<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A-1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 23, 2000
TELESERVICES INTERNET GROUP INC.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-2773602
--------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
100 Second Avenue South, Suite 1000, St. Petersburg, Florida 33701
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (727) 895-4410
---------------------------
--------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
AGREEMENT AND PLAN OF REORGANIZATION. On August 30, 2000, the Registrant
reported on Form 8-K that it executed an Agreement and Plan of Reorganization
("Agreement") with GeneralSearch.com, Inc., a Minnesota corporation ("GSCI") and
certain stockholders of GSCI on August 23, 2000, pursuant to which the
Registrant acquired 84.7826% of the issued and outstanding shares of common
stock of GSCI on that date, and undertook to provide the required financial
statements by filing an amendment to the Form 8-K. This Form 8-K/A-1 is being
filed to provide the accompanying required financial statements.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired. The required financial
statements of GeneralSearch.com, Inc. are being provided herewith, commencing on
page F-1, which follows the signature page.
(b) Pro Forma Financial Information. The required pro forma financial
information will be filed by a subsequent amendment.
(c) Exhibits. None.
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.
TELESERVICES INTERNET GROUP INC
By: /s/ Robert P. Gordon
--------------------------------
Robert P. Gordon, Chairman
Date: November 6, 2000
<PAGE> 3
GENERALSEARCH.COM, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION
(MAY 1, 1999)
THROUGH
DECEMBER 31, 1999
<PAGE> 4
GENERALSEARCH.COM, INC.
(A Development Stage Company)
INDEX TO FINANCIAL STATEMENTS
For the Period From Inception
(May 1, 1999) through
December 31, 1999
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
INDEPENDENT AUDITORS' REPORT F-1
FINANCIAL STATEMENTS
Balance Sheet F-2
Statement of Operations F-3
Statement of Changes in Stockholders' Deficit F-4
Statement of Cash Flows F-5
Summary of Accounting Policies F-6 - F-7
Notes to Financial Statements F-8 - F-10
</TABLE>
<PAGE> 5
INDEPENDENT AUDITORS' REPORT
GeneralSearch.Com, Inc.
West Chicago, Illinois
We have audited the accompanying balance sheet of GeneralSearch.Com, Inc. (A
Development Stage Company) (the "Company") as of December 31, 1999, and the
related statements of operations, changes in stockholders' deficit and cash
flows for the period from inception (May 1, 1999) through December 31, 1999.
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 GeneralSearch.Com, Inc. at
December 31, 1999, and the results of its operations and cash flows for the
period from inception (May 1, 1999) through December 31, 1999, in conformity
with generally accepted accounting principles.
Chicago, Illinois
July 24, 2000
F-1
<PAGE> 6
GENERALSEARCH.COM, INC.
(A Development Stage Company)
BALANCE SHEET
(Expressed in US Dollars)
<TABLE>
<CAPTION>
DECEMBER 31,
1999
------------
<S> <C>
ASSETS
CURRENT ASSETS
Cash $ 246,638
Prepaid expense (Note 1) 45,000
---------
TOTAL CURRENT ASSETS 291,638
---------
PROPERTY AND EQUIPMENT (Note 2)
Equipment and furnishings 100,000
Less accumulated depreciation (13,333)
---------
TOTAL PROPERTY AND EQUIPMENT 86,667
---------
TOTAL ASSETS $ 378,305
=========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 26,250
Due to officer (Note 3) 438,802
---------
TOTAL CURRENT LIABILITIES 465,052
---------
COMMITMENTS AND CONTINGENCIES (Note 4)
STOCKHOLDERS' DEFICIT (Notes 5 and 6)
Preferred stock, authorized 50,000,000 shares, no shares issued and outstanding --
Common stock, no par value, authorized 100,000,000 shares, issued and outstanding 9,732,400
shares 346,665
Accumulated deficit during the development stage (433,412)
---------
TOTAL STOCKHOLDERS' DEFICIT (86,747)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 378,305
=========
</TABLE>
See accompanying summary of accounting policies and
notes to financial statements.
