<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20509
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
December 23, 1998
Date of Report
(Date of Earliest Event Reported)
COLE COMPUTER CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Nevada 0-23819 76-0547762
(State or other juris- (Commission File No.) (IRS Employer
diction of incorporation) I.D. No.)
11711 South Portland
Oklahoma City, Oklahoma 73170
(Address of Principal Executive Offices)
(405) 692-5351
Registrant's Telephone Number
PANDORA'S GOLDEN BOX
11949 FM 3005, #403
Galveston, Texas 77554
----------------------
(Former Name and Address of Principal Executive Offices)
Item 1. Changes in Control of Registrant.
(a) On December 23, 1998, the Registrant and Electronic Service
Co., Inc., an Oklahoma corporation doing business as Computer Masters
("Computer Masters"), executed an Agreement and Plan of Reorganization (the
"Plan"), whereby the Registrant acquired 100% of the outstanding securities
and subscriptions to purchase securities of Computer Masters as set forth on
Exhibit A to the Plan.
The source of the consideration used by the Computer Masters
Stockholders to acquire their respective interests in the Registrant was the
exchange of all of the issued and outstanding securities of Computer Masters
in accordance with the Plan.
The basis of the "control" by the Computer Masters Stockholders is
stock ownership.
The Plan provided:
1. A three for one forward split of the common stock of the
Registrant, increasing the post-Plan outstanding voting securities from
3,313,633 to 9,940,899;
2. For the acquisition of 100% of the outstanding securities and
subscriptions to purchase securities of Computer Masters;
3. The issuance of 2,433,334 "pre-split" "restricted securities" of
the Registrant's common stock for the outstanding securities of Computer
Masters and 130,966 pre-split shares of the Registrant's common stock for the
outstanding subscriptions;
4. The Resignation of the directors and executive officers of the
Registrant;
5. The election of the directors and executive officers of Computer
Masters as directors and executive officers of the Registrant;
6. For the filing of an Information Statement with the Securities
and Exchange Commission and mailing to the stockholders of the Registrant for
the purpose of amending the Registrant's Articles of Incorporation to change
the name of the Registrant to "Cole Computer Corporation" and to effect a
three for 1 forward split of its post-Plan outstanding voting securities; and
7. The issuance of 535,658 pre-split shares of common stock of the
Registrant to certain persons for services rendered for or on behalf of the
Registrant and/or in connection with the negotiation, review and completion of
the Plan. 335,658 of these securities were "restricted securities," and
200,000 of these securities are to be issued to two attorneys pursuant to a
written compensation agreement and registered under an S-8 Registration
Statement. Further information concerning the recipients of these securities
is contained in the Plan and its exhibits. See Item 7, Agreement and Plan of
Reorganization.
Prior to the completion of the Plan, there were 240,341 outstanding
pre-split shares, 26,666 of which were canceled by two prior members of the
Board of Directors of the Registrant, leaving 213,675 pre-Plan pre-split
outstanding shares. Following the issuance of the shares outlined above and
the subsequent issuance of 16,667 pre-split shares to three additional
subscribers following the initial closing under the Plan, there were 3,330,300
post-Plan pre-split outstanding securities of the Registrant; and following
the three for one forward split provided in the Plan and the Information
Statement, the Registrant currently has 9,990,899 post-Plan post-split
outstanding shares.
A copy of the Plan, including all material exhibits and related
instruments, accompanies this Report, which, by this reference, is
incorporated herein; the foregoing summary is modified in its entirety by such
reference. See Item 7.
(b) The former principal stockholders of the Registrant and their
percentages of ownership of the outstanding voting securities of the
Registrant prior to the completion of the Plan were: David M. Klausmeyer, who
owned 30,834 pre-split shares of the Registrant (12.8%); Linda W. Plemmons,
who owned 33,334 pre-split shares (13.9%); Q-Marq Securities Ltd., which owned
35,334 pre-split shares (14.7%); Leonard W. Burningham, Esq., who owned 20,000
pre-split shares (8.3%); James D. Gravely, who owned 15,000 pre-split shares
(6.2%); James P. Taney, who owned 15,000 pre-split shares (6.2%); and Kelly N.
Taylor, who owned 14,000 pre-split shares (5.8%). Prior to the completion of
the Plan, the Registrant's directors and executive officers were: Sam Bono
(President and Director); and Carol Novick (Secretary/Treasurer and Director).
Each of the Registrant's directors and executive officers owned 20,000 pre-
split shares (8.3%) of the Registrant's common stock prior to the completion
of the Plan; however, each agreed to convey 13,333 pre-split shares to the
Registrant for cancellation, in consideration of the Plan, for an aggregate
total of 26,666 pre-split shares for cancellation.
Item 2. Acquisition or Disposition of Assets.
(a) See Item 1.
The consideration exchanged under the Plan was negotiated at "arms
length" and the Board of Directors of the Registrant used criteria used in
similar proposals involving the Registrant in the past, including the relative
value of the assets of the Registrant; its present and past business
operations; the future potential of Computer Masters; its management; and the
potential benefit to the stockholders of the Registrant. The Board of
Directors determined that the consideration for the exchange was reasonable,
under these circumstances.
No director, executive officer or controlling person of the
Registrant had any direct or indirect interest in Computer Masters prior to
the completion of the Plan.
(b) The Registrant intends to continue the business operations
conducted and intended to be conducted by Computer Masters, and which are
described below under the caption "Business."
Also see the unaudited financial statements (balance sheet and
income statement for the period ended December 31, 1997) of Computer Masters,
which accompanied the Plan as an exhibit, in Item 7, Agreement and Plan of
Reorganization, Exhibit D; and the Compilation Report and Balance Sheets of
Cole Computer Corporation as of September 30, 1998, and December 31, 1997
(Unaudited), and related statements of income and retained earnings and cash
flows for the nine months and year then ended. See Item 7.
Management
Homer O. Cole III. Mr. Cole is 43 years of age and is a Director and
the President of the Registrant. Mr. Cole's work experience includes serving
as Computer Masters Chief Executive Officer since 1991. Mr. Cole has years of
previous experience as a Service Manager for several TV and appliance
companies who maintained a leading presence based on quality service and
integrity in the Oklahoma markets. The Archbishop of Oklahoma City and the
President of St. Gregory's University selected Mr. Cole as a founder of the
University.
Cynthia A. Cole. Ms. Cole is 36 years of age and is a Director and
the Secretary of the Registrant. Ms. Cole has served as President of Computer
Masters since 1991. Ms. Cole received a nursing degree from Rose State
College and is a registered nurse. Ms. Cole performs many charitable services
within the community and is involved in her community church.
Kam Mar. Mr. Mar is 58 years of age and is a Director of the
Registrant. In 1986, Mr. Mar and his business partner, Tony Ho, developed
Elco Computer, a small computer retail store, in Alhambra, California, which,
in one year, became a multi-million dollar computer parts distributor. In
1987, he brought the least expensive PC mother board with 1 mega byte of RAM
to the market. In 1987, Mr. Mark founded Procomp Computer and was the chief
financial officer until 1996. Procomp Computer is a system integrator
providing customized micro computers to corporations. In 1989, he founded
K.M. Corporation to manufacture 486 mother boards in Sunnyvale, California.
In 1994, Lasertech Computer Distributor, Inc. was founded with Mr. Mar as the
CEO and CFO.
S.F. Hartley, D.P.M. Dr. Hartley is 54 years of age and is a
Director of the Registrant. She is a well respected podiatrist in Houston,
Texas, owns five (5) podiatry clinics and is a co-owner of three (3) surgery
centers in the greater Houston area. In addition, Dr. Hartley is a
shareholder and Board of Director member of a national company that owns
seventy-two (72) podiatry clinics across the U.S. Dr. Hartley is on staff at
several hospitals and also serves as the National Representative for the State
of Texas on the National Podiatry Board. Dr. Hartley is also a Board of
Director member for several commercial banking institutions.
Business
Cole Computer Corporation is an emerging computer corporation which
began out of the garage of founders Cynthia A. and Homer O. Cole III, in
November, 1991, doing business as Electronic Service Co., Inc. ("ESCI"). ESCI
filled a valuable niche in Oklahoma's computer community providing helpful
friendly service while upgrading customer's computers at a fraction of the
cost of new systems sold by competitors. The customer demand for helpful
service, low cost and state of the art computers drove ESCI into the computer
market's new computer wholesale and retail sales. ESCI started doing business
as Computer Masters in 1996. Computer Masters, through high volume sales, was
able to aggressively purchase computer parts gaining purchasing power, while
reducing computer costs and passing these savings on to customers. Again,
customer demand dictated ESCI's growth from a statewide corporation into a
multi-state corporation with stores in Arkansas, Oklahoma, offices in
California and monthly computer shows in Texas.
