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OMB APPROVAL
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UNITED STATES OMB Number: 3235-0060
SECURITIES AND EXCHANGE COMMISSION Expires: May 31, 2000
WASHINGTON, D.C. 20549 Estimated average burden
hours per response 5.00
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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 1, 2000
------------------------------
Virtualsellers.com, Inc.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Canada 000-14356 911353658
--------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Suite 1000, 120 North LaSalle Street, Chicago, Illinois 60602
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 920-9999
----------------------------
Not applicable
--------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Pursuant to an Asset Purchase Agreement (the "Asset Purchase Agreement"), dated
for reference May 19, 2000, between the Company, Sullivan Park L.L.C. ("Sullivan
Park") and Edward W. Sharpless ("Sharpless"), the Company acquired all of the
property, assets and undertakings of the internet services development business
carried on by Sullivan Park. Sharpless is a director, officer and shareholder
of Sullivan Park, and has a substantial proprietary and financial interest in
Sullivan Park. The closing date of the Asset Purchase Agreement, as agreed by
the parties, was June 1, 2000.
Under the terms of the Asset Purchase Agreement, the aggregate sum payable by
the Company to Sullivan Park is that number of shares of the Company's common
stock (the "Purchase Shares") equal to the sum of $2,700,000, divided by the
closing sale price per share of the Company's common stock on the trading day
immediately preceding the earlier of (a) the first anniversary of the date of
the Asset Purchase Agreement and (b) the date upon which the Purchase Shares are
registered under the Securities Act of 1933, as amended, and as contemplated in
section 4 of the Asset Purchase Agreement.
The Company intends to continue the business operations of Sullivan Park by
incorporating its customers, operations and employees into a new subsidiary
which the Company is presently incorporating. Sullivan Park is an internet
services developer, focussing on building successful business-to-business
internet companies, providing e-business development services to medium and
large-sized businesses, and offering services as a business-to-business
incubator. General services provided by Sullivan Park include designing and
running websites, e-commerce development, internet consulting, back-office
integration and web-based remote application services. Specific services to
Sullivan Park's customers include the development and hosting of on-line stores,
including services such as site concept, site design, media production, media
acquisition, artwork, animation, web programming, database programming and
application server programming.
<PAGE>
Pursuant to the Asset Purchase Agreement, the Company will continue the
employment of Sullivan Park's two full-time employees, Jeff Yana and Janet
Howard. Mr. Yana is a Project Manager, and has been employed by Sullivan Park
in that capacity since October, 1999. Ms. Howard works in Production, and also
joined Sullivan Park in October, 1999.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Audited Financial Statements of Sullivan Park, LLC as at December 31,
1999 and 1998, and for the year ended December 31, 1999, and from the
date of incorporation on August 26, 1998 to December 31, 1998
(b) Unaudited interim financial statements of Sullivan Park, LLC as at May
31, 2000, and for the five months ended May 31, 1999 and 2000
(b) Pro forma balance sheets as at May 31, 2000 and pro forma Statement of
Operations for the year ended February 28, 2000 and for the three months
ended May 31, 2000
<PAGE>
Financial Statements of
SULLIVAN PARK, LLC
(Expressed in U.S. dollars)
For the five months ended May 31, 2000 and 1999 (unaudited) and
For the year ended December 31, 1999 and
Period from the date of incorporation on August 26, 1998 to
December 31, 1998
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Sullivan Park, LLC
We have audited the accompanying balance sheets of Sullivan Park, LLC as at
December 31, 1999 and 1998 and the related statements of operations and retained
earnings (deficit), members' equity and cash flows for the year ended December
31, 1999 and for the period from incorporation on August 26, 1998 to December
31, 1998. These financial statements are the responsibility of the
Corporation'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 of America. 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 the Corporation as at December
31, 1999 and 1998 and the results of its operations and its cash flows for the
year ended December 31, 1999 and for the period from incorporation on August 26,
1998 to December 31, 1998 in accordance with accounting principles generally
accepted in the United States of America.
