<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
/x/ Annual Report Under section 13 or 15(d) of
The Securities Exchange Act of 1934
For the Fiscal Year Ended March 31, 2000
Transition Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Commission File Number
Dynamic I-T, Inc.
(Exact Name of Registrant as Specified in its Charter)
Colorado 82-0379959
----------------------------------------------------------------------
(State or other jurisdiction Commission File (IRS Employer
of incorporation) No. Identification No.)
2504 Eleventh Street, Santa Monica, California 90405
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 392-8179
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or
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 [ ]
At July 20, 2000, there were issued and outstanding 34,605,213 shares
of Common Stock.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X] Item 4.
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ITEM 1. DESCRIPTION OF BUSINESS.
CERTAIN FACTORS AFFECTING FORWARD LOOKING STATEMENTS
In addition to statements of historical fact, this Annual Report on Form
10-KSB contains forward-looking statements. The presentation of future aspects
of the Company found in these statements is subject to a number of risks and
uncertainties that could cause actual results to differ materially from those
reflected in such statements. Some of these risks might include, but are not
limited to, those discussed below. Readers are cautioned not to place undue
reliance on these forward-looking statements, which reflect management's
analysis only as of the date hereof. Without limiting the generality of the
foregoing, words such as "may", "will", "expect", "believe", "anticipate",
"intend", or "could" or the negative variations thereof or comparable
terminology are intended to identify forward-looking statements. The Company
undertakes no obligation to publicly revise these forward-looking statements to
reflect events or circumstances that arise after the date hereof. Readers should
carefully review the factors described in other documents the Company files from
time to time with the Securities and Exchange Commission, including the
Quarterly Reports on Form 10-QSB filed by the Company in 1999 and any Current
Reports on Form 8-K filed by the Company.
The following discussion should be read in conjunction with the condensed
financial statements and notes thereto appearing elsewhere in this report.
OVERVIEW
Dynamic I-T, Inc. ("Dynamic" or the "Company"), a Colorado corporation, was
incorporated in 1980 as Colorado Gold & Silver Mining to engage in the
exploration, acquisition and development of mining and mineral prospects. In
August 1999, the Company changed its name and ceased all of its efforts in the
mining and minerals industry and approved a plan to pursue the acquisition of
development stage Internet-related companies and technologies which companies
will likely lack any significant operating or financial histories and, in all
likelihood, be unprofitable with significant losses and negative shareholders
equity and which technologies will likely be development stage with little or no
revenue and no history of sales. The Company would intend to be an "incubator"
of Internet-related endeavors and to develop an acquired company to the point
that such company would be able to begin marketing its services and generate
revenue. Thus, the Company amended its Articles of Incorporation in order to
reflect the change in its basic business and conducted extensive market research
and analysis in order to focus its marketing efforts more narrowly to an
Internet business that would have wide application, have the ability to generate
long term growth, be international in scope, and not require capital intensive
start-up costs. A decision was made by Company management to enter the distance
learning ("Distance Learning") market with the objective of developing via the
Internet and delivering tailored global distance educational courses including
business, corporate, medical and pedagogical programs. The Company will offer
the programs from the United States for delivery virtually anywhere in the
world. The technology used by the Company in the delivery of these interactive
programs will be via broadband terrestrial and satellite telecommunications
networks utilizing the Internet as the medium for course work. Although its
primary focus will be in the business, corporate and medical areas, the
Company will be able to provide educational programs through the Internet for
public or private pedagogical institutions or for the training of executives in
virtually any industry. Instruction can be offered to enhance the subscriber's
knowledge for business or other purposes and could ultimately be for degree or
non-degree programs.
In August 1999, the Company effected a reverse split of its common stock
and simultaneously changed its name to Dynamic I-T, Inc. amending its stated
business purpose in order to begin to focus on the aforementioned objective of
acquiring Internet-related companies and/or technologies. The Company's
strategic and tactical plans are currently in the process of being implemented
by Company personnel as well as through the use of outside consultants and other
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professionals. For example, the Company's website is being developed by Engram
Digital, a leading Internet web development company. In addition, the Company
recently announced the completion of the video portion of the first of 25 online
executive seminars that it plans to produce over the next two years. Each
seminar is designed for management personnel of Fortune 1000 companies and can
be accessed from any computer with a modem at any time.
The Company's objective is to be one of the leading providers of Distance
Learning in the United States and ultimately internationally. To achieve this,
Dynamic will need to simultaneously grow through direct and third-party sales,
acquisition of small domestic and international companies, and the generation of
multiple revenue streams. The Company also needs to develop more channels for
the marketing of its Distance Learning programs, and maintain its focus on
emerging technology while continuing to develop a high level of expertise in
this industry. The Company intends to introduce many more innovative product
solutions to the Distance Learning industry and to expand into other
Internet-related businesses by exploiting leading technologies and creating
cutting-edge, customized solutions for emerging customer segments. The Company
believes that more and more international opportunities are emerging for the
Company in the Distance Learning arena and intends to pursue that market more
vigorously.
The key to the Company's future success lies in its ability to provide
premier Distance Learning programs and to execute its acquisition strategy and
the expansion of its product offerings.
The Company's securities are quoted on the Over-the-Counter Bulletin Board
("OTCBB") under the symbol DYNM.
ITEM 2. DESCRIPTION OF PROPERTY.
Dynamic's principal office is located at 2504 Eleventh Street, Santa
Monica, California 90405. The office property in which the office is located is
approximately 1200 square feet and is owned by Spencer Young, Vice President and
Director of the Company, who maintains the property at no charge to the Company.
This location is adequate for the Company's projected needs, and the Company
does not believe it will have difficulty obtaining additional space as needed.
The principal office from which the Company conducts its overseas operations is
approximately 700 square feet of serviced office space located at 15 St. Helen's
Place, London EC3A 6DE, England. The space is shared with Complex Holdings
Limited for which the Company furnishes certain services in return for occupying
the space rent free.
Spencer Young maintains property and liability insurance policies on the
office in Santa Monica. The policy coverage total on contents is approximately
$30,000. The liability coverage is $2,000,000 on these two locations. The
property and liability insurance maintained by Complex Holdings Limited includes
the space occupied by the Company. The Company believes that the coverage
maintained by Complex Holdings Limited is adequate and does not plan to
supplement it with any additional insurance at this time.
ITEM 3. LEGAL PROCEEDINGS.
There is no material litigation pending against the Company at this time.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
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PRICE RANGE OF COMMON STOCK
The Common Stock is traded in the over-the-counter market and quoted under
the symbol "DYNM." The following table sets forth, for the periods indicated,
the high and low bid information for the Common Stock. As of July 20, 2000,
approximately 34,605,213 shares of Common Stock were issued and outstanding, and
there were 2,179 holders of record for such shares.
