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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
Annual Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
For the year ended March 31, 2000
Commission File Number 0-28287
CALIPSO, INC.
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(Name of Small Business Issuer in Its Charter)
Delaware 88-0418749
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
13525 Midland Rd., Suite I, Poway, CA 92064
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(Address of principal Executive Offices) (Zip Code)
(619) 692-2518
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(Issuer's Telephone Number)
Securities registered under Section 12(g) of the Exchange Act:
Common Stock - .001 Par Value
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(Title of Class)
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Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 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 90 days.
Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will 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.
Yes [X] No [ ]
The issuer had no revenues for the year ended March 31, 2000.
As of March 31, 2000, the registrant had 6,696,000 shares of common stock, $.001
par value, issued and outstanding.
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PART I
ITEM 1 DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT
Organization
Calipso, Inc. was incorporated in Delaware on May 31, 1994 for the purpose of
developing software and an Internet web site focused on nature and biological
information. During 1996, the Company received its initial funding through the
sale of common stock to investors. In July 1999, Management decided to expand
its original Internet site concept to include currently available enhanced
Internet features designed for a broader user base and seek additional funding.
Bankruptcy or Similar Proceedings
There have been no bankruptcy, receivership or similar proceedings.
Reorganizations, Purchase or Sale of Assets
As of the Company's fiscal year end of March 31, 2000 there were no material
reclassifications, mergers, consolidations, or purchase or sale of a significant
amount of assets not in the ordinary course of business. In May 2000, the Board
of Directors considered a proposal to acquire a software company, Knowledge
Foundations, Inc. The Board determined the acquisition of Knowledge Foundations,
Inc. would enhance the Company's business plan and increase equity value for the
Shareholders. The Board recommended to the Shareholders that they approve the
acquisition of Knowledge Foundations, Inc. On May 8, 2000, the Company's
Shareholders voted unanimously to take the necessary steps to acquire 100% of
Knowledge Foundations, Inc.
BUSINESS OF ISSUER
Principle Products or Services and Markets
The Company intended to advance its business plan as reported in its previous
public filings, and continue the plan to develop software and an interactive
Internet web site that provides extensive educational nature and biological
information. However, in May 2000, the Board of Directors reviewed the software
currently offered by Knowledge Foundations, Inc. and determined their artificial
intelligence software was a superior product that could afford the Company a
sizeable world-wide profitable market within the next two years. Based upon the
Board's recommendation, the Company's Shareholders voted unanimously on May 8,
2000 to acquire Knowledge Foundations, Inc. in order to acquire and market their
software. As described in Subsequent Events of this filing, Management believes
the proposed acquisition of this artificial
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intelligence software will enhance the Company's business plan revenue through
the marketing of a product with an existing customer base.
Should the Company be unsuccessful in its bid to acquire Knowledge Foundations,
Inc., the Company will continue to pursue its original business plan to offer
extensive educational nature and biological information on its interactive
Internet Web site. This site will provide in-depth facts, scientific studies,
and educational treatises about natural phenomena and biological life forms.
Information on the Company's web site will feature an easy to use interface and
links, full motion color videos, and sound in order to enhance the user's
enjoyment of the Web site. Interactive features will allow users to participate
in polls and chat rooms, and allow them to download text, video and graphics.
The underlying strategy of this site will be to layer multiple pages of
progressively more detailed information that will enable users to travel through
and experience everything from a video presentation concerning a particular life
form, to increasingly deeper levels of relevant scientific facts, studies, and
current research. This will combine the entertaining presentation features of
nature and biological information typically found on television documentaries
such as those presented by the Discovery Channel, with the educational
information found in research papers and textbooks. Each level of the web site
will have interactive features and horizontally integrated pages and links to
provide quicker search access and retain the user's attention with features such
as videos and educational games at the entry or top levels and more detailed
pictorial presentations and in-depth scientific information in the deeper
levels. Vertically integrated pages and links will allow the user to bypass
general knowledge features and move quickly to the individual's desired level of
detail and scientific study. Throughout the Company's web site, interactive
features will be utilized wherever feasible in order to enhance the user's
visual experience and retain the user's attention.
Distribution Methods of Products or Services
The Company will design and maintain its web site in a magazine format around
its niche presentation method of combining varied levels of nature and
biological information with interactive features to maintain the user's
attention. This format is designed to allow the Internet user to find nature
information from world wide sources at one web site that ranges from casual
introductory facts to in-depth data. As this is not currently available on the
Internet at any one site, Internet users seeking this information must spend
more time in multiple web site searches with no assurance that they will find
what they are looking for, and when they do find web sites, no assurance that
they will find the depth or breadth of nature and biological information they
seek. In addition to the Company's own web site, the Company's staff will
continuously search world-wide for Internet sites that fit its format in order
to provide links that will reduce the user's search time and keep the user based
at the Company's site.
Based upon Management's experience in the delivery of educational nature and
biological information via electronic means, the size of the market is
relatively small, but growing. It is composed of general consumers and
educational institutions. Factors driving the growth in this market include
increasing penetration of personal computers in homes, expanding distribution
channels for educational based information such as documentaries, televised
nature studies, and Internet information based sites, and increased awareness of
the potential of multimedia
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presentations as effective educational tools. Management has witnessed and
participated in the market migration from educational software product sales to
Internet web site visits and information download delivery methods. School use
of the Internet for research is being driven by growth in the penetration of
computers into schools, upgrades of the existing base of computers to new
multimedia computers, increases in the number of teachers trained to incorporate
technology-based tools into their curriculum and increased government funding
encouraging the use of computers and the Internet in instructional settings.
