incurred general and administrative expenses of $405,814. These expenses consist
principally of updating existing software products, research and development
expenses for new products, and general overhead expenditures. The depreciation
and amortization expenses of $2,848 consisted of $2,676 of depreciation of
office equipment and $172 of amortization of organizational expenditures. As a
result of the foregoing, the Company incurred a net operating loss of $383,627
or $.04 per share.
As of December 31, 1999, the Company had cash of $377,089 and working
capital of $588,748.
Cash used by operating activities was $329,281 for the year ended December
31, 1999. This consisted of the Company's net operating loss of $383,627 and an
increase in accounts receivable of $6,058 which were partially offset by
depreciation and amortization of $2,848 an increase in accounts payable of
$23,056 and the payment of $134,500 of expenses with shares of the Company's
common stock.
Cash used by investing activities, totaled $292,974 for the year ended
December 31, 1999. This consisted of $228,658 advanced to entities whose
technology the Company is using in its products, a $50,000 investment in an
Internet start-up, the purchase of $13,380 of office equipment and $936 of
additional organizational expenditures.
Cash flows from financing activities totaled $999,344 for the year ended
December 31, 1999, all of which came from an offering of the Company's common
shares.
Based upon the current level of expenditures, it will be necessary for the
Company to seek additional funding over the next twelve months to fully
implement its business plan.
6
<PAGE>
ITEM 7. FINANCIAL STATEMENTS
The consolidated financial statements of the Company, together with the
independent auditors' report thereon of Andersen Andersen & Strong LC appears on
pages F-2 through F-10 of this report. See Index to Financial Statements on page
F-1 of this report.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no changes in or disagreements with the Company's Accountants on
any accounting or financial disclosure item during any period covered by this
report.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT
Information Regarding Present Directors and Executive Officers
The names of the Company's executive officers and directors and the
positions held by them are set forth below:
Name Age Title Director Since
- ------- ------ ------- ----------------
Thomas L. Tedrow 49 President, Chief Executive
Officer and Director 1999
Michael Reynolds 22 Vice President of Product Development
and Director 1999
Jacob Nguyen 26 Treasurer, Secretary and Director 1999
The term of office of each director is one year and until his successor is
elected at the Company's annual shareholders' meeting and is qualified, subject
to removal by the shareholders. The term of office for each officer is for one
year and until a successor is elected at the annual meeting of the board of
directors and is qualified, subject to removal by the board of directors.
Biographical Information
Set forth below is certain biographical information with respect to each of
the Company's officers and directors.
Thomas L. Tedrow is the author of over twenty books. He is an international
marketing strategist who publishes Market Management Reports and founded
Financial Discoveries. He directs Tedrow Communications Corporation, a marketing
communication firm with offices in Orlando, Florida and Hong Kong. Mr. Tedrow is
a graduate of the University of Florida with a degree in Public
Relations/Journalism.
Michael Reynolds is the developer of the Skreem System Acceleration
product. Previously, he was the principal of R&R Marketing, a high-technology
marketing firm based in Missouri which was acquired by the Company. Mr. Reynolds
focuses on the development of various software.
Jacob Nguyen is the managing director of Market Management International,
Inc., an investment research firm. Mr. Nguyen heads a team of analysts and
writers that researches companies from around the world. Previously, he was vice
president of Waterford Sterling, Inc., an international public relations firm
that created media campaigns and advertising for multinational corporations. Mr.
Nguyen has a bachelor's degree in International Economics.
7
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
The following tables set forth certain summary information concerning the
compensation paid or accrued for each of the Company's last completed fiscal
years to the Company's or its principal subsidiaries chief executive officer and
each of its other executive officers that received compensation in excess of
$100,000 during such period (as determined at December 31, 1998, the end of the
Company's last completed fiscal year):
Summary Compensation Table
<TABLE>
Annual Compensation Long Term Compensation
--------------------------- ---------------------------
Awards Restricted Payouts
---------------- -------------
Name and Principal Other Annual Stock Options LTIP All other
Position Year Salary Bonus($) Compensation Awards / SARS Payout compensation
- ------------------- ------ -------- ---------- --------------- -------- --------- -------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Thomas Tedrow (1) 1998 0 0 0 0 0 0 0
President & CEO
</TABLE>
(1) K.A. Emery was the president of the Company prior to its merger with
Skreem.com and subsequent name change. Ms. Emery did not receive a salary.