/s/ KPMG
--------------------------
Chartered Accountants
Vancouver, Canada
August 11, 2000
<PAGE>
<TABLE>
<CAPTION>
SULLIVAN PARK, LLC
Balance Sheets
(Expressed in U.S. dollars)
==================================================================================
May 31, December 31, December 31,
2000 1999 1998
----------------------------------------------------------------------------------
(unaudited)
Assets
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 3,248 $ 14,276 $ 9,018
Accounts receivable 95,534 60,522 8,365
Prepaid rent - 1,500 -
------------------------------------------------------------------------------
Total current assets 74,382 76,298 17,383
Fixed assets, net (note 2) 21,379 18,909 15,919
----------------------------------------------------------------------------------
Total assets $ 120,161 $ 95,207 $ 33,302
==================================================================================
Liabilities and Members' Equity
Current liabilities:
Accounts payable $ 30,917 $ 14,433 $ 11,337
Accrued liabilities 29,981 - -
------------------------------------------------------------------------------
Total current liabilities 60,898 14,433 11,337
Members' equity:
Members' capital (1,757) 23,587 18,999
Retained earnings 61,020 57,187 2,966
------------------------------------------------------------------------------
Total members' equity 59,263 80,774 21,965
Commitments (note 4)
Subsequent event (note 7)
----------------------------------------------------------------------------------
Total liabilities and members' equity $ 120,161 $ 95,207 $ 33,302
==================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
SULLIVAN PARK, LLC
Statements of Operations and Retained Earnings (Deficit)
(Expressed in U.S. dollars)
=====================================================================================================
Period from date
Five month Five month of incorporation on
period ended period ended Year ended August 26, 1998
May 31, May 31, December 31, to December 31,
2000 1999 1999 1998
-----------------------------------------------------------------------------------------------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues $ 162,900 $ 17,473 $ 205,940 $ 65,478
Operating expenses:
Automobile 1,879 2,419 5,726 2,575
Consulting and salaries 49,338 3,292 52,315 30,685
Depreciation 5,083 3,863 9,271 1,989
Equipment rental - 132 132 618
Financing costs 459 591 1,275 73
Insurance 396 - - -
Legal and accounting 38,252 200 1,385 341
Miscellaneous 13,715 5,387 31,710 1,725
Office 9,637 4,291 14,587 5,536
Rent 7,759 7,578 18,078 4,238
Technology 3,984 3,019 3,900 6,084
Telephone 6,726 3,555 6,970 3,666
Travel, marketing and promotion 12,518 3,439 6,370 5,653
-------------------------------------------------------------------------------------------------
149,746 37,766 151,719 63,183
-----------------------------------------------------------------------------------------------------
Income (loss) before undernoted (13,154) (20,293) 54,221 2,295
Other income (expenses):
Interest income - - - 21
Miscellaneous (9,321) - - 650
------------------------------------------------------------------------------------------------
(9,321) - - 671
----------------------------------------------------------------------------------------------------
Net income (loss) for the period (3,833) (20,293) 54,221 2,966
Retained earnings,
beginning of period 57,187 2,966 2,966 -
----------------------------------------------------------------------------------------------------
Retained earnings (deficit),
end of period $ 61,020 $ (17,327) $ 57,187 $ 2,966
====================================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
SULLIVAN PARK, LLC
Statements of Members' Equity
(Expressed in U.S. dollars)
================================================================
Managing Other
member member Total
----------------------------------------------------------------
Initial contribution $ 11,000 $ - $ 11,000
Contributions 14,601 - 14,601
Withdrawals (6,602) - (6,602)
Net income for the period 2,966 - 2,966
----------------------------------------------------------------
Balance, December 31, 1998 21,965 - 21,965
Contributions 11,500 - 11,500
Withdrawals (6,912) - (6,912)
Net income for the period 54,221 - 54,221
----------------------------------------------------------------
Balance, December 31, 1999 80,774 - 80,774
Contributions 7,298 - 7,298
Withdrawals (32,642) - (32,642)
Net income (loss) for the period (3,833) - (20,567)
----------------------------------------------------------------
Balance, May 31, 2000 $ 59,263 $ - $ 34,863
================================================================