F-2
<PAGE> 7
GENERALSEARCH.COM, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM INCEPTION
(MAY 1, 1999) THROUGH
DECEMBER 31,
1999
---------------------
<S> <C>
OPERATING EXPENSES
Selling, general and administrative $ 420,874
Depreciation 13,333
---------
Total operating expenses 434,207
---------
Operating loss (434,207)
---------
OTHER INCOME (EXPENSE)
Interest income 444
Interest expense (220)
Other 571
---------
Total other income 795
---------
NET LOSS $(433,412)
=========
</TABLE>
See accompanying summary of accounting policies and
notes to financial statements.
F-3
<PAGE> 8
GENERALSEARCH.COM, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
PERIOD FROM INCEPTION (MAY 1, 1999) THROUGH
DECEMBER 31, 1999
----------------------------------------------------------------
TOTAL
COMMON ACCUMULATED STOCKHOLDERS'
SHARES STOCK DEFICIT DEFICIT
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Initial capitalization 9,665,000 $ 9,665 $ -- $ 9,665
Private placement proceeds 67,400 337,000 -- 337,000
Net loss -- -- (433,412) (433,412)
--------- --------- --------- ---------
BALANCE, DECEMBER 31, 1999 9,732,400 $ 346,665 $(433,412) $ (86,747)
========= ========= ========= =========
</TABLE>
See accompanying summary of accounting policies and
notes to financial statements.
F-4
<PAGE> 9
GENERALSEARCH.COM, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM INCEPTION
(MAY 1, 1999) THROUGH
DECEMBER 31,
1999
---------------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(433,412)
Less: Expenditures paid on behalf of the Company by the founder/CEO 338,802
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation 13,333
Changes in assets and liabilities
Increase in prepaid expense (45,000)
Increase in accounts payable and accrued expenses 26,250
---------
Net cash used in operating activities (100,027)
---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from initial capitalization 9,665
Proceeds from private placement 337,000
---------
Net cash provided by financing activities 346,665
---------
NET INCREASE IN CASH $ 246,638
=========
</TABLE>
--------------------------------------------------------------------------------
NONCASH FINANCING ACTIVITIES
The founder/CEO advanced funds and provided fixed assets which are
recorded in due to officer for the startup of the Company as follows:
<TABLE>
<S> <C>
Operations $338,802
Fixed Assets 100,000
--------
$438,802
</TABLE>
See accompanying summary of accounting policies and
notes to financial statements.
F-5
<PAGE> 10
GENERALSEARCH.COM, INC.
(A Development Stage Company)
SUMMARY OF ACCOUNTING POLICIES
BUSINESS AND The Company, founded May 1, 1999 in West
OPERATIONS Chicago, IL, is a global Internet
communications and commerce company which
provides a family-oriented search engine
and Internet service for online users.
Since its inception, the Company's efforts
have been devoted to raising capital and
developing its website for online users.
Accordingly, through the date of these
financial statements, the Company is
considered to be in the development stage
and the accompanying financial statements
represent those of a development stage
enterprise.
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 revenues and
expenses during the period reported. Actual
results could differ from those estimates.
REVENUE RECOGNITION No revenue has been generated as of
December 31, 1999. The Company intends to
derive revenue initially from advertisers
who link their websites through
GeneralSearch.Com's shopping site. The
Company will receive a percentage of sales
ranging from two to ten percent for
purchases made through the Company's site.
PRODUCT DEVELOPMENT Product development costs included in
selling, general and administrative
expenses consist primarily of payroll and
related expenses incurred in developing the
Company's website.
CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of cash
of highly liquid investments with
maturities of three months or less.
PROPERTY AND EQUIPMENT; Property and equipment are stated at cost.
DEPRECIATION All property is depreciated over the
estimated useful lives of the assets using
the straight-line method.
IMPAIRMENT OF LONG- The Company reviews its long-lived assets
LIVED ASSETS for impairment whenever events or changes
in circumstances indicate that the carrying
amount of an asset may not be recoverable.
Recoverability of assets held and used is
measured by a comparison of the carrying
amount of an asset to undiscounted pretax
future net cash flows expected to be
generated by that asset. An impairment loss
is recognized for the amount by which the
carrying amount of the assets exceeds the
fair value of the assets. To date, no such
impairment has been recognized.