Price Range
High Low
YEAR ENDED MARCH 31, 2000
Fourth Quarter 0.2500 0.0010
Third Quarter 0.5000 0.0010
Second Quarter 0.3750 0.1563
First Quarter 5.5000 0.1563
The high and low bid information provided above is reported by the Nasdaq
Stock Market OTC Bulletin Board. The quotations reflect inter-dealer prices,
without retail markup, markdown or commission and may not represent actual
transactions.
The Company has not declared or paid any cash dividends since its
organization.
RECENT SALES OF UNREGISTERED SECURITIES
None.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE FISCAL YEAR ENDED MARCH 31, 2000
COMPARED TO THE FISCAL YEAR ENDED MARCH 31, 1999
The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto appearing elsewhere in this
report.
OVERVIEW
Dynamic I-T, Inc. is a Colorado corporation which was founded in 1980
for the principal purpose of engaging in the mining and mineral prospecting
industry. The Company ceased all efforts in mining in 1999 and redirected its
marketing and strategic efforts focusing on the acquisition of Internet-related
businesses. The Company changed its name from Colorado Gold and Silver Mining to
Dynamic I-T, Inc. in August 1999 and began the development of its Distance
Learning Internet business which would provide educational programs to various
market segments through its website ("Distance Learning"). The Company has
retained a number of college professors and similar educators to function as
consultants to the Company in order to develop the educational programs that
will be offered over the Internet. The Company's website is not yet operational,
but the Company expects it to be completed prior to the end of this year and to
begin offering its educational programs at that time.
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REVENUES
Dynamic I-T, Inc. had no revenues for the fiscal year ended March 31,
2000 and had no revenues for the comparable period in 1999. The Company expects
to generate revenues later this year upon commencing offering of educational
programs over the Internet.
GENERAL AND ADMINISTRATIVE EXPENSES
The Company's General and Administrative expenses increased to $95,762
for the year ended March 31, 2000 as compared to $25,000 during the comparable
period ended March 31, 1999. This increase was primarily attributable to
professional fees incurred by the Company associated with accounting, legal and
consulting services performed and for interest on the default of a note. The
Company had no other expenses during the year ended March 31, 2000 or during the
comparable period ended March 31, 1999.
OTHER INCOME (EXPENSE)
The Company had no other income (expense) during the fiscal year ended
March 31, 2000. During the comparable period ended March 31, 1999, the Company
had a gain of $1,435,922 which was the result of certain writeoffs in connection
with the Company's mining and mineral prospecting endeavors.
NET INCOME (LOSS) BEFORE INCOME TAXES
For the fiscal year ended March 31, 2000, the Company had a loss of
($95,762) as compared to a gain of $1,435,922 during the year ended March 31,
1999. This decrease is because the Company had a gain in the prior fiscal year
which was attributable to the Company's previously noted writeoff associated
with its mining activities. During the fiscal year ended March 31, 2000, the
Company's net loss of $ (95,762) was attributable to expenses incurred for
professional fees for accounting, legal and consulting services and for interest
on the default of a note.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THE
THREE MONTHS ENDED MARCH 31, 1999
REVENUES
Dynamic I-T, Inc. had no revenues for the three months ended March 31,
2000 and had no revenues for the comparable period in 1999. The Company expects
to generate revenues during fiscal year 2000 upon completing of its website and
commencing offering of its various Distance Learning programs.
GENERAL AND ADMINISTRATIVE EXPENSES
The Company's General and Administrative expenses were $0 for the
three months ended March 31, 2000 as compared to $0 during the comparable period
ended March 31, 1999. The Company had no other expenses during the three months
ended March 31, 2000 or during the comparable period ended March 31, 1999.
OTHER INCOME (EXPENSE)
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The Company had no other income (expense) during the three months ended
March 31, 2000 or during the comparable period ended March 31, 1999.
NET INCOME (LOSS) BEFORE INCOME TAXES
For the three months ended March 31, 2000, the Company had net income
(loss) of $0.
LIQUIDITY AND CAPITAL RESOURCES
The Company had minimal cash capital at the end of the fiscal year
ended March 31, 2000 as well as for the comparable period ended March 31, 1999.
The Company will be forced to either borrow funds or to sell shares of its
common stock in order to fund operations. Historically, the Company has financed
its working capital requirements through internally generated funds, that is,
prior to its abandoning the mining and mineral prospecting business, the sale of
shares of its common stock, and from the proceeds of short-term bank borrowings.
The Company currently has a note with First Trust Corporation in the outstanding
principal amount of $100,000 which is in default. First Trust Corporation
assessed a penalty in the amount of $50,000 during the fiscal year ended March
31, 2000 due to the Company's default . The Company also increased the principal
amount on a note to the former President and Director of the Company, M. Coke
Reeves, by $25,000, or fifty (50%) percent, so that that note now totals
$75,000.
As of March 31, 2000, the Company had cash capital of $488 as compared
with cash capital of $0 for the comparable period ended March 31, 1999.
The Company currently anticipates existing sources of liquidity and
cash to be insufficient to satisfy its operational needs through the next nine
months. To make future acquisitions or for other forthcoming similar expenses,
the Company may seek to increase the amount of its credit facilities, negotiate
additional credit facilities or issue corporate debt or equity securities. Any
debt incurred or issued by the Company may be secured or unsecured, fixed or
variable rate interest and may be subject to such terms as the Board of
Directors of the Company deems prudent. The Company expects any proceeds from
such additional credit or sales of securities to be used primarily in the
development and marketing of its products. No assurances can be given that the
Company will be successful in obtaining any additional credit facilities or in
generating sufficient capital from the sale of its securities to adequately fund
its operational needs.
The Company does not believe that its business is subject to seasonal
trends.
The Company does not believe that inflation had a significant impact on
the Company's results of operations for the period presented. On an ongoing
basis, the Company attempts to minimize any effects of inflation on its
operating results by controlling operating and other costs.
ITEM 7. FINANCIAL STATEMENTS.
The Financial Statements required by this item are attached hereto on
pages F1 - F14.
ITEM 8. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE:
None.
<PAGE>
PART III
ITEM 9. DIRECTORS, OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following are the directors and executive officers of the Company:
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Business Experience During
Name (Age) Position(s) the Past Five Years
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
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Ahmed Abdulla Mannai (69) Director Mr. Mannai is a citizen of Qatar and is the Chairman
of Mannai Corporation a diversified company that
employs over 3000 people within the companies that
operate on a worldwide basis. Mr. Mannai currently
serves on the Board of Directors of Complex Holdings
Limited, Qatar Insurance Company, the Gulf
Publishing & Printing Organization [the publishers
of the "Gulf Times" in Qatar] and the Bahrain based
international investment Bank "The Investcorp Bank
EC" of which he is also a founding member. In
recognition of his contribution towards Economic and
Industrial Co-operation between Qatar and France,
Mr. Mannai was appointed "Commandeur de la Legion
d`Honneur" by the late President Francois Mitterand.
The current President of France Jaques Chirac
awarded to Mr. Mannai, in honor of his distinguished
services, the "Gold Medal of the Town of Paris".
