SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 6, 2000
----------------
SAFE IDEA, Inc.
----------
(Exact name of registrant as specified in its charter)
Nevada 000-29553 86-0972776
------- --------- ----------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
SAFE IDEA, Inc.
----------
Suite 711, 1755 Robson Street
-------------------------
Vancouver, British Columbia
---------------------
Canada, V6G 3B7
-----------
(Address of principal executive offices)
(Zip Code)
(604) 908-0337
--------------
(Registrant's telephone number, including area code)
Obligation Futures, Inc.
-------------------------
10130 E. Winding Trail
----------------------
Tucson, Arizona 85749
---------------------
(former name and former address)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
(a) Pursuant to a Plan of Merger dated November 6, 2000, the shareholders of
SAFE IDEA, Inc., ("SAFE") a Nevada corporation acquired all of the issued and
outstanding capital stock of the former registrant, Obligation Futures, Inc., a
Nevada corporation ("OBFU") in a merger cash for share exchange for $200,000.00
(the "Exchange").
Pursuant to the plan, SAFE's officers and directors, retained their positions
with the combined company that they had previously held with SAFE IDEA, Inc. As
a result of the Exchange, 100% of the outstanding capital stock of OBFU was
purchased by the principals of SAFE and returned to treasury for cancellation,
and SAFE became the sole surviving company upon the cessation of separate
existence of OBFU. Prior to the Exchange, SAFE had 6,000,000 shares of common
stock issued and outstanding. Following the Exchange, SAFE has the same
6,000,000 shares of common stock issued and outstanding. A copy of the Plan is
filed as an exhibit to this Form 8-K and is incorporated in its entirety herein.
The foregoing description is modified by such reference.
Also as a result of the Merger, SAFE has assumed the reporting requirements of
the registrant and is obligated to make such filings as required of companies
compliant under the Securities and Exchange of 1934, as amended.
(b) The following table contains information regarding the shareholdings of
SAFE's directors and executive officers and those persons or entities who
beneficially own more than 5% of the company's common stock based on 6,000,000
shares issued and outstanding after the Share Exchange.
Amount of Common Stock Beneficially Owned Percent of Common Stock
------------------------------------------ ------------------------
(Directors and Officers) Beneficially Owned
------------------
William Scott Marshall 33.3%
Mark Taylor 8.3%
M. Gregg Marshall 8.3%
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) The consideration provided by the parties pursuant to the Plan of Merger was
negotiated between the directors of SAFE, and Mr. Daniel Hodges, the former sole
director of the Registrant. In evaluating the Exchange transaction, Mr. Hodges
considered criteria such as the value of the assets of SAFE, SAFE's ability to
compete in its markets and the current and anticipated business operations of
SAFE. The directors of SAFE considered the value of Obligation Futures, Inc.'s
status as a public reporting company and its ability to enable the Company to
achieve a trading status through the "back-door registration" process permitted
via Release Number 6530 from the Commission.
BUSINESS
SAFE, the acquiring company, was incorporated as Shell, Inc. in Nevada on March
20, 1996 and was listed in 1999 on the Pink Sheets for trading as a company
whose only business was to seek to acquire a viable business. In October, 2000,
a merger occurred between Shell, Inc. and Safe Idea Repository, Inc. (a British
Columbia corporation) and the name was changed to SAFE IDEA, Inc.
SAFE is in the business of providing an online repository of information, an
interactive forum, and a comprehensive directory of services catering to
entrepreneurs. SAFE will create an online community where entrepreneurs can
publish their business plans and share their ideas in a collaborative
environment.
In the 15-year time period from 1982 to 1996, the average number of new firms
started in the US each year was 742,000. Equity investing is becoming
increasingly popular; total venture capital raised in the US increased by 151.6%
and reached US$46.6 billion in 1999. Venture capital is an important source of
funding for start-up companies. The number of entrepreneurs receiving funding is
increasing and is expected to continue on its upward trend. In the 15-year
period from 1982 to 1996, an average of 742,000 new businesses were started
annually in the US. Total venture capital raised in the US increased by 151.6%
and reached US$46.6 billion in 1999.
According to the US Small Business Administration, the number of new firms
created annually in the US has grown at a consistent rate over the 15-year
period from 1982 to 1996. In 1996, 842,000 new businesses were created. From
1982 to 1996, an average of 742,000 new firms were created annually in the US.
The growth in venture capital financing is a key indicator of the increase in
new businesses. Venture capital is a key source of finance for innovative
companies to fund their investments. The annual amount of venture capital raised
has grown at a rapid rate in recent years. In 1999, venture capital investments
in the US reached a record US$46.6 billion, an increase of 151.6% over 1998.
Internet-related companies were the biggest winners, attracting US$31.9 billion
for an increase of 354.8% over 1998. These companies also took a larger share of
total funds, receiving 66.1% versus 36.6% in 1998. Although Internet-related
investments led the way, every industry sector experienced growth in VC
financing in 1999. The amount of venture capital raised is continuing to grow in
2000. In the first quarter of 2000, venture capitalists invested US$22.7 billion
into companies, compared to US$6.2 billion in the first quarter of 1999, a
266.1% increase. The number of companies receiving venture-backed financing also
increased dramatically; 1,557 companies received financing in the first quarter
of 2000, compared to only 851 companies in the first quarter of 1999.
In 1999, 409 venture capital funds raised a record US$46.6 billion, which is a
66.9% increase from 1998 when 275 venture capital funds raised $27.9 billion.
25% of the venture capital funds that raised venture capital money in 1999 were
first time fundraisers, representing $9.9 billion or 21% of the venture capital
raised.
SAFE's objective is to establish a dominant online repository of information and
services. SAFE will generate revenues by charging fees on a
transaction-by-transaction basis for its information and services through online
micro-payment systems. A matrix of several pre-paid membership packages and
associated services will be established to offer clients a wide variety of
packages to fit individual uses and lifestyles. In addition, SAFE will earn
revenue by listing companies and individuals in its directory and by the sale of
advertising space on its web site.
SAFE Forum
The SAFE Forum allows entrepreneurs to collaborate, meet with potential business
partners, perfect business ideas, network, and discuss various topics. SAFE will
facilitate these activities by providing entrepreneurs with online message
boards and real-time chat.