F-6
<PAGE> 11
GENERALSEARCH.COM, INC.
(A Development Stage Company)
SUMMARY OF ACCOUNTING POLICIES
TAXES ON INCOME The Company at inception elected to be
treated as a "C" corporation, as defined in
the Internal Revenue Code. The Company's
current net operating loss may be used to
offset future taxable income to the extent
applicable.
ADVERTISING COSTS Advertising costs are expensed as incurred
and included in selling, general and
administrative expenses. Advertising
expenses amounted to approximately $3,900
for the period through December 31, 1999.
INTERNAL USE SOFTWARE COSTS The Company has adopted the American
Institute of Certified Public Accountants
Statement of Position 98-1 ("SOP 98-1")
"Accounting for the Costs of Computer
Software Developed or Obtained for Internal
Use." The Company has not incurred any
costs as of December 31, 1999 that should
be capitalized under SOP 98-1.
COSTS OF START-UP ACTIVITIES In April 1998, Statement of Position 98-5,
"Reporting on the Cost of Start-up
Activities" was issued. This SOP requires
that the cost of start-up activities,
including organization costs, be expensed
as incurred. The Company has followed this
policy since its inception.
F-7
<PAGE> 12
GENERALSEARCH.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
1. PREPAID EXPENSE On December 2, 1999, the Company entered into a
one-year partner agreement with DirectHit
Technologies, Inc. for specific online services.
The contract terms required a $50,000 payment at
inception, specifying first two months of service
period at $5,000 and the four succeeding months at
$10,000 each. The remaining term of the agreement
shall be paid on a monthly basis. See Note 4 for
remaining liability over the contract term.
2. PROPERTY AND Property and equipment, at cost, consists of the
EQUIPMENT following:
<TABLE>
<CAPTION>
DECEMBER 31,
1999
AMOUNT
------------
<S> <C>
Computer hardware $ 82,400
Furniture and fixtures 13,250
Software 4,350
--------
100,000
Less accumulated depreciation 13,333
--------
Property and equipment, net $ 86,667
========
</TABLE>
3. DUE TO OFFICER Due to officer represents funds advanced from the
Company's founder/CEO for start-up operations and
provided fixed assets. The funds have been paid in
full subsequent to year end.
4. COMMITMENTS Lease Commitments
At year end, the Company leased its operating
facility in West Chicago. This lease initially
expired on May 31, 2000, with a month-to-month
extension available by the lessor. As of December
31, 1999, the approximate future minimum lease
payments totaled $15,700. Rental expense for the
period was approximately $18,000.
Contractual Commitments
As of December 31, 1999, the Company had entered
into an agreement with DirectHit Technologies,
Inc. as disclosed in Note 1. The related future
contractual payments totaled $60,000.
F-8
<PAGE> 13
GENERALSEARCH.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
5. EQUITY Initial Capitalization
TRANSACTIONS
On May 1, 1999, in connection with the Company's
formation, 9,665,000 shares of common stock were
sold at $0.001 per share to the Company's
founders, resulting in total cash proceeds of
$9,665.
Private Placement
On September 15, 1999, the Company issued a
private placement under Regulation D, Section 504
of the Securities Exchange Commission's ("SEC")
Act of 1933. The offering was for a minimum of
50,000 common stock shares and a maximum of
1,000,000 common stock shares at $5.00 per share.
As of December 31, 1999, the Company had received
cash proceeds of $337,000 for 67,400 shares of
common stock.
6. SUBSEQUENT EVENTS a) In March 2000, the Company entered into an
employment contract with an individual who
was terminated shortly thereafter. Pursuant
to the terms of the employment contract and
termination agreement, the parties agreed
to a final payment of $100,000 to the
employee, with no future obligations by
either party.
b) During fiscal 2000, the Company sold the
remaining 1,091,600 shares under the first
private placement including an over
allotment of 159,000 shares, resulting in
$5,458,000 of cash proceeds.
c) On April 15, 2000, the Company issued a
second private placement under Regulation D,
Section 504 of the SEC's Act of 1933. The
offering was for a maximum of 1,000,000
shares of common stock at $6.00 per share.