Educational institutions are increasingly requiring students to use the Internet
as part of their coursework research.
The Company plans to offer access to its home page and selected deeper level
pages to its educational nature and biological information web site free of
charge to Internet users. The Company's web site will provide daily updated
nature and biological news along with pictures at its entry level pages. The use
of updated news and numerous color photographs will be designed to capture the
attention of Internet users interested in subjects such as nature, pets, and
environmental concerns. The deeper levels of information will be designed for
educators, students, researchers, and any other users interested in science
based studies of nature and biological information. The Company intends to
generate minor fees from individuals and educational institutions for allowing
utilization of the web site's most intensive research and scientific pages. The
Company intends to generate most of its revenues by charging fees to companies
that place advertisements within its web site pages and charging commissions for
sales of nature related products provided by other Internet businesses through
its web site.
Status of Any Publicly Announced New Products or Services
As of the Company's fiscal year end of March 31, 2000, the Company has no new
product or service planned or announced to the public. The Board of Directors,
with unanimous Shareholder approval, has subsequently begun negotiations
necessary to acquire 100% of another software company, Knowledge Foundations,
Inc. in order to acquire and market their artificial intelligence software.
Competition and Competitive Position
The size and financial strength of the Company's primary competitors,
nationalgeographic.com, animal.discovery.com and natureco.com are substantially
greater than those of the Company. In examining major competitors' web sites,
Management has concluded nationalgeographic.com is the most interactive and
broad based of the three, but lacks in-depth information; animal.discovery.com
is a part of the larger Discovery Channel web site which focuses primarily on
its weekly television schedule without providing in-depth information on its
site; natureco.com is basically an online store for the pet products sold
through their retail stores. The information these sites offer is of a cursory
nature with mostly pictures and a minor amount of text, lacks biological or
technical data, and has no advanced in-depth articles or research material.
However, the Company's competitors have longer operating histories, larger
customer bases, and greater brand recognition than the Company. Management is
not aware of any significant barriers to the Company's entry into the
educational nature and biological information
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market, however, the Company at this time has no market share of this market.
Suppliers and Sources of Raw Materials
Management will create the core software and information content used at the
Company's web site. Management will rely on their experience and knowledge in
creating educational nature and biological CD-ROMS for sale to computer
manufacturers and educational institutions, and in creating and managing a web
site, remedia.com, that is focused on their CD-ROM library. The Company will
follow its business plan by hiring new employees to internally create and expand
the content of its new web site, utilize linking software to incorporate other
web sites' free information directly into the Company's "host" site, and
contract for licensed content from other web sites whenever needed. The
Company's business plan includes a budget of $100,000 per year for licensing
fees, which Management believes is adequate for its needs. While the Company has
no current licensing contracts with Internet content providers, Management is
familiar with these Internet content providers such as the San Diego Zoo and
photographic agencies such as Earthviews. The Company will enter into licensing
agreements with Internet content providers per its business plan after raising
capital during the first six months of its plan.
Dependence on One or a Few Major Customers
The Company intends to offer access to its web site home page and selected other
deeper content level pages free of charge to Internet users. In the Company's
business plan, in-depth information contained in deeper page levels of the site
will be designed to be fee-based with minor fees charged to interested
individuals and educational institutions. The Company intends to generate most
of its revenues by charging fees to companies that place advertisements within
its web site pages and charging commissions for sales of nature related products
provided by other Internet businesses through its web site. These advertisers
and sponsors will be broad based and the Company will not depend on any one or a
few major customers.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or
Labor Contracts
The Company owns its Internet domain name, has applied for U.S. trademark
protection, and has setup a preliminary web site - universeofnature.com. The
Company will license web site content information as needed per its business
plan, but has no current licensing arrangements and has not commenced licensing
negotiations with any entity. The Company has no current plans for any
additional registrations such as patents, other trademarks, copyrights,
franchises, concessions, royalty agreements or labor contracts. The Company will
assess the need for any additional copyright, trademark or patent applications
on an ongoing basis as new intellectual property is created for our website.
Need for Government Approval for its Products or Services
The Company is not required to apply for or have any government approval for its
products or services.
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Effect of Existing or Probable Governmental Regulations on the Company
The Company is not currently subject to direct federal, state or local
regulation in the United States other than regulations applicable to businesses
generally or directly applicable to electronic commerce. However, because the
Internet is becoming increasingly popular, it is possible that a number of laws
and regulations may be adopted in the United States with respect to the
Internet. These laws may cover issues such as user privacy, freedom of
expression, pricing, content and quality of products and services, taxation,
advertising, intellectual property rights and information security. Furthermore,
the growth of electronic commerce may prompt calls for more stringent consumer
protection laws. Several states have proposed legislation to limit the use of
personal user information gathered online or require online services to
establish privacy policies. The Federal Trade Commission has indicated that it
may propose legislation on this issue to Congress in the near future and has
initiated action against at least one online service regarding the manner in
which personal information was collected from users and provided to third
parties. The adoption of such consumer protection laws could create uncertainty
in Internet usage and reduce the demand for all products and services. The
Company does not provide customer information to third parties and, therefore,
does not anticipate any current or proposed legislation relating to online
privacy to directly affect its activities to a material extent.
