SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------
FROM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of the earliest event reported: July 28, 1998
USA TALKS.COM, INC.
(f/k/a SBB, Inc.)
(Exact name of registrant as specified in charter)
NEVADA 33-2474-LA 93-0915593
(State or other jurisdiction (Commission (IRS employer
of incorporation) file number) identification no.)
4350 Executive Drive, Suite 220
San Diego, California 92121
(Address of Principal Executive Offices)
Registrant's telephone number, including area code (619) 546-0550
USA TALKS.COM, INC.
Item 7. Financial Statements and Exhibits
Included are the financial statements of USA Talks.com, Inc. for the
periods ended July 31, 1998 and December 31, 1997 and 1996.
Exhibits.
Included are the proforma financial statements of USA Talks.com, Inc. for
the periods ended July 31, 1998 and December 31, 1997 and 1996.
USA TALKS.COM, INC.
(A Development Stage Company)
Consolidated Financial Statements
For the Periods ended July 31, 1998,
December 31, 1997 and 1996 and
For the Period From December 26, 1985
(inception) to July 31, 1998
To the Board of Directors of
USA Talks.Com, Inc. and Subsidiary
(formerly SBB, Inc.)
The accompanying consolidated balance sheets of USA Talks.com, Inc. (formerly
SBB, Inc.) and subsidiary as of July 31, 1998 and the related consolidated
statements of operations, stockholders' equity, and cash flows for the seven
months ended July 31, 1998 were not audited by us and, accordingly, we do not
express an opinion on them.
The financial statements of USA Talks.com, Inc. as of December 31, 1997 and
prior periods were audited by us (Parent Corporation) and other accountants
(subsidiary) and we/they expressed an unqualified opinion on them in our/their
report dated March 18, 1998 and February 13, 1998, respectively, but we/they
have not performed any auditing and auditing procedures since that date.
Crouch, Bierwolf & Chisholm
November 16, 1998
USA TALKS.COM, INC. AND SUBSIDIARY
( A Development Stage Company)
Consolidated Balance Sheet
ASSETS
July 31, December 31,
1998 1997
CURRENT ASSETS
Cash and Cash equivalents $ 21,162 $ 112,314
Prepaid expenses and other
current assets 14,249 15,220
Total Current Assets 35,411 127,534
FURNITURE AND EQUIPMENT, net (Note 4) 42,548 42,548
OTHER ASSETS
Notes receivable 40,000 40,000
Technology & marketing rights 250,000 -
Other - 198
TOTAL ASSETS $ 367,959 $ 210,280
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 421,762 $ 422,159
Note payable, including $0 and
$11,772 to a related party 26,710 76,772
Contract payable 211,500 -
Accrued expenses 20,907 51,306
Total Current Liabilities 680,879 550,237
COMMITMENTS (Note 6)
STOCKHOLDERS' EQUITY
Common Stock: $.001 par value;
13,396,677, 800,000,000 shares authorized
13,000,000 and 13,396,677 shares
issued and outstanding 13,000 13,397
Additional paid-in capital 4,276,690 3,304,469
Deficit accumulated during development
stage (4,602,610) (3,657,823)
Total Stockholders' Equity (312,920) (339,957)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 367,959 $210,280
USA TALKS.COM, INC. AND SUBSIDIARY
( A Development Stage Company)
Consolidated Statements of Operations
From Inception
For the Seven For the Year For the Year on December 26,
Months Ended Ended Ended 1985 through
July 31, December 31, December 31, July 31,
1998 1997 1996 1998
REVENUE
Bad debt $ - $ - $ - $578,084
Legal and
Professional 107,075 283,191 87,980 582,834
Selling,
general and
administrative 99,811 767,688 93,585 1,106,049
Research and
development 599,667 627,421 212,909 1,699,997
Salaries and
other
compensation 138,419 222,750 192,668 652,832
Total operating
expenses 944,972 1,901,050 587,142 4,619,796