SAFE Hot Directory
Hot Directory is a paid listing of companies that offer services required by
entrepreneurs. Hot Directory is a hub of information that can be used to locate
resources and services needed by business owners. Hot Directory will have a wide
variety of professional categories including, but not limited to: web
development, graphic design, legal, and accounting, among others. This
centralized repository of contact information serves as an online resource that
entrepreneurs can access from any terminal through a simple web interface.
SAFE Business Plan Vault
SAFE Business Plan Vault offers entrepreneurs a means of generating interest in
their business ideas. Entrepreneurs can improve their current business ideas and
develop new ideas by viewing business plans that have been submitted by their
peers. SAFE will store the business plans in its searchable database and will
collect fees based on a pay-per-view basis.
SAFE Business Plan Toolkit
As part of its value-added service, SAFE will provide entrepreneurs with
business plan writing tools such as templates, guidelines, tips, and tutorials.
This service will be particularly useful for new entrepreneurs or those who are
looking to improve their business plan.
SAFE will generate revenues from listing fees from companies, advertising fees
from the sale of web site space and subscription fees from members.
Listing fees from companies
SAFE will list, for a fee, companies that wish to appear on its Hot Directory.
Companies will benefit from listing on the Hot Directory as SAFE's community
consists of entrepreneurs that require the services of these listed companies.
Entrepreneurs can search the Hot Directory by service category and by region.
Advertising fees from the sale of web site space
SAFE will generate revenue through the sale of advertising space on its web
site. Companies and individuals can proactively advertise their products and
services through banner advertisements.
Subscription fees from members
SAFE offers several types of monthly and annual subscription packages that
entitle members to varying levels of information and services to suit individual
lifestyles and usage.
EMPLOYEES
SAFE currently has 4 full-time employees.
RISK FACTORS
AN INVESTMENT IN OUR STOCK INVOLVES A HIGH DEGREE OF RISK.
The achievement of the business objectives is subject to a number of market and
other factors beyond SAFE's control, and the future prospects are speculative.
SAFE's stock should only be purchased by investors who understand the high level
of risk that a purchase of the stock entails and who are willing and able if
necessary to hold the stock for an extended period of time, or indefinitely, and
to risk the loss of their entire investment in the stock. If you are a suitable
investor for SAFE you should fully understand the following material risk
factors.
SAFE'S SERVICES MAY BECOME OBSOLETE.
The success depends on SAFE's ability to introduce new products and services
that are responsive to the demands of the marketplace for service providers and
service requesters. In addition, technological, product or service advances by
any one or more of our present or potential competitors could render SAFE's
products and services obsolete or less competitive.
THE COMPANY FACES INTENSE COMPETITION IN THE MARKET FOR INTERNET PRODUCTS AND
The market for online service providers is extremely competitive and highly
fragmented. SAFE competes in the overall e-commerce market, as well as in those
market segments that correspond to the individual products and services. SAFE
expects competition to persist, increase and intensify in the future as markets
for the products and services continue to develop and as additional companies
enter each of our markets. SAFE is aware of numerous online services providers
that are focusing significant resources on developing and marketing products and
services that will compete with SAFE's products and services.
Many of SAFE's current and potential competitors in each of the markets have
longer operating histories and significantly greater financial, technical and
marketing resources and name recognition than we have. SAFE faces competition
from companies that have been offering similar services on the Internet longer
than we have.
SAFE IDEA, INC. IS A THINLY TRADED ISSUER.
SAFE's shares are traded on the NQB Pink Sheets. SAFE cannot assure you that
such market will be maintained. The absence of an active trading market would
reduce the liquidity of an investment in the company's shares.
The market price for SAFE's shares is likely to be very volatile, and numerous
factors beyond SAFE's control may have a significant adverse effect on prices.
SAFE'S COMMON STOCK IS SUBJECT TO PENNY STOCK REGULATION.
SAFE's common stock is considered penny stock and is, therefore, subject to the
Securities Enforcement Remedies and Penny Stock Reform Act of 1990. Penny stock,
as defined by the Penny Stock Reform Act, is any equity security not traded on
an exchange or quoted on Nasdaq that has a market price of less than $5.00 per
share. This classification requires additional disclosure in connection with any
trades, including the delivery to purchasers, prior to any penny stock
transaction, of a disclosure schedule explaining the penny stock market and the
associated risks. The regulations applicable to penny stocks could severely
limit the market liquidity of the company's common stock and could limit your
ability to sell securities in the secondary market.
AN INVESTMENT IN SAFE'S COMMON STOCK MAY BE VERY ILLIQUID.
SAFE's shareholders could find that there is nobody willing to purchase their
shares when they want to sell, and it is possible that our shareholders could
lose their entire investment in our stock. The company has never paid cash
dividends on our capital stock and do not anticipate paying any cash dividends
for the foreseeable future.
FORWARD-LOOKING STATEMENTS.
If SAFE makes any forward-looking statements or assumptions concerning its
future business activities, revenues, profits or financial condition, or if SAFE
make any forward-looking statements concerning industry, the economy,
technological changes or the competition, you should recognize that predictions
and assumptions are subject to a great deal of uncertainty. Actual results could
differ materially from these predictions and assumptions, particularly given the
highly speculative nature of SAFE's business and that of other Internet-related
businesses in our industry. If SAFE's predictions prove to be too optimistic,
the value of the business could be adversely impacted and the shareholders will
probably lose money.
PROPERTY
SAFE's executive office and principal place of business is located at Suite 711,
1755 Robson Street, Vancouver, B.C., V6G 3B7, Canada. SAFE leases this property
from an unaffiliated person. Under the terms of the lease, SAFE occupies an
office space of 1000 square feet for $800.00 per month.
LITIGATION
There is no current or pending litigation against SAFE IDEA, Inc. or it's
officers.
DESCRIPTION OF SECURITIES
The Company has an authorized capitalization of 50 million shares of common
stock, $.0001 par value per share ("Common Stock").
COMMON STOCK
Following the Exchange, there were 6,000,000 shares of SAFE's Common Stock
issued and outstanding. Each shareholder of Common Stock, either in person or by
proxy, may cast one vote per share of Common Stock held on all matters to be
voted on. SAFE's articles do not provide for cumulative voting or preemptive
rights.
TRANSFER AGENT
The transfer agent for the SAFE's Common Stock is Alexis Stock Transfer, located
at 43725 Monterey Avenue, Palm Desert, California, 92270.
