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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): June 8, 1999
INFOAMERICA, INC.
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(Exact Name of Registrant as Specified in Charter)
Colorado 0-13338 84-0853869
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File No.) Identification No.)
5 Clover Leaf Court, Tehachapi, California 93561
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (661) 821-6018
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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Item 4. Change in Registrant's Certifying Accountant.
On July 12, 1999 the Registrant entered into an engagement letter
with Hollander, Lumer & Co., LLP formalizing the terms of its engagement in
which Hollander, Lumer & Co., LLP would serve as the Registrant's independent
public accountants effective as of the date hereof.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) In connection with the transactions contemplated by the Merger
Agreement and Plan of Reorganization (the "Merger Agreement"), dated June 8,
1999, among the registrant, RWC Communications, Inc., a California corporation,
D&K Communications, Inc., a California corporation, and DL Hawk Communications,
Inc., a California corporation; Richard W. Clark and Richard Lubic, a Current
Report on Form 8-K was filed with the Securities and Exchange Commission ("SEC")
on June 24, 1999 (the "Initial 8-K") and is incorporated herein by reference. At
the time of filing the Initial 8-K, it was impossible for the registrant to file
the required financial statements since the Registrant was in the process of
retaining new independent auditors. The Registrant is now filing the financial
statements which were required to have been filed with the Initial 8-K.
(c) Exhibits.
Exhibit
No. Description
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Exhibit 2.1 Merger Agreement and Plan of Reorganization dated June 8,
1999, among InfoAmerica, Inc.; RWC Communications, Inc.,
D&K Communications, Inc. and DL Hawk Communications, Inc.,
Richard W. Clark, Richard Lubic; and Paul Knight and Larry
Salmen. 1
Exhibit 99.1 Audited Financial Statements of DDD Cablevision, LTD. as o
December 31, 1998.
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1. Filed as Exhibit 2.1 to that Current Report on Form 8-K of InfoAmerica,
Inc., filed with the Securities and Exchange Commission on June 22, 1999
and incorporated herein by reference.
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Forward-Looking Information
This Report contains forward-looking statements, which are generally
identified by words such as "may," "should," "seeks," "believes," "expects,"
"intends," "estimates," "projects," "strategy" and similar expressions or the
negative of those words. Those statements may appear in a number of places in
this Report and include statements regarding the intent, belief, expectation,
strategies or projections of the registrant and its management at that time.
Forward-looking statements are subject to a number of known and unknown risks
and uncertainties that could cause actual results to differ materially from
those projected, expressed or implied in the forward-looking statements. These
risks and uncertainties, many of which are not within the registrant's control,
include, but are not limited to, the uncertainty of potential manufacturing
difficulties, the dependence on key personnel, the possible impact of
competitive products and pricing, the registrant's continued ability to finance
its operations, general economic conditions and the achievement and maintenance
of profitable operations and positive cash flow. Forward-looking statements
speak only as of the date made, and neither the registrant nor its management
undertakes any obligation to update or revise any forward-looking statements. It
is likely that if one or more of the risks and uncertainties materializes, the
current expectations of the registrant and its management will not be
recognized.
SIGNATURES
Pursuant to the requirement 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.
Dated: November 18 , 1999
INFOAMERICA, INC.
By: /s/ Richard Lubic
___________________________________
Name: Richard Lubic
Title: President
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Exhibit 99.1
DDD CABLEVISION, LTD
INDEX TO FINANCIAL STATEMENTS
Report of Independent Auditors F-1
Balance Sheets as of December 31, 1998 and 1997 F-2
Statements of Operations for the years ended
December 31, 1998 and 1997 F-3
Statements of Partners' Equity for the years ended
December 31, 1998 and 1997 F-4
Statements of Cash Flows for the years ended
December 31, 1998 and 1997 F-5
Notes to Financial Statements F-6
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REPORT OF INDEPENDENT AUDITORS
To the Joint Venturers of
DDD Cablevision, Ltd.
We have audited the accompanying balance sheet of DDD Cablevision, Ltd. as of
December 31, 1998 and the related statements of operations, partners' equity,
and cash flows for the year then ended. 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. The financial
statements of DDD Cablevision, Ltd. as of December 31, 1997 were audited by
other auditors whose report dated August 17, 1998 expressed an unqualified
opinion on those statements, with an explanatory paragraph about the Company's
ability to continue as a going concern.
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
misstatements. 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 audit 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 DDD Cablevision, Ltd. as of
December 31, 1998, and the results of its operations, partners' equity and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
HOLLANDER, LUMER & CO. LLP
Los Angeles, California
October 31, 1999
F-1
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DDD CABLEVISION, LTD.
