SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 1, 1998
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PRE-CELL SOLUTIONS, INC.
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(Exact Name of Registrant as Specified in Charter)
Colorado 0-14978 84-0751916
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
255 East Drive, Suite C, Melbourne, Florida 32904
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (321) 308-2900
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Transamerican Petroleum Corporation
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(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
On December 1, 1998 (the "Closing Date"), Transamerica Petroleum, Inc.
(the "Registrant") and Pre-Cell Solutions, Inc. ("Pre-Cell") executed a Share
Exchange Agreement ("Exchange Agreement"), pursuant to which the Registrant
issued and delivered to the stockholders of Pre-Cell or their designees an
aggregate of 32,156,000 shares the Registrant's common Stock (the "Shares").
Additionally, on December 6, 1998, the Registrant filed an amendment to its
Articles of Incorporation with the Secretary of State of the State of Colorado
changing its name from Transamerica Petroleum Corp. to Pre-Cell Solutions, Inc.
On the Closing Date, the Registrant entered into an employment
agreement ("Biddix Employment Agreement") with Thomas E. Biddix, the President
and Chief Executive Officer of Pre-Cell who was appointed the Chief Executive
Officer, President and Treasurer of the Registrant. The Biddix Employment
Agreement is for a three-year term through November 2002. Mr. Biddix is entitled
to receive an annual base salary of $180,000, subject to annual increases and
bonuses as the Board of Directors of the Registrant may determine. Mr. Biddix
was also appointed to the Registrant's board of directors.
On the Closing Date, the Registrant entered into an employment
agreement ("McWilliams Employment Agreement") with Timothy F. McWilliams, the
Chief Operating Officer of Pre-Cell who was appointed the Chief Operating
Officer of the Registrant. The McWilliams Employment Agreement is for a
three-year term through January 2002. Mr. McWilliams is entitled to receive an
annual base salary of $95,000, subject to annual increases and bonuses as the
Board of Directors may determine. Mr. McWilliams was also appointed to the
Registrant's board of directors.
Item 4. Changes in Registrant's Certifying Accountant.
(a) Edward Isaacs & Company LLP served as the independent auditors of
the Registrant for the fiscal years ended April 30, 1996. On April 26, 1999 the
Registrant dismissed Edward Isaacs & Company LLP because it was determined that
the best interests of the Registrant would be served by retaining Vestal & Wiler
LLP. The decision to change auditors was approved by the Registrant's Board of
Directors. There have been no disagreements between the Registrant and Edward
Isaacs & Company LLP on any matters of accounting principles or practices,
financial statement disclosure or auditing scope or procedures.
(b) Vestal & Wiler, LLP has been engaged by the Registrant as of as its
principal independent auditors and began serving as the independent auditors of
the Registrant for the fiscal year ending April 30, 1999.
2
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired.
Pre-Cell Solutions, Inc.
Pre-Cell Solutions, Inc. d/b/a DPS Solutions, Inc. as of
November 30, 1998, and the related statements of operations
and cash flows for the period May 27, 1997 (date of inception)
through November 30, 1998 beginning on F-1.
(b) Pro Forma Financial Information.
See unaudited Pro Forma Financial Statements of Pre-Cell
Solutions, Inc. as of November 30, 1998 beginning on F-9
(c) Exhibits.
16.1 Letter from Edward Isaacs & Company LLP
3
<PAGE>
SIGNATURE
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.
Date: February 1, 2000
PRE-CELL SOLUTIONS, INC.
By: /s/ Timothy F. McWilliams
------------------------------------------
Timothy F. McWilliams, Chief Operating
Officer (and Principal Accounting Officer)
4
<PAGE>
PRE-CELL SOLUTIONS, INC.
(a Florida Corporation)
FINANCIAL STATEMENTS
WITH INDEPENDENT AUDITOR'S REPORT
November 30, 1998
F-1
<PAGE>
CONTENTS
Page
INDEPENDENT AUDITOR'S REPORT F-3
BALANCE SHEET F-4
STATEMENT OF OPERATIONS F-5
STATEMENT OF CASH FLOWS F-6
NOTES TO FINANCIAL STATEMENTS F-7
F-2
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Pre-Cell Solutions, Inc.