Computer Masters expects to double its current stores in the first
half of 1999. In the first quarter, it will focus on the expansion of markets
in wholesale, retail sales, corporate and government sales. Their alliance
with AMD will insure that the Registrant can remain in the lead as the low
cost producer in computer sales. The latter half of 1999 will see the
Registrant growing laterally in the computer market, increasing market shares
in Arkansas, Oklahoma and Texas.
Plant, Property or Equipment
Computer Masters has nine stores and a manufacturing/corporate
facility.
Store Number Square Footage Rent Term
1 1,200 sq. ft. Month to Month
2 700 sq. ft. Pres - Jan 31, 2003
3 1,624 sq. ft. Pres - Feb 21, 2001
4 959 sq. ft. Pres - Jan 31, 2001
5 1,200 sq. ft. Pres - Mar 30, 1999
6 1,000 sq. ft. Pres - June 30, 2000
7 3,300 sq. ft. Pres - Oct 30, 2000
8 1,200 sq. ft. Pres - Apr 30, 2001
9 750 sq. ft. Pres - Jan 01, 2000
TOTAL: 11,933 sq. ft.
Manufacturing/Corporate 3,500 sq. ft. Pres - July 31, 2001
Item 3. Bankruptcy or Receivership.
None; not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Jones, Jensen & Company, LLC, Certified Public Accountants, of Salt
Lake City, Utah, audited the financial statements of the Registrant for the
calendar years ended December 31, 1997 and 1996; these financial statements
accompanied the Registrant's 10-KSB Annual Report for the year ended December
31, 1997, which was previously filed with the Securities and Exchange
Commission, and which are incorporated herein by reference.
Malone & Bailey, Certified Public Accountants, of Houston, Texas,
were engaged on or about January 11, 1999, by the Board of Directors of the
Registrant to prepare the audited financial statements of the Registrant for
the period ended December 31, 1998; the audited financial statements of
Computer Masters for the year ended December 31, 1997; and the unaudited
financial statements for Computer Masters for the period ended September 30,
1998.
There were no disagreements between the Registrant and Jones,
Jensen & Company, whether resolved or not resolved, on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which, if not resolved, would have caused them to make
reference to the subject matter of the disagreement in connection with their
reports.
The reports of Jones, Jensen & Company did not contain any adverse
opinion or disclaimer of opinion, and with the exception of a standard "going
concern" qualification because of the lack of material operations of the
Registrant on the date of these Reports, were not qualified or modified as to
uncertainty, audit scope or accounting principles.
During the Registrant's three most recent calendar years, and since
then, neither Jones, Jensen & Company nor Malone & Bailey has advised the
Registrant that any of the following exists or is applicable:
(1) That the internal controls necessary for the Registrant to
develop reliable financial statements do not exist, that
information has come to their attention that has lead them
to no longer be able to rely on management's
representations, or that has made them unwilling to be
associated with the financial statements prepared by
management;
(2) That the Registrant needs to expand significantly the scope
of its audit, or that information has come to their
attention that if further investigated may materially impact
the fairness or reliability of a previously issued audit
report or the underlying financial statements or any other
financial presentation, or cause them to be unwilling to
rely on management's representations or be associated with
the Registrant's financial statements for the foregoing
reasons or any other reason; or
(3) That they have advised the Registrant that information has
come to their attention that they have concluded materially
impacts the fairness or reliability of either a previously
issued audit report or the underlying financial statements
for the foregoing reasons or any other reason.
During the Registrant's three most recent fiscal years and since
then, the Registrant has not consulted Malone & Bailey regarding the
application of accounting principles to a specified transaction, either
completed or proposed; or the type of audit opinion that might be rendered on
the Registrant's financial statements or any other financial presentation
whatsoever.
The Registrant has provided Jones, Jensen & Company with a copy of
the disclosure provided under this caption of this Report, and has advised it
to provide the Registrant with a letter addressed to the Securities and
Exchange Commission as to whether it agrees or disagrees with the disclosures
made herein. A copy of its response is attached hereto and incorporated
herein by this reference. See Item 7 of this Report.
Item 5. Other Events.
An Information Statement was filed with the Securities and Exchange
Commission and forwarded to stockholders regarding a forward split of the
Registrant's outstanding voting securities on a basis of three for one, while
retaining the current authorized capital and par value, with appropriate
adjustments in the stated capital accounts and capital surplus accounts; and
to change the name of the Registrant to "Cole Computer Corporation."
The effective date of the name change and forward split was February
2, 1999, the date of the Certificate of Amendment was filed with the Nevada
Secretary of State.
This Information Statement is incorporated herein by reference.
Item 6. Resignations of Registrant's Directors.
The pre-Plan directors and executive officers of the Registrant
resigned and designated the directors and executive officers of Computer
Masters to serve in the same capacities in which they served under Computer
Masters, until the next respective annual meetings of the stockholders and the
Board of Directors and until their respective successors are elected and
qualified or until their prior resignations or terminations.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Financial Statements of Businesses Acquired.
See Agreement and Plan of Reorganization, Exhibits D and D-1, below;
and the Compilation Report and Balance Sheets of Cole Computer Corporation as
of September 30, 1998, and December 31, 1997 (Unaudited), and related
statements of income and retained earnings and cash flows for the nine months
and year then ended.
(b) Pro Forma Financial Information.
Pro Forma Combined Balance Sheet (Unaudited) of Pandora's and
Computer Masters as of September 30, 1998
Pro Forma Combined Notes to Balance Sheet (Unaudited)
Exhibits
2 Agreement and Plan of Reorganization
Exhibit A- Stockholders and Subscribers of
of Electronic Service, Co., Inc.
Exhibit B- Pandora's Financial Statements for
the years ended 12/31/97 and 12/31/96
Exhibit B-1- Pandora's Unaudited Balance Sheet
and Statement of Operations for the
Nine Months ended 9/30/98
Exhibit C- Pandora's Exceptions
Exhibit D- Electronic Service Co., Inc. Unaudited
Financial Statement for the period
ended 12/31/97
Exhibit D-1 Electronic Service Co., Inc. Unaudited
Balance Sheet for the period ended
5/31/98
Exhibit E- Electronic Service Co., Inc. Exceptions
Exhibit F- Investment Letter
Exhibit G- Pandora's Compliance Certificate
Exhibit H- Electronic Service Co., Inc. Compliance
Certificate
3 Certificate of Amendment effecting the name change to
"Cole Computer Corporation" and the three for one
forward split
13 Form 10-KSB Annual Report for the year ended December
31, 1997*
16 Letter regarding change in certifying accountants
19 Information Statement*
* Incorporated herein by reference.
Item 8. Change in Fiscal Year.
None; not applicable.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned hereunto duly authorized.
PANDORA'S GOLDEN BOX
Date: 1/18/99 By:/s/ Homer O. Cole III
--------------------------------------
President and Director
Date: 1/18/99 By:/s/ Cynthia A. Cole
--------------------------------------
Secretary and Director
Date: 1/20/99 By:/s/ Kam Mar
--------------------------------------
Director
Date: 1/18/99 By: /s/ Shirley F. Hartley
--------------------------------------
Director
<PAGE>
(LETTERHEAD OF MALONE & BAILEY, PLLC)
January 11, 1999
To the Board of Directors
Cole Computer Corporation
(formerly Electronic Service Co., Inc.)
dba Computer Masters
Oklahoma City, Oklahoma
We have compiled the accompanying balance sheets of Cole Computer Corp. as of
September 30, 1998 and December 31, 1997, and the related statements of income
and retained earnings and cash flows for the nine months and year then ended,
respectively, in accordance with Statements on Standards for Accounting and
Review Services issued by the American Institute of Certified Public
Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of the owners. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not
express an opinion or any other form of assurance on them.