DIVIDEND; MARKET FOR THE COMPANY'S SECURITIES
During the last two years, no dividends have been paid on SAFE's stock and SAFE
does not anticipate paying any cash dividends in the foreseeable future.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following persons are the current directors, executive officers and
significant employees:
NAME AGE POSITION
---- --- --------
William Scott Marshall 41 President & Board Chairman
Mark Taylor 40 Secretary & Director
M. Gregg Marshall 35 Director
Each director is elected to hold office until the next annual meeting of
stockholders and until his Successor is elected and qualified. All officers
serve at the discretion of the Board of Directors.
WILLIAM SCOTT MARSHALL. Mr. Marshall has served as the President and Board
Chairman of SAFE IDEA, Inc. since October, 2000. Before that he served as
President and Chairman of Safe Idea Repository, Inc. the subsidiary company of
SAFE IDEA, Inc. and it's only asset. Working for the past 10 years through his
former Company, Asset Information Management, Inc., a private consulting
company, Mr. Marshall has participated in the formation and business of over 100
companies many of which proceeded to the public markets and thus has an intimate
knowledge of the proposed business of the Company.
MARK TAYLOR. Mr. Taylor joined the Company in late October after serving on the
Board of Safe Idea Repository, Inc. since its' inception. Mr. Taylor brings over
20 years of business, software development, and financial experience to the web
development arena. Mr. Taylor has spent the last two years engaged as a
consultant for several dot com companies to help them focus, re-engineer, and
build their business to profitability. During that time he was also engaged as a
forensic auditor, and a senior tax preparer. From 1994 to 1999 Mr. Taylor served
as Chief Information Officer and Chief Financial Officer for Leigh Morgan
Fashions Inc., an apparel manufacturer and retailer. From 1989 to 1994 Mr.
Taylor served as President of Resolve Automation Systems Inc., a software
development company. From 1984 to 1989 Mr. Taylor was employed at Modatech
Systems, Inc., a software development company, where he held several positions
including Vice President of Software development. From 1983 to 1984 Mr. Taylor
served as Manager of Software Development at Blossom Software Inc., a software
development company.
M. GREGG MARSHALL. Mr. Marshall worked for the last nine years in the
hospitality industry before joining the Company in October, 2000. He was
employed at the Pan Pacific Hotel in downtown Vancouver, B.C. for most of his
former career and earned a reputation for integrity and business acumen that the
Company believes will bring unique perspectives and impact positively on the
business strategies of the Company.
EXECUTIVE COMPENSATION
SAFE has not paid, nor does it owe, any compensation to our executive officers
for the interim period ended October 30, 2000.
SAFE's by-laws authorize the Board of Directors to fix the compensation of
directors, to establish a set salary for each director and to reimburse the
director's expenses for attending each meeting of the Board of Directors. As of
the date of this Form 8-K, no salaries or other compensation have been paid to
any of our Board of Directors, individually or as a group.
RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND RELATED TRANSACTIONS
No member of the management, officers, or directors is or has a direct or
indirect interest in a material transaction or contract with SAFE.
INDEBTEDNESS OF MANAGEMENT
SAFE has not entered into any loans with its officers or directors.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Nevada law authorizes a Nevada corporation to indemnify its officers and
directors against claims or liabilities arising out of such person's conduct as
officers or directors if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
company. The Articles of Incorporation provide for indemnification of the
directors of the SAFE. In addition, SAFE's Bylaws provide for indemnification of
the directors, officers, employees or agents of the company. In general, these
provisions provide for indemnification in instances when such persons acted in
good faith and in a manner they reasonably believed to be in or not opposed to
the best interests of the Company.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements are set forth below.
(b) The Exhibits to this report are set forth below.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SAFE IDEA, Inc.
(fka Obligation Futures, Inc.)
By:_______//ss//__________
William Scott Marshall
President and Chairman
November 10, 2000
EXHIBIT INDEX
Audited Financial Statements
1.1 Plan of Merger between Obligation Futures, Inc. and the shareholders of
SAFE IDEA, Inc., dated November 6, 2000.
2.1 Articles of Incorporation of SAFE IDEA, Inc.(fka Shell, Inc. dated March
20, 1996.
2.1.1 Amendment to Articles dated November 30, 1998.
2.1.2 Amendment to Articles dated October 27, 2000.
3.1 By-Laws of SAFE IDEA,Inc. (fka Shell, Inc.)
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
Obligation Futures, Inc.
(A Development Stage Company)
We have reviewed the accompanying balance sheets of Obligation Futures,
Inc. (a development stage company) as of September 30, 2000 and December 31,
1999, and the related statements of operations for the three and nine month
periods ended September 30, 2000 and 1999, and cash flows for the nine month
periods ended September 30, 2000 and 1999. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statement taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
Respectfully submitted
/s/ Robison, Hill & Co.
---------------------------
Certified Public Accountants
Salt Lake City, Utah
November 3, 2000
4
<PAGE>
<TABLE>
<CAPTION>
OBLIGATION FUTURES, INC.
------------------------
(A Development Stage Company)
-----------------------------
BALANCE SHEETS
--------------
September 30, December 31,
2000 1999
-------------- --------------
<S> <C> <C>
ASSETS: $ - $ -
============== ==============
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 312 $ -
Total Liabilities
Stockholders' Equity:
Common Stock, Par value $.001
Authorized 100,000,000 shares,
Issued 1,000,000 Shares at September 30, 2000
and December 31, 1999 1,000 1,000
Paid-In Capital 1,325 350
Retained Deficit (1,200) (1,200)
Deficit Accumulated During the
Development Stage (1,437) (150)
-------------- --------------
Total Stockholders' Equity (312) -
-------------- --------------
Total Liabilities and
Stockholders' Equity $ - $ -
============== ==============
</TABLE>
See accompanying notes and accountants' report.
5
<PAGE>
<TABLE>
<CAPTION>
OBLIGATION FUTURES, INC.
