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This 8-K/A relates to the 8-K filing (0001091818-00-000039) which was
accepted by the U.S. SEC on August 18, 2000.
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 27, 2000
DATAMEG, CORP.
(Exact name of registrant as specified in its charter)
NEW YORK 0-12493 13-3134389
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
3148 Dumbarton Street, N.W., Washington, D.C. 20007
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (202) 965-2448
The Viola Group Inc.
1653, Haight Avenue, Bronx, New York 10461-1503
(Former name or former address, if changed since last report)
The Exhibit Index appears on Page 18.
Item 4. Changes in Registrant's Certifying Accountant.
On October 27, 2000 the Registrant's President approved the
engagement of Hoffman, Fitzgerald & Snyder, P.C. and the
dismissal of Scrudato & Co. as the principal accountants to audit
the Registrant's financial statements. The decision to change
auditors was made in connection with the recently completed share
exchange, previously reported, and was not the result of any, and
there have been no, disagreements, during the two most recent
fiscal years on any matter of accounting principles or practice,
financial statement disclosure, or auditing scope or procedure.
None of the former auditor's reports on the Registrant's financial
statements for either of the two most recent fiscal years
contained an adverse opinion or disclaimer of opinion or was
qualified or modified as to uncertainty, audit scope or accounting
principles. As the composition of the Board of Directors resulting
from the recently completed share exchange, above referenced, is
currently in transition, pending compliance with Rule 14f-1,
engagement of the new auditors will be submitted to the new Board
for ratification.
Item 5. Other Events
On August 9, 2000, via a Written Consent in lieu of Joint Special
Meeting of the Board of Directors and Stockholders, the sole
director of The Viola Group, Inc. and shareholders holding in
excess of a majority of the total voting power of The Viola Group,
Inc.'s capital stock determined to change the corporation's name
to DataMEG Corp.
Attached as an exhibit is the Certificate of Amendment to the
Certificate of Incorporation of The Viola Group, Inc., as filed
with the New York Department of State on September 7, 2000,
effectuating the name change to DataMEG Corp.
<PAGE> 2
Item 7. Financial Statements, Pro Forma Financials & Exhibits
A copy of the disclosure in Item 4 has been furnished to Scrudato
& Co. who have been requested to furnish the Registrant a letter
addressed to the Commission stating whether it agrees with the
statements made therein which letter will be filed as an exhibit
to this report.
(a) Financial Statements
Audited December 31, 1999, and the related
statements of operations, changes in stock-
holders' equity and cash flows for the period
from January 13, 1999 (date of inception) to
December 31, 1999.
(b) Pro Forma Financial Information
as of June 30, 2000 and it's accompaniing notes
(c) Exhibits
AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION OF THE VIOLA GROUP, INC.
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.
Date: October 30, 2000 DATAMEG, CORP.
(Registrant)
By: /s/ Andrew Benson
-------------
Andrew Benson
President
DataMEG Corp.
(A Development Stage Enterprise)
Financial Statements
For the Period from January 13, 1999 (Date of Inception)
To December 31, 1999
With Independent Auditors' Report
CONTENTS PAGE
Independent Auditors' Report 1
Financial Statements:
Balance sheets 2
Statements of operations 3
Statements of changes in
stockholders' equity (deficit) 4
Statements of cash flows 5
Notes to Financial Statements 6-12
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
DATAMEG CORP., (A DEVELOPMENT STAGE ENTERPRISE),
Washington, DC
We have audited the accompanying balance sheet of DATAMEG CORP., (a de-
velopment stage enterprise), (the "Company") as of December 31, 1999,
and the related statements of operations, changes in stockholders' equity
and cash flows for the period from January 13, 1999 (date of inception)
to December 31, 1999. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion
on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
stanards. 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 DATAMEG CORP., as of December 31, 1999 and the
results of its operations and its cash flows for the period from January
13, 1999 to December 31, 1999 in conformity with generally accepted
accounting principles.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of DATAMEG CORP., as of
December 31, 1999 and the results of its operations and its cash flows
for the period from January 13, 1999 to December 31, 1999 in conformity
with generally accepted accounting principles.