Raymond A. King (57) Chief Financial Officer and Director Mr. King is qualified in England as a Chartered
Secretary and is also a Fellow of the Institute of
Bankers and the Institute of Financial Accountants.
He has had a distinguished career spanning over 35
years in the Banking and Financial Markets in the
City of London. Mr. King was a part of the senior
management team at National Westminster Bank Ltd for
27 years followed by experience with P.K.
Christiania Bank and The Moscow Narodny Bank Ltd.
After one career in the Banking sector Mr. King
embarked upon a second career in Corporate Finance
in which he continues to be actively involved to the
present date. In 1962 Mr. King was appointed Finance
Director, and rose to become Managing Director of
Chartwell International Group PLC a company listed
on the London Stock Exchange AIM market. In 1996 Mr.
King was appointed the Chairman of Norske Energy
Corporation and was instrumental in obtaining a
listing on Nasdaq for that Corporation. In 1999 Mr.
King was appointed the Finance Director of Complex
Holdings Limited and in the same year was also
appointed Finance Director of Groundwork Trust an
environmental charity.
Chafe Omar Abou Richeh (53) Director Mr. Abou Richeh is a Saudi National and has some 30
years of experience in the Telecommunications
Industry that encompasses secure communications,
31, data communications, line of sight, satellite
and security systems. In 1968 Mr. Abou Richeh
graduated from George Washington University with a
Masters Degree in Electronics. Mr. Abou Richeh has
spent a considerable part of his career in the
Middle East where he established and subsequently
managed numerous successful telecommunication
enterprises in Saudi Arabia, the Gulf States,
Lebanon and Syria. He was one of the founding
members of British Telecom and Telettra in Saudi
Arabia, and served on the Boards of both companies.
Mr. Abou Richeh was responsible for introducing into
Saudi Arabia the first commercial application of
fiber optics, the first commercial e-mail network,
the first to introduce line conditioning equipment
into the PTT network, and through Telettra installed
most of Saudi Arabia`s spur commercial links. Mr.
Abou Richeh has undertaken numerous consultancy
roles in the Middle East. Among his many clients are
Cable and Wireless, Andrew Corporation, Hughes
Aircraft, NEC/Sumitomo, Crypto AG and Motorola. Mr.
Abou Richeh is a director of Elixir International
[in Saudi Arabia], Inma Engineering [in Lebanon],
Complex Holdings Limited, a diversified company with
interests in Telecommunications and Internet related
activities in Hungary and the Russian Federation. He
also serves on the Board of Complex Investments
Limited.
Melvyn F. Quiller (54) Chief Executive Officer and Director Mr. Quiller graduated from Harrow College of
Technology as a Mechanical Engineer in 1975. He has
spent a substantial part of his career working with
a major British construction company "600 Group PLC"
in communication and transport related projects
throughout Eastern Europe and the Middle East. Mr.
Quiller served as a Director of a subsidiary of 600
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Group PLC and subsequently was appointed Managing
Director in 1979 a position that he held for 9 years
before retiring from the Board in 1986. In 1997
Mr. Quiller was appointed to the Board of Russian
Telecommunication Network, a Russian Company
operating satellite and terrestrial networks for
National and International voice and data
communications. He resigned from the Board in 1999.
In 1997 Mr. Quiller was appointed a Director of
Complex Investments Limited, and in the following
year was appointed to the Board of Complex Holdings
Limited, a diversified company that has interests in
Telecommunications and Internet activities in
Hungary and the Russian Federation.
Patrick D. Doyle (58) Director Mr. Doyle is an English qualified lawyer [Bachelor
of Laws, London University 1963]. In April 1967 he
was admitted as a Solicitor of the Supreme Court of
England and joined the Legal Department of
Commonwealth Development Finance Company ["CDFC"] a
subsidiary of the Bank of England. He spent over 15
years with CDFC rising to the position of Senior
Legal Advisor. While with CDFC he was actively
involved in the provision of Project Finance in over
30 countries of the Commonwealth. Mr. Doyle has
devoted his professional career to the practice of
International Law. He has worked in Eastern Europe
and a number of countries of the former Soviet
Union. In his work he has accumulated considerable
first hand knowledge of complex international legal
and ethical problems. Mr. Doyle has advised several
Governments and worked alongside major international
funding agencies such as The World Bank, The
International Finance Corporation and EBRD. For some
years Mr. Doyle has been advising clients on the
legal problems associated with Telecommunications
and more recently Internet related issues. In
February 1995 Mr. Doyle was recruited by Minneapolis
based Law Firm Popham Haik to open an office in
London, England. In May 1997 this London office was
acquired by the Washington Law Firm of McKenna &
Cuneo and Mr. Doyle became Counsel. In October 1998
Mr. Doyle joined the London office of the global law
firm Arnold & Porter from where he retired in
December 1999.
Brian J. O`Dell (56) Director Mr. O'Dell has had a long and successful career in
International Trade Finance in the City of London.
He has recently capitalized upon his financial
knowledge by joining the Boards of several
companies. Mr. O'Dell has worked in the City of
London for over 30 years. For 15 years he was the
General Manager of Barter Group a leading player in
Barter and Countertrade activities. At Barter Group,
he headed the highly specialized team that was
responsible for the creation of financial support
instruments based on Barter and Compensation for
Governments and Corporate bodies. His recognized
expertise in this highly sophisticated area of
international trade led to his being retained by
"Euromoney" business magazine to lecture at seminars
throughout Europe and Africa. A number of his papers
have been published and may be found in the Business
section of the City of London Library. In 1996 Mr.
O`Dell joined the Board of Complex
Telecommunications Limited to assist in the
development of corporate activities. In the
following year he was appointed to the Board of
Complex Holdings Limited a diversified company with
interests in Telecommunications and Internet
holdings in Eastern Europe. At the same time, he was
appointed to the Board of Complex Investments
Limited. In 1999, Mr. O'Dell joined the Board of
Satnet Limited, a UK registered company. At the same
time Mr. O`Dell was appointed to the Board of
Satellite News Services Limited. He retains all
these directorships to the present day.
Paul Warshaw (56) Director Paul R Warshaw graduated from the University of
California at Berkeley with a BA in Economic History
and an MBA in Finance, after which he worked as
Security Analyst at Arnold Bernhard & Company in New
York City, where he wrote more than 100 published
reports on individual companies and industry groups
for the Value Line Investment Service. Returning to
graduate school in 1974, Dr. Warshaw earned a Ph.D.
in Marketing and Psychology in 1977 from the
University of Massachusetts, then joined the Faculty
of Management at McGill University in Montreal,
serving as both Assistant and Associate Professor,
teaching, researching and and publishing numerous
articles with respect to various aspects of Consumer
Behavior, Advertising, and Marketing. Dr. Warshaw
was appointed to the Editorial Boards of the Journal
of Marketing Research and the Journal of Business
Research; served as reviewer for Journal of Consumer
Research, Management Science, Journal of
Experimental Social Psychology, and the Association
for Consumer Research. Dr. Warshaw is listed in
Who's Who in American Advertising. Upon returning to
his native United States in 1983, he worked as
Associate and full Professor of Marketing at
Massachusetts Institute of Technology, New York
University, Drexel University, and Cal Poly. Dr.