The Company is not certain how its business may be affected by the application
of existing laws governing issues such as property ownership, copyrights,
encryption and other intellectual property issues, taxation, libel, obscenity
and export or import matters. The vast majority of those laws were adopted prior
to the advent of the Internet. As a result, they do not contemplate or address
the unique issues of the Internet and related technologies. Changes in laws
intended to address such issues could create uncertainty in the Internet
marketplace. That uncertainty could reduce demand for the Company's products or
services or increase the cost of doing business as a result of litigation costs
or increased service delivery costs.
Research and Development Costs
The Company has not expended funds for research and development costs since
inception.
Costs and Effects of Compliance with Environmental Laws
The Company has not expended any funds for compliance with environmental laws
and does not anticipate its business plan will encompass any such compliance
requirements.
Number of Total Employees and Number of Full-Time Employees
The Company's only current employees are its two Officers who will devote as
much time as the Board of Directors determines is necessary to manage the
affairs of the Company. The Officers intend to work on a full-time basis when
the Company raises capital per its business plan. The Company's business plan
calls for hiring seven new full-time employees during the next twelve months.
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Risks
While Management believes its estimates of projected occurrences and events are
within the timetable of its business plan, there can be no guarantees or
assurances that the results anticipated will occur. Investors in the Company
should be particularly aware of the inherent risks associated with the Company's
planned software - Internet business. These risks include a lack of a proven
market for the Company's web site, lack of equity funding, and the size of the
Company compared to the size of its competitors. Although Management intends to
implement its business plan through the foreseeable future and will do its best
to mitigate the risks associated with its business plan, as of the date of this
filing, the Company has been unable to elicit sufficient public interest in its
business plan to warrant additional funding through a private placement.
Consequently, Management has investigated the possibility of acquiring other
software and Internet products through a merger with or acquisition of
compatible companies. On May 8, 2000, the Company's Board recommended that the
shareholders unanimously approve an acquisition of Knowledge Foundations, Inc.,
a software company with a breakthrough technological version of artificial
intelligence.
Year 2000 Disclosure
Before January 1, 2000, users of computers in business applications were
concerned that time-sensitive software might cause their computer systems to
recognize a date using "00" as the year 1900 rather than the year 2000. This
date recognition problem was mitigated by computer software compliance,
remediation, and improvements throughout the world. As of the date of this
filing, minimal computer software problems have been recorded or reported
relating to software date recognition problems.
The Company's Management has hands-on familiarity with all of the software
utilized in its business plan and has experienced no Year 2000 related systems
problems as of the date of this filing. Third party suppliers of software,
hardware, and equipment which rely on proper date recognition have also
confirmed their products have experienced no significant malfunctions or errors
related to date recognition problems.
As Management has experienced no date recognition problems in computer systems,
equipment, or third party provided products, the Company's Year 2000 compliance
plan is: utilize software and other products which are already Year 2000
compatible and prepare no Year 2000 contingency plans.
Subsequent Events
In May 2000, the Board of Directors of Calipso, Inc. considered a proposal to
acquire a software company, Knowledge Foundations, Inc. Calipso's Board
determined the acquisition of Knowledge Foundations, Inc. would enhance the
Calipso's business plan and increase equity value for Calipso Shareholders by
providing Calipso with a superior artificial intelligence software product that
could afford Calipso a sizeable world-wide profitable market within the next two
years. Management believes the proposed acquisition of this artificial
intelligence
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software will enhance Calipso's business plan revenue through the
marketing of a product with an existing customer base. Calipso's Board
recommended to Calipso Shareholders that they approve the acquisition of
Knowledge Foundations, Inc. On May 8, 2000, Calipso's Shareholders voted
unanimously to take the necessary steps to acquire 100% of Knowledge
Foundations, Inc.
If the proposed acquisition of Knowledge Foundations, Inc. is consummated, the
following business plan of Knowledge Foundations, Inc. will be integrated into
Calipso's business plan:
Knowledge Foundations, Inc. holds the rights to a breakthrough
technological version of artificial intelligence, ("AI") software. The
Company's AI software was developed over twelve years ago, is in its
second generation, and has been in use and refined over the last eight
years. Users include the U.S. Air Force Space Systems Division, U. S. Army
Strategic Defense Command, NASA Johnson Space Center, and many others.
Current computer processing systems utilize "information based computing".
These systems employ coding languages that convert information such as
words, numbers, and pictures into machine code that allow computers to
process data mechanically through set procedures. Software engineers have
been able to increase the operating and computing speeds of these systems,
but these systems are incapable of learning or growing on their own.
The Company's software products are defined in the software-artificial
intelligence community as "knowledge based computing". In essence, this
software introduces human reasoning as an integral part of the computer's
capabilities. Knowledge based computing is a completely different way for
computers to operate. The Company's software allows computer systems to
solve and manage problems, build knowledge through examining millions of
relationships, hundreds of layers deep, and utilize information that is
disparate or even conflicting as it makes decisions. The Company's
software learns and grows as it processes more and more information faster
and faster.
The Company's software will work with most operating systems in use today
such as Unix, Microsoft DOS and Windows, etc. Software manufacturers will
be able to license the Company's software to enhance their own information
based applications. Users will be able to permanently store their
intellectual capital, work products, experience, and learning in a
knowledge base. These knowledge bases will then be able to grow, correct
themselves, and perfect themselves through new real-world experiences and
the introduction of new information.