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
SULLIVAN PARK, LLC
Statements of Cash Flows
(Expressed in U.S. dollars)
===========================================================================================================
Period from date
Five month Five month of incorporation on
period ended period ended Year ended August 26, 1998
May 31, May 31, December 31, to December 31,
2000 1999 1999 1998
-----------------------------------------------------------------------------------------------------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Cash provided by (used in):
Operating activities:
Net income (loss) for the period $ (3,833) $ (20,293) $ 54,221 $ 2,966
Depreciation, an item not involving
cash 5,083 3,863 9,271 1,989
Change in working capital accounts:
Accounts receivable (35,012) 8,115 (52,157) (8,365)
Prepaid rent 1,500 - (1,500) -
Accounts payable and
accrued liabilities 46,465 (3,256) 3,096 11,337
-------------------------------------------------------------------------------------------------------
21,869 (11,571) 12,931 7,927
Investing activities:
Purchase of fixed assets (7,553) (1,197) (12,261) (17,908)
-------------------------------------------------------------------------------------------------------
(7,553) (1,197) (12,261) (17,908)
Financing activities:
Member contributions (withdrawals) (25,344) 8,092 4,588 18,999
-------------------------------------------------------------------------------------------------------
(25,344) 8,092 4,588 18,999
-----------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and
cash equivalents (11,028) (4,676) 5,258 9,018
Cash and cash equivalents,
beginning of period 14,276 9,018 9,018 -
-----------------------------------------------------------------------------------------------------------
Cash and cash equivalents,
end of period $ 3,248 $ 4,342 $ 14,276 $ 9,018
===========================================================================================================
</TABLE>
Non-cash transactions and supplemental disclosures - note 6.
See accompanying notes to financial statements.
<PAGE>
SULLIVAN PARK, LLC
Notes to Financial Statements, page 3
(Expressed in U.S. dollars)
Five month periods ended May 31, 2000 and 1999 (unaudited),
Year ended December 31, 1999 and
For the period from the date of incorporation on August 26, 1998 to December 31,
1998
================================================================================
Sullivan Park, LLC (the "Corporation") was incorporated on August 26, 1998 in
California, U.S.A. and is engaged in the provision of web based consulting
services.
1. SIGNIFICANT ACCOUNTING POLICIES:
(a) Basis of presentation:
The financial statements include the results of Sullivan Park, LLC
from the date of incorporation on August 26, 1998.
(b) Cash and cash equivalents:
Cash equivalents consist of highly liquid debt instruments with
original terms to maturity of three months or less when acquired.
(c) Fixed assets:
Fixed assets are stated at cost.
Depreciation is provided using the straight-line method over the
following number of years:
======================================================================
Asset Years
----------------------------------------------------------------------
Computer equipment 3
Furniture and equipment 5
Computer software 3
======================================================================
(d) Income taxes:
The Corporation is a limited liability corporation which is not
directly subject to income taxes. Accordingly, no income liability or
expense is reflected in these financial statements. The Corporation's
annual taxable income is allocated to its member's in accordance with
their membership interest and the members' file their tax returns and
pay tax in accordance with their individual circumstances.
(e) Use of estimates:
Management of the Corporation has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and
the disclosure of contingent assets and liabilities to prepare these
financial statements in conformity with United States generally
accepted accounting principles. Actual results could differ from
those estimates.
(f) Research and development:
Research and development costs are expensed as incurred.
<PAGE>
SULLIVAN PARK, LLC
Notes to Financial Statements
(Expressed in U.S. dollars)
Five month periods ended May 31, 2000 and 1999 (unaudited),
Year ended December 31, 1999 and
For the period from the date of incorporation on August 26, 1998 to December 31,
1998
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
(g) Revenue recognition:
The Company's revenue consists of web based consulting services which
are billed and recorded as the services are provided.