Loss From
Operations (944,972) (1,901,050) (587,142) (4,619,796)
OTHER INCOME (EXPENSES)
Interest
income 1,435 3,428 - 45,061
Interest
expense (1,250) (15,783) (5,638) (27,875)
Total 185 (12,355) (5,638) 17,186
NET INCOME
(LOSS) $(944,787) $(1,913,405) $(592,780) $ (4,602,610)
Basic loss
per common
share $ (.07) $ (.15) $ (.05) $ (.66)
Weighted-
average
common
shares 13,218,580 12,615,188 12,433,390 6,989,623
USA TALKS.COM, INC. AND SUBSIDIARY
(A Development Stage Company)
Statements of Stockholders' Equity
From Inception on December 26, 1985 through July 31, 1998
Deficit
Accumulated
Capital in During
Common Common Excess of Development
Shares Stock Par Value Stage
Balance at Inception
on December 26, 1985 - $ - $ - $ -
Issuance of 5,000 shares
to officers & directors for
cash at $1.00 per share 5,000 5 4,995 -
Issuance of 10,000 shares
of common stock to the public
in February of 1987 for
$10 per share 10,000 10 99,990 -
Deferred offering costs offset
against capital in excess
of par value - - (35,388) -
Net loss from inception on
December 26, 1985
through December 31, 1987 - - - (8,954)
Balance, December 31, 1987 15,000 15 69,597 (8,954)
Issuance of 68,390,000 shares
upon exercise of A Warrants for
$10 per share (less brokerage
fees of $250) 68,390 68 683,582 -
Net loss for the year ended
December 31, 1988 - - - (223,378)
Balance, December 31, 1988 83,390 83 753,179 (232,332)
Net loss for the year
ended December 31, 1989 - - - (387,263)
Balance, December 31, 1989 83,390 83 753,179 (619,595)
Net loss for the year
ended December 31, 1990
(12,292)
Balance, December 31, 1990 83,390 83 753,179 (631,887)
continued
USA TALKS.COM, INC. AND SUBSIDIARY
( A Development Stage Company)
Consolidated Statements of Stockholders' Equity
From Inception on December 26, 1985 through July 31, 1998
Deficit
Accumulated
Capital in During
Common Common Excess of Development
Shares Stock Par Value Stage
Issuances of stock for acquisition
of Alfine Corporation (Note 1) 12,350,000 12,350 (12,350) -
Services rendered by corporate
officers - - 170 -
Stock sold by acquired corporation - - 180,000 -
Net loss for the year ended
December 31, 1991 - - - (161,132)
Balance, December 31, 1991 12,433,390 12,433 920,999 (793,019)
Services rendered by corporate
officers - - 7,500 -
Net loss for the year ended
December 31, 1992 - - - (132,170)
Balance, December 31, 1992 12,433,390 12,433 928,499 (925,189)
Services rendered by corporate
officers - - 48,750 -
Net loss for the year ended
December 31, 1993 - - - (49,222)
Balance, December 31, 1993 12,433,390 12,433 977,24 (974,411)
Services rendered by corporate
officers - - 11,250 -
Net loss for the year ended
December 31, 1994 - - - (108,568)
Balance, December 31, 1994 12,433,390 12,433 988,499 (1,082,979)
Services rendered by corporate
officers - - 60,000 -
Capital contributions - - 3,750 -
Net loss for the year ended
December 31, 1995 - - - (68,659)
Balance, December 31, 1995 12,433,390 12,433 1,052,249 (1,151,638)
continued
USA TALKS.COM, INC. AND SUBSIDIARY
( A Development Stage Company)
Consolidated Statements of Stockholders' Equity
From Inception on December 26, 1985 through July 31, 1998
Deficit
Accumulated
Capital in During
Common Common Excess of Development
Shares Stock Par Value Stage
Services rendered by corporate
officers - - 18,251 -
Stock sold by acquired corporation - - 371,000 -
Sale of warrants by acquired
corporation - - 2,650 -
Net loss for the year ended
December 31, 1996 - - - (592,780)
Balance, December 31, 1996 12,433,390 12,433 1,444,150 (1,744,418)
Issuance of 85,000 shares for
cash and note receivable
at $1 per share 85,000 85 84,915 -
Issuance of 850,000 shares for
