SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDED CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): April 4, 2000
iSHOPPER.COM, INC.
(Exact name of registrant as specified in this Charter)
Nevada 033-03275-D 87-0431533
--------------------------- ----------------------- ------------------
State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
8722 South 300 West, Suite 106
Sandy, Utah 84070
-------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (801) 984-9300
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
On April 4, 2000, iShopper.com, Inc. acquired Uniq Studios, Inc.
Following are the financial statements with this acquisition. Financial
statements of Uniq are filed herewith as Exhibit 99.1.
(a) Financial Statements.
See Exhibit Index, Exhibit 99.1
(b) Pro forma financial information
See Exhibit Index, Exhibit 99.1
(c) Exhibits. The following exhibits are
incorporated herein by this reference:
Exhibit No. Description of Exhibit
----------- ------------------------------------------
10* Stock Exchange Agreement dated as of
April 4, 2000 among the Registrant and
Uniq Studios, Inc., Clayton F. Kearl,
Troy Kearl, Devin O. Kearl and Dustin Kearl
99.1** Financial statements.
____________________________
* Incorporated by reference to the same numbered Exhibits to the Report
on Form 8-K, as filed on May 10, 2000
** Filed herewith
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.
iSHOPPER.COM, INC.
Date: June 23, 2000 By: /S/ Douglas S. Hackett
----------------------------
Douglas S. Hackett, President
Chief Executive Officer and Director
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Exhibit
----------- -------------------------------------------
10* Stock Exchange Agreement dated as
of April 4, 2000 among the Registrant
and Uniq Studios, Inc., Clayton F. Kearl,
Troy Kearl, Devin O. Kearl and Dustin Kearl
99.1** Financial statements, Index
____________________________
* Incorporated by reference to the same numbered Exhibits
to the Report on Form 8-K, as filed on May 5, 2000
** Filed herewith
<PAGE>
iSHOPPER.COM, INC.
INDEX TO FINANCIAL STATEMENTS
Page
Unaudited Pro Forma Condensed Consolidated Financial Statements F-2
Unaudited Pro Forma Condensed Consolidated Balance Sheet -
March 31, 2000 . . . . . . . . . . . . . . . . . . . . . . F-3
Unaudited Pro Forma Condensed Consolidated Statements
of Operations for the Three Months Ended March 31, 2000
and for the Year Ended December 31, 1999 . . . . . . . . . F-4
Notes to Unaudited Pro Forma Condensed Consolidated
Financial Statements . . . . . . . . . . . . . . . . . . . F-6
Uniq Studios, Inc. Financial Statements
Report of Independent Certified Public Accountants. . . . . F-7
Balance Sheets - March 31, 2000 (Unaudited) and
December 31, 1999. . . . . . . . . . . . . . . . . . . . . F-8
Statements of Operations for the Three Months Ended
March 31, 2000 and 1999 (Unaudited) and for the Years
Ended December 31, 1999 and 1998 . . . . . . . . . . . . . F-9
Statements of Stockholders' Deficit for the Years Ended
December 31, 1998 and 1999 and for the Three Months
Ended March 31, 2000 (Unaudited) . . . . . . . . . . . . . F-10
Statements of Cash Flows for the Three Months Ended
March 31, 2000 and 1999 (Unaudited) and for the Years
Ended December 31, 1999 and 1998 . . . . . . . . . . . . . F-11
Notes to Financial Statements . . . . . . . . . . . . . . . F-12
<PAGE>
iSHOPPER.COM, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
On April 4, 2000, iShopper.com, Inc. (the Company) completed an
agreement (the Agreement) acquiring Uniq Studios, Inc. (Uniq), a
Nevada corporation. Uniq is involved in software development. Uniq
has developed and has applied for a patent for its isolated browser
technology, has developed Internet games and streaming audio and
video. Uniq provides services to customers using these technologies
and in providing Web page design.
Under the terms of the Agreement, Uniq was acquired by the Company
issuing 1,500,000 restricted shares of common stock and options to
purchase 500,000 additional restricted common shares at $7.60 per
share. Options for 250,000 shares are exercisable upon Uniq earning
revenue of $2,500,000 and not incurring a net loss during the year
ending March 31, 2001. Options for 250,000 shares are exercisable
upon Uniq earning revenue of $7,500,000 and having positive net
income during the two-year period ending March 31, 2002.
The acquisition was accounted for by the purchase method of
accounting based upon the fair value of the common stock issued. The
common stock issued was valued at $6,720,000, or $4.48 per share.