The Company's software was not designed to maintain a warehouse of data,
or print out mounds of information. It was designed to provide solutions
to complex problems. The Company's product is designed to replace all
relational databases.
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The Company intends to establish its unique patentable technology as an
"industry standard" coding language and operating system for all knowledge
based computing.
The Company has chosen three primary markets for its initial sales:
Publishers of service or product documentation: In the process of
studying law, medicine, technical, or reference documentation, the
user will be able to ask for solutions to intricate problems and
receive expert advice. The user can examine the reasoning and
research that support these solutions.
Information technology and consulting firms: By using the Company's
software, outside consulting professionals in all fields, such as
Anderson Consulting, will be able to provide complex systems
analysis and more accurate statistical predictions to their clients.
General business customers: Using individual computers or large
network systems, employees, managers, and owners will be able to
find expert analysis and advice culled from vast pools of
electronically stored information. Users may interact with this
analysis and advice information and add new data that will allow the
expert systems to grow.
Should Calipso, Inc. be successful in its bid to acquire Knowledge Foundations,
Inc., Calipso will file required information and financial statements on Form
8-K with the Securities and Exchange Commission.
REPORTS TO SECURITIES HOLDERS
The Company's bylaws do not require the Company to deliver an annual report to
its shareholders and the Company has no present plans to provide an annual
report to its shareholders. The Company is voluntarily filing this Form 10-KSB
in order to make its financial information equally available to any interested
parties or investors. The Company is subject to the disclosure rules of
Regulation S-B for a small business issuer under the Securities Act of 1933 and
the Securities Exchange Act of 1934. The Company is subject to disclosure filing
requirements and is required to file Form 10-KSB annually and Form 10-QSB
quarterly. In addition, the Company will be required to file Form 8 and other
proxy and information statements from time to time as required.
The public may read and copy any materials the Company files with the Securities
and Exchange Commission, ("SEC"), at the SEC's Public Reference Room at 450
Fifth Street, N. W., Washington D. C. 20549. The public may obtain information
on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC.
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ITEM 2 DESCRIPTION OF PROPERTY
The Company's principal executive office address is 13525 Midland Road, Suite I,
Poway, CA 92064. The principal executive office and telephone number are
provided by an officer of the corporation. The costs associated with the use of
the telephone and mailing address were deemed by management to be immaterial as
the telephone and mailing address were almost exclusively used by the officer
for other business purposes. Management considers the Company's current
principal office space arrangement adequate until such time as the Company
achieves its business plan goal of raising capital of $2,000,000 and then begins
hiring new employees per its business plan.
ITEM 3 LEGAL PROCEEDINGS
The Company is not currently involved in any legal proceedings and is not aware
of any pending or potential legal actions.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year ended March 31, 2000, there were no
submissions of matters to a vote of security holders. Subsequent to the year
ended March 31, 2000, the Company's Shareholders voted unanimously on May 8,
2000, to take the necessary steps to acquire 100% of Knowledge Foundations,
Inc., an artificial intelligence software company.
PART II
ITEM 5 MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS.
On February 22, 2000 the Company filed for trading on the OTC Electronic
Bulletin Board, which is sponsored by the National Association of Securities
Dealers (NASD). The OTC Electronic Bulletin Board is a network of security
dealers who buy and sell stock. The dealers are connected by a computer network
which provides information on current "bids" and "asks" as well as volume
information. As of March 31, 2000 the Company was in the comment period with the
NASD and had not been approved for trading. Subsequent to April 26th, an
immaterial amount (less than 1%) of the Company's shares traded on the OTC
Electronic Bulletin Board under the symbol CPSJ.
As of March 31, 2000 the Company had 78 shareholders of record and there was no
public market for the Company's securities. The Company has paid no cash
dividends. The Company has no outstanding options. The Company has no plans to
register any of its securities under the Securities Act for sale by security
holders. There is no public offering of equity and there is no proposed public
offering of equity.
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ITEM 6 MANAGEMENT'S PLAN OF OPERATION
The Company's current cash balance is $55. Management believes the current cash
balance is sufficient to fund only a minimum level of operations. In order to
advance the Company's business plan, the Company must raise capital through the
sale of equity securities. To date, the Company has sold $8,600 in equity
securities and used approximately $7,000 for licenses and fees, and $1,545 for
office supplies and postage. Sales of the Company's equity securities have
allowed the Company to maintain a positive cash flow balance. However, as of the
date of this filing the Company has been unable to elicit sufficient public
interest in its business plan to warrant additional funding through a private
placement.
In order to expand the Company's business potential, enhance Shareholder equity
value, and make the Company more attractive to potential investors, Management
has considered the possibility of acquiring other software and Internet products
through a merger with or acquisition of compatible companies. In May 2000, the
Board of Directors reviewed the software currently offered by Knowledge
Foundations, Inc. and determined their artificial intelligence software was a
superior product that could afford the Company a sizeable world-wide profitable
market within the next two years. Based upon the Board's recommendation, the
Company's Shareholders voted unanimously on May 8, 2000 to acquire Knowledge
Foundations, Inc. in order to acquire and market their software. As described in
Subsequent Events of this filing, Management believes the proposed acquisition
of this artificial intelligence software will enhance the Company's business
plan revenue through the marketing of a product with an existing customer base.
Should the Company be unsuccessful in its bid to acquire Knowledge Foundations,
Inc., the Company's current business plan encompasses raising capital of
$2,000,000 through the sale of equity securities via a private placement, and,
following the receipt of capital, expending approximately $1,022,000 for
software products, completion of its Internet site, and operations.