/s/ Hoffman, Fitzgerald & Snyder, P.C.
----------------------------------
Hoffman, Fitzgerald & Snyder, P.C.
McLean, Virginia
October 11, 2000
<PAGE> 4
DataMEG Corp.
(A Development Stage Enterprise)
Balance Sheets
<TABLE>
<CAPTION>
<S> <C> <C>
June 30,
December 31, 2000
1999 (unaudited)
ASSETS
CURRENT ASSETS:
Cash 1,030 1,030
Employee advances 267 267
Prepaid expenses 56,667 77,667
Due from stockholder and officer 25,700 25,700
Total current assets 83,664 104,664
PROPERTY AND EQUIPMENT, net 46,387 37,388
OTHER ASSETS:
Intangible assets 91,631 91,631
Deposits 3,714 3,714
Total other assets 95,345 95,345
225,396 237,397
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Capital lease obligation 9,339 5,947
Accounts payable and accrued expenses 76,285 67,889
Due to stockholders and officers 57,593 37,593
Total current liabilities 143,217 111,429
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY:
Common stock, $.0069 par value; 75,000,000 shares
authorized 14,896,930 and 14,938,025 shares issued and out-
standing at December 31, 1999 and June 30, 2000, respectively 102,736 103,014
Common stock subscriptions receivable (31,300) (31,300)
Additional paid-in capital 1,057,671 1,834,294
Accumulated deficit (1,046,928) (1,780,040)
Total stockholders' equity 82,179 125,968
225,396 237,397
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 5
DataMEG Corp.
(A Development State Enterprise)
Statements of Operations
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the period For the six For the six Cumulative
from inception months ended months ended from inception
(January 13, 1999) June 30, June 30, (January 13, 1999)
to December 2000 1999 to June 30, 2000
31, 1999 (Unaudited) (Unaudited) (Unaudited)
REVENUE - - - -
COST OF REVENUES - - - -
Gross profit - - - -
OPERATING EXPENSES 1,055,458 733,112 316,117 1,788,570
Loss from operations (1,055,458) (733,112) (316,117) (1,788,570)
OTHER INCOME (EXPENSES):
Realized gains on
sale of securities 8,530 - - 8,530
Total other (income)
expenses 8,530 - - 8,530
NET LOSS BEFORE BENEFIT FOR
INCOME TAXES (1,046,928) (733,112) (316,117) (1,780,040)
Benefit for income taxes - - - -
NET LOSS (1,046,928) (733,112) (316,117) (1,780,040)
Net loss per common share (basic) (0.07) (0.05) (0.02) (0.12)
Weighted average number of common
shares outstanding 14,396,725 14,918,512 14,118,904 14,570,654
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 6
DataMEG Corp.
(A Development Stage Enterprise)
Statements of Changes in Stockholders' Equity
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Common stock Deficit Accumulated Total
Common Stock Additional subscriptions during development Stockholders'
Shares Amount Paid-In Capital receivable stage Equity
BALANCE, January 13, 1999
(date of inception) - $ - - - - -
Stock issuances 1,096,555 7,561 1,040,346 - - 1,047,907
Stock issuances in lieu
of cash for compensation 13,800,375 95,175 17,325 - - 112,500
Stock subscriptions
receivable - - - (31,300) - (31,300)
Net loss - - - - (1,046,928) (1,046,928)
BALANCE, December 31, 1999 14,896,930 $ 102,736 1,057,671 (31,300) (1,046,928) 82,179
Stock issuances 39,095 264 756,637 - - 756,901
Stock issuances in lieu
of cash for compensation 2,000 14 19,986 - - 20,000
Net loss - - - - (733,112) (733,112)
BALANCE, June 30, 2000
(Unaudited) 14,938,025 $ 103,014 1,834,294 (31,300) (1,780,040) 125,968
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 7
DataMEG Corp.