The contingently issuable options were not included in the purchase
price but will be recorded if and when the contingency is resolved
and options are exercisable. The options will be recorded at their
fair value on the date they are exercisable as an additional cost of
the acquisition and will be increase goodwill. The purchase price
was allocated to the net assets of Uniq based upon their fair value
with the excess of the purchase price allocated to goodwill. The
acquisition resulted in the recognition of $5,244,864 of goodwill at
the acquisition date, which will be amortized over a period of five
years by the straight-line method. Any additional goodwill
recognized upon the options becoming exercisable will be amortized
over the remaining estimated life of the goodwill.
The following condensed consolidated pro forma balance sheet has
been prepared to present the consolidated financial position of the
Company assuming the acquisition of Uniq occurred on March 31, 2000.
The following condensed consolidated pro forma statements of
operations have been prepared to present the results of operations
of the Company assuming the acquisition occurred on January 1, 1999.
The amounts presented for the Company have been derived from the
Company's historical consolidated financial statements for the
three months ended March 31, 2000 and for the year ended December
31, 1999. The amounts presented for Uniq are the historical
financial position and results of operations of Uniq and were
derived from the financial statements presented herein. The
accompanying pro forma statements of operations should be read in
conjunction with those historical financial statements.
Had the acquisition occurred on January 1, 1999, actual results of
operations would likely have differed from the amounts presented in
these pro forma statements. In addition, the pro forma results of
operations presented in the accompanying financial statements are
not necessarily indicative of the results that may be expected for
the remainder of the year ending December 31, 2000.
<PAGE>
F-2
iSHOPPER.COM, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA BALANCE SHEET
MARCH 31, 2000
<TABLE>
<CAPTION>
Pro
Forma Pro
iShopper Uniq Adjustments Forma
----------- ------------ ----------- -----------
ASSETS
<S> <C> <C> <C> <C> <C>
Current Assets
Cash $ 242,883 $ 8,404 $ 251,287
Trade accounts receivable,
net 77,953 - 77,953
Inventory - 2,000 2,000
Merchant reserve account 105,607 - 105,607
----------- ------------ ------------
Total Current Assets 426,443 10,404 436,847
Property and Equipment, Net 138,518 13,684 A $ (3,034) 149,168
Deposit On Purchase of
Business 33,650 - 33,650
Software to be Sold or
Marketed - 1,625 A 3,000,000 3,001,625
Goodwill, Net 62,900 - A 5,244,864 5,307,764
----------- ------------ ----------- ------------
Total Assets $ 661,511 $ 25,713 $ 8,241,830 $ 8,929,054
=========== ============ =========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts payable $ 476,528 $ 10,562 $ 487,090
Accrued liabilities 184,132 1,320,612 1,504,744
Unearned revenue - 37,000 37,000
Notes payable 337,558 - 337,558
Notes payable to related
parties 31,000 179,369 210,369
----------- ------------ ------------
Total Current
Liabilities 1,029,218 1,547,543 2,576,761
----------- ------------ ------------
Stockholders' Equity (Deficit)
Common stock 9,035 1,500 - 10,535
Additional paid-in capital 3,366,486 - A $ 8,233,298
B (1,514,798) 10,084,986
Discount on common stock - (8,532) A 8,532 -
Receivable from shareholders (1,783,000) - (1,783,000)
Accumulated deficit (1,960,228) (1,514,798) B 1,514,798 (1,960,228)
----------- ------------ ----------- --------------
Total Stockholders'
Equity (Deficit) (367,707) (1,521,830) 8,241,830 6,352,293
Total Liabilities and
Stockholders' Equity
(Deficit) $ 661,511 $ 25,713 $ 8,241,830 $ 8,929,054
<FN>
See the accompanying notes to unaudited condensed consolidated pro forma financial statements.