Management made initial progress in implementing its business plan by
registering its Internet domain name on the Internet, applying for U.S.
trademark protection, and setting up a preliminary web site -
universeofnature.com. However, the Company will face considerable risk in each
of its business plan steps, such as difficulty of hiring competent personnel
within its budget, longer than anticipated web site programming, and a shortfall
of funding due to the Company's inability to raise capital in the equity
securities market. If no funding is received during the next twelve months, the
Company will be forced to rely on its existing cash in the bank and funds loaned
by the directors and officers. The Company's officers and directors have no
formal commitments or arrangements to advance or loan funds to the Company. In
such a restricted cash flow scenario, the Company would be unable to complete
its business plan steps, and would, instead, delay all cash intensive
activities. Without necessary cash flow, the Company may be dormant during the
next twelve months, or until such time as necessary funds could be raised in the
equity securities market.
There are no current plans for future product research and development. The
Company plans to purchase approximately $125,000 in furniture, computers,
software, Internet content materials
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and related licenses during the next twelve months from proceeds of its equity
security sales. The Company's business plan provides for an increase of seven
employees during the next twelve months.
ITEM 7 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The audited financial statements of the Company and related notes which are
included in this offering have been examined by Barry L. Friedman, P.C.,
Certified Public Accountant, and have been so included in reliance upon the
opinion of such accountant given upon his authority as an expert in auditing and
accounting.
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CALIPSO, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
MARCH 31, 2000
MARCH 31, 1999
MARCH 31, 1998
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE #
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<S> <C>
INDEPENDENT AUDITORS REPORT F1
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ASSETS F2
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LIABILITIES AND STOCKHOLDERS' EQUITY F3
----------------------------------------------------------------------------
STATEMENT OF OPERATIONS F4
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STATEMENT OF STOCKHOLDERS' EQUITY F5
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STATEMENT OF CASH FLOWS F6
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NOTES TO FINANCIAL STATEMENTS F7-F11
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</TABLE>
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INDEPENDENT AUDITORS' REPORT
Board of Directors May 26, 2000
CALIPSO, INC.
San Diego, California
I have audited the accompanying Balance Sheets of CALIPSO, INC. (A
Development Stage Company), as of March 31, 2000, March 31, 1999, and March 31,
1998, and the related statements of operations, stockholders' equity and cash
flows for the three years ended March 31, 2000, March 31, 1999, and March 31,
1998. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of CalIpso, Inc. (A
Development Stage Company), as of March 31, 2000, March 31, 1999, and March 31,
1998, and the related statements of operations, stockholders' equity and cash
flows for the three years ended March 31, 2000, March 31, 1999, and March 31,
1998, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note #5 to the
financial statements, the Company has suffered recurring losses from operations
and has no established source of revenue. This raises substantial doubt about
its ability to continue as a going concern. Management's plan in regard to these
matters is described in Note #5. These financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Barry L. Friedman
---------------------------
Barry L. Friedman
Certified Public Accountant
1582 Tulita Drive
Las Vegas, NV 89123
(702) 361-8414
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CALIPSO, INC.
(A Development Stage Company)
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
MARCH MARCH MARCH
31, 2000 31, 1999 31, 1998
-------- -------- --------
<S> <C> <C> <C>
CURRENT ASSETS
CASH $ 55 $8,574 $8,600
------ ------ ------
TOTAL CURRENT ASSETS $ 55 $8,574 $8,600
------ ------ ------
OTHER ASSETS $ 0 $ 0 $ 0
------ ------ ------
TOTAL OTHER ASSETS $ 0 $ 0 $ 0
------ ------ ------
TOTAL ASSETS $ 55 $8,574 $8,600
------ ------ ------
</TABLE>
The accompanying notes are an integral part of these financial statements
- F2 -
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CALIPSO, INC.