Melbourne, Florida
We have audited the accompanying balance sheet of Pre-Cell Solutions, Inc. (a
Florida corporation) d/b/a DPS Solutions, Inc. as of November 30, 1998, and the
related statements of operations and cash flows for the period May 27, 1997
(date of inception) through November 30, 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 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 the Company as of November 30,
1998, and the results of its operations and its cash flows for the period May
27, 1997 (date of inception) through November 30, 1998 in conformity with
generally accepted accounting principles.
Certified Public Accountants
November 12, 1999
F-3
<PAGE>
<TABLE>
<CAPTION>
PRE-CELL SOLUTIONS, INC.
(A Florida Corporation)
BALANCE SHEET
November 30, 1998
ASSETS
CURRENT ASSETS:
<S> <C>
Cash $ 1,522
Certificate of deposit, 5.12% due June 21, 1999 (Note 4) 12,000
Other 179
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$ 13,701
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
Accounts payable $ 5,645
Due to stockholder (Note 4) 280,000
Due to related party 1,202
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TOTAL CURRENT LIABILITIES 28,847
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COMMITMENTS AND CONTINGENCIES (Notes 3,4 and 6)
STOCKHOLDERS' DEFICIENCY:
Common Stock - $1 par value;
1,000 shares authorized, issued and outstanding 1,000
Additional paid-in capital 36,001
Accumulated deficit (310,147)
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TOTAL STOCKHOLDERS' DEFICIENCY (273,146)
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$ 13,701
</TABLE>
See notes to financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
PRE-CELL SOLUTIONS, INC.
(A Florida Corporation)
STATEMENT OF OPERATIONS
For the Period May 27, 1997 (Date of Inception)
Through November 30, 1998
<S> <C>
REVENUE $ 4,997
COST OF REVENUE 6,149
---------
GROSS LOSS (1,152)
GENERAL AND ADMINISTRATIVE EXPENSES 308,995
---------
NET LOSS $(310,147)
=========
</TABLE>
See notes to financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
PRE-CELL SOLUTIONS, INC.
(A Florida Corporation)
STATEMENT OF CASH FLOWS
For the Period May 27, 1997 (Date of Inception)
Through November 30, 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C>
Net loss $(310,147)
Net increase (decrease) in cash attributed to changes in:
Other (179)
Accounts payable 5,645
Due to stockholder 280,000
Due to related party 1,202
---------
Net cash used in operations (23,479)
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of certificate of deposit (12,000)
---------
Net cash used in investing activities (12,000)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock 37,001
---------
Net cash provided by financing activities 37,001
---------
NET INCREASE IN CASH 1,522
CASH - Beginning of period -
---------
CASH - End of period $ 1,522
=========
</TABLE>
See notes to financial statements.
F-6
<PAGE>
PRE-CELL SOLUTIONS, INC.
(A Florida Corporation)
NOTES TO FINANCIAL STATEMENTS
For the Period May 27, 1997 (Date of Inception)
Through November 30, 1998
NOTE 1 BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business - Pre-Cell Solutions, Inc. d/b/a DPS Solutions, Inc. ("the
Company"), was incorporated in Florida on May 27, 1997; however,
operations did not commence until early in 1998. The Company operates
as a competitive local exchange carrier (CLEC), utilizing Bell South
interconnection services. Such local telephone service is provided
throughout Florida.
Use of Estimates - The preparation of the financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results could
differ from those estimates.
Cash - Cash consists of bank deposits, which at times may exceed
federally insured limits.
Income Taxes - The Company accounts for income taxes pursuant to
Statement of Financial Accounting Standards No. 109 (SFAS 109). SFAS
109 requires the recognition of deferred tax assets and liabilities and
adjustments to deferred tax balances for changes in tax law and rates.