Mr. Tedrow was the President of Skreem.com Corporation prior to its merger
with the Company and did not receive a salary during this time. The Company
had no operations prior to its merger with Skreem.com Corporation which
itself had no operations in prior years.
Options /SAR Grants in Last Fiscal Year
The Company has never granted options or stock appreciation rights.
Bonuses and Deferred Compensation
None
Compensation Pursuant to Plans
The Company does not have any compensation or option plans.
Pension Plans
Not applicable
Other Compensation
None
Directors receive no compensation except for re-imbursement for expenses
associated with attending director meetings.
8
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of the Company's Common
Stock, par value $0.01, held by each person who is believed to be the beneficial
owner of 5% or more of the shares of the Company's common stock outstanding at
March 31, 2000, based on the Company's transfer agent's list, representations
and affidavits from shareholders and beneficial shareholder lists provided by
the Depository Trust and securities broker dealers, and the names and number of
shares held by each of the Company's officers and directors and by all officers
and directors as a group.
<TABLE>
Name and Address of Amount and Nature of
Title of Class Beneficial Owner Beneficial Ownership Percent of Class
----------------- --------------------- ---------------------- ------------------
Principal Shareholders
<S> <C> <C> <C>
Common Thomas Tedrow 7,867,000 58.2%
200 S. Knowles Avenue
Winter Park, Florida 32789
Common Jeff Martin 1,346,974 9.96%
179 Fairview Point Circle
Orlando, Florida 32790
Common Mike Reynolds 250,000 1.86%
Common Jacob Nguyen 100,000 0.74%
All officers and Directors, and as a Group
(3 Person) 8,217,000 60.78%
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company completed the acquisition of Skreem.com Corporation, a Nevada
corporation in 1999. At the time of the acquisition, the Company was controlled,
in part, by Jeff Martin who has had a long term business relationship in
numerous companies with Tom Tedrow, the current president of the Company and the
president of the private Skreem.com Corporation at the time of the acquisition.
This relationship brings into question the arm's length nature of the
transaction. However, management believes the terms of the merger were fair.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Finanancial Data Schedules
(b) Reports on Form 8-K
None
9
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SKREEM.COM CORPORATION
By: /s/ Thomas L. Tedrow
------------------------
Thomas L. Tedrow
Chief Executive Officer
Dated: April 12, 2000
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities and on
the dates indicated.
Name Title Date
-------- --------- ---------
/s/ Thomas L. Tedrow President, Chief Executive April 12, 2000
- -------------------------- Officer and Director
Thomas L. Tedrow
/s/ Michael Reynolds Vice President of Product April 12, 2000
- -------------------------- Development and Director
Michael Reynolds
/s/ Jacob Nguyen Secretary, Treasurer, Chief April 12, 2000
- -------------------------- Financial Officer and Director
Jacob Nguyen
10
<PAGE>
SKREEM.COM CORPORATION
Index to Consolidated Financial Statements
Page
-------
Report of Independent Public Accountants
Balance Sheets as of December 31, 1999 and 1998 F-2
Statements of Operations for the Years Ended
December 31, 1999 and 1998 F-3
Statements of Cash Flows for the Years Ended
December 31, 1999 and 1998 F-4
Statements of Shareholders' Equity for the Years
Ended December 31, 1999 and 1998 F-5
Notes to Financial Statements F-6 - F-9
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Skreem.com Corporation Consolidated
Salt Lake City, Utah
We have audited the balance sheets of Skreem.com Corporation Consolidated (a
development stage company) at December 31, 1999 and 1998, and the related
statements of operations, stockholders' equity, and cash flows for the years
then ended, and the period from May 17, 1989 (date of inception) to December 31,
1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 opinions.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Skreem.com Corporation
Consolidated (a development stage company) at December 31, 1999 and 1998, and
the results of its operations and cash flows for the years then ended, and the
period from May 17, 1989 (date of inception) to December 31, 1999 in conformity
with generally accepted accounting principles.