<PAGE>
COLE COMPUTER CORPORATION
(formerly Electronics Service Co., Inc.)
dba Computer Masters
BALANCE SHEETS
As of September 30, 1998 and December 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
1998 1997
CURRENT ASSETS
Cash $ 41,469 $ 22,960
Accounts receivable 73,840 60,171
Inventory 606,039 131,545
Other current assets 5,264 4,179
Total Current Assets 726,612 218,855
EQUIPMENT, less accumulated depreciation
of $29,305 and $16,107, respectively 73,734 56,821
TOTAL ASSETS $800,346 $275,676
CURRENT LIABILITIES
Current portion of installment
notes payable $ 35,345 $ 32,100
Demand note payable to stockholder 30,000
Accounts payable 490,132 68,277
Accrued expenses 90,946 53,396
Income taxes payable 1,448
Total Current Liabilities 647,871 153,773
LONG-TERM DEBT, net of current portion 122,971 125,095
Deferred income taxes 2,793 2,793
Total Liabilities 773,635 281,661
STOCKHOLDERS' EQUITY
Common stock, $.10 par value, 100,000
shares authorized, 5,000 shares
issued and outstanding 500 500
Paid in capital 6,577 6,577
Retained earnings (Deficit) 19,634 (13,062)
Total Stockholders' Equity (Deficit) 26,711 ( 5,985)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $800,346 $275,676
</TABLE>
<TABLE>
COLE COMPUTER CORPORATION
(formerly Electronics Service Co., Inc.)
dba Computer Masters
STATEMENTS OF INCOME AND RETAINED EARNINGS
For the Nine Months Ended September 30, 1998
and the Year Ended December 31, 1997
(UNAUDITED)
<CAPTION>
<S> <C> <C>
1998 1997
REVENUES $5,919,568 $4,459,475
COST OF SALES 5,107,790 3,965,020
GROSS MARGIN 811,778 494,455
Selling expenses 536,110 254,764
General and administrative 217,049 192,636
NET INCOME (LOSS) FROM OPERATIONS 58,619 47,055
Interest (income) ( 561) ( 1,122)
Interest expense 20,532 25,098
NET INCOME (LOSS) BEFORE TAXES 38,648 23,079
INCOME TAX 5,952 3,608
NET INCOME (LOSS) 32,696 19,471
RETAINED EARNINGS
- Beginning of period ( 13,062) ( 32,533)
- End of period $ 19,634 $( 13,062)
</TABLE>
<TABLE>
COLE COMPUTER CORPORATION
(formerly Electronics Service Co., Inc.)
dba Computer Masters
STATEMENTS OF CASH FLOW
For the Nine Months Ended September 30, 1998
and the Year Ended December 31, 1997
(UNAUDITED)
<CAPTION>
<S> <C> <C>
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 32,696 $ 19,471
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 13,198 10,096
Deferred income taxes 2,793
Change in cash from:
Accounts receivable ( 13,669) ( 57,807)
Inventory (474,494) ( 96,999)
Other current assets ( 1,085) ( 4,179)
Accounts payable 421,855 15,671
Accrued expenses 37,549 53,396
Income taxes payable 1,448
NET CASH OPERATING ACTIVITIES 17,498 ( 57,558)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment ( 30,111) ( 43,306)
CASH FLOWS FROM FINANCING ACTIVITIES
Advances by (repayments to) stockholders 30,000 ( 54,862)
New installment loans 18,561 175,000
Principal payments on installment loans ( 17,439) ( 17,805)
NET CASH FINANCING ACTIVITIES 31,122 102,333
NET INCREASE IN CASH 18,509 1,469
CASH ON HAND - beginning of year 22,960 21,491
- end of year $ 41,469 $ 22,960
SUPPLEMENTAL DISCLOSURES
Interest paid $ 20,532 $ 25,098
Income taxes paid 0 815
</TABLE>
COLE COMPUTER CORPORATION
(formerly Electronics Service Co., Inc.)
dba Computer Masters
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business: Cole Computer Corporation ("Company") was formed in
November 1991 as an Oklahoma corporation named Electronics Service Co., Inc.
for the purpose of acquiring and operating an electronics repair business. In
1996, the Company changed its business to personal computer "clone" hardware
assembly, sales and repair, utilizing both the Intel and AMD microprocessors.
The Company changed its name to Cole Computer Corporation incident to its
reverse acquisition ("reorganization") described in Note 3. The Company now
has nine retail stores in Oklahoma and Arkansas, and also sells to government
agencies and military installations.
In preparing financial statements, management makes estimates and assumptions
that affect the reported amounts of assets and liabilities in the balance
sheet and revenue and expenses in the income statement. Actual results could
differ from those estimates.
Cash and Cash Equivalents include highly liquid investments, which are readily
convertible into cash and have maturities of three months or less.
Revenue is recognized when products are delivered. Bad debts are
insignificant and are recognized when collection is deemed doubtful by
management.
Inventories include component parts, sub-assemblies and merchandise held for
sale, and valued at the lower of cost or market, using the first-in, first-out
method. Obsolete inventory is written down to liquidation value as needed.
Depreciation is determined using the straight-line method based on estimated
useful lives.
Deferred income taxes are determined on the liability method. Timing
differences between net income and taxable income as reported result mostly
from depreciation timing differences.
NOTE 2. DEMAND NOTE PAYABLE TO STOCKHOLDER
The two stockholders (a married couple) loaned $30,000 to the Company in early
1998. The note attaches no collateral, is repayable on demand, and carries a
12% interest rate.
NOTE 2. INSTALLMENT NOTES PAYABLE
Installment debt is as follows:
1998 1997
Note payable to American State Bank,
payable in 65 remaining installments
of $1,687, including interest initially
at 10.5% APR, and varying monthly at
prime + 2.25%, guaranteed by the Small
Business Administration, and secured
by substantially all assets $ 85,998 $95,119
Notes payable to American State Bank,
GMAC, Union Acceptance, and Employees
Federal Credit Union, payable in
various remaining installments of
$1,076, $418, $386, and $311, including
interest ranging from 4.9% to 13.5%
APR, secured by certain equipment
and vehicles 72,318 62,076
Less: current maturities (35,345) (32,100)
Net long-term debt $122,971 $125,095
NOTE 3. SUBSEQUENT EVENTS
In December 1998, the Company agreed to a reorganization with Pandora's Golden
Box ("Pandora"), a Nevada publicly-held shell company, whereby the Company's
shareholders exchanged 100% of the Company's outstanding stock for 73% of the
NOTE 3. SUBSEQUENT EVENTS (continued)
In connection with this reorganization, $492,900 in cash was raised by the
sales of stock at $1 per share, after a 3-for-1 stock split. These monies
were used to pay off $118,000 of installment debt, an estimated $25,000 in
offering costs, and the balance is being used for operating expenses.
Pro Forma Consolidated Balance Sheet
<PAGE>
PRO FORMA CONSOLIDATED BALANCE SHEET
The following condensed pro forma balance sheet has been derived from the
balance sheet of Pandora's Golden Box ("Pandora") adjusted to give effect to
the December 23, 1998 reverse acquisition ("reorganization") of Pandora by
Cole Computer Corp. ("Cole") as if such reorganization had occurred on
September 30, 1998. The pro forma balance sheet is presented for
informational purposes only and does not purport to be indicative of the
financial condition that actually would have resulted if the reorganization
had occurred on September 30, 1998. The pro forma balance sheet should be
read in conjunction with the attached notes and the separate financial
statements including footnotes for Pandora and Cole.
<TABLE>
In thousands (000's) At Sept. 30, 1998 Adjust-
Cole Pandora ments Combined
<CAPTION>
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash $ 41 $ 3 (b) $ 131 $ 175
Accounts receivable 74 74
Inventory and other 683 683
Total Current Assets 798 3 131 932
Equipment, net 74 74
TOTAL ASSETS $872 $ 3 $ 131 $1,006
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of notes payable $ 35 (b) $( 31) $ 4
Accounts payable and other 583 $ 8 (b) 591
Total Current Liabilities 618 8 ( 31) 595
Long-term debt and other liabilities 125 (b) (113) 12
Total Liabilities 743 8 (144) 607
Stockholders' Equity
Common stock, $.10 par value,
100,000 shares authorized,
5,000 shares issued and o/s 1 (a) ( 1) -
Common stock, $.0001 par value,
25,000,000 shares authorized,
180,341 shares issued and o/s 1 (a) ( 1) -
Common stock $.0001 par value,
25,000,000 shares authorized,
10,300,000 shares issued and o/s (a) 1
(b) 1
Paid in capital 6 273 (a) (256)
(b) 275 298
Retained earnings 122 (279) (a) 257 100
Total Stockholders' Equity 129 ( 5) 399
Total Liabilities & Equity $872 $ 3 $1,006
</TABLE>
Notes to Pro Forma Consolidated Condensed Balance Sheet
(1) Per the Agreement dated December 23, 1998, shareholders of Pandora, a
Nevada publicly-held shell without operations, agreed to cancel certain
shares and issue shares to the shareholders of Cole, an Oklahoma
corporation, in exchange for 100% of the outstanding shares of Cole.