(A Development Stage Enterprise)
Statements of Cash Flows
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Cummulative
For the period For the six For the six from inception
from inception months ended months ended (January 13,
(January 13, 1999) June 30, June 30, 1999) to
to December 2000 1999 June 30, 2000
31, 1999 (Unaudited) (Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss (1,046,928) (733,112) (316,117) (1,780,040)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 8,999 8,999 3,208 17,998
Stock issued in lieu of cash for
professional services 112,500 20,000 95,175 132,500
Realized gains on sales of investments (8,530) - - (8,530)
Changes in assets and liabilities
affecting operations:
Employee advances (267) - (267) (267)
Prepaid expenses (56,667) (21,000) (28,000) (77,667)
Due from stockholder and officer (25,700) - - (25,700)
Accounts payable and accrued
expenses 76,285 (8,396) - 67,889
Due to stockholders and officers 57,593 (20,000) 45,417 37,593
Net cash used in operating
activities (882,715) (753,509) (200,584) (1,636,224)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (30,222) - (14,311) (30,222)
Payments for intangible assets (91,631) - (40,565) (91,631)
Payments for security deposits (3,714) - - (3,714)
Purchases of investments (20,000) - - (20,000)
Sales of investments 28,530 - - 28,530
Net cash used in investing
activities (117,037) - (54,876) (117,037)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of capital lease obligations (15,825) (3,392) - (19,217)
Net proceeds from issuance of stock 1,016,607 756,901 261,619 1,773,508
Net cash provided by financing
activities 1,000,782 753,509 261,619 1,754,291
NET CHANGE IN CASH 1,030 - 6,159 1,030
CASH, BEGINNING OF PERIOD - 1,030 - -
CASH, END OF PERIOD 1,030 1,030 6,159 1,030
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:
Financing of property and equipment
with capital lease 25,164 -
Issuance of stock in exchange for notes
receivable 31,300 -
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 8
A. ORGANIZATION
DataMEG CORP., a development stage enterprise, (the "Company"), was
incorporated in the State of Virginia in January 1999. The Company
is a technology development enterprise focused on introducing to the
marketplace a technology it has developed, which it has termed
Communications Acceleration System (CAS). CAS is a high-speed data
transmission processor that uses, primarily, Plain Old Telephone
Service (POTS) as the communication medium to interface between the
transmission source and the receiving entity.
In August 2000, the Company consummated a share exchange with a non-
operating public shell corporation (see Note L).
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting - The accounts of the Company are maintained on
the accrual basis of accounting whereby revenue is recognized when
earned, and costs and expenses are recognized when incurred.
Use of estimates - Management uses estimates and assumptions in
preparing financial statements in accordance with generally accepted
accounting principles. Those estimates and assumptions affect the
reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities, and the reported revenues and expenses. Actual
results could vary from those estimates.
Property and equipment - Property and equipment are stated at cost.
Depreciation and amortization is determined using the straight-line
method over estimated useful lives ranging from three to five years.
Intangible assets - Intangible assets consisted of costs incurred related
to a pending patent as of December 31, 1999. Patent costs are amortized
over seventeen years using the straight-line method. For the period from
January 13, 1999 to December 31, 1999 no amortization expense related to
patents was recorded since the patent is still pending.
Advertising - Advertising costs are charged to operations as incurred.
For the period from January 13, 1999 to December 31, 1999, amounts
charged to operations were $5,000.
Software development costs - Statement of Financial Accounting Standard
("SFAS") No. 86, "Accounting for the Costs of Computer Software to be
Sold, Leased or Otherwise Marketed", requires capitalization of certain
software development costs subsequent to the establishment of
technological feasibility and readiness of general release. Costs
incurred by the Company between the completion of technological
feasibility and general release have been insignificant and have been
charged to expense in the accompanying consolidated financial statements.