(h) Unaudited financial information:
The financial information as at May 31, 2000 and for each of the five
month periods ended May 31, 2000 and 1999 is unaudited. However, such
unaudited financial information reflects all adjustments (consisting
solely of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the results for the
periods presented.
2. FIXED ASSETS:
As at May 31, 2000 (unaudited):
=========================================================================
Accumulated Net book
Cost depreciation value
-------------------------------------------------------------------------
Computer equipment $ 27,164 $ 12,554 $ 14,610
Furniture and equipment 6,311 2,265 4,046
Production software 4,247 1,524 2,723
-------------------------------------------------------------------------
$ 37,722 $ 16,343 $ 21,379
=========================================================================
As at December 31:
=========================================================================
1999 1998
-------------------------------------------------------------------------
Accumulated Net book Net book
Cost depreciation value value
-------------------------------------------------------------------------
Computer equipment $ 22,400 $ 8,781 $ 13,619 $ 10,524
Furniture and equipment 5,880 1,739 4,141 4,506
Production software 1,889 740 1,149 889
-------------------------------------------------------------------------
$ 30,169 $ 11,260 $ 18,909 $ 15,919
=========================================================================
3. MEMBERS' CAPITAL:
The Corporation has two members - the managing member and the other member.
The managing member is entitled to 100% of any profit or loss from the
Corporation's operations. The other member's sole purpose is to satisfy
the California state regulation which requires the Corporation to have
at least two members.
<PAGE>
SULLIVAN PARK, LLC
Notes to Financial Statements
(Expressed in U.S. dollars)
Five month periods ended May 31, 2000 and 1999 (unaudited),
Year ended December 31, 1999 and
For the period from the date of incorporation on August 26, 1998 to December 31,
1998
================================================================================
4. COMMITMENT:
The Corporation is obligated under certain office facility and equipment
leases expiring at various dates through December 31, 2001. Future minimum
rental payments under operating leases are as follows:
===========================================================================
2000 $ 3,325
2001 1,340
===========================================================================
5. NON-CASH TRANSACTIONS AND SUPPLEMENTAL DISCLOSURES:
(a) Non-cash transactions:
The Corporation received consulting services from its managing member
for no consideration in all periods presented.
(b) Supplemental disclosures:
(i) Cash income taxes paid:
The Corporation did not pay any cash income taxes for any of the
periods presented.
(ii) Cash interest paid:
For the five months ended May 31, 2000, the Corporation paid
interest of $459 (five months ended May 31, 1998 - $591; year
ended December 31, 1999 - $1,275; period from date of
incorporation on August 26, 1998 to December 31, 1998 - $73)
6. FINANCIAL INSTRUMENTS:
For all periods presented, the Corporation did not utilize derivative
financial instruments. The fair market value of cash and cash equivalents,
accounts receivable and accounts payable and accrued liabilities
approximates their recorded values given the short-term nature of these
items.
7. SUBSEQUENT EVENTS:
Effective June 1, 2000, the Corporation sold substantially all its assets
and operations to Virtualsellers.com, Inc. for $2,700,000 of common shares
of Virtualsellers.com, Inc. The common shares are receivable on the
earlier of (a) June 1, 2001 and (b) the registration of the shares with
the Securities and Exchange Commission. The number of common shares to be
received will be determined based on the market price of the shares on
the date they become issuable.
<PAGE>
Unaudited Pro Forma Combined Financial Statements of
VIRTUALSELLERS.COM, INC.
As at May 31, 2000, for the year ended February 29, 2000 and
for the three months ended May 31, 2000
<PAGE>
<TABLE>
<CAPTION>
VIRTUALSELLERS.COM, INC.