Immediately following this share cancellation and issuance was a 3 for 1
forward split of outstanding shares. Adjustments to reflect such
issuance and cancellation of shares in Pandora are as follows:
<TABLE>
Pre- Post-
Split Split
<CAPTION>
<S> <C> <C>
Pandora, shares outstanding
as of September 30, 1998 180,341
Shares canceled per agreement (26,666) 461,025
Shares issued in connection with
the reverse merger
to promoters 526,324 1,578,973
to lawyers 220,000 660,000
to shareholders of Cole 2,433,334 7,300,002
Totals 3,333,333 10,000,000
</TABLE>
Pandora has adopted the name and all accounting attributes of Cole.
According to SEC rules, the legal acquiree becomes the accounting
acquirer, and all post-combination reporting will include only the
historical information from the former Oklahoma corporation.
Stock issued to promoters and lawyers is valued at $.01 per share and
will be charged to operations in the last quarter of 1998.
(2) In connection with the reorganization, $492,900 in funds were raised
during December 1998 and January 1999 pursuant to an offering of stock
exempt from registration under Regulation D, Section 506. The stock was
sold for $3 per share, post-split, and the proceeds were used to retire
$118,000 in installment debt, pay $25,000 in offering expenses, and the
balance is being used for operating expenses.
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Plan") is made
this 23rd day of December, 1998, among Pandora's Golden Box, a Nevada
corporation ("Pandora's"); Electronic Service Co., Inc., an Oklahoma
corporation doing business as "Computer Masters" ("Computer Masters"); and the
stockholders (the "Computer Masters Stockholders") and subscribers (the
"Computer Masters Subscribers") to purchase common stock of Computer Masters
who are listed on Exhibit A hereto and who execute and deliver a copy of the
Plan (sometimes, collectively, the "Computer Masters Stockholders").
W I T N E S S E T H:
RECITALS
WHEREAS, the respective Boards of Directors of Pandora's and
Computer Masters and the Computer Masters Stockholders have adopted
resolutions pursuant to which Pandora's shall acquire and Computer Masters
Stockholders shall exchange 100% of the outstanding common stock and
subscriptions to purchase common stock of Computer Masters; and
WHEREAS, the sole consideration for 100% interest in Computer
Masters shall be the exchange of "unregistered" and "restricted" shares of
$0.001 par value common stock of Pandora's, as outlined in Exhibit A; and
WHEREAS, the Computer Masters Stockholders shall acquire in
exchange such "unregistered" and "restricted" shares of Pandora's in a
reorganization within the meaning of Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended;
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, it is agreed:
Section 1
Exchange of Stock
1.1 Number of Shares. The Computer Masters Stockholders
and the
Computer Masters Subscribers respectively agree to transfer to Pandora's at
the closing (the "Closing") 100% of the outstanding securities and
subscriptions to purchase securities of Computer Masters, which are listed in
Exhibit A hereof attached hereto and incorporated herein by reference (the
"Computer Masters Shares"), respectively in exchange for 2,433,334 pre-split
shares of common stock of Pandora's (for the outstanding securities of
Computer Masters [see Section 1.5 below respecting the planned three for one
forward split of the outstanding voting securities of Pandora's]), and 130,966
pre-split shares of Pandora's (for the outstanding subscriptions). Taking
into account (i) these shares (collectively, 2,584,001 shares), (ii) the
current outstanding shares of Pandora's (240,341 shares), the shares to be
canceled as outlined in Section 1.5 below (26,666 shares), (iii) the shares to
be issued to a financial consultant as outlined in Section 1.6 below (335,658
shares) and (iv) the shares to be issued to two attorneys as outlined in
Section 1.7 below (200,000 shares), there will be 3,333,333 outstanding post-
Plan and pre-split shares on the Closing.
1.2 Delivery of Certificates by Computer Masters
Stockholders.
The transfer of the Computer Masters Shares by the Computer Masters
Stockholders shall be effected by the delivery to Pandora's at the Closing of
stock certificate or certificates representing the transferred shares duly
endorsed in blank or accompanied by stock powers executed in blank (duly
endorsed Assignments Separate From Stock Powers shall be sufficient for the
outstanding subscriptions), with all signatures witnessed or guaranteed to the
satisfaction of Pandora's and with all necessary transfer taxes and other
revenue stamps affixed and acquired at the Computer Masters Stockholders'
expense.
1.3 Further Assurances. At the Closing and from time to
time
thereafter, the Computer Masters Stockholders shall execute such additional
instruments and take such other action as Pandora's may request in order to
exchange and transfer clear title and ownership in the Computer Masters Shares
to Pandora's.
1.4 Resignations of Present Directors and Executive
Officers and
Designation of New Directors and Executive Officers. On Closing, the present
directors and executive officers of Pandora's shall resign, in seriatim, and
designate the directors and executive officers nominated by Computer Masters
to serve in their place and stead, until the next respective annual meetings
of the stockholders and Board of Directors of Pandora's, and until their
respective successors shall be elected and qualified or until their respective
prior resignations or terminations, who shall be: Cynthia A. Cole, President,
Secretary and Director; and Homer O. Cole, III, Chairman, Vice President and
Director.
1.5 Cancellation of Certain Pre-Plan Shares and Rights to
Acquire Shares. In consideration of the Plan, Sam Bono and Carol Novick, the
two current directors and executive officers of Pandora's, shall each convey
to Pandora's simultaneous with the Closing, 13,333 shares of common stock of
Pandora's which are respectively owned by them (26,666 shares in the
aggregate), and shall agree to compromise and waive any past or future
compensation due each of them by Pandora's, in cash, common stock, common
stock options or otherwise.
1.6 Financial Consultant's Compensation. In
consideration of
services rendered in connection with the negotiation and Closing of the Plan,
simultaneous with the Closing, Pandora's shall issue 335,658 "unregistered"
and "restricted" shares of its common stock to Eurotrade Financial, Inc., or
its designees.
1.7 Attorneys' Compensation Agreement. Subject to the
Closing
of the Plan and pursuant to a written compensation agreement with certain
attorneys (Leonard W. Burningham, Esq. and David R. Strawn, Esq.) engaged by
Pandora's, Pandora's shall issue 200,000 pre-split shares of its common stock
(100,000 pre-split shares to each) for non-capital raising services rendered,
and which shares shall be registered with the Securities and Exchange
Commission on Form S-8.
1.8 Change of Name and Reverse Split. Simultaneous with
the
Closing of this Plan, Pandora's shall adopt such resolutions necessary for the
preparation and mailing to its post-Plan stockholders of an Information
Statement for the purpose of amending Pandora's's Articles of Incorporation to
change the name of Pandora's to "Computer Masters, Inc." and to effect a
forward split of its outstanding post-Plan common stock on a basis of three
for one (increasing the post-Plan common outstanding shares [3,333,333 shares,
more or less] to 10,000,000 shares, more of less), while retaining the current
par value and authorized shares, with appropriate adjustments in the
additional paid in capital and stated capital accounts of Pandora's.
1.9 Assets and Liabilities of Pandora's at Closing.
Pandora's
shall have no material assets and no liabilities at Closing, and all costs
incurred by Pandora's incident to the Plan shall have been paid or satisfied.
1.10 Limitation on Reverse Splits and Issuance of
Securities
Under and S-3 or S-8 Registration Statement. Without the prior written
consent of the current members of the Board of Directors of Pandora's, (i) no
reverse split of the outstanding voting securities of Pandora's shall be
effected following the Closing, for a period of not less than 18 months; and
(ii) except for the S-8 Registration Statement to be filed in accordance with
Section 1.7 hereof, following the Closing, Pandora's shall not utilize Form S-
3 or S-8 of the Securities and Exchange Commission (or any forms which replace
or supercede these forms and are for similar purposes) to offer, sell or issue
any of any its securities, now or hereafter authorized to be issued by
Pandora's, for a period of 18 months.