</FN>
</TABLE>
<PAGE>
F-3
iSHOPPER.COM, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
Pro
Forma Pro
iShopper Uniq Adjustments Forma
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues $ 1,125,204 $ 108,500 $ 1,233,704
Cost of Sales 365,472 - 365,472
----------- ------------ -----------
Gross Profit 759,732 108,500 868,232
Operating Expenses
General and administrative 1,241,609 113,789 1,355,398
Bad debt 149,097 - 149,097
Depreciation and
amortization 14,250 - C $ 262,243
D 16,667 293,160
----------- ------------- ----------- -----------
Total Operating Expenses 1,404,956 113,789 278,910 1,797,655
----------- ------------- ----------- -----------
Loss from Operations (654,224) (5,289) (278,910) (929,423)
Interest income 12,546 - 12,546
Interest expense (16,376) (9,532) (25,908)
----------- ------------- ----------- -----------
Loss Before Income Taxes (649,054) (14,821) (278,910) (942,785)
Income tax expense (236,060) - - (236,060)
----------- ------------- ----------- -----------
Net Loss $ (885,114) $ (14,821) $ (278,910) $(1,178,845)
=========== ============= =========== ===========
Basic and diluted loss per
common share $ (0.11) $ (0.12)
=========== ===========
Weighted average number
of common shares used
in per share calculation 8,285,861 9,785,861
=========== ===========
<FN>
See the accompanying notes to unaudited condensed consolidated pro
forma financial statements.
</FN>
</TABLE>
<PAGE>
F-4
iSHOPPER.COM, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Pro
Forma Pro
iShopper Uniq Adjustments Forma
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues $ 3,924,869 $ 295,974 $ 4,220,843
Cost of Sales 276,600 23,385 299,985
------------ ------------ -----------
Gross Profit 3,648,269 272,589 3,920,858
Operating Expenses
General and administrative 3,912,542 513,410 4,425,952
Bad debt 653,702 - 653,702
Loss from write off of
goodwill 229,713 - 229,713
Depreciation and
amortization 23,543 - C $ 1,048,973
D 600,000 1,672,516
------------ ------------ ------------ -----------
Total Operating Expenses 4,819,500 513,410 1,648,973 6,981,883
------------ ------------ ------------ -----------
Loss from Operations (1,171,231) (240,821) (1,648,973) (3,061,025)
Interest income 28,567 - 28,567
Interest expense (5,197) (38,744) (43,941)
------------ ------------ ------------- -----------
Loss Before Income Taxes (1,147,861) (279,565) (1,648,973) (3,076,399)
Income tax benefit 233,810 - - 233,810
------------ ------------ ------------- -----------
Loss Before Extraordinary
Item $ (914,051) $ (279,565) $ (1,648,973) $(2,842,589)
============ ============ ============= ===========
Basic and diluted loss before
extraordinary item per common
share $ (0.68) $ (1.00)
============ ===========
Weighted average number
of common shares used in
per share calculation 1,349,234 2,849,234
============ ===========
<FN>
See the accompanying notes to unaudited condensed consolidated pro
forma financial statements.
</FN>
</TABLE>
<PAGE>
F-5
iSHOPPER.COM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA FINANCIAL STATEMENTS
A - To record the issuance of 1,500,000 shares
of common stock to acquire Uniq Studios, Inc. and to
allocate the purchase price to the net assets acquired.
The shares issued were recorded at $4.48 per share which
is the fair value of restricted shares being issued in a
private stock offering occurring at the same time, net of
offering costs. The net assets acquired were recorded at
their fair value and resulted in the recognition of
$5,237,364 of goodwill. Goodwill will be amortized over a
period of five years by the straight-line method.
B - To eliminate the accumulated deficit of Uniq
Enterprises, Inc.
C - To record amortization of goodwill on a
straight-line basis over a period of five years.
D - To record amortization of capitalization
software costs to be sold or marketed on a straight-line
method over a period of five years.
<PAGE>
F-6
HANSEN, BARNETT & MAXWELL
A Professional Corporation
CERTIFIED PUBLIC ACCOUNTANTS
Member of AICPA Division of Firms (801) 532-2200
Member of SECPS Fax (801) 532-7944
Member of Summit International Associates 345 East 300 South, Suite 200
Salt Lake City, Utah 84111-2693
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and the Stockholders of
iShopper.com, Inc.
We have audited the accompanying balance sheet of Uniq
Studios, Inc. (the Company) as of December 31, 1999 and
the related statements of operations, stockholders'
deficit, and cash flows for the years ended December 31,
1999 and 1998. These financial statements are the
responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing
standards generally accepted in the United States. Those
standards require that we plan and perform the audits 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 Uniq Studios, Inc. as of December 31, 1999 and
the results of its operations and its cash flows for the
years ended December 31, 1999 and 1998 in conformity with
accounting principles generally accepted in the United
States.