Andersen Andersen & Strong LLC
Salt Lake City, Utah
March 31, 2000
<PAGE>
SKREEM.COM CORPORATION CONSOLIDATED
(A Development Stage Company)
BALANCE SHEETS
December 31, 1999 and 1998
1999 1998
------ ------
ASSETS
CURRENT ASSETS:
Cash $ 377,089 $ -
Demand notes receivable (Note 4):
Related parties 209,331 -
Other 25,384 -
---------- -------
Total current assets 611,804 -
---------- -------
MARKETABLE SECURITIES:
Available for sale securities (Note 5) 162,500 -
---------- -------
EQUIPMENT:
Office equipment 13,380 -
Accumulated depreciation (2,676) -
---------- -------
10,704 -
OTHER ASSETS:
Organization costs net of amortization 765 -
---------- -------
$ 785,773 $ -
========== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 23,056 $ -
---------- -------
Total current liabilities 23,056 -
STOCKHOLDERS EQUITY:
Common stock, par value $.01;
authorized 30,000,000 shares; issued and
outstanding 13,545,315 and 2,920,200 135,453 48,670
Capital in excess of par value 985,311 42,750
Receivable on shares issued - (4,500)
Deficit accumulated during the
development stage (470,547) (86,920)
Unrealized gain on securities available
for sale 112,500 -
---------- -------
Total stockholders' equity 762,717 -
---------- -------
$ 785,773 $ -
========== =======
See accompanying notes to financial statements
F-2
<PAGE>
SKREEM.COM CORPORATION CONSOLIDATED
(A Development Stage Company)
Statements of Operations
Years Ended December 31, 1999 and 1998
And May 17, 1989 (Date of Inception) To December 31, 1999
Inception
To
Dec. 31, Dec. 31, Dec. 31,
1999 1998 1999
----------- --------- ----------
REVENUE
Interest income $ 25,035 $ - $ 25,035
---------- --------- ---------
EXPENSES:
General and administrative 405,814 8,470 487,034
Depreciation and amortization 2,848 - 8,548
---------- --------- ---------
Total expenses 408,662 8,470 495,582
NET LOSS $ (383,627) $ (8,470) $ (470,547)
========== ========= =========
Net loss per common share
Basic $ (.04) $ -
========== =========
Weighted average shares
outstanding Basic 10,819,630 1,335,057
=========== ===========
See accompanying notes to financial statements
F-3
<PAGE>
SKREEM.COM CORPORATION CONSOLIDATED
(A Development Stage Company)
Statements of Cash Flows
Years Ended December 31, 1999 and 1998
And May 17, 1989 (Date of Inception) To December 31, 1999
Inception
To
Dec. 31,
1999 1998 1999
------ ------ ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(383,627) $( 8,470) $( 470,547)
Adjustment to reconcile net loss to
net cash used by operating activities:
Depreciation and amortization 2,848 - 2,848
(Increase) in accounts receivable (6,058) - (6,058)
Increase (decrease)in accounts payable 23,056 (13,450) 23,056
Expenses paid and debts settled
with common stock 34,500 21,920 111,420
--------- -------- ---------
Net cash (used) by operations (329,281) - (339,281)
--------- -------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Issuance of notes receivable (228,658) - (228,658)
Purchase of marketable securities (50,000) - (50,000)
Purchase of equipment (13,380) - (13,380)
Increase in organization costs (936) - (936)
--------- -------- ---------
Net cash (used) by investing activities (292,974) - (292,974)
--------- -------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common
stock for cash 999,344 - 1,009,344
--------- -------- ---------
Net cash provided from financing activities 999,344 - 1,009,344
--------- -------- ---------
NET INCREASE IN CASH 377,089 - 377,089
Cash, beginning - - -
--------- -------- ---------
Cash, ending $ 377,089 $ - $ 377,089
========= ======== =========
SUPPLEMENTAL DISCLOSURES:
Non cash financing activities:
Issuance of common stock for expenses $ 34,500 $ - $ 111,420
========= ======== =========
See accompanying notes to finanial statements
F-4
<PAGE>
<TABLE>
Unrealized
Gain On
Common Common Capital In Receivable Securities