cash at $.001 per share 850,000 850 7,650 -
Rounding from reverse stock
split (Note 3) 28,287 29 (29)
Sale of common stock by
acquired corporation - - 971,684 -
Sale of warrants by acquired
corporation - - 40,657 -
Stock issued upon conversion of
notes payable - - 52,500 -
Stock of acquired corporation
issued for business combination - - 80 -
Stock of acquired corporation
issued for services rendered - - 26,750 -
Stock of acquired corporation
issued for fixed assets - - 25,000 -
continued
USA TALKS.COM, INC. AND SUBSIDIARY
( A Development Stage Company)
Consolidated Statements of Stockholders' Equity
From Inception on December 26, 1985 through July 31, 1998
Deficit
Accumulated
Capital in During
Common Common Excess of Development
Shares Stock Par Value Stage
Stock of acquired corporation
issued for an option to license
technology - - 50,000 -
Options of acquired corporation
issued to non-employees - - 433,020 -
Conversion of advance from officer - - 37,750 -
Capital contribution - - 130,342 -
Net loss for the year ended
December 31, 1997 - - - (1,913,405)
Balance, December 31, 1997 13,396,677 13,397 3,304,469 (3,657,823)
Cancellation of 850,000 shares for
cancellation of $40,000
subscription receivable (850,000) (850) (42,431) -
Capital contribution - - 1,014,652 -
Issuance of 453,323 shares for
services rendered at $.001
per share 453,323 453 - - -
Net loss for the seven months
ended July 31, 1998 - - - (944,787)
Balance, July 31, 1998 13,000,000 $ 13,000 $4,276,690 $(4,602,610)
USA TALKS.COM, INC. AND SUBSIDIARY
( A Development Stage Company)
Consolidated Statements of Cash Flows
From Inception
For the Seven For the Year For the Year on December 26,
Months Ended Ended Ended 1985 through
July 31, December 31, December 31, July 31,
1998 1997 1996 1998
Cash Flows from operating
Activities
Net Loss $(944,787) $(1,913,405) $(592,780) $ (4,602,610)
Adjustments
to reconcile net
Loss to cash used in
Operating activities
Depreciation/
Amortization - 10,107 844 11,001
Bad Debt - - - 568,666
Issuance of options to
Non-employees - 433,020 - 433,020
Issuance of stock
for Services
rendered 453 26,750 18,251 173,124
Issuance of
stock for an
Option to license - 50,000 - 50,000
Expense paid by Note
Receivable
holder - 40,000 - 40,000
(Increase) decrease in:
Other
Receivables - 8,348 (11,065) (2,717)
Prepaid
expenses and other
Current assets 971 (9,730) (2,773) (11,532)
Other assets 198 5,627 (5,253) 80
Increase (decrease) in:
Accounts payable (397) 343,248 78,911 421,762
Accrued expenses (33,680) (40,711) 87,267 17,626
Contract payable 211,500 - - 211,500
Net Cash Used in
Operating
Activities (765,742) (1,046,746) (426,598) (2,690,080)
Cash Flows from Investing
Activities
Purchase of furniture
And equipment - (11,835) (16,664) (28,499)
Purchase of
technology and
Marketing
rights & Other(250,000) - - (250,050)
Loans to Other
Entities - - - (568,667)
Net Cash Used in
Investing
Activities (250,000) (11,835) (16,664) (847,216)
(Continued)
USA TALKS.COM, INC. AND SUBSIDIARY
( A Development Stage Company)
Consolidated Statements of Cash Flows
(Continued)
From Inception
For the Seven Forthe Year For the Yearon December 26,
Months Ended Ended Ended 1985 through
July 31, December 31, December 31, July 31,
1998 1997 1996 1998
Cash Flows from Financing
Activities
Payments on note
payable (50,062) (23,578) (23,000) (96,640)
Proceeds from notes
payable - 5,350 125,000 175,850
Proceeds from sale of
common stock - 985,184 371,000 2,289,447
Proceeds from capital
contributions 1,014,652 130,342 - 1,186,494
Proceeds from sale of
warrants - 40,657 2,650 43,307
Payments for note
receivable (40,000) - - (40,000)
Net Cash Provided by
