SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K/A
AMENDMENT NO. 1
TO
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
April 20, 2000
------------------------------------------------
Date of Report (date of earliest event reported)
TangibleData, Inc.
----------------------------------------------------
Exact name of Registrant as Specified in its Charter
Colorado 33-07075-LA 33-0179781
--------------------------- --------------- ---------------------------
State or Other Jurisdiction Commission File IRS Employer Identification
of Incorporation Number Number
5660 Airport Boulevard, Suite 105, Boulder, Colorado 80301
-----------------------------------------------------------
Address of Principal Executive Offices Zip Code
(303) 417-0441
--------------------------------------------------
Registrant's Telephone Number, Including Area Code
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
This Amendment No. 1 to the Current Report on Form 8-K dated April 20, 2000 of
TangibleData, Inc. ("TangibleData" or the "Company" - formerly Kimbell deCar
Corporation) relates to the Company's acquisition of YGCD Assets, Inc., a
Colorado corporation ("YGCD"), pursuant to a Share Exchange Agreement between
the Company and YGCD. The purpose of this amendment is to provide the
financial statements of YGCD required by Item 7(a) of Form 8-K and the pro
forma audited financial information required by Item 7(b) of Form 8-K, which
information was excluded from the original filing in reliance upon Item
7(a)(4) of Form 8-K.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
DESCRIPTION PAGE
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
Independent Auditor's Report ....................................... F-1
Balance Sheet - March 31, 2000 ..................................... F-2
Statement of Operations - For the Period from March 9, 2000
(Inception) through March 31, 2000 ................................. F-3
Statement of Stockholders' Equity - For the Period from March 9,
2000 (Inception) through March 31, 2000 ............................ F-4
Statement of Cash Flows - For the Period from March 9, 2000
(Inception) through March 31, 2000 ................................. F-5
Notes to Financial Statements ...................................... F-6
(b) PRO FORMA FINANCIAL INFORMATION - YGCD ASSETS, INC. AND
TANGIBLEDATA, INC.
Introduction ....................................................... F-12
Combining, Condensed Balance Sheet - March 31, 2000 (Unaudited) .... F-13
Combining, Condensed Statement of Operations for the Three
Months Ended March 31, 2000 (Unaudited) ............................ F-14
Notes to Combining, Condensed Financial Information ................ F-15
2
<PAGE>
(c) EXHIBITS
Exhibit
Number Description Location
3.2 Articles of Amendment filed Incorporated by reference
April 20, 2000 to the Company's Form 8-K
as filed on May 5, 2000
10 Share Exchange Agreement between Incorporated by reference
Kimbell deCar Corporation and to the Company's Form 8-K
YGCD Assets, Inc. as filed on May 5, 2000
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.
TANGIBLEDATA, INC.
Dated: June 28, 2000 By:/s/ Blair Zykan
Blair Zykan, President
3
<PAGE>
INDEPENDENT AUDITOR'S REPORT
The Stockholders and Directors
YGCD Assets, Inc.
Boulder, Colorado
We have audited the accompanying balance sheet of YGCD Assets, Inc. (a
development stage company) as of March 31, 2000, and the related statements of
operations, stockholders' equity and cash flows for the period from March 9,
2000 (inception) to March 31, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. 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 audit provides 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 YGCD Assets, Inc. as of March
31, 2000 and the results of its operations and its cash flows for the period
from March 9, 2000 (inception) to March 31, 2000, in conformity with generally
accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to
the consolidated financial statements, as of March 31, 2000, the Company is in
development stage, has no revenue, and has incurred losses from operations.
These factors 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
that might result from the outcome of these uncertainties.
Hein + Associates LLP
Denver, Colorado
June 22, 2000
F-1
<PAGE>
YGCD ASSETS, INC.
(A Development Stage Company)
BALANCE SHEET
MARCH 31, 2000
ASSETS
Current Assets:
Restricted cash $ 616,000
Deferred Offering Costs 138,000
-----------
Total Assets $ 754,000
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 285,000
Notes payable - related parties 125,000
-----------
Total current liabilities 410,000
Commitments (Notes 5 and 6)
Stockholders' Equity:
Common stock, no par value; 50,000,000 shares
authorized; 10,900,000 shares issued and outstanding 7,855,000
Stock subscriptions 616,000
Deficit accumulated during the development stage (8,127,000)
-----------
Total stockholders' equity 344,000
-----------
Total Liabilities and Stockholders' Equity $ 754,000
===========
See accompanying notes to these financial statements.