The accompanying financial statements have been prepared
assuming that the Company will continue as a going
concern. As discussed in Note 2 to the financial
statements, the Company has suffered recurring losses from
operations and as of December 31, 1999 had a working
capital deficit of $1,718,894 and a stockholders' deficit
of $1,705,950. These matters raise substantial doubt about
the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also
described in Note 2. The financial statements do not
include any adjustments relating to the recoverability and
classification of asset carrying amounts or the amount and
classification of liabilities that might result should the
Company be unable to continue as a going concern.
HANSEN, BARNETT & MAXWELL
Salt Lake City, Utah
June 6, 2000
<PAGE>
UNIQ STUDIOS, INC.
BALANCE SHEETS
March 31, December 31,
2000 1999
---------- ----------
(Unaudited)
ASSETS
Current Assets
Cash $ 8,404 $ 30,847
Inventory 2,000 2,000
---------- ----------
Total Current Assets 10,404 32,847
---------- ----------
Property and Equipment 73,296 69,514
Less: accumulated depreciation 59,612 58,195
---------- ----------
Net Property and Equipment 13,684 11,319
---------- ----------
Other Assets 1,625 1,625
---------- ----------
Total Assets $ 25,713 $ 45,791
========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable $ 10,562 $ 15,411
Accrued liabilities payable to shareholders 1,320,612 1,519,961
Unearned revenue 37,000 37,000
Related party notes payable 179,369 179,369
---------- ----------
Total Current Liabilities 1,547,543 1,751,741
---------- ----------
Stockholders' Deficit
Preferred stock - $0.001 par value;
2,000,000 shares authorized; no shares
issued or outstanding -- --
Common stock - $0.001 par value; 50,000,000
shares authorized; 1,500,000 shares issued
and outstanding 1,500 1,500
Discount on common stock (8,532) (71,170)
Notes receivable from shareholders -- (136,303)
Accumulated deficit (1,514,798) (1,499,977)
---------- ----------
Total Stockholders' Deficit (1,521,830) (1,705,950)
---------- ----------
Total Liabilities and Stockholders' Deficit $ 25,713 $ 45,791
========== ==========
The accompanying notes are an integral part of these financial statements.
F-8
<PAGE>
UNIQ STUDIOS, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months For the Years Ended
Ended March 31, December 31,
----------------------- -----------------------
2000 1999 1999 1998
---------- ---------- ---------- ----------
(Unaudited)
<S> <C> <C> <C> <C>
Revenue $ 108,500 $ 73,994 $ 295,974 $ 189,453
Cost of goods sold -- 6,574 23,385 54,584
---------- ---------- ---------- ----------
Gross Profit 108,500 67,420 272,589 134,869
General and administrative expense 113,789 128,741 513,410 460,804
---------- ---------- ---------- ----------
Loss From Operations (5,289) (61,321) (240,821) (325,935)
Interest expense (9,532) (9,686) (38,744) (47,871)
---------- ---------- ---------- ----------
Net Loss $ (14,821) $ (71,007) $ (279,565) $ (373,806)
========== ========== ========== ==========
Basic and Diluted Loss Per
Common Share $ (0.01) $ (0.05) $ (0.19) $ (0.24)
========== ========== ========== ==========
Weighted Average Shares Used in
Per Share Calculation 1,500,000 1,500,000 1,500,000 1,500,000
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-9
<PAGE>
UNIQ STUDIOS, INC.