------------------------
(A Development Stage Company)
-----------------------------
STATEMENTS OF OPERATIONS
------------------------
Cumulative
since October
For the For the 20,1999
Three Months Nine Months Inception of
Ended Ended Development
September 30, September 30, Stage
------------- --------------- -------------
2000 1999 2000 1999
------ ----- -------- -----
<S> <C> <C> <C> <C> <C>
Revenues $ - $ - $ - $ - $ -
------ ----- -------- ----- -------------
Expenses
General and Administrative 352 - 1,287 - 1,437
------ ----- -------- ----- -------------
Net Loss $(352) $ - $(1,287) $ - $ (1,437)
====== ===== ======== ===== =============
Basic & Diluted loss per share $ - $ - $ $ -
====== ===== ======== =====
</TABLE>
See accompanying notes and accountants' report.
6
<PAGE>
<TABLE>
<CAPTION>
OBLIGATION FUTURES, INC.
------------------------
(A Development Stage Company)
-----------------------------
STATEMENTS OF CASH FLOWS
------------------------
Cumulative
Since October
For the nine months ended 20, 1999
September 30, Inception of
------------------------- Development
2000 1999 Stage
------------ ----------- -------------
CASH FLOWS FROM OPERATING
-------------------------
ACTIVITIES:
-----------
<S> <C> <C> <C>
Net Loss $ (1,287) $ - $ (1,437)
Increase (Decrease) in Accounts Payable 312 - (112)
------------ ----------- -------------
Net Cash Used in operating activities (975) - (1,325)
------------ ----------- -------------
CASH FLOWS FROM INVESTING
-------------------------
ACTIVITIES:
-----------
Net cash provided by investing activities - - -
------------ ----------- -------------
CASH FLOWS FROM FINANCING
-------------------------
ACTIVITIES:
-----------
Capital contributed by shareholder 975 - 1,325
------------ ----------- -------------
Net Cash Provided by
Financing Activities 975 - 1,325
------------ ----------- -------------
Net (Decrease) Increase in
Cash and Cash Equivalents - - -
Cash and Cash Equivalents
at Beginning of Period - - -
------------ ----------- -------------
Cash and Cash Equivalents
at End of Period $ - $ - $ -
============ =========== =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
-------------------------------------------------
Cash paid during the year for:
Interest $ - $ - $ -
Franchise and income taxes $ - $ - $ 75
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: None
-------------------------------------------------------------- -----------
See accompanying notes and accountants' report.
7
<PAGE>
OBLIGATION FUTURES, INC.
-------------------------
(A Development Stage Company)
------------------------------
NOTES TO FINANCIAL STATEMENTS
------------------------------
FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999
-----------------------------------------------------------------------
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------------------------------------------
This summary of accounting policies for Obligation Futures, Inc. is
presented to assist in understanding the Company's financial statements. The
accounting policies conform to generally accepted accounting principles and have
been consistently applied in the preparation of the financial statements.
The unaudited financial statements as of September 30, 2000 and for the
three and nine months then ended reflect, in the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
fairly state the financial position and results of operations for the three and
nine months. Operating results for interim periods are not necessarily
indicative of the results which can be expected for full years.
Organization and Basis of Presentation
-------------------------------------------
The Company was incorporated under the laws of the State of Nevada on
March 3, 1997. The Company ceased all operating activities during the period
from March 3, 1997 to October 20, 1999 and was considered dormant. Since
October 20, 1999, the Company is in the development stage, and has not commenced
planned principal operations.
Nature of Business
---------------------
The Company has no products or services as of September 30, 2000. The
Company was organized as a vehicle to seek merger or acquisition candidates.
The Company intends to acquire interests in various business opportunities,
which in the opinion of management will provide a profit to the Company.
Cash and Cash Equivalents
-----------------------------
For purposes of the 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 to the extent the funds are not being held for investment
purposes.
Pervasiveness of Estimates
-----------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles required management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Loss per Share
-----------------
The reconciliations of the numerators and denominators of the basic loss
per share computations are as follows:
8
<PAGE>
OBLIGATION FUTURES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999
(Continued)
<TABLE>
<CAPTION>
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
-----------------------------------------------------------------------------
(Continued)
Income Shares Per-Share
------------ ------------- Amount
(Numerator) (Denominator) -----------
<S> <C> <C> <C>
For the three months ended September 30, 2000
---------------------------------------------
BASIC & DILUTED LOSS PER SHARE
Loss to common shareholders $ (352) 1,000,000 $ -
============ ============= ===========
For the nine months ended September 30, 2000
BASIC & DILUTED LOSS PER SHARE
Loss to common shareholders $ (1,287) 1,000,000 $ -
============ ============= ===========
For the three months ended September 30, 1999
BASIC & DILUTED LOSS PER SHARE
Loss to common shareholders $ - 1,000,000 $ -
============ ============= ===========
For the nine months ended September 30, 1999
BASIC & DILUTED LOSS PER SHARE
Loss to common shareholders $ - 1,000,000 $ -
============ ============= ===========
</TABLE>
The effect of outstanding stock equivalents are anti-dilutive for
September 30, 2000 and 1999 and are thus not considered.
Reclassification
-----------------
Certain reclassifications have been made in the 1999 financial statements
to conform with the September 30, 2000 presentation.
NOTE 2 - INCOME TAXES
--------------------------
As of September 30, 2000, the Company has a net operating loss
carryforward for income tax reporting purposes of approximately $2,000 that may
be offset against future taxable income through 2011. Current tax laws limit
the amount of loss available to be offset against future taxable income when a
substantial change in ownership occurs. Therefore, the amount available to
offset future taxable income may be limited. No tax benefit has been reported
in the financial statements, because the Company believes there is a 50% or
greater change the carry-forwards will expire unused. Accordingly, the
potential tax benefits of the loss carry-forwards are offset by a valuation
allowance of the same amount.
NOTE 3 - DEVELOPMENT STAGE COMPANY
----------------------------------------
The Company has not begun principal operations and as is common with a
development stage company, the Company has had recurring losses during its
development stage.
9
<PAGE>
OBLIGATION FUTURES, INC.
-------------------------
(A Development Stage Company)
------------------------------
NOTES TO FINANCIAL STATEMENTS
------------------------------
FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999
-----------------------------------------------------------------------
(Continued)
NOTE 4 - COMMITMENTS
------------------------
As of September 30, 2000 all activities of the Company have been conducted
by corporate officers from either their homes or business offices. Currently,
there are no outstanding debts owed by the Company for the use of these
facilities and there are no commitments for future use of the facilities.