F-2
<PAGE>
YGCD ASSETS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM MARCH 9, 2000 (INCEPTION) TO MARCH 31 2000
Net Revenues $ -
Operating Expenses:
Consulting and employment expenses paid with stock 7,854,000
Research and development cost 163,000
Acquisition costs 25,000
Other 85,000
-----------
Total operating expenses 8,127,000
-----------
Net Loss $(8,127,000)
===========
See accompanying notes to these financial statements.
F-3
<PAGE>
YGCD ASSETS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM MARCH 9, 2000 (INCEPTION) THROUGH MARCH 31, 2000
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock During the
---------------------- Stock Development
Shares Amount Subscriptions Stage Total
---------- ---------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balances, March 9,
2000 (Inception) - $ - $ - $ - $ -
Issuance of shares to
founders ($.000025
per share) 6,973,000 - - - -
Issuance of shares
to employees and
consultants ($2.00
per share) 3,927,000 7,855,000 - - 7,855,000
Stock subscriptions
(308,000 shares of
common stock at
$2.00 per share) - - 616,000 - 616,000
Net loss - - - (8,127,000) (8,127,000)
---------- ---------- -------- ------------ -----------
Balances, March 31,
2000 10,900,000 $7,855,000 $616,000 $(8,127,000) $ 344,000
========== ========== ======== =========== ===========
</TABLE>
See accompanying notes to these financial statements.
F-4
<PAGE>
YGCD ASSETS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM MARCH 9, 2000 TO MARCH 31, 2000
Cash Flows from Operating Activities:
Net loss $(8,127,000)
Expenses paid with stock 7,855,000
Expenses paid with notes 125,000
Adjustments to reconcile net loss to net
cash from operating activities:
Changes in operating assets and liabilities:
(Increase) in deferred offering cost (138,000)
Increase in accounts payable and accrued
liabilities 285,000
-----------
Net cash used in operating activities -
Cash Flows from Investing Activity -
Cash Flows from Financing Activities -
Net (Decrease) Increase in Cash and Cash Equivalents -
-----------
Cash and Cash Equivalents, inception -
-----------
Cash and Cash Equivalents, end of year $ -
===========
See accompanying notes to these financial statements.
F-5
<PAGE>
YGCD ASSETS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
NATURE OF OPERATIONS - YGCD Assets, Inc. (the "Company") was
incorporated in Colorado in January 2000. The Company intends to provide
user-driven e-content publishing and delivery solutions for business and
consumer markets.
Subsequent to March 31, 2000, the Company merged with TangibleData, Inc.
(formerly Kimbell Decar Corporation) see Note 3, and changed its name to
TangibleData Corporation.
CASH AND CASH EQUIVALENTS - The Company considers all highly liquid debt
instruments purchased with an original maturity of three months or less to be
cash equivalents.
REVENUE RECOGNITION - The Company currently has no revenue, however, in
the future, revenue will be recognized for fulfillment and publication
services upon shipment of the product to the end users. Revenue for storage
services will be recognized over the life of the storage contract.
RESEARCH AND DEVELOPMENT COSTS - Research and development costs are
charged to operations in the period incurred.
DEFERRED OFFERING COSTS - The amount represents costs incurred in
connection with a private placement that was in process at March 31, 2000.
This amount will be offset against the proceeds of the private placement which
was completed after year-end (see Note 4).
FINANCIAL INSTRUMENTS - The carrying amount of accounts payable, notes
payable, and accrued liabilities approximate fair value due to their short
maturities.
USE OF ESTIMATES - The preparation of the Company's financial statements
in conformity with generally accepted accounting principles requires the
Company's management to make estimates and assumptions that affect the amounts
reported in these financial statements and accompanying notes. Actual results
could differ from those estimates. Significant estimates include the
valuation of the fair value of the Company's stock, which was used for the
calculation of expense for shares issued to employees and consultants.
2. LIQUIDITY AND CONTINUING OPERATIONS:
The Company is in the development stage and has not incurred revenues
since inception. Additionally, the private placements raised both before and
after March 31, 2000 may not be sufficient to fund its business plan for the
entire year.
F-6
<PAGE>
YGCD ASSETS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
The financial statements have been prepared on a going concern basis
which contemplates the realization of assets and liquidation of liabilities in
the ordinary course of business. Continuation of the Company as a going
concern is dependent upon raising additional capital, completing its research
and development, and successfully achieving profitable operations after its
product has been brought to market. The financial statements do not include
any adjustments should the Company be unable to continue operations as a going
concern.