1.11 Closing. The Plan will be deemed to be closed on
receipt of
the signatures of Computer Masters Stockholders owning not less that 80% of
the Computer Master Shares.
Closing
The Closing contemplated by Section 1 shall be held at the offices
of Leonard W. Burningham, Esq., Suite 205 Hermes Building, 455 East 500 South,
Salt Lake City, Utah 84111, on or before ten days following the execution and
delivery of this Plan, unless another place or time is agreed upon in writing
by the parties. The Closing may be accomplished by wire, express mail or
other courier service, conference telephone communications or as otherwise
agreed by the respective parties or their duly authorized representatives.
Section 3
Representations and Warranties of Pandora's
Pandora's represents and warrants to, and covenants with, the
Computer Masters Stockholders and Computer Masters as follows:
3.1 Corporate Status. Pandora's is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Nevada and is licensed or qualified as a foreign corporation in all states
in which the nature of its business or the character or ownership of its
properties makes such licensing or qualification necessary (Nevada only.)
Pandora's is a publicly held company, having previously and lawfully offered
and sold a portion of its securities in accordance with applicable federal and
state securities laws, rules and regulations. It is a fully "reporting
issuer" as that term in defined under the Securities Exchange Act of 1934, as
amended; is "current in all related filing requirements with the Securities
and Exchange Commission; and all reports and/or registration statements so
filed by Pandora's are true and accurate in every material respect. There is
presently no public market for these or any other securities of Pandora's.
3.2 Capitalization. The current pre-Plan authorized
capital
stock of Pandora's consists of 25,000,000 shares of $0.001 par value common
voting stock, of which 240,341 shares are issued and outstanding, all fully
paid and non-assessable. Except as otherwise provided herein, there are no
outstanding options, warrants or calls pursuant to which any person has the
right to purchase any authorized and unissued common stock of Pandora's.
3.3 Financial Statements. The financial statements of
Pandora's
furnished to the Computer Masters Stockholders and Computer Masters,
consisting of audited financial statements for the years ended December 31,
1997 and 1996, attached hereto as Exhibit B, and unaudited balance sheet and
statement of operations for the nine months ended September 30, 1998, attached
hereto as Exhibit B-1 and incorporated herein by reference, are correct and
fairly present the financial condition of Pandora's at such dates and for the
periods involved; such statements were prepared in accordance with generally
accepted accounting principles consistently applied, and no material change
has occurred in the matters disclosed therein, except as indicated in Exhibit
C, which is attached hereto and incorporated herein by reference. Such
financial statements do not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements made,
in light of the circumstances under which they were made, not misleading.
3.4 Undisclosed Liabilities. Pandora's has no
liabilities of
any nature except to the extent reflected or reserved against in its balance
sheets, whether accrued, absolute, contingent or otherwise, including, without
limitation, tax liabilities and interest due or to become due, except as set
forth in Exhibit C.
3.5 Interim Changes. Since the date of its balance
sheets,
except as set forth in Exhibit C, there have been no (1) changes in financial
condition, assets, liabilities or business of Pandora's which, in the
aggregate, have been materially adverse; (2) damages, destruction or losses of
or to property of Pandora's, payments of any dividend or other distribution in
respect of any class of stock of Pandora's, or any direct or indirect
redemption, purchase or other acquisition of any class of any such stock; or
(3) increases paid or agreed to in the compensation, retirement benefits or
other commitments to its employees.
3.6 Title to Property. Pandora's has good and marketable
title
to all properties and assets, real and personal, reflected in Pandora's
balance sheets, and the properties and assets of Pandora's are subject to no
mortgage, pledge, lien or encumbrance, except for liens shown therein or in
Exhibit C, with respect to which no default exists.
3.7 Litigation. There is no litigation or proceeding
pending,
or to the knowledge of Pandora's, threatened, against or relating to
Pandora's, its properties or business, except as set forth in Exhibit C.
Further, no officer, director or person who may be deemed to be an affiliate
of Pandora's is party to any material legal proceeding which could have an
adverse effect on Pandora's (financial or otherwise), and none is party to any
action or proceeding wherein any has an interest adverse to Pandora's.
3.8 Books and Records. From the date of this Plan to the
Closing, Pandora's will (1) give to the Computer Masters Stockholders and
Computer Masters or their respective representatives full access during normal
business hours to all of Pandora's offices, books, records, contracts and
other corporate documents and properties so that the Computer Masters
Stockholders and Computer Masters or their respective representatives may
inspect and audit them; and (2) furnish such information concerning the
properties and affairs of Pandora's as the Computer Masters Stockholders and
Computer Masters or their respective representatives may reasonably request.
3.9 Tax Returns. Pandora's has filed all federal and
state
income or franchise tax returns required to be filed or has received currently
effective extensions of the required filing dates.
3.10 Confidentiality. Until the Closing (and thereafter
if there
is no Closing), Pandora's and its representatives will keep confidential any
information which they obtain from the Computer Masters Stockholders or from
Computer Masters concerning the properties, assets and business of Computer
Masters. If the transactions contemplated by this Plan are not consummated by
December 31, 1998, Pandora's will return to Computer Masters all written
matter with respect to Computer Masters obtained by Pandora's in connection
with the negotiation or consummation of this Plan.
3.11 Corporate Authority. Pandora's has full corporate
power and
authority to enter into this Plan and to carry out its obligations hereunder
and will deliver to the Computer Masters Stockholders and Computer Masters or
their respective representatives at the Closing a certified copy of
resolutions of its Board of Directors authorizing execution of this Plan by
Pandora's officers and performance thereunder, and the directors adopting and
delivering such resolutions are the duly elected and incumbent director of
Pandora's.
3.12 Due Authorization. Execution of this Plan and
performance
by Pandora's hereunder have been duly authorized by all requisite corporate
action on the part of Pandora's, and this Plan constitutes a valid and binding
obligation of Pandora's and performance hereunder will not violate any
provision of the Articles of Incorporation, Bylaws, agreements, mortgages or
other commitments of Pandora's.
3.13 Environmental Matters. Pandora's has no knowledge of
any
assertion by any governmental agency or other regulatory authority of any
environmental lien, action or proceeding, or of any cause for any such lien,
action or proceeding related to the business operations of Pandora's or
Pandora's' predecessors. In addition, to the best knowledge of Pandora's,
there are no substances or conditions which may support a claim or cause of
action against Pandora's or any of Pandora's' current or former officers,
directors, agents or employees, whether by a governmental agency or body,
private party or individual, under any Hazardous Materials Regulations.
"Hazardous Materials" means any oil or petrochemical products, PCB's,
asbestos, urea formaldehyde, flammable explosives, radioactive materials,
solid or hazardous wastes, chemicals, toxic substances or related materials,
including, without limitation, any substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous
materials," or "toxic substances" under any applicable federal or state laws
or regulations. "Hazardous Materials Regulations" means any regulations
governing the use, generation, handling, storage, treatment, disposal or
release of hazardous materials, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act and the Federal Water Pollution Control
Act.
3.14 Access to Information Regarding Computer Masters.
Pandora's
acknowledges that it has been delivered copies of what has been represented to
be documentation containing all material information respecting Computer
Masters and Computer Masters's present and contemplated business operations,
potential acquisitions, management and other factors; that it has had a
reasonable opportunity to review such documentation and discuss it, to the
extent desired, with Pandora's's legal counsel, directors and executive
officers; that it has had, to the extent desired, the opportunity to ask
questions of and receive responses from the directors and executive officers
of Computer Masters, and with the legal and accounting firms of Computer
Masters, with respect to such documentation; and that to the extent requested,
all questions raised have been answered to Pandora's's complete satisfaction.
Section 4
Representations, Warranties and Covenants of Computer Masters
and the Computer Masters Stockholders
Computer Masters and the Computer Masters Stockholders (Sections
4.1, 4.11 and 4.12 are the only representations of the Computer Masters
Subscribers and Dr. Shirley F. Hartley) represent and warrant to, and
covenant with, Pandora's as follows:
4.1 Ownership. Computer Masters Stockholders own the
Computer
Masters Shares, free and clear of any liens or encumbrances of any type or
nature whatsoever, and each has full right, power and authority to convey the
Computer Masters Shares owned without qualification.