Warshaw left academia in 1991 to pursue
entrepreneurial ventures in entertainment and
marketing research, co-founding private companies
RMO
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Entertainment Group, Digital Hollywood, Streamline
Multimedia, and WEB Research. In 1999, with Spencer
Young, he founded, Dynamic I-T. They were
instrumental in the formation of the Company's
Distance Learning division. In February 2000
Dr.Warshaw was elected to the Board of Directors of
Dynamic I-T, Inc.
Spencer H. Young (62) Vice President and Director Spencer H. Young (J.D. Fordham University):
practiced law with Lord, Day & Lord Thacher
Proffitt, Prizer Crawley & Wood. Thereafter he
joined the legal department of A.S.C.A.P. and later
became a Vice President of Motion Business Affairs
at Ashley Famous Agency (the forerunner of
International Creative Management) specializing in
literary, television, motion picture, music, and
publishing business affairs and legal matters on
behalf of the agency and its clients. When General
Electric entered into motion picture and television
production, through its subsidiary Tomorrow
Entertainment, he was recruited to be its Vice
President of Business Affairs Thereafter he was Vice
President of Business Affairs for Lorimar. While at
Lorimar he was one of the first American executives
to establish co-production agreements for an
independent American company. During his tenure at
Lorimar these arrangements (with German, Italian and
British partners) resulted in the financing of five
feature films. The co-production formula he devised
became the basis for the financing of dozens of the
Lorimar films which followed. In 1981 he was
appointed Managing Director of Clydebank Film
Studios, Plc and relocated to Britain. In 1992 he
returned to the United States to head the newly
formed Falcon Film Finance, Ltd. He has been a
business affairs consultant to numerous companies
including R.K.O. and Taft Broadcasting and has
produced three motion pictures and a mini-series. In
1995 he became associated with the Law Offices of
Debra M. Stasson from which he resigned in March
1999 to devote his time to Internet related
business.
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Directors serve from the time they are elected until the next annual meeting of
shareholders or until their successors are elected.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, each
executive officer, director and beneficial owner of 10% or more of the Company's
Common Stock is required to file certain forms with the Securities and Exchange
Commission. A report of beneficial ownership of the Company's Common Stock on
Form 3 is due at the time such person becomes subject to the reporting
requirement and a report on Form 4 or 5 must be filed to reflect changes in
beneficial ownership occurring thereafter. During the fiscal year ended March
31, 2000 and as of July 21, 2000, none of the executive officers, directors, and
beneficial owners of 10% or more of the Company's Common Stock were current with
these filing requirements.
ITEM 10. EXECUTIVE COMPENSATION.
Management Compensation
The following table sets forth certain information regarding the annual
compensation for services to the Company for the fiscal year ended March 31,
2000 with respect to the Company's executive officers and directors as of March
31, 2000 who are compensated at a rate of more than $100,000 in salary during
such fiscal year (the "Named Executive Officers"):
Summary Compensation Table
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Long-Term
Compensation and
Annual Compensation Awards
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Name and Principal Position Year Salary Bonus Options
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Spencer Young 1999 $110,000 $ 0 285,000
Vice President and Director
Paul Warshaw 1999 $110,000 $ 0 435,000
Director
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The following table contains certain information concerning the options
granted to the Named Executive Officers and Directors during the fiscal year
ended March 31, 2000.
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OPTION GRANTS IN LAST FISCAL YEAR
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<CAPTION>
Number of Percent of
Securities Total Options
Underlying Granted to
Options Granted Employees in Exercise or
Name Fiscal Year Base Price Expiration Date
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<S> <C> <C> <C> <C>
Patrick Doyle
Director 225,000 $2.00 December 31, 2008
25,000 $1.50 December 31, 2008
25,000 $1.00 December 31, 2008
25,000 $ .50 December 31, 2008
------
300,000 9.9%
Ray King
Chief Financial Officer 250,000 $2.00 December 31, 2008
and Director 50,000 $1.50 December 31, 2008
50,000 $1.00 December 31, 2008
50,000 $ .50 December 31, 2008
------
400,000 13.2%
Melvyn Quiller
Chief Executive Officer 250,000 $2.00 December 31, 2008
and Director 50,000 $1.50 December 31, 2008
50,000 $1.00 December 31, 2008
50,000 $ .50 December 31, 2008
------
400,000 13.2%
Brian O'Dell
Director 250,000 $2.00 December 31, 2008
50,000 $1.50 December 31, 2008
50,000 $1.00 December 31, 2008
50,000 $ .50 December 31, 2008
------
400,000 13.2%
Spencer Young
Vice President and 260,000 $ .50 December 31, 2008
Director 25,000 $2.00 December 31, 2008
------
285,000 9.4%
Paul Warshaw
Director 410,000 $ .50 December 31, 2008
25,000 $2.00 December 31, 2008
------
435,000 14.4%
Chafe Omar Abou Richeh
Director 250,000 $2.00 December 31, 2008
50,000 $1.50 December 31, 2008
50,000 $1.00 December 31, 2008
50,000 $ .50 December 31, 2008
------
400,000 13.2%
Ahmed Abdulla Mannai
Director 250,000 $2.00 December 31, 2008
50,000 $1.50 December 31, 2008
50,000 $1.00 December 31, 2008
50,000 $ .50 December 31, 2008
------
400,000 13.2%
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EMPLOYMENT AGREEMENTS
The Company has entered into an Employment Agreement with Mr. Spencer
Young, dated December 13, 1999, pursuant to which Mr. Young has agreed to serve
as Vice President and Director of the Company for a term of two years commencing
on February 1, 2000 through January 31, 2002 and for additional one year term if
the Company elects to extend the term. In consideration for his services as Vice
President and Director, Mr. Young will receive on an annual basis a base salary
of not less than $110,000. Mr Young was also granted stock options in the amount
of 285,000 shares of the Company's common stock.
The Company has entered into an Employment Agreement with Dr. Paul Warshaw,
dated December 13, 1999, pursuant to which Dr. Warshaw has agreed to serve as
Director of the Company and to perform employment services for the United States
operation for a term of one year commencing on February 1, 2000 through January
31, 2001 and for additional one year term if the Company elects to extend the
term. In consideration for his services as Vice President and Director, Dr.
Warshaw will receive on an annual basis a base salary of not less than $110,000.
Dr. Warshaw was also granted stock options in the amount of 435,000 shares of
the Company's common stock.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The Company is authorized to issue 100,000,000 shares of Common Stock, of
which 34,605,213 shares were issued and outstanding on July 20, 2000. As of July
20, 2000, there were 2,179 shareholders of record.