The Company plans to improve its financial condition by executing a
business plan geared at providing new ways for businesses to publish, archive
and distribute digital information. The Company believes its technology will
enable customers to bring digital data, via the Internet, to a Web-integrated
fulfillment center where they can access on-demand manufacturing and
distribution of content on CDS, DVDs, and other media. The system is
anticipated to offer complete e-commerce functionality including online
billing, user tracking, security, shipping services, and direct e-marketing.
The Company's objective is to target software developers, music
publishers, and other owners of digital content with a more effective,
efficient way of marketing and distributing their products. The system is
expected to allow businesses and consumers archive information on hard media
quickly, easily and securely.
Management believes this will be the first true "user-driven" e-content
publishing and delivery system. The system is expected to offer a compelling
solution for companies seeking to lower their total-delivered cost of
distributing digital information, while improving service to their customers.
The Company is hopeful that successfully providing this solution will
enable TangibleData to earn revenue through:
* Production and fulfillment of digital products
* Hosting and storage of data
* Building and servicing of e-sites for customers
The Company has undertaken an accelerated development plan in order to
get its product to market in a timely manner and generate revenues from
operations. Under this accelerated plan, the Company is expected to have its
product to market in the third or fourth quarter of the fiscal year ended
March 31, 2001.
The Company is also executing a marketing strategy it believes is
designed to create maximum revenue impact while minimizing cost. This
marketing strategy includes the following:
F-7
<PAGE>
YGCD ASSETS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
* The Company intends to establish direct relationships with
large-scale owners of digital content. The Company anticipates
providing content hosting, duplication and complete e-fulfillment
services for these partners creating multiple revenue sources for
the Company. The Company is hopeful that the on-going revenue
stream will substantially lower the customer acquisition cost.
The Company believes it has key opportunities with software
development firms, business information services, and music and
entertainment media companies.
* Through its Web-Partner Program, the Company intends to access the
customer bases of partner sites, bases built with the partners'
marketing dollars. The Company believes Internet companies are
aggressively seeking real revenue channels as the equity markets
shift attention to more tangible business models. The Company's
Web-Partner Program will enable a partner to earn revenue and profit
with each CD created by a referred customer.
There can be no assurance that the business plan or marketing strategy
will be successful, and any delays in the completion of the Company's research
and development could delay or frustrate the ability of the Company to achieve
the above goals and its ability to achieve profitable operations.
In addition to the above, the Company has raised approximately $438,000
(net of offering costs) before March 31, 2000 and an additional $1,453,000
(net of offering costs) subsequent to March 31, 2000. These funds are
expected to support the current planned activity through the third quarter of
2001. The Company is also actively pursuing additional equity financing
which will enable it to continue its accelerated development plan.
3. SHARE PURCHASE AGREEMENT AND REVERSE ACQUISITION WITH TANGIBLEDATA, INC.
(TDI) (FORMERLY KIMBELL DECAR CORPORATION):
Subsequent to March 31, 2000, the Company completed a reverse merger with
TDI. For financial statement purposes, the Company is considered the
acquiring company, and this transaction will be treated as a purchase by the
Company of TDI. For legal purposes, however, TDI will remain the surviving
entity. The stockholders of the Company received 12,113,489 shares of common
stock of TDI in the exchange. Accordingly, the Company's stockholders will
own approximately 96% of the combined entity on the merger date. The net
assets of TDI acquired in the merger will be recorded at their net historical
recorded value, which approximates their fair value. As TDI has no fixed
assets and no operations, the cost of the acquisition will be expensed as
incurred. As part of the acquisition, the Company paid a stockholder of TDI
$200,000 for his ownership of 2,400,000 shares of TDI. These shares were then
retired.
F-8
<PAGE>
YGCD ASSETS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
4. STOCKHOLDERS' EQUITY:
In March 2000, the Company declared a 4 for 1 stock split. Accordingly,
all amounts for common stock reflected in the financial statements and
accompanying notes reflect the effect of this split.
In March 2000, the Company issued 6,973,120 shares to its founding
stockholders at $.000025 per share for cash. The Company also issued
3,927,320 shares in March 2000 to certain consultants and employees at
$.000025. The fair value of the shares issued for services was determined to
be $2.00 per share (post split) based upon the terms of the private placement
described below. Accordingly, the Company recognized a non-cash expense of
$7,854,640.