Financing Activities 924,590 1,137,955 475,650 3,558,458
Net Increase in Cash (91,152) 79,374 32,288 21,162
Cash and Cash Equivalents
Beginning of Period 112,314 32,940 552 -
Cash and Cash Equivalents
End of Period $ 21,162 $112,314 $32,940 $ 21,162
Supplemental Cash Flow
Information
Cash Paid For:
Interest $ - $12,928 $ - $13,584
Taxes $ - $ - $ - $ 900
Continued
USA TALKS.COM, INC. AND SUBSIDIARY
( A Development Stage Company)
Consolidated Statements of Cash Flows
(Continued)
From Inception
For the Seven For the Year For the Year on December 26,
Months Ended Ended Ended 1985 through
July 31, December 31, December 31, July 31,
1998 1997 1996 1998
Stock of Acquired corporation
Issued for conversion of
Note Payable $ - $ 52,500 $ - $ 52,500
Stock of Acquired corporation
Issued for acquisition of
Fixed Assets & Option for
License Technology $ - $ 75,000 $ - $ 75,000
Stock of Acquired corporation
Issued for conversion of
Note - RelatedParty $ - $37,750 $ - $ 37,750
Options of Acquired corporation
to non-employees $ - $433,020 $ - $433,020
USA TALKS.COM, INC. AND SUBSIDIARY
(a development stage Company)
Notes to the Consolidated Financial Statements
July 31, 1998
NOTE 1 - DESCRIPTION OF BUSINESS
USA TALKS.COM, Inc. (the Company) was incorporated in Utah on December
26, 1985. The Company is a development stage company which owns the exclusive
worldwide licensing and marketing rights for a proprietary speech recognition
technology. The Company is in the process of developing speech-to-text
software.
In July 1998, the Company acquired all of the outstanding assets and
liabilities of AlfineCorporation (a Delaware corporation)(Alfine) including
100% of the stock of Essence corporation, a wholly owned subsidiary of
Alfine.
In July 1997, Alfine entered into an agreement with Essence Corporation
(Essence), a Nevada corporation. Essence was a related party since its
majority shareholder is an officer and shareholder of Alfine. Under the
terms of the agreement, the Company exchanged 800,000 shares of Alfine's common
stock for 100% of the outstanding stock of Essence. As part of the agreement,
the Company acquired all assets of Essence, including a fully-paid up exclusive
worldwide license in perpetuity for proprietary speech-to-text software
applications. This merger was accounted for in a manner similar to a pooling
of interest.
Together the three companies (USA Talks.Com, Alfine and Essence) are
combined into USA Talks.Com, Inc. A consolidated group of corporations known
in this report as the Company. The accounting for the acquisition of the
assets and liabilities of Alfine corporation including 100% of the stock of
Essence is treated as a "reverse acquisition" whereby the control parties of
the acquired corporations (Alfine corporation and Essence) take control of the
parent corporation (USA Talks.Com,Inc.). The financial statements at July 31,
1998 presented herein is the historical cost data from all three corporations
are combined into one, similar to a "pooling of interests method of
accounting". The surviving corporations include the parent corporation, USA
Talks and its wholly owned subsidiary, Essence Corporation.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles which contemplate
continuation of the Company as a going concern. However, during the year ended
December 31, 1997, the Company incurred a net loss of $1,901,050, and as of
that date, the Company's current liabilities exceeded its current assets by
$294,625 and its total liabilities exceeded its total assets by $339,957. In
addition, the Company is in the development stage at July 31, 1998. These
factors raise substantial doubt about the Company's ability to continue as a
going concern.