4.2 Corporate Status. Computer Masters is a corporation
duly
organized, validly existing and in good standing under the laws of the State
of Oklahoma and is licensed or qualified as a foreign corporation in all
states or foreign countries and provinces in which the nature of Computer
Masters's business or the character or ownership of Computer Masters
properties makes such licensing or qualification necessary.
4.3 Capitalization. The authorized capital stock of
Computer
Masters consists of 5,000 shares of common stock, par value $0.10 per share,
of which 5,000 shares are issued and outstanding, all fully paid and non-
assessable. Except for the subscriptions of the Computer Masters Subscribers
referred to elsewhere herein, there are no outstanding options, warrants or
calls pursuant to which any person has the right to purchase any other
securities of Computer Masters. Computer Masters has received subscriptions
in the total amount of $366,900, representing the agreement to purchase
122,300 post-Plan shares of common stock of Pandora's; all such sales were
made in accordance with Section 4(2) of the Securities Act of 1933, as
amended, and Rule 506 of Regulation D promulgated by the Securities and
Exchange Commission thereunder. Such subscriptions were place directly by
Computer Masters and its management, without sales commissions, other charges
or expenses, fees, warrants or other compensation due to anyone. In
connection therewith, except as otherwise provided herein, neither the Company
nor its management is aware of any finders', underwriters, brokers or other
persons entitled to any compensation in connection with this financing or the
Plan. Computer Masters will utilize the proceeds from the sale of these
subscriptions and the underlying shares as set forth in Schedule 4.3 attached
hereto and incorporated herein by reference.
4.4 Financial Statements. The financial statements of
Computer
Masters furnished to Pandora's, consisting of an unaudited balance sheet and
income statement for the year ended December 31, 1997, attached hereto as
Exhibit D, and an unaudited balance sheet and income statement for the period
ended May 31, 1998, attached hereto as Exhibit D-1, and incorporated herein by
reference, are correct and fairly present the financial condition of Computer
Masters as of these dates and for the periods involved, and such statements
were prepared in accordance with generally accepted accounting principles
consistently applied, and no material change has occurred in the matters
disclosed therein, except as indicated in Exhibit E, which is attached hereto
and incorporated herein by reference. These financial statements do not
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
4.5 Undisclosed Liabilities. Computer Masters has no
material
liabilities of any nature except to the extent reflected or reserved against
in the balance sheets, whether accrued, absolute, contingent or otherwise,
including, without limitation, tax liabilities and interest due or to become
due, except as set forth in Exhibit E attached hereto and incorporated herein
by reference.
4.6 Interim Changes. Since the date of these balance
sheets,
except as set forth in Exhibit E, there have been no (1) changes in the
financial condition, assets, liabilities or business of Computer Masters, in
the aggregate, have been materially adverse; (2) damages, destruction or loss
of or to the property of Computer Masters, payment of any dividend or other
distribution in respect of the capital stock of Computer Masters, or any
direct or indirect redemption, purchase or other acquisition of any such
stock; or (3) increases paid or agreed to in the compensation, retirement
benefits or other commitments to their employees.
4.7 Title to Property. Computer Masters has good and
marketable
title to all properties and assets, real and personal, proprietary or
otherwise, reflected in these balance sheets, and the properties and assets of
Computer Masters are subject to no mortgage, pledge, lien or encumbrance,
except as reflected in the balance sheet or in Exhibit E, with respect to
which no default exists.
4.8 Litigation. There is no litigation or proceeding
pending,
or to the knowledge of Computer Masters, threatened, against or relating to
Computer Masters or its properties or business, except as set forth in Exhibit
E. Further, no officer, director or person who may be deemed to be an
affiliate of Computer Masters is party to any material legal proceeding which
could have an adverse effect on Computer Masters (financial or otherwise), and
none is party to any action or proceeding wherein any has an interest adverse
to Computer Masters.
4.9 Books and Records. From the date of this Plan to the
Closing, the Computer Masters Stockholders will cause Computer Masters to (1)
give to Pandora's and its representatives full access during normal business
hours to all of its offices, books, records, contracts and other corporate
documents and properties so that Pandora's may inspect and audit them; and (2)
furnish such information concerning the properties and affairs of Computer
Masters as Pandora's may reasonably request.
4.10 Tax Returns. Computer Masters has filed all federal
and
state income or franchise tax returns required to be filed or has received
currently effective extensions of the required filing dates.
4.11 Confidentiality. Until the Closing (and continuously
if
there is no Closing), Computer Masters, the Computer Masters Stockholders and
their representatives will keep confidential any information which they obtain
from Pandora's concerning its properties, assets and business. If the
transactions contemplated by this Plan are not consummated by December 31,
1998, Computer Masters, the Computer Masters Stockholders will return to
Pandora's all written matter with respect to Pandora's obtained by them in
connection with the negotiation or consummation of this Plan.
4.12 Investment Intent. The Computer Masters Stockholders
are
acquiring the shares to be exchanged and delivered to them under this Plan for
investment and not with a view to the sale or distribution thereof, and the
Computer Masters Stockholders have no commitment or present intention to
liquidate the Company or to sell or otherwise dispose of the Pandora's shares.
The Computer Masters Stockholders shall execute and deliver to Pandora's on
the Closing an Investment Letter attached hereto as Exhibit F and incorporated
herein by reference, acknowledging the "unregistered" and "restricted" nature
of the shares of Pandora's being received under the Plan in exchange for the
Computer Masters Shares, and receipt of certain material information regarding
Pandora's.
4.13 Corporate Authority. Computer Masters has full
corporate
power and authority to enter into this Plan and to carry out its obligations
hereunder and will deliver to Pandora's or its representative at the Closing a
certified copy of resolutions of its Board of Directors authorizing execution
of this Plan by its officers and performance thereunder.
4.14 Due Authorization. Execution of this Plan and
performance
by Computer Masters hereunder have been duly authorized by all requisite
corporate action on the part of Computer Masters, and this Plan constitutes a
valid and binding obligation of Computer Masters and performance hereunder
will not violate any provision of the Articles of Incorporation, Bylaws,
agreements, mortgages or other commitments of Computer Masters.
4.15 Environmental Matters. Computer Masters and the
Computer
Masters Stockholders have no knowledge of any assertion by any governmental
agency or other regulatory authority of any environmental lien, action or
proceeding, or of any cause for any such lien, action or proceeding related to
the business operations of Computer Masters or its predecessors. In addition,
to the best knowledge of Computer Masters, there are no substances or
conditions which may support a claim or cause of action against Computer
Masters or any of its current or former officers, directors, agents, employees
or predecessors, whether by a governmental agency or body, private party or
individual, under any Hazardous Materials Regulations. "Hazardous Materials"
means any oil or petrochemical products, PCB's, asbestos, urea formaldehyde,
flammable explosives, radioactive materials, solid or hazardous wastes,
chemicals, toxic substances or related materials, including, without
limitation, any substances defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials," or "toxic
substances" under any applicable federal or state laws or regulations.
"Hazardous Materials Regulations" means any regulations governing the use,
generation, handling, storage, treatment, disposal or release of hazardous
materials, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, the Resource Conservation and
Recovery Act and the Federal Water Pollution Control Act.
4.15 Access to Information Regarding Pandora's. Computer Masters
and the Computer Masters Stockholders acknowledge that they have been
delivered copies of what has been represented to be documentation containing
all material information respecting Pandora's and its present and contemplated
business operations, potential acquisitions, management and other factors,
which documents included Pandora's 10-SB Registration Statement, as amended,
previously filed with the Securities and Exchange Commission, and all other
reports filed with the Securities and Exchange Commission during the past
twelve months; that they have had a reasonable opportunity to review such
documentation and discuss it, to the extent desired, with their legal counsel,
directors and executive officers; that they have had, to the extent desired,
the opportunity to ask questions of and receive responses from the directors
and executive officers of Pandora's, and with the legal and accounting firms
of Pandora's, with respect to such documentation; and that to the extent
requested, all questions raised have been answered to their complete
satisfaction.
Section 5
Conditions Precedent to Obligations of Computer Masters and the Computer
Masters Stockholders
All obligations of Computer Masters and the Computer Masters
Stockholders under this Plan are subject, at their option, to the fulfillment,
before or at the Closing, of each of the following conditions:
5.1 Representations and Warranties True at Closing. The
representations and warranties of Pandora's contained in this Plan shall be
deemed to have been made again at and as of the Closing and shall then be true
in all material respects and shall survive the Closing.