Stock Stock Excess of On Shares Available Accumulated
Shares Amount Par Value Issued For Sale (Deficit) Total
-------- -------- ------------- ------------ ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of shares of
common stock on May
17, 1989 for professional
services rendered at $.02 1,200,057 $12,001 $ 7,999 $ - - - 20,000
Accumulated deficit-period
May 17, 1989 to December
31, 1995 - - - - - (20,000) (20,000)
Issuance of shares of common
stock during 1996 for cash
at $.33 30,000 300 9,700 - - - 10,000
Issuance of shares of common
stock during 1996 for
professional services rendered
at $.33 105,000 1,050 33,950 - - - 35,000
Net loss year ended December
31, 1996 - - - - - (45,000) (45,000)
Net loss year ended December
31, 1997 - - - - - (13,450) (13,450)
Issuance of shares of common
stock during 1998 in
settlement of accrued
liabilities for professional
services at $.02 1,315,258 13,152 8,768 - - - 21,920
Issuance of shares of common
stock during 1998 for a
commitment to provide future
capital at $.02 270,000 2,700 1,800 (4,500) - - -
Net loss year ended December
31, 1998 - - - - - (8,470) (8,470)
----------- --------- -------- --------- --------- ---------- ----------
Balance December 31, 1998 2,920,315 $29,203 $ 62,217 $ (4,500) $ - (86,920) -
----------- --------- -------- --------- --------- ---------- ----------
Issuance of shares of common
stock during 1999 to
acquire wholly owned
subsidiary at $.00 9,600,000 96,000 (86,000) - - - 10,000
Issuance of common stock
during 1999 for cash
at $.99 1,000,000 10,000 984,344 - - - 994,344
Commitment to provide
future capital satisfied
with payment of expenses - - - 4,500 - - 4,500
Issuance of shares for
services during 1999 at
$1.00 25,000 250 24,750 - - - 25,000
Net change in unrealized
gain on securities
available for sale - - - - 112,500 - 112,500
Net loss year ended December
31, 1999 - - - - - (383,627) (383,627)
----------- --------- -------- --------- --------- ---------- ----------
Balance December 31, 1999 13,545,315 135,453 985,311 - 112,500 (470,547) 762,717
</TABLE>
F-5
<PAGE>
SKREEM.COM CORPORATION CONSOLIDATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BUSINESS ACTIVITY
Business activity
- -----------------
The Company, a Delaware corporation was incorporated on May 17, 1989, and is
currently in the development stage. The Company intends to acquire and develop
high technology software firms.
In April 1999 the Company changed its name from Commerce Centers Corporation to
Skreem.com Corporation and approved a reverse stock split of 3 shares of
outstanding stock for 5 shares. The report has been prepared as if the stock
split had occurred at inception.
Accounting method
- -----------------
The Company's financial statements are prepared using the accrual method of
accounting.
Principles of consolidation
- ---------------------------
The consolidated financial statements include the accounts of Skreem.com
Corporation, a Nevada corporation. All material intercompany transactions have
been eliminated.
Computer software costs
- -----------------------
The Company expenses research and development costs related to software
development that has not reached technological feasibility and started
production for sale. Thereafter costs are capitalized and amortized over a
maximum of five years or expected life of the product, whichever is less.
Computer research and development costs of $35,526 were incurred in the current
year ended December 31, 1999.
Income (loss) per share
- -----------------------
The computation of income (loss) per share of common stock is based on the
weighted average number of shares outstanding, after the stock split.
Statement of cash flows
- -----------------------
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents for purposes of the
statement of cash flows.