Recovery of the Company's assets is dependent upon future event, the
outcome of which is indeterminable. Successful completion of the Company's
development program and its transition to attainment of profitable operations
is dependent upon the Company obtaining adequate debt and equity financing to
fulfill its development activities and achieving a level of sales adequate to
support the Company's cost structure. In addition, realization of a major
portion of the assets in the accompanying balance sheet is success of its
plans to sell its products. The financial statements do not include any
amounts and classification of liabilities that might be necessary should the
Company be unable to continue in existence.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)
Basis of Presentation (continued)
Management plans to raise additional equity capital, continue to develop
its products, and look for merger or acquisition candidates. Unaudited
Interim Financial Information The information furnished herein for the seven
months ended July 31, 1998 was taken from thebooks and records of the Company
without audit. However, such information reflects all adjustments which are,
in the opinion of management, necessary to properly reflect the results of
the interim period presented. The information presented is not necessarily
indicative of the results from operations expected for the full fiscal year.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements, as well as the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all
highly-liquid investments purchased with original maturities of three months
or less to be cash equivalents.
Furniture and Equipment
Furniture and equipment are recorded at cost, less accumulated
depreciation. Depreciation is provided using the straight-line method over an
estimated useful life of five years. Betterments, renewals, and extraordinary
repairs that extend the life of the asset are capitalized; other repairs and
maintenance charges are expensed as incurred. The cost and related
accumulated depreciation applicable to assets retired are removed from the
Company's accounts, and the gain or loss on dispositions is recognized in the
statement of operations.
Development Stage Enterprise
The Company is a development stage company as defined in Statement of
Financial Accounting Standards (SFAS) No. 7, "Accounting and Reporting by
Development Stage Enterprises". The Company is devoting substantially all of
its present efforts to establish a new business, and its planned principal
operations have not yet commenced. All losses accumulated since inception
have been considered as part of the Company's development stage activities.
Research and Development Costs
Research and development costs are charged to expense as incurred.
Income Taxes
The Company adopted Statement of Financial Standards No. 109 "Accounting
for Income taxes" in the fiscal year ended December 31, 1989 and was applied
retroactively.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income Taxes -continued
Statement of Financial Accounting Standards No. 109 " Accounting for
Income Taxes" requires an asset and liability approach for financial accounting
and reporting for income tax purposes. Thiss tatement recognizes (a) the
amount of taxes payable or refundable for the current year and (b) deferred
tax liabilities and assets for future tax consequences of events that have
been recognized in the financial statements or tax returns.
Deferred income taxes result from temporary differences in the
recognition of accounting transactions for tax and financial reporting
purposes. There were no temporary differences at December 31, 1997 and
earlier years; accordingly, no deferred tax liabilities have been
recognized for all years.
The Company has cumulative net operating loss carryforwards of
approximately $581,000 at December 31, 1997. No effect has been shown in the
financial statements for the net operating loss carryforwards as the
likelihood of future tax benefit from such net operating loss carryforwards is
not presently determinable. Accordingly, the potential tax benefits of the
net operating loss carryforwards, estimated based upon current tax rates of
$197,500 at December 31, 1997 have been offset by valuation reserves of the
same amount. The net change in deferred tax asset and offsetting valuation
reserve amounted to $17,500 for 1997.
The Company has available $581,000 in net operating loss carryforwards
that will begin to expire in the year 2000. The Company has accrued $100 per
year minimum state income taxes.
Earnings Per Share
For the year ended December 31, 1997 and subsequent periods, the Company
adopted SFAS No. 128, "Earnings Per Share". Basic earnings per share is
computed by dividing income available to common stockholders by the weighted-
average number of common shares outstanding. Diluted earnings per share is
computed similar to basic earnings per share except that the denominator is
increased to include the number of additional common shares that would have
been outstanding if the potential common shares had been issued and if the
additional common shares were dilutive. Because the Company has incurred net
losses, basic and diluted loss per share are the same.