STATEMENTS OF STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
Notes
Common Stock Discount Receivable Total
------------------------- on Common From Accumulated Stockholders'
Shares Amount Stock Stockholders Deficit Deficit
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance - December 31, 1997 1,402,262 $ 1,402 $ (1,202) $ (102,466) $ (846,606) $ (948,872)
Issued for cash, $0.00 per share 97,738 98 (84) -- -- 14
Distributions to shareholders -- -- (1,650) -- -- (1,650)
Increase in notes receivable from
shareholders -- -- -- (32,178) -- (32,178)
Net loss -- -- -- -- (373,806) (373,806)
----------- ----------- ----------- ----------- ----------- -----------
Balance - December 31, 1998 1,500,000 1,500 (2,936) (134,644) (1,220,412) (1,356,492)
Contribution to capital by payment
of expenses and notes payable to
shareholders, no additional shares
issued -- -- 64,372 -- -- 64,372
Increase in notes receivable from
shareholders -- -- -- (1,659) -- (1,659)
Distributions to shareholders -- -- (132,606) -- -- (132,606)
Net loss
-- -- -- -- (279,565) (279,565)
----------- ----------- ----------- ----------- ----------- -----------
Balance - December 31, 1999 1,500,000 1,500 (71,170) (136,303) (1,499,977) (1,705,950)
Conversion of accrued liabilities
to capital, no additional shares
issued -- -- 62,638 -- -- 62,638
Offset of notes receivable from
shareholders against accrued
liabilities payable to shareholders -- -- -- 136,303 -- 136,303
Net loss (unaudited) -- -- -- -- (14,821) (14,821)
----------- ----------- ----------- ----------- ----------- -----------
Balance March 31, 2000
(Unaudited) 1,500,000 $ 1,500 $ (8,532) $ -- $(1,514,798) $(1,521,830)
=========== =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-10
<PAGE>
UNIQ STUDIOS, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Three Months For the Years Ended
Ended March 31, December 31,
----------------------- -----------------------
2000 1999 1999 1998
---------- ---------- ---------- ----------
(Unaudited)
<S> <C> <C> <C> <C>
Cash Flows From Operating Activities
Net loss $ (14,821) $ (71,007) $ (279,565) $ (373,806)
Depreciation 1,417 1,659 6,635 9,189
Expenses paid by capital contributions -- 14,689 35,419 --
Changes in current assets and liabilities:
Inventories -- -- -- 39,000
Accounts payable (4,849) -- (10,241) 16,310
Accrued liabilities (408) 54,627 359,250 362,704
Unearned revenue -- -- 37,000 --
---------- ---------- ---------- ----------
Net Cash Provided (Used) In
Operating Activities (18,661) (32) 148,498 53,397
---------- ---------- ---------- ----------
Cash Flows From Investing Activities
Cash paid for property and equipment (3,782) -- (7,319) (12,392)
Increase in other assets -- -- (1,625) --
---------- ---------- ---------- ----------
Net Cash Used In Investing Activities (3,782) -- (8,944) (12,392)
---------- ---------- ---------- ----------
Cash Flows From Financing Activities
Capital contributions -- -- -- 14
Increase in notes receivable from
shareholders -- -- (1,659) (32,178)
Proceeds from borrowings from
shareholders -- -- 25,526 --
Payments on notes payable to members -- -- -- (7,159)
Distributions to members -- -- (132,606) (1,650)
---------- ---------- ---------- ----------
Net Cash Used In Financing Activities -- 28,274 (108,739) (40,973)
---------- ---------- ---------- ----------
Net Increase (Decrease) In Cash (22,443) (32) 30,815 32
Cash - Beginning of Period 20,847 32 32 --
---------- ---------- ---------- ----------
Cash - End of the Period $ 8,404 $ -- $ 30,847 $ 32
========== ========== ========== ==========
Supplemental Cash Flow Information
Cash Paid for Interest $ -- $ -- $ -- $ --
========== ========== ========== ==========
Noncash Investing and Financing
Activities
Accrued liabilities offset against
notes receivable from shareholders
and converted into contributed
capital $ 198,941 $ -- $ -- $ --
Reduction in notes payable to
shareholders from contributed capital -- 13,585 28,953 --
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-11
<PAGE>
UNIQ STUDIOS, INC.
NOTES TO FINANCIAL STATEMENTS
(Information with Respect to March 31, 2000 and for the Three
Months Ended March 31, 2000 and 1999 is Unaudited)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
On March 8, 1993 Uniq Enterprises LLC (Enterprises)
was formed as a Utah limited liability company under
the laws of the State of Utah. The Company was formed
for the purpose of software development. The Company
has developed and has applied for a patent for its
isolated browser technology. The Company has also
developed Internet games and streaming audio and
video. The Company provides services to customers
using these technologies and in providing Web page
design.
On August 5, 1998, Uniq Studios LLC (Studios) was
formed under the laws of the State of Utah by the
owners of Enterprises to provide similar Internet
services. On March 31, 2000, Uniq Studios, Inc. (the
Corporation) was incorporated under the laws of the
State of Nevada and the assets, liabilities and
operations of Enterprises and Studios were transferred
to the Corporation in exchange for the issuance of
1,500,000 shares of its common stock. The
reorganization of Enterprises and Studios into the
Corporation has been accounted for as a
recapitalization at historical cost in a manner
similar to a pooling of interests. The accompanying
financial statements include the combined historical
operations of Enterprises and Studios and have been
restated for all periods presented for the effects of
the shares of common stock of the Corporation issued
in the recapitalization. The combined entity is
referred to herein as the Company.