The following table sets forth certain information regarding the beneficial
ownership of the shares of Common Stock as of July 20, 2000, by (i) each person
who is known by the Company to be the beneficial owner of more than five percent
(5%) of the issued and outstanding shares of Common Stock, (ii) each of the
Company's directors and executive officers and (iii) all directors and executive
officers as a group:
Shares Percent of
Beneficially Shares
Beneficial Owner* Owned Outstanding**
--------------------------------------------------------------------------------
Ahmed Abdulla Mannai 0 0%
Patrick D. Doyle 0 0%
Raymond A. King 0 0%
Melvyn F. Quiller 0 0%
Brian J. O'Dell 0 0%
Chafe Omar Abou Richeh 0 0%
Paul Warshaw 165,000 .4%
Spencer Young 117,000 .3%
All Directors and Executive
Officers as a Group (8 persons) 282,000 .8%
--------------------
* Unless otherwise indicated, the beneficial owner's address is the same as
the Company's principal office.
** Percentages calculated on the basis of the amount of outstanding shares
plus, for each person, any shares that person has the right to acquire
within 60 days pursuant to options or other rights.
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
ITEM 13. EXHIBITS, LIST, AND REPORTS ON FORM 8-K.
a) Exhibits. The exhibits filed as part of this Annual report on Form 10-KSB are
incorporated by reference to the indicated exhibit as part of the filing of the
Company shown below.
Exhibit No. Description
----------- -----------
2 Share Purchase Agreement, dated January 28, 2000, by and
between the Company and Banknet Kft (Exhibit 7.1 of Form 8-K
filed 2/29/00).
3.1 Articles of Incorporation (Exhibit 3.1 to Form 8-K filed
8/25/99).
3.2 Bylaws.*
4 Form of Common Stock Certificate of Company.*
10.1 Employment Agreement, dated December 13, 1999, by and
between the Company and Mr. Spencer Young.*
10.2 Employment Agreement, dated December 13, 1999, by and
between the Company and Dr. Paul Warshaw.*
10.3 Professional Services Agreement, dated December 1999, by and
between the Company and Dr. Fred Davis.*
10.4 Consulting Agreement, dated April 11, 2000, by and between
the Company and Dr. J. Christopher Westland.*
10.5 Consulting Agreement, dated April 11, 2000, by and between
the Company and Dr. Viswanath
Venkatesh.*
10.6 Consulting Agreement, dated April 11, 2000, by and between
the Company and Ms. Pam J. Schmidt.*
10.7 Professional Services Agreement, dated April 11, 2000, by
and between the Company and Ms. Jane Frances Stuart.*
27.1 Financial Data Schedule.*
* Filed herewith.
b) Item 6 Exhibits and Reports on Form 8-K.
(i) Form 8-K was filed with the Securities and Exchange
Commission on April 30, 1999 to report the Company's cancellation of a Plan and
Agreement of Reorganization with Contract Power, Inc. for non-performance and to
report related business matters. The 8-K also contained information regarding
the appointment of two new directors to the Company's Board of Directors.
<PAGE>
(ii) Form 8-K was filed with the Securities and Exchange
Commission on June 23, 1999 to report that one of the directors that was to be
appointed to the Company's Board of Directors could not assume his directorship
until the shareholders of the Company approved an increase in the number of
directors from three.
(iii) Form 8-K was filed with the Securities and Exchange
Commission on August 27, 1999 to report (a) that the Company effected reverse
split of the issued and outstanding common shares of the Company; (b) that the
name of the Company was changed to Dynamic I-T, Inc.; and (c) that the number of
directors of the corporation was increased from not less than three to no more
than nine.
(iv) Previous counsel of the Company filed Form 8-K on October
22, 1999 identical in content to the Form 8-K filed on August 27, 1999.
(v) Form 8-K was filed with the Securities and Exchange
Commission on March 1, 2000 to report the forthcoming acquisition by the Company
of Banknet KFT, a Hungarian corporation with the issuance in consideration of
30,400,000 of shares of the Company's common stock. The closing of the
transaction was postponed until not later than July 31, 2000. The Company plans
to file an amended Form 8-K upon consummation of this transaction.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act,
the Company duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DYNAMIC I-T, INC.
By: /s/ Patrick D. Doyle
Patrick D. Doyle
Director
Date: July 21, 2000
In accordance with the Exchange Act, this Report has been
signed below by the following persons on behalf of the Company in the capacities
set forth and on the dates indicated.
Signature Position Date
By: /s/ Patrick D. Doyle Director July 21, 2000
Patrick D. Doyle
By: /s/ Raymond King Chief Financial Officer July 21, 2000
Raymond King
This schedule contains summary financial information extracted from
financial statements for the fiscal year ended March 31, 2000 and is qualified
in its entirety by reference to such financial statements.
<PAGE>
DYNAMIC I-T, INC.
INDEX TO FINANCIAL STATEMENTS
PAGE
-- Accountants' Review Report F-1
-- Audited Condensed Consolidated Balance Sheets,
March 31, 2000 and March 31, 1999 F-2
-- Audited Condensed Consolidated Statements of Operations
from inception through March 31, 2000 and for the fiscal
year ended March 31, 2000 and March 31, 1999 F-3
-- Statement of Shareholders' Equity from inception through
March 31, 2000 and for the fiscal year ended March 31,
2000 and March 31, 1999 F-4
-- Audited Condensed Consolidated Statements of Cash Flows
from inception through March 31, 1999 and for the nine
months ended December 31, 1999 and 1998 F-7
-- Notes to audited Condensed Consolidated Financial
Statements F-10
<PAGE>
[LETTERHEAD OF MICHAEL JOHNSON & CO., LLC]
INDEPENDENT AUDITORS REPORT
Board of Directors
Dynamic I-T, Inc.
We have audited the accompanying balance sheet of Dynamic I-T, Inc. (An
Exploration Stage Company) as of March 31, 2000, and the related statements of
operations, cash flows, and changes in stockholders' equity for the period March
3, 1980 (inception), through March 31, 2000 and March 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our 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 statements 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 Dynamic I-T, Inc. at March 31,
2000, and the results of its operations and its cash flows for the period March
3, 1980 (inception), through March 31, 2000, and March 31, 1999, in conformity
with generally accepted accounting principles.
As shown in the financial statements, the company incurred a loss for this year
and had incurred substantial losses in the prior years. At March 31, 2000,
current liabilities exceed current assets by $924,570. These factors indicate
that the company has substantial doubt about its ability to continue as a going
concern. The financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts and
classification of liabilities that might be necessary in the event the company
cannot continue in existence.
The financial statements for the years ended March 31, 1980 through March 31,
1992 were audited by other accountants, whose reports dated July 6, 1992 were
qualified as to a going concern. They have not performed any auditing procedures
since that date.
/s/ Michael Johnson & Co., LLC
Michael Johnson & Co., LLC
Denver, Colorado
July 10, 2000
F-1
<PAGE>
DYNAMIC I-T, INC.