Accounting Pronouncements
The Financial Accounting Standards Board (FASB) issued SFAS No. 130,
"Reporting Comprehensive Income", which is effective for financial statements
with fiscal years beginning after December 15, 1997. SFAS No. 130 establishes
standards for reporting and display of comprehensive income and its components
in a full set of general-purpose financial statements. The Company does not
expect adoption of SFAS No. 130 to have a material effect, if any, on its
financial position or results of operations.
The FASB issued SFAS 131, "Disclosure about Segments of an Enterprise and
related Information", issued by FASB, which is effective for financial
statements with fiscal years beginning after December 31, 1997. This statement
establishes standards for the way that public entities report selected
information about operating segments, products, and services, geographic areas,
and major customers in interim and annual financial reports. The Company
does not expect adoption of SFAS No. 131 to have a material effect, if any, on
its financial position or results of operations.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair Value of Financial Instruments
The Company measures its financial assets and liabilities in accordance
with generally accepted accounting principles. For certain of the Company's
financial instruments, including cash, accounts receivable, accounts payable,
and accrued expenses, the carrying amounts approximate fair value because
current interest rates offered to the Company for note payable of similar
maturities are substantially the same.
NOTE 3 - CASH AND CASH EQUIVALENTS
The Company maintains cash deposits at one bank. Deposits at this bank
are insured by the Federal Deposit Insurance Corporation up to $100,000. As
of December 31, 1997, uninsured portions of balances held at this financial
institution totaled $24,053. The Company has not experienced any losses in
such accounts and believes it is not exposed to any significant risk
on cash and cash equivalents.
NOTE 4 - FURNITURE AND EQUIPMENT
Furniture and equipment at December 31, 1997 consisted of the following:
Office equipment $ 26,346
Computer equipment and software 27,153
53,499
Less accumulated depreciation (10,951)
Total $ 42,548
Depreciation expense for the year ended December 31, 1997 was $10,107.
NOTE 5 - NOTES PAYABLE
Notes payable at December 31, 1997 consisted of the following:
Note payable to individual, due on November 18, 1998. Principle is due
at maturity, interest payable quarterly at 10% per annum, unsecured. $ 25,000
Note payable to individuals, originally due on September 30, 1997.
Principle and interest due on demand, interest accruing at 10% per annum,
unsecured. Subsequent to September 30, 1997, these $40,000 promissory notes
were converted into demand notes. 40,000
Note payable to officer. Principle and interest are due at
maturity, November 8, 1997 (currently in default), with interest at
12% per annum, unsecured. 11,772
Total $ 76,772
NOTE 6 - COMMITMENTS
Lease
The Company leases certain facilities for its corporate offices under a
long-term, non-cancellable operating lease agreement that expires December 31,
1998. Future minimum aggregate lease payments nder this lease for 1998 are
$33,282. Rent expense was $35,142 for the year ended December 31, 1997.
Employment Agreements
The Company has entered into employment agreements, expiring August 31,
1998 with certain key officers of the Company. These officers will receive
aggregate annual salaries of $180,000.
Option to License Technology
Effective January 24, 1997, the Company entered into an agreement with a
manufacturer of voice recording equipment for an exclusive option, subject to
limited use, to license certain technology of the Company. Under the terms of
the agreement, the Company received $50,000 in exchange for 20,000 shares of
common stock and the exclusive option upon the execution of the agreement.
The Company will receive three additional payments of $50,000 each upon the
Company meeting certain development milestones for the technology. Upon the
achievement of the first milestone and receipt of payment, an additional
20,000 shares of common stock will be issued. Upon completion of the second
and third (final) milestones and receipt of payments of $50,000 for each, the
Company will issue the manufacturer five-year warrants to purchase an
additional 20,000 shares of common stock at an exercise price of $4.00.