NOTE 5 - STOCK SPLIT
-------------------------
On October 20, 1999 the Board of Directors authorized 1,000 to 1 stock
split, changed the authorized number of shares to 100,000,000 shares and the par
value to $.001 for the Company's common stock. As a result of the split,
999,000 shares were issued. All references in the accompanying financial
statements to the number of common shares and per-share amounts for 1999 have
been restated to reflect the stock split.
<PAGE>
SAFE IDEA, INC.
(Formerly Shell, Inc.)
(A Development Stage Company)
-:-
INDEPENDENT AUDITOR'S REPORT
SEPTEMBER 30, 2000 AND
DECEMBER 31, 1999 AND 1998
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Independent Auditor's Report...............................................................................F - 1
Balance Sheets
September 30, 2000 and December 31, 1999 and 1998........................................................F - 2
Statements of Operations for the nine months ended
September 30, 2000 and the Years Ended December 31, 1999 and 1998........................................F - 3
Statement of Stockholders' Equity
Since March 20, 1996 (Inception) to September 30, 2000...................................................F - 4
Statements of Cash Flows for the nine months ended
September 30, 2000 and the Years Ended December 31, 1999 and 1998........................................F - 5
Notes to Financial Statements..............................................................................F - 6
</TABLE>
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Safe Idea, Inc.
(Formerly Shell, Inc.)
(A Development Stage Company)
We have audited the accompanying balance sheets of Safe Idea, Inc.(formerly
Shell, Inc.) (a development stage company) as of September 30, 2000 and December
31, 1999 and 1998, and the related statements of operations, and cash flows for
the nine months ended September 30, 2000 and the two years ended December 31,
1999 and the statement of Stockholders' equity from March 20, 1996 (inception)
to September 30, 2000. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Safe Idea, Inc.(formerly
Shell, Inc.) (a development stage company) as of September 30, 2000 and December
31, 1999 and 1998, and the results of its operations and its cash flows for the
nine months ended September 30, 2000 and two years ended December 31, 1999 in
conformity with generally accepted accounting principles.
Respectfully submitted
/S/ ROBISON, HILL & CO.
Certified Public Accountants
Salt Lake City, Utah
November 2, 2000
F-1
<PAGE>
SAFE IDEA, INC.
(Formerly Shell, Inc.)
(A Development Stage Company)
BALANCE SHEETS
September 30, December 31,
------- ------------------
2000 1999 1998
------- ------- -------
Assets: ....................................... $ -- $ -- $ --
======= ======= =======
Liabilities - Accounts Payable ................ $ 478 $ -- $ --
------- ------- -------
Stockholders' Equity:
Common Stock, Par value $.0001
Authorized 50,000,000 shares,
Issued 6,000,000, 3,000,000 and 2,500,000
shares at September 30, 2000 and
December 31, 1999 and 1998, respectively .. 600 300 250
Paid-In Capital ............................. 2,250 2,250 2,250
Deficit Accumulated During the
Development Stage ......................... (3,328) (2,550) (2,500)
------- ------- -------
Total Stockholders' Equity ............... (478) -- --
------- ------- -------
Total Liabilities and
Stockholders' Equity ................... $ -- $ -- $ --
======= ======= =======
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
SAFE IDEA, INC.
(Formerly Shell, Inc.)
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Cumulative
For the nine since
months ended inception
months ended For the year ended of
September 30, December 31, development
------- -------------------
2000 1999 1998 stage
------- ------- -------- -------
Revenues: .......................... $ -- $ -- $ -- $ --
Expenses: .......................... 778 50 -- 3,328
------- ------- -------- -------
Net Loss ...................... (778) $ (50) $ -- $(3,328)
------- ------- -------- -------
Basic & Diluted loss per share ..... $ -- $ -- $ --
======= ======== =======
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
SAFE IDEA, INC.
(Formerly Shell, Inc.)
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
SINCE MARCH 20, 1996 (INCEPTION) TO
SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
Deficit
Accumulated
During
Common Stock Paid-In Development
Shares Par Value Capital Stage
--------- --------- --------- ---------
March 20, 1996 (inception) Issuance
<S> <C> <C> <C> <C>
of Stock for cash ........................... 25,000 $ 2,500 $ -- $ --
Net Loss .................................... -- -- -- (2,500)
--------- --------- --------- ---------
Balance at December 31, 1996 ................ 25,000 2,500 -- (2,500)
Net Loss .................................... -- -- -- --
--------- --------- --------- ---------
Balance at December 31, 1997 ................ 25,000 2,500 -- (2,500)
Retroactive adjustment for 100 to 1 Stock
Split November 30, 1998 ..................... 2,475,000 (2,250) 2,250 --
Net Loss .................................... -- -- -- --
--------- --------- --------- ---------
Balance at December 31, 1998 ................ 2,500,000 250 2,250 (2,500)
October 30, 1999 issuance of stock
for services and payment of accounts payable
500,000 50 -- --
Net Loss .................................... -- -- -- (50)
--------- --------- --------- ---------
Balance at December 31, 1999 ................ 3,000,000 300 2,250 (2,550)
March 30, 2000 issuance of stock for services
and payment of accounts payable
3,000,000 300 -- --
Net Loss .................................... -- -- -- (778)
--------- --------- --------- ---------
Balance at September 30, 2000 ............... 6,000,000 $ 600 $ 2,250 $ (3,328)
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
SAFE IDEA, INC.
(Formerly Shell, Inc.)
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Deficit
Accumulated
During
Common Stock Paid-In Development
Shares Par Value Capital Stage
------- ------- --------- ---------
2000 1999 1998 Stage
------- ------- -------- -------
CASH FLOWS FROM OPERATING
ACTIVITIES:
<S> <C> <C> <C> <C>
Net Loss ........................................ $ (778) $ (50) $ -- $(3,328)
Stock issued for services and payment of accounts
payable ......................................... 300 50 -- 350
Increase (Decrease) in Accounts Payable ......... 478 -- -- 478
------- ------- -------- -------
Net Cash Used in operating activities ......... -- -- -- (2,500)
------- ------- -------- -------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Net cash provided by
investing activities .......................... -- -- -- --
------- ------- -------- -------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Stock issued for cash ........................... -- -- -- 2,500
------- ------- -------- -------
Net Cash Provided by
Financing Activities .......................... -- -- -- 2,500
------- ------- -------- -------
Net (Decrease) Increase in
Cash and Cash Equivalents ..................... -- -- -- --
Cash and Cash Equivalents
at Beginning of Period ........................ -- -- -- --
------- ------- -------- -------
Cash and Cash Equivalents
at End of Period .............................. $ -- $ -- $ -- $ --
======= ======= ======== =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest ...................................... $ -- $ -- $ -- $ --
Franchise and income taxes .................... $ -- $ -- $ -- $ --
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: None
----------------------------------------------------------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
SAFE IDEA, INC.