NOTE 2 - SUMMARY OF 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 the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of
revenues and expenses during the reporting period.
Actual results could differ from these estimates.
Financial Instruments - The carrying amount reported
in the accompanying consolidated financial statements
for cash, accounts payable, accrued liabilities
payable to shareholders, unearned revenue and related
party notes payable approximate fair values because of
the immediate or short-term maturities of these
financial instruments.
Inventory - Inventory is stated at the lower of cost
(using the first-in, first-out method) or market
value. Inventory consists of produced software
products available for sale.
Property & Equipment - Property and equipment are
stated at cost and consist of furniture and fixtures,
computer software and office equipment. Maintenance
and repairs are charged to operations while major
improvements are capitalized. Upon retirement, sale,
or other disposition, the cost and accumulated
depreciation are eliminated from the accounts and gain
or loss is included in operations. Depreciation is
computed using the straight-line method over the
estimated useful lives of the property and equipment,
which are three to seven years.
Revenue Recognition - Revenue is recognized upon
completion of services and acceptance by the customer.
Revenue from sale of software is recognized upon
delivery and acceptance by the customer.
Business Condition - The Company has incurred net
losses from operations for the years ended December
31, 1999 and 1998 of $279,565 and $373,806,
respectively, and has incurred a loss from operations
for the three months ended March 31, 2000 of $14,821.
As of December 31, 1999, the Company had a working
capital deficit of $1,718,894 and a stockholders'
deficit of $1,705,950. As of March 31, 2000, the
Company had a working capital deficit of $1,537,139
and a stockholders' deficit of $1,521,830. These
matters raise substantial doubt about the Company's
ability to continue as a going concern. The Company
needs to obtain additional financing to fund payment
of debt obligations and to provide working capital for
operations. Management is attempting to obtain
additional debt or equity capital through the
acquisition by iShopper.com, Inc. The financial
statements do not include any adjustments relating to
the recoverability and classification of asset
carrying amounts or the amount and classification of
liabilities that might result should the Company be
unable to continue as a going concern. On April 4,
2000 the Company entered into an agreement providing
for its acquisition by iShopper.com, Inc., a Nevada
corporation. There is no assurance the change of
ownership will provide additional financing for the
Company.
Net Loss per Common Share - The Company computes
basic and diluted loss per common share by dividing
net loss by the weighted average number of common
shares outstanding.
NOTE 3 - RELATED PARTY TRANSACTIONS
Notes Receivable from Shareholders - The Company has
paid expenses on behalf of shareholders from its
inception in exchange for notes receivable. No
interest accrues on the notes and the notes are due
upon demand.
Notes Payable to Related Parties - Since inception,
the Company has partially relied on funds advanced by
members to meet its obligations and to fund its
operations. These advances have been classified as
related party notes payable. The notes payable accrue
interest at the rate of 12% per annum and are due on
demand.
NOTE 4 - LEASE OBLIGATIONS
Operating Lease - On December 31, 1999, the Company
entered into a three-year lease agreement to rent
office space. The lease provides for monthly lease
payments of $2,569 per month for the first year after
which the monthly lease payment is subject to a 2%
yearly escalation. At the end of the lease period the
Company has one option to renew the lease for an
additional three years. Future minimum lease payments
are $30,828, $31,440 and $32,076 for the years ending
December 31, 2000, 2001 and 2002, respectively. Lease
expense during the three months ended March 31, 2000
was $7,707.
NOTE 5 - INCOME TAXES
Until March 31, 2000, Enterprises and Studios were
taxed as partnerships. As such, they were nontaxable
entities and elements of income and expense were
recognized by the members. Upon recapitalization into
the Corporation, the Company's tax status changed to a
taxable entity.
The Company recognizes an asset or liability for the
deferred tax consequences of all temporary differences
between the tax bases of assets or liabilities and
their reported amounts in the financial statements
that will result in taxable or deductible amounts in
future years when the reported amounts of the assets
or liabilities are recovered or settled. These
deferred tax assets or liabilities are measured using
the enacted tax rates that will be in effect when the
differences are expected to reverse. Deferred tax
assets are reviewed periodically for recoverability
and valuation allowances are provided, as necessary.
The components of the deferred tax asset as of March
31, 2000 are as follows:
Accrued expenses not yet deducted $ 492,588
Unearned revenue not yet deducted 13,801
----------
Deferred Tax Assets 506,389
Valuation allowance (506,389)
----------
Net Deferred Tax Assets $ -
==========