(AN EXPLORATION STAGE COMPANY)
BALANCE SHEET
Mar. 31, Mar. 31,
ASSETS 2000 1999
------ -------- --------
Current Assets:
Cash $ 488 $ -
---------- ----------
TOTAL ASSETS $ 488 $ -
========== ==========
LIABILITIES AND SHAREHOLDERS'
Current Liabilities:
Accounts payable & Accrued expenses $255,413 $360,058
Accrued salary, officer 390,000 390,000
Note Payable (Note 4) 229,645 100,000
Loan Payable - Shareholders (Note 5) 50,000 -
---------- ----------
Total Current Liabilities 925,058 850,058
---------- ----------
Shareholders' (Deficit):
Common stock, no par value;
authorized 100,000,000 shares;
1,001,343 shares issued and outstanding at
March 31, 2000, and 642,174 as of March
31, 1999 2,735,853 2,714,603
Deficit accumulated during the
exploration stage
(3,660,423) (3,564,661)
---------- ----------
Total Shareholders' (Deficit)
(924,570) (850,058)
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 488 $ -
========== ==========
F-2
<PAGE>
DYNAMIC I-T, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM MARCH 3, 1980 (INCEPTION) THROUGH MARCH 31, 2000
<TABLE>
<CAPTION>
Cumulative
Amounts from
Inception (March
3, 1980) through Year Ended Three Months Ended
Dec. 31,1999 March 31, 2000 March 31, 1999 March 31, 2000 March 31, 1999
---------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Costs and Expenses:
General and administrative,
including exploration costs $ 2,013,655 $ 95,762 $ 25,000 $ - $ -
Interest expense 710,069 - - - -
Bad debt expense 2,500 - - - -
Depreciation 44,325 - - - -
Write-down of deferred mine development
costs, mineral properties, and joint
ventures advances to estimated net
realizable value. 1,227,003 - - - -
Write-down of milling equipment to
estimated net realizable value. 619,365 - - - -
Write-off of abandoned mineral properties
and write-off of advance royalties on
abandoned or expired lease claims. 210,240 - - - -
Write-down of inventories to lower of cost
or market. 18,401 - - - -
Oil and gas dry-hole costs 25,000 - - - -
Write-off of deferred mine development
costs on abandoned mine projects. 264,238 - - - -
-------------- ------------- ------------- ------------ -------------
Operating (Loss) 5,134,796 95,762 25,000 - -
-------------- ------------- ------------- ------------ -------------
Other Income (Expenses):
Assay services 20,041 - - - -
Interest income 212,754 - - - -
Rental income 38,238 - - - -
Other income 32,149 - - - -
Loss on dispositions including
sale of milling equipment and
abandonments of mine equipment,
buildings and improvements,
furniture and equipment and vehicles. (311,542) - - - -
-------------- ------------- ------------- ------------ -------------
(8,360) - - - -
-------------- ------------- ------------- ------------ -------------
Net (loss) before income taxes
and extraordinary items. (5,143,156) (95,762) (25,000) - -
Provision for income taxes - - - -
-------------- ------------- ------------- ------------ -------------
Net (loss) before extraordinary item (5,143,156) (95,762) (25,000) - -
-------------- ------------- ------------- ------------ -------------
Extraordinary item:
Gain from forgiveness of debt (Note 4) 1,482,733 - - - -
-------------- ------------- ------------- ------------ -------------
Net Gain (loss) $(3,660,423) $ (95,762) $ 1,435,922 $ (9,250) $ -
============== ============= ============= ============ =============
Net Gain (loss) per share: $ (0.10) $ 0.02 $ - $ -
------------- ------------- ------------ -------------
Weighted average shares outstanding 1,001,343 64,217,400 1,001,343 64,217,400
============= ============= ============ =============
</TABLE>
F-3
<PAGE>
DYNAMIC I-T, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM MARCH 3, 1980 (INCEPTION)
THROUGH MARCH 31, 2000
<TABLE>
<CAPTION>
Deficit
Common Stock Accumulated
----------------------- During the Total
Number of Exploration Shareholders'
Shares Amount Stage Equity
---------- ----------- ------------- ---------------
<S> <C> <C> <C> <C>
Date of inception, March 3, 1980
Contributed property from officers and
directors 282,500 222,048 222,048
Net (loss) for the period from
inception (March 3, 1980)
through March 31, 1981 - - (9,293) (9,293)
---------- ----------- ------------- ---------------
Balance at March 31, 1981 282,500 222,048 (9,293) 212,755
Sale of stock to officers and directors
for cash - 12,500 20,000 - 20,000
for cash - 2,500 6,250 - 6,250
for cash - 2,500 6,250 - 6,250
Sale of stock (private placement)
during June 1981 - 60,000 300,000 - 300,000
Sale of stock in public offering- 250,179 2,129,473 - 2,129,473
Net (loss) for the year ended
March 31, 1982 -- -- (18,559) (18,559)
---------- ----------- ------------- ---------------
Balances at March 31, 1982 610,179 2,684,021 (27,852) 2,656,169
Net (loss) for the year ended
March 31, 1983 -- -- (236,492) (236,492)
---------- ----------- ------------- ---------------
Balances at March 31, 1983 610,179 2,684,021 (264,344) 2,419,677
Net (loss) for the year ended
March 31, 1984 -- -- (538,995) (538,995)
---------- ----------- ------------- ---------------
Balances at March 31, 1984 610,179 2,684,021 (803,339) 1,880,682
Net (loss) for the year ended
March 31, 1985 -- -- (624,177) (624,177)
---------- ----------- ------------- ---------------
Balances at March 31, 1985 610,179 2,684,021 (1,427,516) 1,256,505
---------- ----------- ------------- ---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
DYNAMIC I-T, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM MARCH 3, 1980 (INCEPTION)
THROUGH MARCH 31, 2000
<TABLE>
<CAPTION>
Deficit
Common Stock Accumulated
----------------------------- During the Total
Number of Exploration Shareholders'
Shares Amount Stage Equity
---------- ----------- ------------- ---------------
<S> <C> <C> <C> <C>
Issuance of restricted stock for cash
on behalf of the company 17,500 $ 20,082 $ -- $ $20,082
Net (loss) for the year ended
March 31, 1986 -- -- (847,308) (847,308)
---------- ----------- ------------- ---------------
Balance at March 31, 1986 627,679 2,704,103 (2,274,824) 429,279
Issuance of restricted stock for
services 10,000 5,000 -- 5,000
Net (loss) for the year ended
March 31, 1987 -- -- (526,070) (526,070)
---------- ----------- ------------- ---------------
Balances at March 31, 1987 637,679 2,709,103 (2,800,894) (91,791)
Net (loss) for the year ended
March 31, 1988 -- -- (194,762) (194,762)
---------- ----------- ------------- ---------------
Balances at March 31, 1988 637,679 2,709,103 (2,955,656) (286,553)
Issuance of restricted stock for cash 1,995 3,000 -- 3,000
Issuance of restricted stock in
partial settlement of a disputed
liability 2,500 2,500 -- 2,500
Net (loss) for the year ended
March 31, 1989 -- -- (165,082) (165,082)
---------- ----------- ------------- ---------------
Balances at March 31, 1989 642,174 2,714,603 (3,160,738) (446,135)
Net (loss) for the year ended