(Formerly Shell, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for Safe Idea, Inc.(formerly Shell,
Inc.) is presented to assist in understanding the Company's financial
statements. The accounting policies conform to generally accepted accounting
principles and have been consistently applied in the preparation of the
financial statements.
Organization and Basis of Presentation
The Company was incorporated under the laws of the State of Nevada on
March 20, 1996. The Company is in the development stage, and has not commenced
planned principal operations.
Nature of Business
The Company has no products or services as of September 30, 2000. The
Company was organized as a vehicle to seek merger or acquisition candidates. The
Company intends to acquire interests in various business opportunities, which in
the opinion of management will provide a profit to the Company.
Cash and Cash Equivalents
For purposes of the 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 to the extent the funds are not being held for investment
purposes.
Pervasiveness of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles required management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Concentrations of Credit Risk
The Company has no significant off-balance-sheet concentrations of
credit risk such as foreign exchange contracts, options contracts or other
foreign hedging arrangements.
F-6
<PAGE>
SAFE IDEA, INC.
(Formerly Shell, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
--------------------------------------------------------------------------------
Loss per Share
The reconciliations of the numerators and denominators of the basic
loss per share computations are as follows:
<TABLE>
<CAPTION>
Per-Share
Income Shares Amount
------ ------ ------
(Numerator) (Denominator)
For the nine months ended September 30, 2000
--------------------------------------------
Basic Loss per Share
<S> <C> <C> <C>
Loss to common shareholders $(778) 5,014,599 $ -
=================== ==================== ===================
For the year ended December 31, 1999
------------------------------------
Basic Loss per Share
Loss to common shareholders $(50) 2,584,932 $ -
=================== ==================== ===================
For the year ended December 31, 1998
------------------------------------
Basic Loss per Share
Loss to common shareholders $ - 2,500,000 $ -
=================== ==================== ===================
</TABLE>
The effect of outstanding common stock equivalents would be
anti-dilutive for September 30, 2000 and December 31, 1999 and 1998 and are thus
not considered.
NOTE 2 - INCOME TAXES
As of September 30, 2000 and December 31, 1999, the Company had a net
operating loss carryforward for income tax reporting purposes of approximately
$3,000 that may be offset against future taxable income through 2011. Current
tax laws limit the amount of loss available to be offset against future taxable
income when a substantial change in ownership occurs. Therefore, the amount
available to offset future taxable income may be limited. No tax benefit has
been reported in the financial statements, because the Company believes there is
a 50% or greater chance the carryforwards will expire unused. Accordingly, the
potential tax benefits of the loss carryforwards are offset by a valuation
allowance of the same amount.
F-7
<PAGE>
SAFE IDEA, INC.
(Formerly Shell, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
(Continued)
NOTE 3 - DEVELOPMENT STAGE COMPANY
The Company has not begun principal operations and as is common with a
development stage company, the Company has had recurring losses during its
development stage.
NOTE 4 - COMMITMENTS
As of September 30, 2000 all activities of the Company have been
conducted by corporate officers from either their homes or business offices.
Currently, there are no outstanding debts owed by the company for the use of
these facilities and there are no commitments for future use of the facilities.
NOTE 5 - STOCK SPLIT
On November 30, 1998, the Board of Directors authorized 100 to 1 stock
split and changed the par value to $.0001 for the company's common stock. As a
result of the split, 2,475,000 shares were issued, common stock was reduced by
$2,250 and paid in capital was increased by $2,250. All references in the
accompanying financial statements to the number of common shares and per-share
amounts for 1999 and 1998 have been restated to reflect the stock split.
NOTE 6 - SUBSEQUENT EVENTS
On October 5, 2000, the Company entered into an agreement ("Plan of
Merger") with Safe Idea Repository Inc., (Repository) whereby the Company is to
become a parent company and Repository is to become a wholly owned subsidiary.
Under the terms of the Plan of Merger, all of the issued and outstanding shares
of Repository shall be exchanged into 3,000,000 shares of Company common stock.
An amount of 3,000,000 previously issued shares of Company were handed into
treasury for cancellation resulting in total shares outstanding of 6,000,000
after the merger.
On November 6, 2000, the Company entered into an agreement with
Obligation Futures, Inc. ("OBFU") whereby the company purchased 100% of OBFU's
outstanding common stock for a payment of $200,000 in cash to be delivered to
the former holders of the common stock of OBFU on a pro-rata basis of prior
stock ownership. The Company shall be the surviving entity.
F-8
<PAGE>
Safeidea Repository Inc.
(A Development Stage Company)
(Expressed in U.S. dollars)
Financial Statements
September 30, 2000
<PAGE>
-------------------------------------------------------------------------------
James Stafford Chartered Accountant An Incorporated Professional
-------------------------------------------------------------------------------
AUDITOR'S REPORT
To the Shareholder of
Safeidea Repository Inc.
(A Development Stage Company)
I have audited the balance sheet of Safeidea Repository Inc. as at September 30,
2000 and the statements of operations and deficit and cash flows for the period
from the date of incorporation on September 6, 2000 to September 30, 2000. 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 I plan and perform an audit to obtain reasonable
assurance whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.
In my opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at September 30, 2000 and the
results of its operations and its cash flows for the period from the date of
incorporation on September 6, 2000 to September 30, 2000 in accordance with
generally accepted accounting principles.
"JAMES STAFFORD"
\s\ James Stafford
Vancouver, Canada Chartered Accountant
October 27, 2000
COMMENTS BY AUDITOR FOR U.S. READERS ON
CANADA - U.S. REPORTING CONFLICT
The preceding opinion is expressed in accordance with standards of reporting
established and generally accepted in Canada. Had the report been prepared in
accordance with United States reporting standards, my report on the financial
statements would have contained the following explanatory paragraph after the
opinion paragraph:
The accompanying financials statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered losses from operations and has a
deficit, which raises substantial doubt about its ability to continue as a going
concern. Until it achieves a continuous profitable level of operations, the
Company may be dependent upon management obtaining sufficient financing to allow
the Company to meet its objectives. This raises substantial doubt about its
ability to continue as a going concern. The financial statements do not include
any adjustments that might result form the outcome of this uncertainty.