NOTE 7 - SHAREHOLDER'S DEFICIT
Legal Settlement
During the year ended December 31, 1997, the Company participated as a
defendant with other defendants, consisting of certain of its officers/
directors/shareholders, in the settlement of a class action lawsuit brought
by a former officer/director/shareholder and other shareholders. The lawsuit
was dismissed, and the terms of the settlement provided that all 585,000 shares
owned by the plaintiffs were to be repurchased by the Company and/or the
officers/directors/shareholder named as defendants for $360,000 with the excess
of the resale proceeds over the repurchase payments going to the Company.
A portion of these shares were then resold under a special stock offering
along with new shares of the Company which resulted in the Company receiving
additional paid-in capital of 130,342 due to the of the resale of shares
exceeding the repurchase payments. There were no substantive allegations
against the Company in the lawsuit, and the Company has no further obligation
under the terms of the settlement agreement at December 31, 1997.
NOTE 8 - RELATED PARTIES
During the year ended December 31, 1997, the Company paid $224,100 and
$60,000 to consultants for services rendered. These consultants became
officers of the Company during 1997 after they had provided these services.
NOTE 9 - REVERSE STOCK SPLIT
In 1997, the shareholders approved a 1 for 1,000 share reverse stock
split. This change has been made retroactive to the beginning balances of
this financial statement. At the time of the reverse split, the company
reverse split all shares to no less than 100 shares. All shareholders
holding less than 100 shares were not changed.
NOTE 10 - STOCK TRANSACTION
In 1997, the Board of Directors approved the sale of 85,000 shares
(post split) for $5,000 cash and an $80,000 note at 10% interest. The note is
due at the time the company qualifies for a NASD bulletin board listing.
$40,000 of this note was paid in November, 1997.
Also in 1997, the Board of Directors approved the sale of 850,000
shares (post split) for $8,500 or $.001 per share.
During the second quarter 1998, the principle stockholder of The
Company canceled 850,000 shares of common stock in consideration for
cancellation of the $40,000 note receivable and all outstanding accrued
interest.
NOTE 11 - CHANGE IN DOMICILE
During the second quarter 1998, the Company created and later merged with
a wholly owned Nevada corporation. The Company now is a Nevada Corporation.
Supplementary Schedules
Proforma Financial Statements
For the Period Ended July 31, 1998 and
December 31, 1997 and 1996
USA TALKS.COM, INC. AND SUBSIDIARY
( A Development Stage Company)
Proforma Balance Sheets
July 31, 1998
USA Talks.com Alfine Adustments Total
ASSETS
Cash and short term
deposits $ - $ 21,162 $ - $ 21,162
Prepaid expenses and other
current assets - 14,249 - 14,249
Total - 35,411 - 35,411
CAPITAL ASSETS - 42,548 - 42,548
OTHER ASSETS
Notes Receivable - 40,000 - 40,000
Technology & marketing
rights - 250,000 - 250,000
Total $ - $367,959 $ - $367,959
LIABILITIES AND
SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable and
accruals $ - $ 442,669 $ - $ 442,669
Notes and advances
payable - 26,710 - 26,710
Contracts payable - 211,500 - 211,500
Total - 680,879 - 680,879
STOCKHOLDERS' EQUITY
Common stock 13,000 530 (530) 13,000
Additional paid in
capital 790,934 3,485,226 530 4,276,690
Accumulated deficit during
development stage (803,934) (3,798,676) - (4,602,610)
Total $ - $367,959 $ - $367,959
USA TALKS.COM, INC. AND SUBSIDIARY
( A Development Stage Company)
Proforma Balance Sheets
December 31, 1997
USA Talks.Com Alfine Adjustments Total
ASSETS
Cash and short term deposits $ - $112,314 $ - $ 112,314