As of the report date, the Company has
received $278,400 total cash proceeds for
46,400 shares under this second private
offering.
F-9
<PAGE> 14
GENERALSEARCH.COM, INC.
(A Development Stage Company)
d) Subsequent to year end, the Company has
pursued a potential merger with
TeleServices Internet Group, Inc. ("TSIG"),
a public, Internet-based company. As of the
report date, the Company has advanced
approximately $1,025,000 to TSIG for
business operations and $505,000 to the
Chairman/CEO of TSIG. All funds advanced to
TSIG and the Chairman have been formalized
in promissory notes bearing interest at 8%
if paid by the respective maturity dates of
120 days after the note date. If payment is
not received by or on the maturity date,
the promissory notes shall bear interest of
18% on the unpaid balance. Promissory notes
due from the Chairman are secured by
390,909 shares of TSIG common stock.
Promissory notes from TSIG are unsecured.
e) In July 2000, the Company entered into a
38-month lease agreement for its new
operating facility in Oak Brook, Illinois,
commencing on August 1, 2000. The
approximate future minimum lease payments
on this lease entered into subsequent to
year end are:
<TABLE>
<CAPTION>
DECEMBER 31, AMOUNT
<S> <C>
2000 $ 65,000
2001 157,000
2002 162,000
2003 124,000
--------
TOTAL $508,000
========
</TABLE>
f) Subsequent to year end, the Company entered
into numerous business agreements primarily
related to the expansion of on-line user
features. The approximate future payments
totaled $251,000 and $123,000 for the years
ended December 31, 2000 and 2001
respectively.
g) Subsequent to year end, the Company issued
200,000 options at below market exercise
prices to various employees upon being
hired.
The difference between the market price and
the option strike price will result in a
charge to compensation expense.
h) Subsequent to year end, the Company issued
617,600 shares for services rendered by
financial advisors. The Company will take a
charge to operations in 2000 for the fair
value of the shares issued.
F-10
<PAGE> 15
GENERALSEARCH.COM, INC. (A DEVELOPMENT STAGE COMPANY)
CONTENTS
UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDED JUNE 30, 2000:
<TABLE>
<S> <C>
Balance Sheet F-11
Statements of Operations F-12
Statement of Changes in Stockholders' Equity F-13
Statements of Cash Flows F-14
Notes to Financial Statements F-15 - F-16
</TABLE>
<PAGE> 16
GeneralSearch.Com, Inc. (A Development Stage Company)
Balance Sheet
(unaudited)
June 30, 2000
<TABLE>
<S> <C>
ASSETS
Current Assets:
Cash 3,594,945
Notes receivable, related party 900,000
Interest receivable 5,348
Prepaid expense 28,961
------------
Total Current Assets 4,529,254
Equipment and furnishings, net of accumulated depreciation 179,017
Capitalized software development costs 263,136
------------
Total Assets $ 4,971,407
============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable and accrued expenses $ 33,086
------------
Total Liabilities $ 33,086
------------
Stockholders' Equity
Preferred stock, authorized 50,000,000 shares, no shares issued
and outstanding --
Common stock, no par value, authorized 100,000,000 shares,
issued and outstanding 11,482,300 shares 9,139,775
Accumulated deficit during the development stage (4,480,554)
Additional paid in capital 382,000
Deferred compensation (102,900)
Total Stockholders' equity 4,938,321
------------
Total Liabilities and Stockholders' equity $ 4,971,407
============
</TABLE>
See accompanying notes to unaudited financial statements
F-11
<PAGE> 17
GeneralSearch.Com, Inc. (A Development Stage Company)
Statement of Operations
(unaudited)
<TABLE>
<CAPTION>
Period from Period from
inception inception
Six months (May 1, 1999) (May 1, 1999)
Ended through through
June 30, 2000 June 30, 1999 June 30, 2000
------------- ------------- -------------
(unaudited) (unaudited)
<S> <C> <C> <C>
Operating Expenses:
Selling, general and administrative $ 4,058,364 $ 104,649 $ 4,479,238
Depreciation 27,950 -- 41,283
------------ ------------ ------------
Total operating expenses 4,086,314 104,649 4,520,521
------------ ------------ ------------
Operating loss (4,086,314) (104,649) (4,520,521)
------------ ------------ ------------
Other Income (Expense):
Interest income 39,014 -- 39,458
Interest expense -- -- (220)
Other 158 -- 729
------------ ------------ ------------
Total other income 39,172 -- 39,967
------------ ------------ ------------