5.2 Due Performance. Pandora's shall have performed and
complied with all of the terms and conditions required by this Plan to be
performed or complied with by it before the Closing.
5.3 Officers' Certificate. Computer Masters and the
Computer
Masters Stockholders shall have been furnished with a certificate signed by
the President of Pandora's, in such capacity, attached hereto as Exhibit G and
incorporated herein by reference, dated as of the Closing, certifying (1) that
all representations and warranties of Pandora's contained herein are true and
correct; and (2) that since the date of the financial statements (Exhibits B
and B-1 hereto), there has been no material adverse change in the financial
condition, business or properties of Pandora's, taken as a whole.
5.4 Opinion of Counsel of Pandora's. Computer Masters
and the
Computer Masters Stockholders shall have received an opinion of counsel for
Pandora's, dated as of the Closing, to the effect that (1) the representations
of Sections 3.1, 3.2 and 3.11 are correct; (2) except as specified in the
opinion, counsel knows of no inaccuracy in the representations in 3.5, 3.6 or
3.7; and (3) the shares of Pandora's to be issued to the Computer Masters
Stockholders under this Plan will, when so issued, be validly issued, fully
paid and non-assessable.
5.5 Assets and Liabilities of Pandora's. Unless
otherwise
agreed, Pandora's shall have no assets and no liabilities at Closing, and all
costs, expenses and fees incident to the Plan shall have been paid.
5.6 Resignation of Directors and Executive Officers and
Designation of New Directors and Executive Officers. The present directors
and executive officers of Pandora's shall resign, and shall have designated
nominees of Computer Masters as outlined in Section 1.4 hereof as directors
and executive officers of Pandora's to serve in their place and stead, until
the next respective annual meetings of the stockholders and Board of Directors
of Pandora's, and until their respective successors shall be elected and
qualified or until their respective prior resignations or terminations.
5.7 Name Change and Reverse Split of Pandora's,
Cancellation of
Pre-Plan Outstanding Shares and Issuance of Compensation Shares.
Simultaneous with the Closing of this Plan, (i) Pandora's shall adopt such
resolutions as necessary for the preparation and mailing to stockholders of an
Information Statement for the purpose of amending its Articles of
Incorporation to change the name of Pandora's to "Computer Masters, Inc." and
to effect a forward split of its outstanding common stock on a basis of three
for one, while retaining the current par value and authorized shares, with
appropriate adjustments in the additional paid in capital and stated capital
accounts of Pandora's; (ii) cause the shares of common stock as outlined in
Section 1.5 hereof to be canceled; and (iii) cause the shares of common stock
outlined in Sections 1.6 and 1.7 hereof to be issued as fully paid and non-
assessable shares.
Section 6
Conditions Precedent to Obligations of Pandora's
All obligations of Pandora's under this Plan are subject, at
Pandora's' option, to the fulfillment, before or at the Closing, of each of
the following conditions:
6.1 Representations and Warranties True at Closing. The
representations and warranties of Computer Masters and the Computer Masters
Stockholders contained in this Plan shall be deemed to have been made again at
and as of the Closing and shall then be true in all material respects and
shall survive the Closing.
6.2 Due Performance. Computer Masters and the Computer
Masters
Stockholders shall have performed and complied with all of the terms and
conditions required by this Plan to be performed or complied with by them
before the Closing.
6.3 Officers' Certificate. Pandora's shall have been
furnished
with a certificate signed by the President of Computer Masters, in such
capacity, attached hereto as Exhibit I and incorporated herein by reference,
dated as of the Closing, certifying (1) that all representations and
warranties of Computer Masters and the Computer Masters Stockholders contained
herein are true and correct; and (2) that since the date of the financial
statements (Exhibit E), there has been no material adverse change in the
financial condition, business or properties of Computer Masters, taken as a
whole.
6.4 Books and Records. The Computer Masters Stockholders
or the
Board of Directors of Computer Masters shall have caused Computer Masters to
make available all books and records of Computer Masters, including minute
books and stock transfer records; provided, however, only to the extent
requested in writing by Pandora's at Closing.
Section 7
Termination
Prior to Closing, this Plan may be terminated (1) by mutual
consent in writing; (2) by either the sole director of Pandora's or Computer
Masters and the Computer Masters Stockholders if there has been a material
misrepresentation or material breach of any warranty or covenant by the other
party; or (3) by either the sole director of Pandora's or Computer Masters and
the Computer Masters Stockholders if the Closing shall not have taken place,
unless adjourned to a later date by mutual consent in writing, by the date
fixed in Section 2.
Section 8
General Provisions
8.1 Further Assurances. At any time, and from time to
time,
after the Closing, each party will execute such additional instruments and
take such action as may be reasonably requested by the other party to confirm
or perfect title to any property transferred hereunder or otherwise to carry
out the intent and purposes of this Plan.
8.2 Waiver. Any failure on the part of any party hereto
to
comply with any of Pandora's obligations, agreements or conditions hereunder
may be waived in writing by the party to whom such compliance is owed.
8.3 Brokers. Each party represents to the other parties
hereunder that no broker or finder has acted for it in connection with this
Plan, and agrees to indemnify and hold harmless the other parties against any
fee, loss or expense arising out of claims by brokers or finders employed or
alleged to have been employed by he/she/it.
8.4 Notices. All notices and other communications
hereunder
shall be in writing and shall be deemed to have been given if delivered in
person or sent by prepaid first-class registered or certified mail, return
receipt requested, as follows:
If to Pandora's: 11944 FM 3005 #403
Galveston, Texas 77554
With a copy to: Leonard W. Burningham, Esq.
Suite 205 Hermes Building
455 East 500 South Street
Salt Lake City, Utah 84111
If to Computer Masters: 11711 South Portland
Oklahoma City, Oklahoma 73170
If to the Computer Masters
Stockholders: To the addresses listed on
Exhibit A
8.5 Entire Agreement. This Plan constitutes the entire
agreement between the parties and supersedes and cancels any other agreement,
representation, or communication, whether oral or written, including the
Letter of Intent dated November 8, 1998, between the parties hereto relating
to the transactions contemplated herein or the subject matter hereof.
8.6 Headings. The section and subsection headings in
this Plan
are inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Plan.
8.7 Governing Law. This Plan shall be governed by and
construed
and enforced in accordance with the laws of the State of Nevada, except to the
extent pre-empted by federal law, in which event (and to that extent only),
federal law shall govern.
8.8 Assignment. This Plan shall inure to the benefit of,
and be
binding upon, the parties hereto and their successors and assigns; provided
however, that any assignment by any party of Pandora's's rights under this
Plan without the prior written consent of the other parties shall be void.
8.9 Counterparts. This Plan may be executed
simultaneously in
two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
8.10 Default. In the event of any default hereunder, the
prevailing party in any action to enforce the terms and provisions hereof
shall be entitled to recover reasonable attorney's fees and related costs.
IN WITNESS WHEREOF, the parties have executed this Agreement and
Plan of Reorganization effective the day and year first above written.
PANDORA'S GOLDEN BOX
Date: 12/20/98 By /s/ Sam Bono, President
ELECTRONIC SERVICE CO., INC.
Date: 12/23/98 By /s/ Cynthia A. Cole, President
ELECTRONIC SERVICE CO., INC.
STOCKHOLDERS
Date: 12/23/98 /s/ Homer O. Cole, III
Date: 12/23/98 /s/ Cynthia A. Cole
Date: 12/23/98 /s/ Dr. Shirley F. Hartley
ELECTRONIC SERVICE CO., INC.
SUBSCRIBERS*
Date: 12/23/98 /s/ Sandra Sue Frost
Date: 12/23/98 /s/ Thomas R. Grippo, Jr.