The Company is also in the process of completing a private placement of
1,600,000 shares of common stock at $2.00 per share. As of March 31, 2000,
the Company has sold approximately 308,000 shares for $616,000. The proceeds
at March 31, 2000 were being held in an escrow account until a $750,000
minimum was obtained. The escrow account was released to the Company in April
2000. In connection with the private placements, the Company has agreed to
pay finders fees to three consultants as follows:
Consultant 1 - 2.3% of proceeds private placements.
Consultant 2 - 4% of net proceeds from private placements,
plus 4% of shares issued.
Consultant 3 - 12% of proceeds from private placement, warrants
for 15% of shares placed, an incentive fee of 4% of the
outstanding shares, post merger with KDC, and profile cost of
$20,000 plus expenses.
As of March 31, 2000, fees due to the above consultants for private
placements before March 31, 2000 totaled $113,000. These cost are being
deferred until the funds are released from escrow, at which time they will be
shown as a reduction of proceeds in the statement of stockholders' equity.
5. RELATED PARTIES AND NOTES PAYABLE TO RELATED PARTIES:
In fiscal 2000, the Company engaged the services of an entity to locate
and recruit a qualified CEO. The Company paid $28,600 in connection with the
subsequent hiring of the Company's CEO. The CEO's spouse is a partner in the
recruiting entity.
The Company entered into an agreement for Assignment of Rights with
Duplication Systems, Inc. (DSI), a company that is owned by one of its
founders. Pursuant to the terms of this agreement, the Company obtained
trademarks, domain names, contract rights, and work product, certain
agreements and all intellectual property rights related to a specific
technology. These rights were obtained by issuing a $79,000 note payable to
DSI. The $79,000 was determined based on the amount paid by DSI for research
F-9
<PAGE>
YGCD ASSETS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
and development of the technology. This research and development still needs
to be completed and consequently, the $79,000 was expensed by the Company as
research and development in progress.
The Company has also issued a $46,000 note to one of its founders for
reimbursement of costs incurred by the founder on behalf of the Company.
Both of the above notes are due in July 2000 and have a stated interest
rate of 4%.
In the aggregate, the Company issued 300,000 shares of common stock and
has agreed to issue 100,000 options upon closing of the merger with KDC at the
fair current market price to a director and to an officer of the Company. The
options will vest immediately, have a five-year term with an exercise price
equal to the market price on the date of grant. In addition, the officer will
be paid $5,000 a month for one year.
6. COMMITMENTS:
OFFICE LEASE - Subsequent to March 31, 2000, the Company sign an office
lease under a noncancellable operating leases. Total rental expense was
insignificant for the period ending March 31, 2000. The total minimum rental
commitments under the new lease are as follows:
For the Years Ending
March 31,
--------------------
2001 $ 78,000
2002 81,000
2003 83,000
2004 86,000
2005 88,000
--------
$416,000
========
The first two years of this lease are guaranteed by one of the Company's
founding shareholders.
EMPLOYMENT AGREEMENT - The Company has entered into an employment
agreement, which can be terminated only for cause, with the CEO. The terms of
the agreement are for one year beginning March 6, 2000 and the aggregate
commitment as of March 31, 2000 for future salaries, excluding bonuses, is
approximately $140,000.
F-10
<PAGE>
YGCD ASSETS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
7. INCOME TAXES:
Long-term deferred tax assets consist of the following:
Organizational costs $ 9,000
Purchased R&D 29,000
Net operating loss carryforward 50,000
Less valuation allowance (88,000)
---------
Net tax asset $ -
=========
The Company is expected to have a net operating loss carryforwards of
approximately $134,000 which will expire in the year 2020.
The actual income tax expense (benefit) differs from the expected tax
expense (benefit) computed by applying the U.S. Federal corporate income tax
rate of 34% as follows:
% Amount
------- -----------
Computed (expected) tax expense
(benefit) (34.0%) $(2,763,000)
Non-deductible compensation
expense associated with issuance
of common stock 36.1% 2,930,000
Non-deductible expense associated
with merger .6% 51,000
Valuation allowance .6% 50,000
State income taxes, net of Federal
income tax benefit (3.3%) (268,000)
------- -----------
Net tax expense - $ -
======= ===========
F-11
<PAGE>
PRO FORMA FINANCIAL INFORMATION
INTRODUCTION
In April 2000, YGCD Assets, Inc. (YGCD) entered into a reverse acquisition
transaction with TangibleData, Inc. (TDI) (formerly Kimbell Decar
Corporation), a Colorado corporation incorporated in April 1986. At the time
of the transaction, TDI was inactive. TDI's assets and liabilities were
nominal at the date of the reverse acquisition. The transaction is accounted
for as a reverse merger acquisition, which results in a recapitalization of
YGCD in as much as it is deemed to be the acquiring entity for accounting
purposes.