Fair value of financial instruments - The carrying value of cash, notes
receivable and notes payable approximate fair value because of the
relatively short maturity of these instruments.
<PAGE> 9
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income Taxes - The Company, a C-corporation, accounts for income taxes
under Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes." Under this method, deferred tax assets and liabilities
are determined based on differences between the financial reporting and
tax basis of assets and liabilities and are measured using the enacted
tax rates and laws that will be in effect when the differences are
expected to reverse. Valuation allowances are established when necessary
to reduce deferred tax assets to the amount expected to be realized. The
principal differences are net operating losses, start-up costs and the
use of accelerated depreciation methods to calculate depreciation expense
for income tax purposes.
Stock-based compensation - In October 1995, the FASB issued SFAS No. 123,
"Accounting for Stock-Based Compensation", which encourages companies to
recognize expense for stock-based awards based on their estimated fair
value on the grant date. SFAS is effective beginning with the year ending
December 31, 1996. SFAS No. 123 permits companies to account for stock-
based compensation based on provisions prescribed in SFAS No. 123 or
based on the authoritative guidance in Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees". The Company
has elected to account for its stock based compensation in accordance
with APB 25 which uses the intrinsic value method. The Company accounts
for all other issuances of equity instruments in accordance with SFAS
No. 123.
Net loss per common share - The Company reports basic and diluted
earnings per share ("EPS") according to the provisions of SFAS No. 128,
"Earnings Per Share." SFAS No. 128 requires the presentation of basic EPS
and, for companies with complex capital structures, diluted EPS. As the
Company has only common stock outstanding and no common stock equivalents,
only basic EPS is presented. Basic EPS excludes dilution and is computed
by dividing net income (loss) available to common stockholders by the
weighted average number of common shares outstanding during the period.
Diluted EPS is computed by dividing net income (loss) available to common
stockholders, adjusted by any convertible preferred dividends; the
after-tax amount of interest recognized in the period associated with any
convertible debt; and any other changes in income or loss that would
result from the assumed conversion of those potential common shares, by
the weighted number of common shares and common share equivalents (unless
their effect is anti-dilutive) outstanding.
Capital Structure - SFAS No. 129, "Disclosure of Information about Capital
Structure," requires a summary presentation of the pertinent rights and
privileges of the various securities outstanding. The Company's
outstanding stock is completely comprised of voting common stock. There
are no other rights or privileges to disclose.
<PAGE> 10
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Comprehensive Income - SFAS No. 130, "Reporting Comprehensive Income,"
establishes standards for reporting comprehensive income and its
components. Comprehensive income is defined as the change in equity during
a period from transactions and other events from non-owner sources.
Entities that do not have items of other comprehensive income in any
period presented are not required to report comprehensive income,
accordingly the Company has not made any such disclosure in the statements
presented herein.
Segment Information - SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information." requires public enterprises to report
certain information about operating segments, including products and
services, geographic areas of operations, and major customers. The Company
has determined that it does not have any separately reportable business
segments for period ending December 31, 1999.
NEW ACCOUNTING PRONOUNCEMENTS:
Derivatives Instruments and Hedging Activities - In June 1998, the FASB
issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities." It establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded
in other contracts and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the balance
sheet and measure those instruments at fair value. The FASB has recently
issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities- Deferral of Effective Date of FASB Statement No. 133." The
Statement defers the effective date of SFAS No. 133 to fiscal years
beginning after June 15, 2000. Management believes that the adoption of
this standard will not have a material effect on the Company's financial
position or results of operations.
<PAGE> 11
C. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following as of December 31, 1999:
Equipment $ 51,393
Furniture 3,481
Computer software 512
------
55,386
Less: accumulated depreciation (8,999)
------
Property and equipment, net $ 46,387
======
D. DUE TO/FROM STOCKHOLDERS
As of December 31, 1999, an officer and stockholder was indebted to the
Company $25,700 related expense advances received by the President.