Net loss $ (4,047,142) $ (104,649) $ (4,480,554)
============ ============ ============
</TABLE>
See accompanying notes to unaudited financial statements
F-12
<PAGE> 18
GeneralSearch.Com, Inc. (A Development Stage Company)
Statement of Changes in Stockholders' Equity
(unaudited)
<TABLE>
<CAPTION>
Total
Common Paid-in Deferred Accumulated Stockholders'
Shares Stock Capital Compensation Deficit Equity
----------- ----------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Period from inception (May 1, 1999)
through June 30, 2000 9,665,000 $ 9,665 $ -- $ -- $ -- $ 9,665
Private placement proceeds 67,400 337,000 -- -- -- 337,000
Net loss -- -- -- -- (433,412) (433,412)
----------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 1999 9,732,400 $ 346,665 $ -- $ -- $ (433,412) $ (86,747)
Private placement proceeds at $5 per share 1,097,300 5,486,500 -- -- -- 5,486,500
Private placement proceeds at $6 per share 44,400 266,400 -- -- -- 266,400
Issuance of common stock as private
placement offering costs 101,498 -- -- -- -- --
Issuance of common stock for financial
advisory services 496,202 2,977,210 -- -- -- 2,977,210
Issuance of common stock to employees 10,500 63,000 -- -- -- 63,000
Below market stock options issued -- -- 382,000 (102,900) -- 279,100
Net Loss -- -- -- -- (4,047,142) (4,047,142)
----------- ----------- ----------- ----------- ----------- -----------
Balance, June 30, 2000 11,482,300 $ 9,139,775 $ 382,000 $ (102,900) $(4,480,554) $ 4,938,321
=========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to unaudited financial statements
F-13
<PAGE> 19
GeneralSearch.Com, Inc. (A Development Stage Company)
Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Period from Period from
inception inception
Six months (May 1, 1999) (May 1, 1999)
Ended through through
June 30, 2000 June 30, 1999 June 30, 2000
------------- ------------- -------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss from continuing operations $ (4,047,142) $ (104,648) $ (4,480,554)
Less: Expenditures paid on behalf of the Company by
The Founder/CEO -- 98,597 338,802
Adjustments to reconcile net loss to net cash (used in)
Provided by operating activities:
Non cash items
Depreciation 27,950 -- 41,283
Stock issued as compensation to employees 63,000 -- 63,000
Stock option compensation 279,100 -- 279,100
Common stock issued for financial advisory services 2,977,210 -- 2,977,210
Changes in
Interest receivable (5,348) -- (5,348)
Prepaid expenses 16,039 -- (28,961)
Accounts payable and accrued expenses 6,836 6,051 33,086
------------ ------------ ------------
Net cash used in Operating Activities (682,355) (--) (782,382)
Cash flows from investing activities
Purchase of fixed assets (120,300) -- (120,300)
Capital expenditures for software development costs (263,136) -- (263,136)
Loans to Chairman of TSIG (200,000) -- (200,000)
Loans to TSIG (700,000) -- (700,000)
------------ ------------ ------------
Net cash used in investing activities (1,283,436) -- (1,283,436)
------------ ------------ ------------
Cash flows from financing activities
Proceeds from initial capitalization -- 9,665 9,665
Proceeds from private placements of common stock 5,752,900 -- 6,089,900
Repayment of officer loan (438,802) -- (438,802)
------------ ------------ ------------
Net cash provided by financing activities 5,314,098 9,665 5,660,763
------------ ------------ ------------
Increase in cash 3,348,307 9,665 3,594,945
Cash, beginning of period 246,638 -- --
------------ ------------ ------------
Cash, end of period $ 3,594,945 $ 9,665 $ 3,594,945
============ ============ ============
</TABLE>
Noncash Financing Activities:
From inception (May 1, 1999) through December 31, 1999, the founder/CEO advanced
funds and provided fixed assets which were recorded in due to officer for the
startup of the Company as follows:
<TABLE>
<S> <C>
Operations $ 338,802
Fixed assets 100,000
-------------
Total advanced $ 438,802
=============
</TABLE>
See accompanying notes to unaudited financial statements
F-14
<PAGE> 20
GeneralSearch.Com, Inc. (A Development Stage Company)
Notes to Financial Statements
1. Financial Statements:
The financial statements included herein have been prepared without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules
and regulations; however, management believes that the disclosures are
adequate to make the information presented not misleading.