Prepaid expenses and other
current assets 2,717 12,503 - 15,220
Total 2,717 124,817 - 127,534
CAPITAL ASSETS - 42,548 - 42,548
OTHER ASSETS
Notes Receivable 40,000 - - 40,000
Other - 198 - 198
Total $42,717 $167,563 $ - $210,280
LIABILITIES AND
SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable and accruals $ 871 $ 472,594 $ - $ 473,465
Notes and advances payable - 76,772 - 76,772
Total 871 549,366 - 550,237
STOCKHOLDERS' EQUITY
Common stock 13,397 530 (530) 13,397
Additional paid in capital 833,365 2,470,574 530 3,304,469
Accumulated deficit during
development stage (804,916) (2,852,907) - (3,657,823)
Total $ 42,717 $167,563 $ - $210,280
USA TALKS.COM, INC. AND SUBSIDIARY
( A Development Stage Company)
Proforma Consolidated Statements of Operations
For the Seven Months Ended July 31, 1998
USA Talks.Com Alfine Adjustments Total
INCOME $ - $ - $ - $ -
Administrative and General 453 99,358 - 99,811
Legal and accounting - 107,075 - 107,075
Research and development - 599,667 - 599,667
Salaries and other compensation - 138,419 - 138,419
Total 453 944,519 - 944,972
OTHER INCOME (EXPENSE)
Interest 1,435 (1,250) - 185
Net (loss) Income $ 982 $(945,769) $ - $(944,787)
USA TALKS.COM, INC. AND SUBSIDIARY
( A Development Stage Company)
Proforma Consolidated Statements of Operations
For the Year Ended December 31, 1997
USA Talks.Com Alfine Adjustments Total
INCOME $ - $ - $ - $ -
Administrative and General 100 767,588 - 767,688
Legal and accounting 8,971 274,220 - 283,191
Research and development - 627,421 - 627,421
Salaries and other compensation 45,000 177,750 - 222,750
Total 53,971 1,846,979 - 1,901,050
OTHER INCOME (EXPENSE)
Interest 2,717 (15,072) - (12,355)
Net (loss) Income $ (51,354) $(1,862,051) $ - $(1,913,405)
USA TALKS.COM, INC. AND SUBSIDIARY
( A Development Stage Company)
Proforma Consolidated Statements of Operations
For the Year Ended December 31, 1996
USA Talks.Com Alfine Adjustments Total
INCOME $ - $ - $ - $ -
Administrative and General 100 93,485 - 93,585
Legal and accounting - 87,980 - 87,980
Research and development - 212,909 - 212,909
Salaries and other compensation - 192,668 - 192,668
Total 100 587,042 - 587,142
OTHER INCOME (EXPENSE)
Interest - (5,638) - (5,638)
Net (loss) Income $ (100) $(592,680) $ - $(592,780)
USA TALKS.COM, INC. AND SUBSIDIARY
( A Development Stage Company)
Proforma Financial Statements
Statement of Assumptions
1 - Basis of Presentation
The purpose of the presentation of the proforma financial statements of
USA Talks. Com, Inc. is to show the financial position and results of
operations as if the two corporations, USA Talks.Com, Inc. and Alfine
Corporation (Alfine) were combined as one entity for the period for the two
years 1996 and 1997 and the seven month interim period to July 31, 1998.
Separate columns are used to show the financial position and results of
operations of each company separately, adjustments, if any between the two
companies, and the resulting totals from both companies.
USA Talks.Com, Inc. acquired all of the assets and liabilities of Alfine
as of July 28, 1998, including all of the outstanding stock of Essence
Corporation (Essence) (a Nevada Corporation). The end result being that of
USA Talks.Com, Inc. as a parent corporation, with the assets of Alfine
Corporation, including all of the outstanding stock of Essence, being its
wholly owned subsidiary. Alfine and Essence are shown as a consolidated group.
This transaction was accounted for as a "pooling of interest" method for
the business combination.
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 thereunto duly authorized.
Date: November 20, 1998
USA Talks.com, Inc.
by: /s/ Jack Alexander
Jack Alexander
Chief Financial Officer