"JAMES STAFFORD"
\s\ James Stafford
Vancouver, Canada Chartered Accountant
October 27, 2000
Suite 210, 560 Beatty Street, Vancouver, BC, Canada,
V6B 2L3 Telephone (604) 669-0711 Fax (604) 669-0754 E-mail
[email protected]
<PAGE>
Safeidea Repository Inc.
(A Development Stage Company)
Balance Sheet
(Expressed in U.S. dollars)
As at September 30, 2000
<TABLE>
<CAPTION>
<S> <C>
================================================================================================ =====================
ASSET
Capital asset
Domain names and websites (Note 3) $ 5,000
================================================================================================== ===================
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities
Bank indebtedness $ 9
Accounts payable and accrued liabilities 10,443
---------------
10,452
Due to shareholder (Note 5) 158
--------------
10,610
Shareholder's equity
Capital stock (Note 6) 1
Deficit (5,611)
---------------
(5,610)
$ 5,000
============================================================================== =================== ===================
</TABLE>
On behalf of the Board:
Director Director
----------------------------------- ---------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
Safeidea Repository Inc.
(A Development Stage Company)
Statement of Operations and Deficit
(Expressed in U.S. dollars)
For the period from the date of incorporation on September 6, 2000 to September
30, 2000
<TABLE>
<CAPTION>
<S> <C>
================================================================================================ =====================
EXPENSES
Bank charges $ 9
Office and miscellaneous 138
Professional fees 5,464
---------------
5,611
Net loss for the period, being deficit, end of period $ (5,611)
================================================================================================ =====================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Safeidea Repository Inc.
(A Development Stage Company)
Statement of Cash Flows
(Expressed in U.S. dollars)
For the period from the date of incorporation on September 6, 2000 to September
30, 2000
<TABLE>
<CAPTION>
<S> <C>
================================================================================================ =====================
Cash flows from operating activities
Net loss for the period $ (5,611)
Changes in non-cash working capital items
Accounts payable and accrued liabilities 10,443
--------------
4,832
Cash flows from investing activities
Purchase of capital assets (5,000)
---------------
Cash flows from financing activities
Due to shareholder 158
Issuance of capital stock 1
--------------
159
Decrease in cash, being cash deficiency, end of period $ (9)
================================================================================================ =====================
Cash paid during the period for interest $ -
================================================================================================ =====================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Safeidea Repository Inc.
(A Development Stage Company)
Notes to Financial Statements
(Expressed in U.S. dollars)
September 30, 2000
1. Nature of Operations
Safeidea Repository Inc. (the "Company") is incorporated under the laws
of British Columbia and is engaged in the development of various
websites focused on both providing assistance to entrepreneurs in both
meeting and assessing service providers and in developing business
ideas. A primary function of the websites is also to provide a
repository for business plans.
These financial statements have been prepared in accordance with
Canadian generally accepted accounting principles with the assumption
that the Company will be able to realize its assets and discharge its
liabilities in the normal course of business rather than through a
process of forced liquidation. Continued operations of the Company are
dependent on the Company's ability to receive continued financial
support, complete public equity financing, or generate profitable
operations in the future.
2. Significant Accounting Policies
Cash and cash equivalents
Cash and cash equivalents represent highly liquid market investments
with original maturity of three months or less.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles, requires management to make estimates
and assumptions which affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amount of revenue and expenses during the reporting period. Actual
results may differ from these estimated amounts.
Financial instruments
Financial instruments are initially recorded at historical costs. If
subsequent circumstances indicate that a decline in fair value of a
financial instrument is other than temporary, the financial asset is
written-down to its fair value.
Capital asset
The domain names and websites will be amortized, on a straight-line
basis, over 10 years commencing upon their completion.
<PAGE>
Safeidea Repository Inc.
(A Development Stage Company)
Notes to Financial Statements
(Expressed in U.S. dollars)
September 30, 2000
3. Capital Asset
On September 28, 2000, the Company purchased the domain names and
websites related to Hotstocknetwork.com, Hotstocksnetwork.com,
Hotstoxnetwork.com and Safeidea.com (the "Websites") from Existimatio
Pervagus Investment Corporation.
The total purchase price of $5,000 was paid to a related party (Note
4).
4. Related Party Transactions
The Company purchased the Websites (Note 3) from a company related to
the Company by way of a shareholder and director in common.
As at September 30, 2000, accounts payable include $5,000 due to a
company related by way of a shareholder and director in common.
5. Due to Shareholder
Amounts due to shareholder are non-interest bearing, unsecured and have
no fixed terms of repayment.
6. Capital Stock
<TABLE>
<CAPTION>
<S> <C>
===================================================================================================================
Amount
-------------------------------------------------------------------------------------------------------------------
Authorized
10,000 common shares without par value
Issued
1 common share $ 1
-------------
===================================================================================================================
===================================================================================================================
Balance as at September 30, 2000 $ 1
</TABLE>
<PAGE>
Safeidea Repository Inc.
(A Development Stage Company)
Notes to Financial Statements
(Expressed in U.S. dollars)
September 30, 2000
6. Subsequent Events
Subsequent to September 30, 2000, the Company entered into an agreement
("Plan of Merger") with Shell, Inc., a Nevada Corporation, whereby the
Company is to become a 100% subsidiary of Shell, Inc. Under the terms
of the Plan of Merger, Shell, Inc. will provide the shareholder of the
Company with 3,000,000 shares of common stock of Shell, Inc. in
exchange for 100% of the capital stock of the Company.
The Plan of Merger is subject to approval by the regulatory
authorities.
7. United States Generally Accepted Accounting Policies
These financial statements have been prepared in accordance with
generally accepted accounting principles in Canada. These financial
statements also comply, in all material aspects, with accounting
principles generally accepted in the United States and the rules and
regulations of the Securities and Exchange Commission.