(A Development Stage Company)
BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
MARCH MARCH MARCH
31, 2000 31, 1999 31, 1998
-------- -------- --------
<S> <C> <C> <C>
CURRENT LIABILITIES $ 0 $ 0 $ 0
------- ------- -------
TOTAL CURRENT LIABILITIES $ 0 $ 0 $ 0
------- ------- -------
STOCKHOLDERS' EQUITY (Note #4)
Common stock
Par value $0.00001
Authorized 20,000,000 shares
Issued and outstanding at
March 31, 1998 -
186,000 shares
$ 1
Common stock
Par value $0.001
Authorized 20,000,000 shares
Issued and outstanding at
March 31, 1999 -
186,000 shares $ 186
March 31, 2000 -
6,696,000 shares $ 6,696
Additional Paid-In Capital 11,904 18,414 13,599
Deficit accumulated during
The development stage -18,545 -10,026 -5,000
------- ------- -------
TOTAL STOCKHOLDERS' EQUITY $ 55 $ 8,574 $ 8,600
------- ------- -------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 55 $ 8,574 $ 8,600
------- ------- -------
</TABLE>
The accompanying notes are an integral part of these financial statements
- F3 -
<PAGE> 19
CALIPSO, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR YEAR YEAR MAY 31,1994
ENDED ENDED ENDED (INCEPTION)
MAR. 31, MAR. 31, MAR. 31, TO MAR. 31,
2000 1999 1998 2000
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
INCOME
Revenue $ 0 $ 0 $ 0 $ 0
---------- ---------- ---------- ----------
EXPENSES
General, Selling and
Administrative: $ 8,519 $ 5,026 $ 0 $ 18,545
---------- ---------- ---------- ----------
TOTAL EXPENSES: $ 8,519 $ 5,026 $ 0 $ 18,545
---------- ---------- ---------- ----------
NET PROFIT/LOSS (-): $ -8,519 $ -5,026 $ 0 $ -18,545
---------- ---------- ---------- ----------
Net Profit/Loss(-)
per weighted share
(Note 1): $ -.0013 $ -.0008 NIL $ -.0028
---------- ---------- ---------- ----------
Weighted average
Number of common
shares outstanding: 6,696,000 6,696,000 6,696,000 6,696,000
---------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements
- F4 -
<PAGE> 20
CALIPSO, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
ADDITIONAL ACCUMU-
COMMON STOCK PAID-IN LATED
SHARES AMOUNT CAPITAL DEFICIT
------------ ------ ---------- --------
<S> <C> <C> <C> <C>
Balance,
March 31, 1997 136,000 $ 1 $ 13,599 -5,000
Net loss year ended
March 31, 1998 0
--------- --------- --------- --------
Balance,
March 31, 1998 136,000 $ 1 $ 13,599 $-5,000
March 6, 1998,
Issued for services 50,000 1 4,999
December 9, 1998,
changed par value
from $.00001 to
$.001 +184 -184
Net loss year ended
March 31, 1999 -5,026
--------- --------- --------- --------
Balance,
March 31, 1999 186,000 $ 186 $ 18,414 $-10,026
June 8, 1999,
Forward stock split
36 for 1 6,510,000 +6,510 -6,510
Net loss year ended
March 31, 2000 -8,519
--------- --------- --------- --------
Balance,
March 31, 2000 6,696,000 $ 6,696 $+11,904 $-18,545
--------- --------- --------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements
- F5 -
<PAGE> 21
CALIPSO, INC.
(A DEVELOPMENT COMPANY)
<TABLE>
<CAPTION>
YEAR YEAR YEAR MAY 31,1994
ENDED ENDED ENDED (INCEPTION)
MAR. 31, MAR. 31, MAR. 31, TO MAR. 31,
2000 1999 1998 2000
------- -------- -------- -----------
<S> <C> <C> <C> <C>
Cash Flows from
Operating Activities
Net Loss $-8,519 $-5,026 $ 0 $-18,545
Adjustment to
Reconcile net loss
To net cash provided
by operating
Activities
Issue Common Stock
For Services 0 +5,000 0 +10,000
Changes in assets and
Liabilities 0 0 0 0
------- ------- ------ --------
Net cash used in
Operating activities $-8,159 $ -26 $ 0 $ -8,545
Cash Flows from
Investing Activities 0 0 0 0
Cash Flows from
Financing Activities
Issuance of Common
Stock for Cash 0 0 0 +8,600
------- ------- ------ --------
Net Increase (decrease) $-8,519 $ -26 $ 0 $ 55
Cash,
Beginning of period 8,574 8,600 8,600 0
------- ------- ------ --------
Cash, End of period $ 55 $ 8,574 $8,600 $ 55
------- ------- ------ --------
</TABLE>
The accompanying notes are an integral part of these financial statements
- F6 -
<PAGE> 22
CALIPSO, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000, March 31, 1999, and March 31, 1998
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized May 31, 1994, under the laws of the State of
Delaware as CALIPSO, INC. The Company currently has no operations and in
accordance with SFAS #7, is considered a development company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Method
The Company records income and expenses on the accrual method.
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 revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Cash and equivalents
The Company maintains a cash balance in a non-interest-bearing
bank that currently does not exceed federally insured limits. For
the purpose of the statements of cash flows, all highly liquid
investments with the maturity of three months or less are
considered to be cash equivalents. There are no cash equivalents
as of March 31, 2000.
Income Taxes
Income taxes are provided for using the liability method of
accounting in accordance with Statement of Financial Accounting
Standards No. 109 (SFAS #109) "Accounting for Income Taxes". A
deferred tax asset or liability is recorded for all temporary
difference between financial and tax reporting. Deferred tax
expense (benefit) results from the net change during the year of
deferred tax assets and liabilities.
- F7 -
<PAGE> 23
CALIPSO, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
March 31, 2000, March 31, 1999, and March 31, 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Loss Per Share
Net loss per share is provided in accordance with Statement of
Financial Accounting Standards No. 128 (SFAS #128) "Earnings Per
Share". Basic loss per share is computed by dividing losses
available to common stockholders by the weighted average number
of common shares outstanding during the period. Diluted loss per
share reflects per share amounts that would have resulted if
dilative common stock equivalents had been converted to common
stock. As of March 31, 2000, the Company had no dilative common
stock equivalents such as stock options.
Year End
The Company has selected March 31st as its fiscal year-end.
Policy in Regards to Issuance of Common Stock in a Non-Cash Transaction
The company's accounting policy for issuing shares in a non-cash
transaction is to issue the equivalent amount of stock equal to
the fair market value of the assets or services received.
Year 2000 Disclosure
Computer programs that have time sensitive software may recognize
a date using "00" as the year 1900 rather than the year 2000.
This could result in a system failure or miscalculations causing
disruption of normal business activities.