F-6
<PAGE>
SKREEM.COM CORPORATION CONSOLIDATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BUSINESS ACTIVITY
(continued)
Financial instruments
- ---------------------
The Company estimates that the fair value of all financial instruments at
December 31, 1999 and December 31, 1998 do not differ materially from the
aggregate carrying values of its financial instruments recorded in the
accompanying balance sheets.
Dividend policy
- ---------------
The Company has not yet adopted a policy regarding payment of dividends.
Estimates and assumptions
- -------------------------
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
Marketable securities:
- ---------------------
Equity securities are classified as available for sale as defined by SFAS 115.
In accordance with that Statement, they are reported at aggregate fair value
with unrealized gains and losses excluded from earnings and reported as a
separate component of stockholders' equity.
2. INCOME TAXES
The Company complies with Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes. At December 31, 1999 the Company had a net
operating loss ("NOL") carry forward for United States income tax purposes of
approximately $470,547. The NOL carryforward expires in increments beginning in
2004. The Company's ability to utilize its net NOL carryforward is subject to
the realization of taxable income in future years, and under certain
circumstances, the Tax Reform Act of 1986 restricts a corporation's use of its
NOL carryforward. The Company believes that there is at least a 50% chance that
the carryforward will expire unused, therefore, any tax benefit from the loss
carryforward has been fully offset by a valuation reserve.
3. ACQUISITION OF NEVADA SKREEM.COM CORPORATION
In April 1999 the Company, Skreem.com Corporation, a Delaware corporation
("SCD") acquired all of the outstanding stock of Skreem.com Corporation, a
Nevada corporation ("SCN") through a stock for stock exchange in which the
stockholders of SCN received 9,600,000 post stock split common shares of the SCD
in exchange for all of the stock of the SCN. Skreem.com Corporation ("SCN") was
incorporated in Nevada on January 29, 1999 for the purpose of developing high
technology software.
F-7
<PAGE>
For reporting purposes, the acquisition is treated as an acquisition of the
Company ("SCD") by Skreem.com Corporation of Nevada ("SCN") (reverse
acquisition) and a recapitalization of SCN with its historical financial
statements being combined with the Company's. No proforma statements have been
included since the acquisition is considered to be a reverse acquisition.
4. DEMAND NOTES RECEIVABLE
As of December 31, 1999, the Company had demand notes receivable, including
accrued interest as follows:
Maker Interest rate Amount
------- ---------------- --------
Related parties:
Organized Internet Services, Inc. 8% $ 51,655
Organized Internet Services, Inc. 8% 51,438
Organized Internet Services, Inc. 8% 50,625
Skreem Entertainment Corp. 10% 55,613
----------
209,332
Other:
Capital Media Group 8% 25,384
----------
$ 234,715
==========
The notes due from Organized Internet Services, Inc. are each to be secured with
200,000 shares of common stock of the maker, however, delivery of the security
had not been made as of December 31, 1999. The note due from Skreem
Entertainment Corp. is secured by recording equipment. Refer to note 6 for
discussion of related party transactions.
5. MARKETABLE SECURITIES
The Company had no sales of securities classified as available for sale for the
years ended December 31, 1999 and 1998. The amortized cost and estimated fair
values of marketable securities as of December 31, 1999 are as follows as:
Gross
Amortized Unrealized Fair
Cost Gain Value
--------- ------------ -------
Available for sale equity securities $50,000 $112,500 $162,500
F-8
<PAGE>
SKREEM.COM CORPORATION CONSOLIDATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
6. RELATED PARTY TRANSACTIONS
During February 1998, the Company issued 1,585,258 post stock split shares to
five major stockholders and two persons who were both officers and directors.
The consideration for the issuance was assumption of the Company's accrued
liabilities in the amount of $21,920 by the above mentioned shareholders, and
the agreement by them to fund future Company expenditures in the amount of
$4,500.
The shares issued pursuant to the acquisition agreement as described in note 3
were issued to four individuals who collectively represent a controlling
interest of the Company.
Certain demand notes receivable as detailed in note 4 above were created in
related party transactions since the Company's President is a major shareholder
in both Organized Internet Services, Inc. and Skreem Entertainment Corp.