As of December 31, 1999, the Company was indebted to an officer and
stockholder $31,906 for expenses incurred on behalf of the Company.
The Company also was indebted to an officer and stockholder $25,687 in
salary related to 1999.
E. COMMON STOCK SUBSCRIPTIONS RECEIVABLE
As of December 31, 1999, common stock subscriptions receivable consisted
of the following:
Note receivable from stockholder dated September 20, 1999
in the amount of $13,300. The note is non-interest bearing
and is due in full on December 31, 2000. $ 13,300
Note receivable from stockholder dated April 15, 1999 in
the amount of $8,000. The note is non-interest bearing
and is due in full on December 31, 2000. 8,000
Note receivable from stockholder dated April 14, 1999 in
the amount of $10,000. The note is non-interest bearing
and is due in full on December 31, 2000. 10,000
------
Total $ 31,300
======
<PAGE> 12
F. INCOME TAXES
The benefit for income taxes for the year ended December 31, 1999
is as follows:
Current $ -
Deferred -
------
Total benefit for income taxes $ -
======
A reconciliation of income tax at the statutory rate to the Company's
effective rate is as follows for 1999:
Computed at the expected statutory rate $ (356,000)
State income tax - net of Federal
tax benefit (63,000)
Less: meals and entertainment 4,000
Less: valuation allowance 415,000
-------
Total benefit for income taxes $ -
=======
Deferred tax assets and liabilities at December 31, 1999 were as follows:
Deferred tax assets:
Net operating loss carryforwards $ 4,000
Start-up costs 407,000
Depreciation and amortization 4,000
-------
Gross deferred tax assets 415,000
Valuation allowance (415,000)
-------
Net deferred tax assets $ -
=======
The net change in the valuation allowance for the period from
January 13, 1999 to December 31, 1999 was $415,000. The Company has
available at December 31, 1999 approximately $9,000 of unused operating
loss carryforwards that may be applied against future taxable income
that expire in 2019.
<PAGE> 13
G. STOCK SPLITS
In April 1999, the Board of Directors authorized a 100 to 1 stock split
of the Company's $1 par value common stock. As a result of the stock
split, 9,829,067 additional shares were issued, and par value was
reduced to $.01 per share.
In October 1999, the Board of Directors authorized a 1.45 to 1 stock
split of the Company's $.01 par value common stock. As a result of the
stock split, 4,615,433 additional shares were issued, and par value was
reduced to $.0069 per share.
All references in the accompanying financial statements to the number of
common shares have been restated to reflect the stock splits.
H. RELATED PARTY TRANSACTIONS
As of December 31, 1999, the Company had notes receivable from several
stockholders related to issuances of the Company's stock (see Note D).
The Company also had an amount due from an officer and stockholder and
several amounts payable to various officers and stockholders (see Note E).
I. COMMITMENTS AND CONTINGENCIES
LEASE COMMITMENTS
In January 2000, the Company entered into a lease agreement for office
space in Washington, DC. Terms of the lease agreement require base
monthly rental payments of $2,806.
<PAGE> 14
I. COMMITMENTS AND CONTINGENCIES (continued)
The Company also leases communications equipment held under capital lease
agreements expiring in December 2000. The assets and liabilities under
capital leases are recorded at the lower of the present value of the
minimum lease payments or the fair value of the asset. The assets are
amortized over their estimated useful lives. Amortization of assets under
capital leases is included in depreciation and amortization expense.
The minimum lease payments due under the terms of non-cancelable operating
and capital leases total which have initial or remaining terms in excess
of one year as of December 31, 1999 are as follows:
Capital Operating
For the years ending December 31st, Leases Lease
2000 $ 9,339 $ 30,862
2001 - 33,385
2002 - 34,525
2003 - 2,885
----- -------
Total minimum lease payments 9,339 $ 101,657
Less: imputed interest (-)
-----
Subtotal 9,339
Less: current portion of capital
lease obligation (9,339)
-----
Non-current portion of capital
lease obligation $ -
=====
Total rent expense for all operating leases was $25,100 for the period
from January 13, 1999 to December 31, 1999.