March 31, 1990 -- -- (725,765) (725,765)
---------- ----------- ------------- ---------------
Balances at March 31, 1990 642,174 2,714,603 (3,886,503) (1,171,900)
Net (loss) for the year ended
March 31, 1991 -- -- (134,961) (134,961)
---------- ----------- ------------- ---------------
Balances at March 31, 1991 642,174 2,714,603 (4,021,464) (1,306,861)
Net (loss) for the year ended
March 31, 1992 -- -- (345,090) (345,090)
---------- ----------- ------------- ---------------
Balances at March 31, 1992 642,174 2,714,603 (4,366,554) (1,655,227)
---------- ----------- ------------- ---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
DYNAMIC I-T, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM MARCH 3, 1980 (INCEPTION)
THROUGH MARCH 31, 2000
<TABLE>
<CAPTION>
Deficit
Common Stock Accumulated
----------------------- During the Total
Number of Exploration Shareholders'
Shares Amount Stage Equity
---------- ----------- ------------- ---------------
<S> <C> <C> <C> <C>
Net (loss) for the year ended
March 31, 1993 - - (383,659) (383,659)
Realized loss on security - - - 3,276
---------- ----------- ------------- ---------------
Balance at March 31, 1993 642,174 2,714,603 (4,750,213) (2,035,610)
Net (loss) for the year ended
March 31, 1994 - - (50,370) (50,370)
---------- ----------- ------------- ---------------
Balance at March 31, 1994 642,174 2,714,603 (4,800,583) (2,085,980)
Net (loss) for the year ended
March 31, 1995 - - (50,000) (50,000)
---------- ----------- ------------- ---------------
Balance at March 31, 1995 642,174 2,714,603 (4,850,583) (2,135,980)
Net (loss) for the year ended
March 31, 1996 - - (50,000) (50,000)
---------- ----------- ------------- ---------------
Balance at March 31, 1996 642,174 2,714,603 (4,900,583) (2,185,980)
Net (loss) for the year ended
March 31, 1997 - - (50,000) (50,000)
---------- ----------- ------------- ---------------
Balance at March 31, 1997 642,174 2,714,603 (4,950,583) (2,235,980)
Net (loss) for the year ended
March 31, 1998 - - (50,000) (50,000)
---------- ----------- ------------- ---------------
Balance at March 31, 1998 642,174 2,714,603 (5,000,583) (2,285,980)
Net (loss) for the year ended
March 31, 1999 - - 1,435,922 1,435,922
---------- ----------- ------------- ---------------
Balance at March 31, 1999 642,174 2,714,603 (3,564,661) (850,058)
Issuance for services 357,826 21,250 - 21,250
Additional Shares (Rounding) 1,343 - - -
Net (loss) for the year ended
December 31, 1999 - - (95,762) (95,762)
---------- ----------- ------------- ---------------
Balance at December 31, 1999 1,001,343 $2,735,853 $ (3,660,423) $ (924,570)
=== ==== ========== =========== ============= ===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE>
DYNAMIC I-T, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM MARCH 3, 1980 (INCEPTION)
THROUGH MARCH 31, 2000
<TABLE>
<CAPTION>
Cumulative
Amounts From
March 3, 1980
(Inception)
Through Year Ended
March 31, 2000 March 31, 2000 March 31, 1999
-------------- ------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net Gain (loss) $ (3,660,423) $ (95,762) $ -
Adjustments to reconcile net loss
to net cash (used by)
operating activities:
Depreciation and amortization 147,668 - -
Write-down of deferred mine
development costs, mineral
properties and joint venture
advances to estimated net
realizable value 1,227,003 - -
Write-down of milling equipment
to estimated net realizable value 619,365 - -
Write off of abandoned mineral
properties and advance royalties 210,240 - -
Write-off of deferred mine
development costs 264,238 - -
Loss on disposition of mine
equipment, furniture and
equipment, and vehicles 311,542 - -
Gain on disposition of
property and equipment (17,054) - -
Oil and Gas dry-hole costs 25,000 - -
Bad debt expense 2,500 - -
Decrease in other assets 555 - -
(Decrease) Increase in accounts payable 360,058 - -
(Decrease) Increase in accrued interest payable - - -
Increase in accrued salary, officer 390,000 - -
(Increase) in miscellaneous receivable (2,500) - -
--------------- -------------- -------------
Total Adjustments 3,538,615 - -
--------------- -------------- -------------
Net cash (used by) operating activities $ (121,808) $ (95,762) $ -
=============== ============== =============
</TABLE>
F-7
<PAGE>
DYNAMIC I-T, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM MARCH 3, 1980 (INCEPTION)
THROUGH MARCH 31, 2000
<TABLE>
<CAPTION>
Cumulative
Amounts From
March 3, 1980
(Inception)
Through
March 31, 2000 March 31, 2000 March 31, 1999
-------------- -------------- --------------
<S> <C> <C> <C>
Cash flows from investing activities:
Proceeds from the disposition
of property and equipment $ 86,628 $ - $ -
Additions to deferred mine
development costs (1,257,154) - -
Acquisition of other property
and equipment (1,012,523) - -
(Increase) in other assets (235,651) - -
--------------- -------------- -------------
Net cash (used by) investing activities (2,418,700) - -
--------------- -------------- -------------
Cash flows from financing activities:
Proceeds from issuance of
common stock 249,054 21,250 -
Issuance of long-term debt 131,250 75,000 -
Advance from an officer 36,350 - -
Proceeds from other notes payable
including $14,809 reclassified from
accounts payable and $1,822 of
interest expense incurred during the
March 31, 1991 fiscal year 43,631 - -
Payment on debt principal including
$2,000 for debt forgiveness in 1991 (83,250) - -
Repayment of advances from officer (36,350) - -
Advance to joint venture (186,940) - -
Shareholder advances - - -
--------------- -------------- -------------
Net cash provided by
financing activities 153,745 96,250 -
--------------- -------------- -------------
Net (decrease) increase in cash and
cash equivalents 488 488 -
Beginning cash and cash equivalents - - -
--------------- -------------- -------------
Ending cash and cash equivalents $ - $ - $ -
=============== ============== =============
</TABLE>
F-8
<PAGE>
DYNAMIC I-T, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM MARCH 3, 1980 (INCEPTION)
THROUGH MARCH 31, 2000
<TABLE>
<CAPTION>
Cumulative
Amounts From
March 3, 1980
(Inception)
Through
March 31, 2000 March 31, 2000 March 31, 1999
-------------- -------------- --------------
<S> <C> <C> <C>
Supplemental schedule of non-cash
investing and financing activities:
Issuance of stock for property 224,548 - -
Investment in preferred stock
in exchange for mining claims 4,024 - -
Investment in marketable equity
security and miscellaneous
receivable resulting from
disposition of milling equipment 13,276 - -
Exchange of miscellaneous
receivable resulting from
milling equipment held for sale (10,000) - -
Supplemental disclosures of cash
information:
Cash paid for:
Interest $ 36,961 $ - $ -
================== ================== ===================
</TABLE>
F-9
<PAGE>
DYNAMIC I-T, INC.