BALANCE SHEET
DECEMBER 31, 1997 AND 1998
1997 1998
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ASSETS
CURRENT ASSETS
Cash $ 5,360 $ 4,658
Accounts Receivable - net of
allowance for doubtful accounts of
$5,000 in 1997 and 1998
54,736 47,161
Supplies
41,034 31,034
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TOTAL CURRENT ASSETS
101,130 82,853
PROPERTY AND EQUIPMENT - net of accumulated
depreciation 2,115,095 1,877,595
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TOTAL $ 2,216,225 $ 1,960,448
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LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 187,218 $ 206,727
Revenue billed in advance
53,421 52,161
Franchise fees payable
28,206 42,000
Customer Deposits
5,200 5,200
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Total Current Liabilities 274,045 306,088
PARTNERS' EQUITY 1,942,180 1,654,360
TOTAL $ 2,216,225 $ 1,960,448
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See accompanying Notes to Financial Statements.
F-2
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DDD CABLEVISION, LTD.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1998
1997 1998
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REVENUES $ 618,686 $ 668,478
EXPENSES
Programming 172,034 209,237
Operating 222,304 178,032
Administrative 288,909 365,635
Depreciation 241,398 237,500
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TOTAL EXPENSES 924,645 990,404
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LOSS BEFORE OTHER EXPENSE (305,959) (321,926)
OTHER INCOME (EXPENSE) - NET (47,500) 34,106
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NET LOSS $ (353,459) $ (287,820)
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See accompanying Notes to Financial Statements.
F-3
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DDD CABLEVISION, LTD.
STATEMENTS OF PARTNERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1998
<TABLE>
<CAPTION>
Capital Accumulated
Contributions Losses Total
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<S> <C> <C> <C>
Balance, January 1, 1997 $ 1,000,100 $ (1,907,232) $ (907,132)
Note payable converted into partners' equity 3,202,771 3,202,771
Net loss (353,459) (353,459)
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Balance, December 31, 1997 4,202,871 (2,260,691) 1,942,180
Net loss (287,820) (287,820)
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Balance, December 31, 1998 $ 4,202,871 $ (2,548,511) $ 1,654,360
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</TABLE>
See accompanying Notes to Financial Statements.
F-4
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DDD CABLEVISION, LTD.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1998
<TABLE>
<CAPTION>
1997 1998
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CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net loss (353,459) (287,820)
Adjustments to reconcile net loss to net cash provided by (used
in) operating activities:
Depreciation 241,398 237,500
Changes in operating assets and liabilities:
Accounts receivable 6,231 7,575
Due from Mexico venture 22,021 -
Inventory (1,134) 10,000
Accounts payable and accrued expenses 89,006 19,509
Revenue billed in advance 2,124 (1,260)
Franchise fee payable 513 13,794
Customer deposits 225
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NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 6,925 (702)
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (31,852) -
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NET CASH USED IN INVESTING ACTIVITIES (31,852) -
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NET DECREASE IN CASH (24,927) (702)
CASH AND CASH EQUIVALENT, BEGINNING OF PERIOD 30,287 5,360
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CASH AND CASH EQUIVALENT, END OF PERIOD $ 5,360 $ 4,658
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</TABLE>
See accompanying Notes to Financial Statements.
F-5
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DDD CABLEVISION, LTD.
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
DDD Cablevision, Ltd. (the Company) was formed as a limited liability
partnership in the State of California on January 1990, for the purpose of
constructing and operating cable television systems. The partnership
consists of RWC Communications, Inc., D&K Communications, Inc. and DL Hawk
Communications. All are California corporations. The objective of the
partnership is to operate a cable television system in Tehachapi,
California. and its environs.
Effective June 8, 1999, pursuant to the Merger Agreement and Plan of
Reorganization (the "Merger Agreement"), the partnership has been acquired
by InfoAmerica Inc., a Colorado operating public shell corporation.
InfoAmerica Inc.
become the surviving corporation (see Note 7).
2. SIGNIFICANT ACCOUNTING POLICIES
Use of estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect certain reported amounts of assets
and liabilities and disclosures of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Accordingly, actual results could
differ from those estimates.
Supplies. Supplies, which consists of connectors, wire, converter boxes and
others are stated at the lower of cost (average method) or market.
Property and equipment. Property and equipment are stated at cost.
Depreciation is computed using the straight-line method over estimated
useful lives as follows:
Cable system 15 years
Vehicles and computers 7 years
Other 5 years
The cable system is depreciated using a composite method, therefore no gain
or loss is recognized on the disposition of components of the property and
equipment.
Replacements, renewals and improvements are capitalized. Costs for repairs
and maintenance are charged directly to expense when incurred.
Property and equipment are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss should be recognized when the aggregate of
estimated future cash inflows (less estimated future cash outflows) to be
generated by an asset is less than the asset's carrying value. Future cash
inflows include an estimate of the proceeds from eventual disposition. For
purposes of this comparison, estimated future cash flows are determined
without reference to their discounted present value. If the sum of
undiscounted estimated future cash inflows is equal to or greater than the
asset's carrying value, impairment does not exist. If, however, expected
future cash inflows are less than carrying value, a loss on impairment
should be recorded. Such a loss is measured as the excess of the asset's
carrying value over its fair
F-6
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value. Fair value of an asset is the amount at which an asset could be
bought or sold in a current transaction between a willing buyer and seller
other than in a forced or liquidation sale. The Company measures an
impairment loss by comparing the fair value of the asset to its carrying
amount. Fair value of an asset is calculated as the present value of
expected future cash flows.