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
On October 5, 2000 Safe Idea, Inc. (formerly Shell, Inc.) ("Safe") and
Safe Idea Repository Inc. ("Repository") executed the Merger Agreement that
provides for the Merger of Repository with and into Safe.
On November 6, 2000 Safe and Obligation Futures, Inc.("OBFU") executed
the merger agreement that provides for the merger of OBFU with and into Safe.
The following unaudited pro forma condensed combined financial
statements are based on the September 30, 2000 historical financial statements
of Safe, Repository and OBFU contained elsewhere herein, giving effect to the
transaction under the purchase method of accounting, with Safe treated as the
acquiring entity for financial reporting purposes.
The unaudited pro forma condensed combined balance sheet presenting the
financial position of the Surviving Corporation assumes the purchase occurred as
of September 30, 2000. The unaudited pro forma condensed combined statement of
operations presents the results of operations of the Surviving Corporation,
assuming the merger was completed on October 1, 1999.
The unaudited pro forma condensed combined financial statements have
been prepared by management of Safe, Repository, and OBFU based on the financial
statements included elsewhere herein. The pro forma adjustments include certain
assumptions and preliminary estimates as discussed in the accompanying notes and
are subject to change. These pro forma statements may not be indicative of the
results that actually would have occurred if the combination had been in effect
on the dates indicated or which may be obtained in the future. These pro forma
financial statements should be read in conjunction with the accompanying notes
and the historical financial information of Safe, Repository, and OBFU
(including the notes thereto) included in this Form. See "FINANCIAL STATEMENTS."
<PAGE>
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
Safe Idea, Inc. Safe Idea Obligations Pro Forma
(formerly Repository Futures Pro Forma Combined
Shell, Inc.) Inc. Inc. Adjustments Balance
--------- --------- --------- ------------ ---------
ASSETS
<S> <C> <C> <C> <C> <C>
Current Assets ................................ $ -- $ -- $ -- $ -- $ --
Other Assets (net) ............................ -- 5,000 -- -- 5,000
--------- --------- --------- ------------ ---------
Total Assets ............................. $ -- $ 5,000 -- $ -- $ 5,000
========= ========= ========= ============ =========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts Payable & Accrued Expenses ........... $ 478 $ 8,404 $ 312 $ -- $ 9,194
Due to shareholder ............................ -- 154 -- -- 154
--------- --------- --------- ------------ ---------
Total Liabilities ......................... 478 8,558 312 -- 9,348
--------- --------- --------- ------------ ---------
Stockholders' Equity:
Common Stock ................................ 600 1 1,000 (1,001) A 600
Additional Paid in Capital .................. 2,250 -- 1,325 203,671 A 207,246
Retained Deficit ............................ -- (1,200) 1,200 A --
--------- --------- --------- ------------ ---------
Deficit Accumulated During the
Development Stage ........................ (3,328) (3,559) (1,437) (203,870) A (212,194)
--------- --------- --------- ------------ ---------
Total Stockholders' Equity (Deficit) ..... (478) (3,558) (312) -- (4,348)
--------- --------- --------- ------------ ---------
Total Liabilities and Stockholders' Equity $ -- $ 5,000 $ -- $ -- $ 5,000
========= ========= ========= ============ =========
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
<PAGE>
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
Safe Idea, Inc. Safe Idea Obligations Pro Forma
(formerly Repository Futures Pro Forma Combined
Shell Inc.) Inc. Inc. Adjustments Balance
----------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Revenues: ......................... $ -- $ -- $ -- $ -- $ --
----------- ----------- ----------- ---------- -----------
Expenses:
General & Administrative ....... 828 3,559 1,437 203,558 B 209,382
----------- ----------- ----------- ---------- -----------
Net Loss .......................... $ (828) $ (3,559) $ (1,437) $ (203,558) $ (209,382)
=========== =========== =========== ========== ===========
Loss per share .................... $ -- $ (3,559) $ -- $ --
=========== =========== =========== ===========
Weighted average shares outstanding 6,000,000 1 1,000,000 6,000,000
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(1) General
In the October 5, 2000 merger, Repository will be merged with and into Safe,
with the one share outstanding Repository Common Stock converted into an
aggregate 3,000,000 shares. An amount of 3,000,000 previously issued shares of
Safe were handed into treasury for cancellation resulting in total shares
outstanding of 6,000,000 after the merger. Safe has not yet performed a detailed
evaluation and appraisal of the fair market value of the net assets sold in
order to allocate the purchase price among the assets sold. For purposes of
preparing these pro forma financial statements, certain assumptions as set forth
in the notes to the pro forma adjustments have been made in allocating the sales
price to the net assets sold. As such, the pro forma adjustments discussed below
are subject to change based on final appraisals and determination of the fair
market value of the assets and liabilities of Safe.
In the November 6, 2000 merger, OBFU will be merged with and into Safe, whereby
Safe purchased 100% of OBFU's outstanding stock for a payment of $200,000 in
cash to be delivered to the former holders of the common stock of OBFU on a
pro-rata basis of prior stock ownership. Safe has not yet performed a detailed
evaluation and appraisal of the fair market value of the net assets sold in
order to allocate the purchase price among the assets sold. For purposes of
preparing these pro forma financial statements, certain assumptions as set forth
in the notes to the pro forma adjustments have been made in allocating the sales
price to the net assets sold. As such, the pro forma adjustments discussed below
are subject to change based on final appraisals and determination of the fair
market value of the assets and liabilities of Safe.
(2) Fiscal Year Ends
The unaudited pro forma condensed combined statements of operations for the year
ended September 30, 2000, include Repository's operations on a common fiscal
year. The financial statements of Safe and OBFU have been conformed to the
fiscal year ended September 30, 2000, by including the operating results of Safe
and OBFU from October 1, 1999 to December 31, 1999, and including such results
for the nine months ended September 30, 2000.
(3) Pro Forma Adjustments
The adjustments to the accompanying unaudited pro forma condensed
combined balance sheet as of September 30, 2000, are described below:
(A) Record merger by converting Repository Common stock to Safe Common
Stock, par value $0.0001 per share and by showing the cancellation of 3,000,000
shares of Safe and by showing purchase of OBFU Common stock for $200,000.
The adjustments to the accompanying unaudited pro forma condensed
combined statements of operations are described below:
(B) Writing off of goodwill purchased as a result of the above mergers.