The financial statements for the interim periods included herein, which are
unaudited, include, in the opinion of management, all adjustments
(consisting only of normal recurring adjustments) necessary to present
fairly the financial position and results of operations of GeneralSearch,
Inc. ("GeneralSearch") for the periods presented. The results of operations
for interim periods should not be considered indicative of results to be
expected for the full year.
2. Business and subsequent event:
Upon the consummation of the business combination described in the Form 8-K
dated August 23, 2000 filed by TSIG on August 30, 2000, the former
stockholders of GeneralSearch obtained approximately 55% of the voting
rights of TeleServices Internet Group Inc. ("TSIG"). Although GeneralSearch
became a subsidiary of TSIG, the transaction was accounted for as a
purchase of TSIG by GeneralSearch (a reverse acquisition in which
GeneralSearch is considered the acquirer for accounting purposes) since the
stockholders of GeneralSearch obtained a majority of the voting rights of
TSIG as a result of this transaction. Accordingly, the historical financial
statements of TSIG for the periods prior to the time of the transaction are
those of GeneralSearch.
3. Advances to related party:
The Company has pursued the business combination with TSIG, a public,
Internet-based company, since April 2000. As of June 30 2000, the Company
has advanced approximately $700,000 to TSIG for business operations and
$200,000 to the Chairman/CEO of TSIG and as of September 30, 2000 these
advances have increased to approximately $1,600,000 and $505,000
respectively. All funds advanced to TSIG and the Chairman have been
formalized in promissory notes bearing interest at 8% if paid by the
respective maturity dates of 120 days after the note dates. If payment is
not received by or on the maturity date, the promissory notes shall bear
interest of 18% on the unpaid balance. Promissory notes due from the
Chairman are collateralized secured by 390,909 shares of TSIG common stock.
Promissory notes from TSIG are uncollateralized. The TSIG note and related
interest
See accompanying notes to unaudited financial statements
F-15
<PAGE> 21
GeneralSearch.Com, Inc. (A Development Stage Company)
Notes to Financial Statements (continued)
3. Advances to related party (continued):
expense will be eliminated in the Companies consolidated financial
statements as of the date of the business combination.
4. Private placements:
The Company sold 1,097,300 and 44,400 shares of common stock in private
placements with proceeds of $5,486,500 and $266,400 or $5.00 and $6.00 per
share, respectively, during the six months ended June 30, 2000. The Company
issued 597,700 shares of common stock for financial advisory services
related to the private placements. The Company recorded the issuance of
101,498 of these shares of common stock, with a fair market value of
$608,988 or $6.00 per share, representing approximately 10% of the private
placement offering proceeds in connection with the offerings. The remaining
496,202 shares with a fair market value of $2,977,210 or $6.00 per share,
were charged to operations as financial advisory fees.
5. Stock granted to employees:
The Company granted 10,500 shares of common stock to employees during the
six months ended June 30, 2000 with a fair market value of $63,000 or $6.00
per share. The fair market value of the stock grant was recorded as
compensation expense on the date of grant.
6. Stock options:
During the six months ended June 30, 2000, the Company granted options to
purchase 200,000 shares of the Company's common stock to employees with
exercise prices ranging from $2.50 to $6.00 per share of which 109,000
vested on May 1, 2000 with the remaining 91,000 options vest through May 1,
2002. The Company charged operations for $279,100 related to vested options
issued at below market and recorded $102,000 as deferred compensation
related to unvested options issued at below market.
See accompanying notes to unaudited financial statements
F-16