The company's potential software suppliers have verified that
they will provide only certified "Year 2000" compatible software
for all of the company's computing requirements. Because the
company's products and services are sold to the general public
with no major customers, the company believes that the "Year
2000" issue will not pose significant operational problems and
will not materially affect future financial results.
- F8 -
<PAGE> 24
CALIPSO, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
March 31, 2000, March 31, 1999, and March 31, 1998
NOTE 3 - INCOME TAXES
There is no provision for income taxes for the period ended March 31,
2000, due to the net loss and no state income tax in Delaware, the state
of the Company's domicile and operations. The Company's total deferred
tax asset as of March 31, 2000 is as follows:
<TABLE>
<S> <C>
Net operation loss carry forward $18,545
Valuation allowance $18,545
Net deferred tax asset $ 0
</TABLE>
The federal net operating loss carry forward will expire in various
amounts from 2014 to 2019.
NOTE 4 - STOCKHOLDERS' EQUITY
Common Stock
The authorized common stock of the corporation consists of 20,000,000
shares with a par value $.001 per share.
Preferred Stock
CALIPSO, INC. has no preferred stock.
On June 14, 1994, the Company issued 50,000 shares of its $0.00001 par
value common stock for services of $0.10 to its two directors, 25,000
shares each, or $5,000.
On March 31, 1996, the Company issued 86,000 shares of its $0.00001 par
value common stock for cash of $8,600.00.
On July 6, 1998, the Company issued 50,000 shares of its $0.00001 par
value common stock for services of $0.10 to its two directors, 25,000
shares to each, or $5,000.
On December 9, 1998, the State of Delaware approved the Company's
restated Articles of Incorporation, which changed the par value from
$0.00001 to $0.001.
On June 8, 1999, the Company approved a forward stock split on the basis
of 36 for 1, thus increasing the common stock from 186,000 shares to
6,696,000 shares.
- F9 -
<PAGE> 25
CALIPSO, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
March 31, 2000, March 31, 1999, and March 31, 1998
NOTE 5 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates
the realization of assets and liquidation of liabilities in the normal
course of business. However, the Company does not have significant cash
or other material assets, nor does it have an established source of
revenues sufficient to cover its operating costs and to allow it to
continue as a going concern. The stockholders/officers and or directors
have committed to advancing the operating costs of the Company interest
free.
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property. An
officer of the corporation provides office services without charge. Such
costs are immaterial to the financial statements and accordingly, have
not been reflected therein. The officers and directors of the Company
are involved in other business activities and may in the future, become
involved in other business opportunities. If a specific business
opportunity becomes available, such persons may face a conflict in
selecting between the Company and their other business interests. The
Company has not formulated a policy for the resolution of such
conflicts.
NOTE 7 - WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional
share of common stock.
- F10 -
<PAGE> 26
[BARRY L. FRIEDMAN, P.C. LETTERHEAD]
To Whom It May Concern: May 26, 2000
The firm of Barry L. Friedman, P.C., Certified Public Accountant consents
to the inclusion of their report of May 26, 2000, on the Financial Statements
of CALIPSO, INC., as of March 31, 2000, in any filings that are necessary now
or in the near future with the U.S. Securities and Exchange Commission.
Very truly yours,
/s/ BARRY L. FRIEDMAN
---------------------------
Barry L. Friedman
Certified Public Accountant
- F11 -
<PAGE> 27
ITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no changes in or disagreements with accountants on accounting
and financial disclosure.
PART III
ITEM 9 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The Directors and Officers of the Company, all of those whose one year terms
will expire 6/30/00, or at such a time as their successors shall be elected and
qualified are as follows:
<TABLE>
<CAPTION>
Name & Address Age Position Date First Elected
------------------ --- -------- ------------------
<S> <C> <C> <C>
Robert Ransom 50 President, 7/14/94
13525 Midland Road Secretary,
Suite I Director
Poway, CA 92064
Anne Ransom 48 Treasurer, 7/14/94
13525 Midland Road Director
Suite I
Poway, CA 92064
</TABLE>
Each of the foregoing persons may be deemed a "promoter" of the Company, as that
term is defined in the rules and regulations promulgated under the securities
and Exchange Act of 1933.
Directors are elected to serve until the next annual meeting of stockholders and
until their successors have been elected and qualified. Officers are appointed
to serve until the meeting of the Board of Directors following the next annual
meeting of stockholders and until their successors have been elected and
qualified.
No Executive Officer or Director of the Corporation has been the subject of any
Order, Judgement, or Decree of any Court of competent jurisdiction, or any
regulatory agency permanently or temporarily enjoining, barring suspending or
otherwise limiting him from acting as an investment advisor, underwriter, broker
or dealer in the securities industry, or as an affiliated person, director or
employee of an investment company, bank, savings and loan association, or
insurance company or from engaging in or continuing any conduct or practice in
connection with any such activity or in connection with the purchase or sale of
any securities.
No Executive Officer or Director of the Corporation has been convicted in any
criminal proceeding (excluding traffic violations) or is the subject of a
criminal proceeding which is
14
<PAGE> 28
currently pending.
No Executive Officer or Director of the Corporation is the subject of any
pending legal proceedings.
Resumes
Robert Ransom, PhD., President, Secretary & Director
1994 - Current President and one half owner of REMedia, Inc. Publisher of
fifteen interactive nature and biological CD-ROM titles
sold to computer manufacturers, grade schools, and high
schools throughout the United States. Titles include
Butterflies of the World, Whales and Dolphins, The
Rainforest, Animals In Danger, Soundscapes, etc.