Unaudited Pro Forma Combined Balance Sheet
As of May 31, 2000
======================================================================================================
Sullivan Pro forma
Virtualsellers Park Adjustments combined
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash $ 2,693,370 $ 3,248 $ 2,696,618
Accounts receivable 478,210 95,534 573,744
Inventory 41,075 - 41,075
Prepaid expenses and
advance 197,538 - 197,538
--------------------------------------------------------------------------------------------------
3,410,193 98,782 3,508,975
Fixed assets 2,038,797 21,379 2,060,176
Goodwill - - 3,015,737 2(a) 3,015,737
------------------------------------------------------------------------------------------------------
$ 5,448,990 $ 120,161 $ 8,584,888
======================================================================================================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and
accrued liabilities $ 822,989 $ 60,898 $ 883,887
Stockholders' equity:
Common shares, no par value 106,483,500 (1,757) 1,757 2(a) 106,483,500
Shares to be issued 3,075,000 2(a) 3,075,000
Retained earnings (deficit) (101,857,499) 61,020 (61,020) 2(a) (101,857,499)
--------------------------------------------------------------------------------------------------
4,626,001 159,263 7,701,001
------------------------------------------------------------------------------------------------------
$ 5,448,990 $ 120,161 $ 8,584,888
======================================================================================================
</TABLE>
See accompanying notes to pro forma combined financial statements.
<PAGE>
<TABLE>
<CAPTION>
VIRTUALSELLERS.COM, INC.
Unaudited Pro Forma Combined Statement of Operations
Year ended February 29, 2000
============================================================================================
Sullivan Pro forma
Virtualsellers Park Adjustments combined
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue $ 704,918 $ 205,940 $ 910,858
Cost and expenses:
Direct costs 144,314 - 144,314
Selling, general and
administrative 6,050,758 142,448 6,193,206
Depreciation 170,341 9,271 179,612
Foreign exchange loss 231,440 - 231,440
Amortization of goodwill - - 1,005,246 2(b) 1,013,379
----------------------------------------------------------------------------------------
6,596,853 151,719 1,005,246 7,761,951
--------------------------------------------------------------------------------------------
Income (loss) before other
income (expense) (5,891,935) 54,221 (1,005,246) (6,842,860)
Other income (expense):
Sales of trade name 975,000 - 975,000
Miscellaneous 77,705 - 77,705
Gain on sale of CNC and CNT 146,000 - 146,000
----------------------------------------------------------------------------------------
1,198,705 - 1,198,705
--------------------------------------------------------------------------------------------
Net income (loss) for the year $ (4,693,230) $ 54,221 (1,005,246) $(5,644,155)
============================================================================================
Net income (loss) per share $ (0.05) $ - $ (0.06)
============================================================================================
Unaudited Pro Forma Combined Statement of Operations
For the three months ended May 31, 2000
============================================================================================
Sullivan Pro forma
Virtualsellers Park Adjustments combined
--------------------------------------------------------------------------------------------
Revenue $ 504,811 $ 108,050 $ 612,861
Cost and expenses:
Direct costs 165,182 - 165,182
Selling, general and
administrative 1,645,829 87,714 1,733,543
Depreciation 113,819 2,650 116,469
Amortization of goodwill - - 250,312 2(b) 251,312
----------------------------------------------------------------------------------------
1,924,830 90,364 251,312 2,266,506
--------------------------------------------------------------------------------------------
Income (loss) before other
income (expense) (1,420,019) (17,686) (251,312) (1,653,645)
Other income:
Miscellaneous 7,918 (9,321) (1,403)
--------------------------------------------------------------------------------------------
Net income (loss) for the year $ (1,412,101) $ (8,365) (251,312) $(1,655,048)
============================================================================================
Net income (loss) per share $ (0.01) $ - $ (0.01)
============================================================================================
</TABLE>
See accompanying notes to pro forma combined financial statements.
<PAGE>
VIRTUALSELLERS.COM, INC.