COMMITMENT
The Company has entered into an agreement with a consultant for services
to be rendered over the period October through March 2000, with fees
totaling $60,000 payable in either stock or cash. In addition, the
Company has entered into an agreement with the same consultant for
consideration totaling 3% of outstanding stock and 4% in warrants,
contingent upon the consummation of the share exchange described in Note L.
CONTINGENCIES
In February 2000, a complaint was filed against the Company alleging that
the Company and several of its officers breached a nondisclosure and
confidentiality agreement with the plaintiff and violated the Uniform
Trade Secrets Act. The plaintiff seeks compensatory and punitive damages
in unspecified amounts. Management believes that such claims are without
merit and that the Company and its officers have not violated the rights
of the plaintiff. As of the date of this report, management is unable to
estimate the amount of any losses which may be associated with the
complaint.
J. RESEARCH AND DEVELOPMENT COSTS
Total research and development cost for the period from January 13, 1999
to December 31, 1999 were approximately $157,000.
<PAGE> 15
K. CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of cash. The Company
maintains its cash account with a commercial bank located in Virginia.
Cash balances are insured by the Federal Deposit Insurance Corporation,
up to $100,000 per financial institution. At December 31, 1999, the
Company had no uninsured cash balances.
L. SUBSEQUENT EVENTS
In February 2000, a complaint was filed against the Company (see Note I).
In July 2000, the Company adopted a stock incentive plan. The maximum
number of shares which may be awarded under the plan is 3,000,000. Any
person deemed eligible by the Stock Incentive Committee may receive
shares or options under the plan; option awards may be in the form of
an incentive option or a nonqualified stock option. Stock options issued
under the plan vest over several years, unless accelerated by the Stock
Incentive Committee.
In July 2000, the Company issued convertible subordinated debentures
totaling $140,000. The terms of the debentures require interest payable
at twelve percent per annum with a maturity date of one year from the
date of advance unless mutually extended. The debentures are subordinate
and junior to existing liabilities of the Company and any subsequent
borrowings from banks or insurance companies. The debentures may be
converted to common stock at a price of $2.50 per share.
In August 2000, the Company consummated a share exchange with a public
shell company, the Viola Group, Inc. ("Viola"). In the share exchange
the Company exchanged all its outstanding shares for 90% of the issued
and outstanding voting common stock of Viola. As a result of the
transaction, the stockholders of Viola owned in the aggregate, 3,300,007
shares as of the date of the share exchange. The stockholders of DataMEG
owned, as a result of the share exchange, 90% of the issued and
outstanding common stock of Viola, equaling approximately 29,700,627
shares as of the date of the share exchange. In addition, the Company
was required to pay consulting fees totaling $250,000 to an officer of
Viola and assume tax liabilities totaling approximately $30,000. As a
result of the merger, DataMEG became the operating company. The company
operates under the name of DataMEG Corp. and trades under the symbol
DTMG on the OTC-BB.
<PAGE> 16
DataMEG, Corp.