In addition, future tax benefits such as net operating loss
carryforwards are recognized to the extent recognition of such benefits
is more likely than not.
NOTE 2 INCOME TAXES
At November 30, 1998, the Company had a gross deferred tax asset
resulting from a net operating loss carryforward. The net deferred tax
asset of approximately $121,000 is completely offset by a valuation
allowance due to the uncertainty of its realization.
NOTE 3 RELATED PARTY TRANSACTIONS
The Company has entered into employment agreements with a stockholder
and an officer. Such agreements call for payments totaling $180,000 and
$95,000, respectively, to each individual, per year, through June 30,
1999. Total fees charged to operations for the period from date of
inception to November 30, 1998 amounted to $280,000 and is also
included in current liabilities at November 30, 1998.
F-7
<PAGE>
PRE-CELL SOLUTIONS, INC.
(A Florida Corporation)
NOTES TO FINANCIAL STATEMENTS
For the Period May 27, 1997 (Date of Inception)
Through November 30, 1998
NOTE 4 COMMITMENTS
At November 30, 1998, the Company was contingently liable for a $12,000
irrevocable letter of credit in favor of Bell South. Such letter of
credit expired in June, 1999 and was collateralized by a certificate of
deposit.
NOTE 5 SUBSEQUENT EVENT
On December 1, 1998, the Company was acquired by Pre-Cell Solutions,
Inc., a Colorado corporation f/k/a Transamerican Petroleum Corporation,
an over-the-counter (OTC) bulletin board company.
NOTE 6 YEAR 2000 (Unaudited)
Management has assessed the Company's exposure to date sensitive
computer hardware and software programs that may not be operative
subsequent to 1999 and has implemented a requisite course of action to
minimize Year 2000 risk and ensure that neither significant costs nor
disruption of normal business operations are encountered. However,
because there is no guarantee that all systems of outside vendors or
other entities affecting the Company's operations will be 2000
compliant, the Company remains susceptible to consequences of the Year
2000 Issue.
F-8
<PAGE>
Pre-Cell Solutions, Inc.
Pro Forma Consolidated Financial Information
(Unaudited)
Explanatory Headnote
Introduction
On December 1, 1998 (the "Closing Date"), Transamerica Petroleum, Inc. (the
"Registrant") and Pre-Cell Solutions, Inc. ("Pre-Cell") executed a Share
Exchange Agreement ("Exchange Agreement"), pursuant to which the Registrant
issued and delivered to the stockholders of Pre-Cell or their designees an
aggregate of 32,156,000 shares the Registrant's common Stock (the "Shares").
Additionally, on December 6, 1998, the Registrant filed an amendment to its
Articles of Incorporation with the Secretary of State of the State of Colorado
changing its name from Transamerica Petroleum Corp. to Pre-Cell Solutions, Inc.
The pro forma condensed consolidated balance sheets as of November 30, 1998
assume the transaction was consummated as of November 30, 1998, and the pro
forma condensed consolidated statements of operations for the year ended
November 30, 1998 assume the transaction was consummated as of December 1, 1997.
The pro forma condensed consolidated financial statements may not be indicative
of the actual results of the transactions. In particular, the pro forma
condensed consolidated financial statements are based on management's current
estimate of the allocation of the purchase price, the actual allocation of which
may differ. In the opinion of management, all adjustments have been made that
are necessary to present fairly the pro form data.
F-9
<PAGE>
<TABLE>
<CAPTION>
Pre-Cell Solutions, Inc.