Fair value of financial instruments. The Company's financial instruments
consist of cash equivalent, receivables, accounts payable, and accrued
expenses. The fair values of the Company's financial instruments
approximately the carrying value of the instruments.
Revenue recognition. Revenue is recognized in the period the related
services are provided to the subscribers.
Income taxes. Income and losses of the partnership will be passed through
to the partners. Accordingly, no provision or credit for federal and state
income taxes have been provided in the financial statements.
3. CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES
CATV Franchise. CATV franchise issued to DDD Cablevision, Ltd. requires
prior written consent for a change in the legal or equitable ownership of
the Company. In the opinion of the Company's legal council, the change in
the ownership of the partners of DDD Cablevision, Ltd. without the prior
written consent of the Board of Supervisors of the County of Kern, could
place the above franchise in default. In March 1999 the Company requested
written consent to the merger of the Company into InfoAmerica, Inc.
However, the County of Kern could not give consideration to any assignment
or transfer of control because the Company had not paid the required
franchise fees approximately $42,000 for 1997 and 1998. As of September 30,
1999 those franchise fee have not been paid.
Significant Operating Losses. The Company has experienced significant
operating losses and working capital deficiency. For the fiscal years ended
December 31, 1997 and 1998, the Company experienced net losses of $353,459
and $287,820, and working capital deficiency of $172,915 and 223,235,
respectively. The ability of the Company to continue as a going concern is
dependent upon the management ability to increase revenue and/or
controlling expenses and continued financing from its partners or other
outside sources. In order to gain more access to outside sources of
financing, in June 1999, The Company merged into a publicly owned
InfoAmerica Inc. Even after the Company merged, there can be no assurance
that the Company will continue as a going concern.
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and liabilities in the
normal course of business. The financial statements do not include any
adjustments relating to the recoverability of the recorded assets or the
classification of the liabilities that might be necessary should the
Company be unable to continue as a going concern.
F-7
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4. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
December 31, December 31,
1997 1998
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Cable system $ 3,517,776 $ 3,517,776
Computer 75,246 75,246
Vehicles 66,989 66,989
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Total 3,660,011 3,660,011
Accumulated depreciation 1,544,916 1,782,416
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Net $ 2,115,095 $ 1,877,595
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5. RELATED PARTY TRANSACTIONS
The Company rented its office facility from one of the partner on a
month-to-month basis at $1,300 per month.
A partner in the joint venture provides management services to the
partnership. In 1997 and 1998 the charges for such management services
amounted to $38,550 and $37,300, respectively.
6. COMMITMENT AND CONTINGENCIES
Leases. The Company leases the head-end, tower, and microwave receiver
sites under short-term operating lease agreements. Total rent expense for
the site rentals amounted to $15,527 and $22,359 in 1997 and 1998
respectively.
The Company leases automotive equipment under operating lease expiring at
various dates through 2002. Minimum lease payments under such leases are as
follows:
Year Ending December 31 Amount
------------------------- ------
1999 $28,843
2000 25,574
2001 22,305
2002 10,993
Total rent expense for automotive equipment amounted to $15,472 and $28,842
in 1997 and 1998, respectively.
Franchise agreement. On August 1990, the Company obtained CATV franchise
from Kern County. The franchise terminates on September 30, 2005 however it
is renewable for an additional 15-year term. In related to this franchise,
the County of Kern requires the Company to remit 5% of service revenues
within three months after the year-end. The franchise fee collected from
cable customers amounted to $28,206 and $13,794 in 1997 and 1998,
respectively.
F-8
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Settlement cost. The Company was a defendant in an action brought in the
East Kern Municipal Court by Conrad A. Villegas. The plaintiff sued for
money due in the sum of $24,876 plus interest at 10% and attorney's fees.
On September 23, 1999 this matter was settled in full whereby the Company
agreed to pay Mr. Villegas in the sum of $17,500.
7. SUBSEQUENT EVENT
As mentioned in the Note 1, effective June 8, 1999, pursuant to the Merger
Agreement and Plan of Reorganization (the "Merger Agreement"), InfoAmerica Inc.
has acquired DDD Cablevision, Ltd., a limited liability partnership, resulting
in the partners and management of DDD Cablevision having actual and effective
control of InfoAmerica Inc., the surviving corporation. For accounting purposes,
the transaction has been treated as an acquisition of InfoAmerica by DDD
Cablevision Ltd. and as a recapitalization of DDD Cablevision Ltd. The
historical financial statements prior to the acquisition become those of DDD
Cablevision Ltd. even though they are labeled as those of InfoAmerica Inc. In
the recapitalization, historical partners' equity of DDD Cablevision Ltd. prior
to the merger was retroactively restated for the equivalent number of shares
received in the merger with an offset to paid-in capital. Operations prior to
the merger are those of DDD Cablevision Ltd. Basic loss per share prior to the
merger are restated to reflect the number of equivalent shares received by
partners of DDD Cablevision Ltd.
F-9