Notes to Unaudited Pro Forma Combined Financial Statements
================================================================================
1. BASIS OF PRESENTATION:
The unaudited pro forma combined financial statements of
Virtualsellers.com, Inc. ("Virtualsellers") have been prepared in
accordance with generally accepted accounting principles in the United
States to give effect to the transactions described herein and are
presented in accordance with the requirements of the Securities and
Exchange Commission. These statements do not purport to represent what the
results of operations or financial position of Virtualsellers would
actually have been if the acquisition had in fact occurred at the dates
specified herein. In addition, these financial statements do not project
the results of operations or financial position of Virtualsellers for any
future date or period. These pro forma financial statements have been
prepared in accordance with the accounting policies of Virtualsellers.
These pro forma combined financial statements have been prepared from the
following information:
(a) the pro forma combined statement of operations for the year ended
February 29, 2000 has been prepared from the Virtualsellers audited
consolidated statement of operations for the year ended February 29,
2000, and Sullivan Park, LLC ("Sullivan Park") audited statement of
operations for the year ended December 31, 1999;
(b) the pro forma combined statement of operations for the three months
ended May 31, 2000 has been prepared from Virtualsellers unaudited
consolidated statement of operations for the three months ended May
31, 2000 and Sullivan Park unaudited statement of operations for the
three months ended May 31, 2000;
(c) the pro forma combined balance sheet as at May 31, 2000 is prepared
from Vitualsellers.com unaudited consolidated balance sheet as at May
31, 2000 and the Sullivan Park unaudited balance sheet as at May 31,
2000; and
(d) the additional information set out in note 2.
The unaudited pro forma combined financial statements give effect to the
proposed acquisition using the purchase method of accounting.
The unaudited pro forma combined balance sheet gives effect to the
transaction as if the acquisition had occurred on March 31, 2000. The
unaudited pro forma combined statements have been prepared as if the
acquisition occurred as of the beginning of the 1999 fiscal year. The pro
forma combined statement of operations does not give effect to any
non-recurring charges anticipated as a result of the transactions described
in note 2.
<PAGE>
VIRTUALSELLERS.COM, INC.
Notes to Unaudited Pro Forma Combined Financial Statements, page 2
================================================================================
2. PRO FORMA ASSUMPTIONS:
Major assumptions embodied within these unaudited pro forma combined
financial statements are as follows:
(a) Acquisition and purchase price allocation:
On May 19, 2000, and amended on June 1, 2000, the Corporation entered
into an agreement with Sullivan Park to acquire the net assets of
Sullivan Park for $2,700,000, payable no later than May 19, 2001 in
common shares of Virtualsellers based on the closing market price of
the Vitualsellers common shares. These shares are to be registered and
issued in one instalment on the earlier of (i) May 19, 2001 and (ii)
date at which the shares are registered. In addition, the Company
entered into an employment agreement with the managing member of
Sullivan Park whereby the managing member will receive a monthly
salary of $10,000 and 200,000 common shares of Virtualsellers as a
signing bonus. Virtualsellers can terminate the employment agreement
by giving three months written notice. As the Corporation acquired
control over the net assets of Sullivan Park, the acquisition if
accounted for using the purchase method.
The purchase price is allocated to the identifiable assets acquired
and liabilities assumed based upon their fair values at the effective
date. The residual balance is allocated to goodwill.
Details of the acquisition are as follows:
======================================================================
Net assets acquired:
Cash $ 3,248
Accounts receivable 95,534
Fixed assets 21,379
Goodwill 3,015,737
-------------------------------------------------------------------
3,135,898
Accounts payable and accrued liabilities 60,898
----------------------------------------------------------------------
Net assets acquired $ 3,075,000
======================================================================
Consideration:
Shares to be issued under acquisition agreement $ 2,700,000
Shares to be issued under employment agreement 375,000
----------------------------------------------------------------------
$ 3,075,000
======================================================================
The allocation set out above is preliminary only and is subject to
change.
(b) Depreciation and amortization:
Amortization, arising as a result of the allocation of the excess
purchase price to goodwill, calculated on a straight-line basis over
three years of $1,005,246 per annum has been charged to operations.
<PAGE>
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.
VIRTUALSELLERS.COM, INC.
/s/ Dennis Sinclair
Date: August , 2000 ------------------------------
-- Dennis Sinclair, President
<PAGE>