(A Development Stage Enterprise)
Unaudited Pro Forma Balance Sheet
<TABLE>
<CAPTION>
<S> <C> <C> <C>
June 30, Pro Forma Pro Forma
2000 Adjustments As Adjusted
ASSETS
CURRENT ASSETS:
Cash $ 1,030 $ - $ 1,030
Employee advances 267 - 267
Prepaid expenses 77,667 - 77,667
Due from stockholder and officer 25,700 - 25,700
Total current assets 104,664 - 104,664
PROPERTY AND EQUIPMENT, net 37,388 - 37,388
OTHER ASSETS:
Intangible assets 91,631 - 91,631
Deposits 3,714 - 3,714
Total other assets 95,345 - 95,345
$ 237,397 $ - $ 237,397
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Capital lease obligation $ 5,947 $ - $ 5,947
Accounts payable and accrued expenses 67,889 30,000 (2) 97,889
Due to stockholders and officers 37,593 - 37,593
Total current liabilities 111,429 30,000 141,429
COMMITMENTS AND CONTINGENCIES - - -
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 5,000,000 shares
authorized, none issued or outstanding as of
June 30, 2000 (pro forma) - - -
Common stock, $.01 par value; 75,000,000 shares
authorized , 33,035,683 shares issued and
oustanding as of June 30, 2000 (pro forma) 103,014 227,343 (1) 330,357
Common stock subscriptions receivable (31,300) - (31,300)
Additional paid-in capital 1,834,294 (227,343) (1)
(30,000) (2) 1,576,951
Accumulated deficit (1,780,040) - (1,780,040)
Total stockholders' equity 125,968 (30,000) 95,968
$ 237,397 $ - $ 237,397
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 17
DataMEG, Corp.
(A Development Stage Enterprise)
Unaudited Pro Forma Schedule of Earnings per Share
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the period
from inception For the six For the six Cumulative
(January 13, 1999) months ended months ended from inception
to December June 30, June 30, (January 13, 1999)
31, 1999 2000 1999 to June 30, 2000
Net loss per common
share (basic) $ (1,046,928) $ (733,112) $ (316,117) $ (1,780,040)
Weighted average number of
common shares outstanding (3) 28,658,134 29,696,803 28,105,101 29,004,357
</TABLE>
<PAGE> 18
DataMEG, Corp.
Notes to the Unaudited Pro Forma Condensed Financial Information
1. Basis of presentation
DataMEG, Corp. ("DataMEG") and the Viola Group, Inc. ("Viola") entered
into a share exchange transaction that is essentially a reverse acquisition
with a public shell corporation. The pro forma adjustments reflect the
changes to stockholder's equity as of June 30, 2000.
Effective August 18, 2000, all of the issued and outstanding shares of
DataMEG were exchanged for shares of Viola's common stock equaling 90% of
the issued and outstanding voting common stock of Viola. As a result of
such transaction, the stockholders of Viola now own 10% of the issued and
outstanding shares of Viola, totaling 3,300,007 shares. The stockholders
of DataMEG now own 90% of the issued and outstanding common stock of Viola,
totaling approximately 29,700,627 shares. As a result of the transaction,
DataMEG is a wholly owned subsidiary of Viola. The acquisition will be
accounted for as a public shell acquisition in accordance with accounting
interpretations and guidance issued by the Division of Corporation Finance
of the SEC. This transaction is, in substance, a re-capitalization of
DataMEG. DataMEG will become the reporting entity for accounting purposes.
No net monetary assets of Viola were acquired in the share exchange.
In conjunction with the share exchange, the Company is required to pay
consulting fees totaling $250,000 to an officer of Viola and is required
to issue 3% of outstanding shares of stock and 4% in warrants to a
consultant. The effect of these non-recurring costs has not been
considered in the accompanying pro forma earnings per share calculation.
The pro forma condensed balance sheet is based on the unaudited historical
information of DataMEG as of June 30, 2000. The information contained
therein is not necessarily indicative of that which would have been
attained had the transaction occurred at an earlier date and should be
read in conjunction with the historical financial statements used in the
preparation of such statements.
2. Pro forma adjustments
(1) To adjust stockholders equity to reflect the share exchange.
(2) To adjust for the net liabilities of Viola assumed by DataMEG.
(3) Basic pro-forma-earnings per share is computed using the weighted
average number of DataMEG common shares outstanding during the period as
adjusted to reflect the share exchange ratio.
EXHIBIT INDEX
Exhibit Number Description
3.1 Certificate of Amendment of the Certificate of Incorporation of
The Viola Group, Inc. as filed with the New York Department of
State on September 7, 2000