Pro Forma Consolidated Balance Sheet
November 30, 1998
(Unaudited)
Pre-Cell Pre-Cell Transamerica
Solutions, Acquisition Petroleum, Consolidated
Inc. Adjustments Inc. Pro Forma
------------- ----------- --------------- -----------
Assets:
<S> <C> <C> <C> <C>
Cash $ 1,522 $ -- $ -- $ 1,522
Certificate of deposit 12,000 -- -- 12,000
Stock subscription
Receivable 3,000 -- -- 3,000
Other 178 -- --
Goodwill -- 1,523,303 -- 1,128,155
------------- ----------- --------------- -----------
$ 16,700 $ 1,523,303 $ -- $ 1,144,855
============= =========== =============== ===========
Liabilities and
Stockholders' Equity:
Accounts payable $ 5,645 $ -- $ -- $ 5,645
Due to stockholders 280,000 -- -- 280,000
Due to related party 1,202 -- -- 1,202
------------- ----------- --------------- -----------
286,847 -- -- 286,847
------------- ----------- --------------- -----------
Stockholders' equity
(deficit):
Common stock 40,000 273,289 16,924(1) 338,484
Additional paid-in
Capital -- 939,867 1,353,666(1) 2,318,346
Accumulated deficit (310,147) 310,147 (1,370,590) (1,798,822)
------------- ----------- --------------- -----------
$ 16,700 $ 1,523,303$ -- $ 1,144,855
============= =========== =============== ===========
</TABLE>
(1) Given effect of 1 for 7 stock split.
See accompanying headnote and notes to pro forma consolidated financial
statements (unaudited).
F-10
<PAGE>
<TABLE>
<CAPTION>
Pre-Cell Solutions, Inc.
Pro Forma Consolidated Statement of Operations
Year Ended November 30, 1998
(Unaudited)
Pre-Cell Transamerica
Solutions, Petroleum, Pro Forma Consolidated
Inc. Inc. Entries Pro Forma
-------- ------------- -------- ---------
<S> <C> <C> <C> <C>
Revenues $ 4,997 $ -- $ -- $ 4,997
Cost and expenses:
Cost of revenues 6,149 -- -- 6,149
Operating expense 342,080 -- 85,000(2) 427,080
-------- ------------- -------- ---------
348,229 -- 85,000 433,229
-------- ------------- -------- ---------
Net loss $ 343,232 $ -- $ (85,000) $(428,232)
========= ============= ========== ==========
Loss per share $ (.01)
==========
Weighted average number of
common shares outstanding 33,852,730
==========
</TABLE>
(2) Amortization of goodwill (see note 2 of notes to pro forma financial
statements).
See accompanying headnote and notes to pro forma consolidated financial
statements (unaudited).
F-11
<PAGE>
Pre-Cell Solutions, Inc.
Notes to Pro Forma Consolidated Financial Information
(Unaudited)
1. Acquisition and Pro Forma Adjustments
The pro forma condensed consolidated balance sheet as of November 30,
1998 assumes the transaction was consummated as of November 30, 1998,
and the pro forma condensed consolidated statements of operations for
the year ended November 30, 1998 assume the transaction was consummated
as of December 1, 1997.
2. Acquisition of Pre-Cell Solutions, Inc. (a Florida corporation)
On December 1, 1998, Transamerica Petroleum, Inc. and Pre-Cell
Solutions, Inc. executed a Share Exchange Agreement, pursuant to which
the Registrant issued and delivered to the stockholders of Pre-Cell or
their designees an aggregate of 32,156,000 shares the Registrant's
Common Stock .The purchase price for Pre-Cell Solutions, Inc. (a
Florida corporation) is anticipated to be allocated as follows:
Carrying value of assets acquired $ 16,700
Excess of cost over net assets acquired* 1,523,303
---------
1,540,003
Fair value of liabilities assumed 286,847
----------
Total purchase price $ 1,253,156
===========
*The excess cost over net assets acquired has been applied to goodwill
and will be amortized over 15 years.
F-12
EDWARD ISAACS & COMPANY LLP
Certified Public Accountants
380 Madison Avenue
New York, New York 10017
Telephone: (212) 972-9088
Facsimile: (212) 297-4800
January 21, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Ladies and Gentlemen:
We have read and agree with the comments made with respect to us in Item 4 of
the Current Report on Form 8-K of Pre-Cell solutions, Inc. dated January 21,
2000.
Very truly yours,
/s/ Edward Isaacs & Company LLP
EDWARD ISAACS & COMPANY LLP
Certified Public Accountants