The accompanying unaudited pro forma combining, condensed balance sheet
combines the balance sheet of YGCD as of March 31, 2000 with the balance sheet
of TDI and then assumes the receipt of the net proceeds of $1,701,000 from the
sale of common stock as if such acquisition and private placement occurred at
March 31, 2000.
The accompanying unaudited pro forma combining, condensed statements of
operations combine the operations of the YGCD and TDI for the three months
ended March 31, 2000 as if the acquisition was completed as of the beginning
of the period presented under the purchase method of accounting.
These statements are not necessarily indicative of future operations or the
actual results that would have occurred had the merger been consummated at the
beginning of the periods indicated.
The unaudited pro forma combined, condensed financial statements should be
read in conjunction with the historical financial statements and notes
thereto, included elsewhere in this document.
F-12
<PAGE>
YGCD ASSETS, INC.
TANGIBLEDATA, INC.
COMBINING, CONDENSED BALANCE SHEET
MARCH 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma Adjustments
YGCD ------------------------------
Assets, TangibleData, Private Pro Forma
Inc. Inc. Merger Placement Combined
--------- ------------- ------------- -------------- ----------
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash $ - $ - $(190,000)(a) $1,891,000 (b) $1,701,000
Restricted cash 616,000 - - (616,000)(b) -
-------- ------- --------- ---------- ----------
Total current assets 616,000 - (190,000) 1,275,000 1,701,000
Deferred Offering Costs 138,000 - - (138,000)(b) -
-------- ------- --------- ---------- ----------
Total Assets $754,000 $ - $(190,000) $1,137,000 $1,701,000
Current Liabilities:
Accounts payable and
accrued liabilities $285,000 $ 6,000 $ - $ - $ 291,000
Notes payable -
related parties 125,000 - - (46,000)(b) 79,000
-------- ------- --------- ---------- ----------
Total current
liabilities 410,000 6,000 - (46,000) 370,000
Stockholders' Equity
(Deficit) 344,000 (6,000) (190,000)(a) 1,183,000 (b) 1,331,000
-------- ------- --------- ---------- ----------
Total Liabilities and
Stockholders' Equity
(Deficit) $754,000 $ - $(190,000) $1,137,000 $1,701,000
======== ======= ========= ========== ==========
</TABLE>
See accompanying notes to combining, condensed financial information.
F-13
<PAGE>
YGCD ASSETS, INC.
TANGIBLEDATA, INC.
(Formerly Kimbell Decar Corporation)
COMBINING, CONDENSED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(UNAUDITED)
YGCD
Assets, TangibleData, Pro Forma Pro Forma
Inc. Inc. Adjustments Combined
----------- --------- ----------- ------------
Net Revenues $ - $ - $ - $ -
Operating Expenses 8,094,000 6,000 196,000 (a) 8,296,000
----------- --------- --------- -----------
Operating Loss (8,094,000) (6,000) (196,000) (8,296,000)
Net Loss $(8,094,000) $ (6,000) $(196,000) $(8,296,000)
=========== ========= ========= ===========
Loss Per Share N/A $ - N/A $ (.65)
=========== ========= ========= ===========
Weighted Average
Shares N/A 2,916,687 9,713,489 (a) 12,630,176
=========== ========= ========= (b) ===========
See accompanying notes to combining, condensed financial information.
F-14
<PAGE>
YGCD ASSETS, INC.
TANGIBLEDATA, INC.
NOTES TO COMBINING, CONDENSED FINANCIAL INFORMATION
(a) To record $175,000 due to a stockholder of TDI to purchase his shares
of TDI stock, and to reflect expenses associated with the acquisition.
(b) To reflect the sale of 1,213,000 shares of common stock at $2.00,
respectively, net of estimated offering costs of $351,000, as
contemplated in the private placement offering and the use of proceeds
to repay $46,000 in notes payable to related parties. Related past
interest expense on the $46,000 has not been a significant amount in the
net loss per share amount (if outstanding shares were adjusted to reflect
such net proceeds used to repay the debt).
F-15