(An Exploration Stage Company)
FINANCIAL STATEMENTS
From March 3, 1980 (Inception) Through March 31, 2000
F-10
<PAGE>
DYNAMIC I-T, INC.
(An Exploration Stage Company)
Notes to Financial Statements
March 31, 2000
Note 1 - Organization and Summary of Significant Accounting Policies:
Colorado Gold & Silver, Inc.(the Company) was incorporated under the laws
of the State of Colorado on March 3, 1980. The Company was organized for
the principal purpose of engaging in the business of acquiring,
exploring, and if warranted, developing mineral prospects. Activities
through March 31, 1992, during which time the Company was in the
exploration stage (a development stage company as defined by Statement of
Financial Accounting Standards No. 7), consisted principally of
organizational activities, including the sale of shares of its common
stock, and the acquisition, evaluation, exploration and development of
certain mineral properties for future production. Certain of these
properties were acquired from certain of the Company's officers and
directors. On August 23, 1999, the name of the Corporation was changed to
Dynamic I-T, Inc. per amendment to the articles of incorporation.
Cash and Cash Equivalents:
For purposes of the Statement of Cash Flows, the Company considers demand
deposits and all highly liquid-debt investments purchased with a maturity
of three months or less to be cash equivalents.
Deferred Mine Development Costs, Mineral Properties and Advance
Royalties:
Mineral exploration costs were charged against income as incurred. Costs
incurred in developing mining properties for commercial production are
capitalized and reflected in the financial statements as deferred mine
development costs. Such costs consist primarily of labor, supplies,
contract construction services, allocated overhead and capitalized
interest related to mine development activities. The Company capitalized
deferred mine development costs at March 31, 1985 of $1,001,752 relating
to the development of the Companys Colorado mine. The Company had
suspended development of this mine and had written down the development
costs to $250,000. During the year ended March 31, 1990, management of
the Company made a decision to abandon this Colorado mining project. The
Company recorded a loss of $250,000 on the write down of this Colorado
deferred mine development cost to its estimated net realizable value. In
addition, the management of the Company also abandoned certain of its
California deferred mine development costs, which resulted in a loss of
$93, 386 during the year-end of March 31, 1990.
Costs of mineral properties acquired and advance royalties on expected
future production were deferred pending ultimate realization of such
production. All such costs were to be amortized on a unit-of-production
method if commercial production from the Company's mineral properties
occurs. Such costs were charged against income when the mineral
properties and advance royalties were abandoned.
Other Property and Equipment:
Other property and equipment were carried at costs and were depreciated
on the straight-line method over their estimated useful lives which were
as follows:
Vehicles 3 years
Furniture and 5 years
equipment
F-11
<PAGE>
DYNAMIC I-T, INC.
(An Exploration Stage Company)
Notes to Financial Statements
March 31, 2000
Organization Costs:
Organization costs incurred by the Company totaling $5,000 had been
capitalized and have been amortized on the straight-line method over a
five-year period.
Net (Loss) Per Share:
The net (loss) per common share has been computed on the basis of the
weighted average number of shares of common stock outstanding during the
year. The number of shares outstanding on March 31, 1999 was 64,217,400,
the outstanding shares at March 31, 2000 was 1,001,343. On August 23,
1999 the Dynamic I-T, Inc. Board of Directors authorized a 1/100 reverse
split to shareholders of record as of that date. Shareholder's equity has
been restated to give retroactive recognition to the stock split for all
periods presented. All references to number of shares have been restated
to reflect the stock split.
Note 2 - Going-Concern:
As shown in the financial statements, the Company incurred a net loss for
the period ended March 31, 2000 of $95,762. The Company's current
liabilities exceeded its current assets by $924,570.
Working Capital requirements of the Company have been provided primarily
by Mr. M. Coke Reeves, President of the Company. These factors indicate
that the Company may be unable to continue in existence without future
working capital and future profitable operations. The financial
statements do not include any adjustments relating to the recoverability
and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the Company
be unable to continue in existence.
Note 3 - Income Taxes:
As of March 31, 2000, the Company has financial reporting net operating
loss carryforwards of approximately $3,610,423 for which the tax effect
has not been recognized for financial reporting purposes. The Company
also has approximately $3,000,000 of tax net-operating losses available
for carry forward to offset future years' taxable income. Such losses
expire at various times through 2013 if not utilized earlier.
Note 4 - Notes Payable:
Notes payable as of March 31, 2000 is as follows:
First Trust Corp. dated 11/19/98 payable on
July 1, 1999 with interest at 9% per annum.
An extension agreement on July 1, 1999 extending
maturity date to Sept. 30, 2000. $ 25,000
Banknet advance dated 1/30/2000, due upon
demand. 204,645
-----------
Total notes payable $ 229,645
==========
F-12
<PAGE>
DYNAMIC I-T, INC.
(An Exploration Stage Company)
Notes to Financial Statements
March 31, 2000
Note 5 - Loan Payable - Shareholder
A note for $50,000, payable over twelve months in quarterly installments
of $25,000 to Coke Reeves for settlement of debt and interest.
Note 6 - Related Party Transactions:
Accrued officer salary in the amounts of $390,000 represents salary due
Mr. M. Coke Reeves for services performed through March 31, 1999. An
agreement was reached on April 20, 1999 between Coke Reeves and the Board
of Directors to forgive the $390,000 accrued salary after the common
share price of the Company on the OTC Bulletin Board had averaged $3.00
per share for thirty (30) consecutive trading days. In the event that
such average price does not occur within two years of the date of the
Agreement, the company will issue S-8 registered shares at the then
market price, in full satisfaction of the obligation. In addition, Coke
Reeves shall hold a pledge of 200,000 shares of Dynamic I-T, Inc., as
collateral for the payment of the accrued and unpaid salary.
Note 7 - Subsequent Event
On February 14, 2000 subject to certain conditions in a Share Purchase
Agreement, the Board of Directors authorized the issuance of 30,400,000
shares of restricted common stock to Banknet KFT pursuant to the Share
Purchase Agreement. Banknet provides data communications services within
Hungary and neighboring states. It owns a hub in Budapest with an
installed base of 600 remote sites. On February 11, 2000 the Board of
Directors authorized a total of 1,000,000 warrants to purchase common
shares at $.50 per share for a period of seven years commencing February
1, 2000 as consideration for services rendered in the acquisition of
Banknet.
On February 11, 2000 the Board of Directors authorized the issuance of a
total of 750,000 shares of restricted common stock for the full fair and
adequate consideration for services rendered. On February 28, 2000 the
Board resolved that the closing date of the transactions contemplated by
the Agreement is hereby extended from February 28, 2000 to the date that
is after March 31, 2000 and on or before July 31, 2000.
F-13