Responsible for product development, software development,
marketing, and content review.
1974 Doctorate in computer applications of biology, University
of Edinburgh, Scotland
1970 BSc in biology, University of Aston, England
Anne Ransom, Treasurer & Director
1994 - Current Secretary, Treasurer, and one half owner of REMedia, Inc.
Responsible for photography and video content, text
writing, research, office management, personnel management
of programmers and other staff - one to four employees,
and accounting duties.
ITEM 10 EXECUTIVE COMPENSATION
The company's current officers receive no compensation.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Name & Year Salary Bonus Other Restricted Options LTIP All other
principle ($) ($) annual stock SARs Payouts compen-
position compen- awards($) ($) sation($)
sation($)
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R Ransom 1997 -0- -0- -0- -0- -0- -0- -0-
President 1998 -0- -0- -0- 2,500 -0- -0- -0-
1999 -0- -0- -0- -0- -0- -0- -0-
</TABLE>
15
<PAGE> 29
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A Ransom 1997 -0- -0- -0- -0- -0- -0- -0-
Director 1998 -0- -0- -0- 2,500 -0- -0- -0-
1999 -0- -0- -0- -0- -0- -0- -0-
</TABLE>
There are no current employment agreements between the Company and its Executive
Officers.
The Board agreed to pay Mr. Ransom for administrative services 25,000 shares of
the Company's common stock on July 14, 1994, and pay an additional 25,000 shares
to him for services related to the Company's business plan and web site set up
on July 6, 1998. The stock was valued at the price unaffiliated investors paid
for stock sold by the Company, $.10 per share. On June 8, 1999, 1,750,000 shares
of the Company's common stock were issued to him per a 36 for 1 stock split.
The Board agreed to pay Ms. Ransom for administrative services 25,000 shares of
the Company's common stock on July 14, 1994, and pay an additional 25,000 shares
to her for services related to the Company's business plan on July 6, 1998. The
stock was valued at the price unaffiliated investors paid for stock sold by the
Company, $.10 per share. On June 8, 1999, 1,750,000 shares of the Company's
common stock were issued to her per a 36 for 1 stock split.
The terms of these stock issuances were as fair to the Company, in the Board's
opinion, as could have been made with an unaffiliated third party.
The Officers currently devote an immaterial amount of time managing the affairs
of the Company. The Directors and Principal Officers have agreed to work with no
remuneration until such time as the Company receives sufficient revenues
necessary to provide proper salaries to all Officers and compensation for
Directors' participation. The Officers and the Board of Directors have the
responsibility to determine the timing of remuneration for key personnel based
upon such factors as positive cash flow to include stock sales, product sales,
estimated cash expenditures, accounts receivable, accounts payable, notes
payable, and a cash balance of not less than $15,000 at each month end. When
positive cash flow reaches $15,000 at each month end and appears sustainable the
Board of Directors will readdress compensation for key personnel and enact a
plan at that time which will benefit the Company as a whole. At this time,
management cannot accurately estimate when sufficient revenues will occur to
implement this compensation, or the exact amount of compensation.
There are no annuity, pension or retirement benefits proposed to be paid to
Officers, Directors or employees of the Corporation in the event of retirement
at normal retirement date pursuant to any presently existing plan provided or
contributed to by the Corporation or any of its subsidiaries, if any.
16
<PAGE> 30
ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information on the ownership of the Company's
voting securities by Officers, Directors and major shareholders as well as those
who own beneficially more than five percent of the Company's common stock
through the most current date - March 31, 2000:
<TABLE>
<CAPTION>
Title Of Name & Amount & Percent
Class Address Nature of owner Owned
<S> <C> <C> <C>
Common Robert Ransom 1,800,000(a) 26.9%
13525 Midland Road, Suite H
Poway, CA 92064
Common Anne Ransom 1,800,000(b) 26.9%
13525 Midland Road, Suite H
Poway, CA 92064
Total Shares Owned by Officers & Directors
As a Group 3,600,000 53.8%
</TABLE>
(a) Mr.Ransom received for administrative services 25,000 shares of the
Company's common stock on July 14, 1994, an additional 25,000 shares were
issued to him for services related to the Company's business plan and web
site set up on July 6, 1998. 1,750,000 shares of the Company's common stock
were issued to him per a 36 for 1 stock split on June 8, 1999.
(b) Ms.Ransom received for administrative services 25,000 shares of the
Company's common stock on July 14, 1994, an additional 25,000 shares were
issued to her for services related to the Company's business plan on July
6, 1998. 1,750,000 shares of the Company's common stock were issued to her
per a 36 for 1 stock split on June 8, 1999.
ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The principal executive office and telephone number are provided by Mr. Ransom,
an Officer of the Corporation. The costs associated with the use of the
telephone and mailing address were deemed by Management to be immaterial as the
telephone and mailing address were almost exclusively used by the Officer for
other business purposes.
17
<PAGE> 31
ITEM 13 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
Exhibit 27 Financial Data Schedule
Reports filed on Form 8-K: None
Reports required to be filed by Regulation S-X: None
SIGNATURES
----------
Pursuant to the requirements of Section 13 and 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Calipso, Inc.
Date 6/20/00 By /s/ Robert J. Ransom
------------------------ -----------------------------
Robert J. Ransom, President & Director
Date 6/20/00 By /s/ Anne Ransom
------------------------ -----------------------------
Anne Ransom, Treasurer & Director
18