Date: 12/23/98 /s/ Lasertech Computer Distributor
Date: 12/23/98 /s/ Carol A. Bryant
Date: 12/23/98 /s/ Anita S. Albright
Date: 12/23/98 /s/ Pramod Kumar Chetty
Date: 12/23/98 /s/ Lynne Raye Morin Davis
Date: 12/23/98 /s/ Clifford W. Fager
Date: 12/23/98 /s/ Thomas L. Haas
Date: 12/23/98 /s/ Hogin Family Limited Partnership #3
Date: 12/23/98 /s/ Ronald D. Jack
Date: 12/23/98 /s/ Joseph A. Jacoby
Date: 12/23/98 /s/ Edwina V. Johnson
Date: 12/23/98 /s/ Randy Allen McConnell
Date: 12/23/98 /s/ Marvin Edward Meek
Date: 12/23/98 /s/ Charles J. Moretz
Date: 12/23/98 /s/ Brenda F. Ochs
Date: 12/23/98 /s/ John J. & Susan O'Hare
Date: 12/23/98 /s/ Richard D. & Phyllis G. Parker
Date: 12/23/98 /s/ Paul H. Potter
Date: 12/23/98 /s/ Rosemary P. Powers
Date: 12/23/98 /s/ Joseph K. Powers
Date: 12/23/98 /s/ William C. Powers
Date: 12/23/98 /s/ Ravindar Pruthi
Date: 12/23/98 /s/ Duane B. Ramsey
Date: 12/23/98 /s/ Iraida Salinas
Date: 12/23/98 /s/ Ronald C. Savage, Jr.
Date: 12/23/98 /s/ Robert and Elaine Shortley
Date: 12/23/98 /s/ Marshall E. Smith
Date: 12/23/98 /s/ Harley R. Spencer
Date: 12/23/98 /s/ Tammy Thomas
Date: 12/23/98 /s/ Melton Ray Townley
Date: 12/23/98 /s/ Ordean Arnold
Date: 12/23/98 /s/ Veda Marie Powell
Date: 12/23/98 /s/ John R. Vanderzyl
Date: 12/23/98 /s/ W. Perry Bailey
Date: 12/23/98 /s/ Danny R. Hutchinson
Date: 12/23/98 /s/ John R. Patterson
Date: 12/23/98 /s/ Glen J. Schumeyer
Date: 12/23/98 /s/ Wayne J. Torre
Date: 12/23/98 /s/ James W. Utt
Date: 12/23/98 /s/ Michelle Ann Trush
Date: 12/23/98 /s/ Dufo, Ltd.
Date: 12/23/98 /s/ Robert Harvey
Date: 12/23/98 /s/ Richard Cullison
Date: 12/23/98 /s/ Henry Miller
Date: 1/28/99 /s/ S.F. Hartley, DPM
Date: 1/28/99 /s/ Laura M. Sikes
Date: 1/28/99 /s/ Kenrick J. Dennis
<PAGE>
EXHIBIT A
STOCKHOLDERS OF ELECTRONIC SERVICE, CO., INC.
Number of
Post-Split
Number Number of Post-Plan
of Shares Shares of Shares of
Owned of Pandora's to Pandora's to
Electronic be Received be received
Name and Address Service Co. in Exchange in Exchange
Cynthia A. Cole 4,650 2,263,000 6,789,000
11711 South Portland
Oklahoma City, Oklahoma 73170
Homer O. Cole, III 300 146,000 438,000
11711 South Portland
Oklahoma City, Oklahoma 73170
Dr. Shirley F. Hartley 50 24,333 73,000
2201 Juanita Lane
Deer Park, Texas 77536
SUBSCRIBERS OF ELECTRONIC SERVICES, CO., INC.
Number of
Number of Post-Split
Subscribed Shares Post-Plan Shares
of Pandora's of Pandora's
to be Received to be Received
Subscriber in Exchange (1) in Exchange (2)
(1) computed by dividing three into the dollar amount of the subscription
price opposite each subscribers' name.
(2) the number of shares equal to the dollar amount of the subscription
price at $1.00 per share.
Sandra Sue Frost 1,666 5,000
Thomas R. Grippo, Jr. 5,000 15,000
Lasertech Computer Distributor 33,333 100,000
Carol A. Bryant 333 1,000
Anita S. Albright 500 1,500
Pramod Kumar Chetty 1,666 5,000
Lynne Raye Morin Davis 166 500
Clifford W. Fager 2,000 6,000
Thomas L. Haas 166 500
Hogin Family Limited Partnership #3 3,000 9,000
Ronald D. Jack 333 1,000
Joseph A. Jacoby 2,058 6,175
Joseph A. Jacoby 1,666 5,000
Edwina V. Johnson 758 2,275
Randy Allen McConnell 1,666 5,000
Marvin Edward Meek 1,666 5,000
Charles J. Moretz 500 1,500
Brenda F. Ochs 133 400
John J. & Susan O'Hare 400 1,200
Richard D. & Phyllis G. Parker 3,000 9,000
Paul H. Potter 2,000 6,000
Rosemary P. Powers 2,000 6,000
Joseph K. Powers 1,866 5,600
William C. Powers 5,583 16,750
Ravindar Pruthi 1,666 5,000
Duane B. Ramsey 1,333 4,000
Iraida Salinas 166 500
Ronald C. Savage, Jr. 333 1,000
Robert and Elaine Shortley 666 2,000
Marshall E. Smith 1,333 4,000
Harley R. Spencer 1,666 5,000
Tammy Thomas 166 500
Melton Ray Townley 166 500
Ordean Arnold 833 2,500
Veda Marie Powell 166 500
John R. Vanderzyl 3,333 10,000
W. Perry Bailey 3,333 10,000
Danny R. Hutchinson 1,666 5,000
John R. Patterson 6,666 20,000
Glen J. Schumeyer 6,666 20,000
Wayne J. Torre 3,333 10,000
James W. Utt 3,333 10,000
Michelle Ann Trush 4,000 12,000
Dufo, Ltd. 6,666 20,000
Bob Harvey 3,333 10,000
Richard Cullison 333 1,000
Henry Miller 8,333 25,000
S.F. Hartley, DPM 8,333 25,000
Laura M. Sikes 6,666 20,000
Kenrick J. Dennis 1,666 5,000
147,633 442,900
<PAGE>
EXHIBIT B
PANDORA'S GOLDEN BOX
AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 1997 AND 1996
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Pandora's Golden Box
Galveston, Texas
We have audited the balance sheets of Pandora's Golden Box (a development
stage company) as of December 31, 1997 and the related statements of
operations, stockholders' equity and cash flows for the years ended December
31, 1997 and 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with 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 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 Pandora's Golden Box as of
December 31, 1997 and the results of its operations and its cash flows for the
years ended December 31, 1997 and 1996 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is a development stage company with no
established source of revenues. These conditions raise substantial doubt
about its ability to continue as a going concern. Management's plans
concerning these matters are also described in Note 2. The financial
statements do not include any adjustments that might result from the outcome
of this uncertainty.
/s/Jones, Jensen & Company
Jones, Jensen & Company
March 10, 1998
<PAGE>
PANDORA'S GOLDEN BOX
(A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 1997 and 1996
<PAGE>
<TABLE>
PANDORA'S GOLDEN BOX
(A Development Stage Company)
Balance Sheets
<CAPTION>
ASSETS
December 31,
1997 1996
<S> <C> <C>
CURRENT ASSETS
Cash $ 5,812 $ -
Total Current Assets 5,812 -
TOTAL ASSETS $ 5,812 $ -
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 957 $ -
Total Current Liabilities 957 -
STOCKHOLDERS' EQUITY
Common stock, 25,000,000 shares
authorized at $0.001 par value;
180,341 and 78,570 shares issued and
outstanding, respectively 180 79
Capital in excess of par value 273,719 263,820
Deficit accumulated during the
development stage (269,044) (263,899)
Total Stockholders' Equity 4,855 -
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 5,812 $ -
</TABLE>
<TABLE>
PANDORA'S GOLDEN BOX
(A Development Stage Company)
Statements of Operations
From
Inception on
August 4,
For the Years Ended 1987, through
December 31, December 31,
1997 1996 1995 1997
<S> <C> <C> <C> <C>
REVENUES $ - $ - $ - $ -
EXPENSES 5,145 - - 269,044
NET LOSS $ (5,145) $ - $ - $(269,044)
Net Loss Per Share $ (0.06) $ (0.00) $ (0.00)
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 95,240 78,570 78,570
</TABLE>
<TABLE>
PANDORA'S GOLDEN BOX
(A Development Stage Company)
Statements of Stockholders' Equity
<CAPTION>
Deficit
Accumulated
Capital in During the
Common Stock Excess of Development
Shares Amount Par Value Stage
<S> <C> <C> <C> <C>
Inception on August 4, 1987 - $ - $ - $ -
45,000 shares of common stock 45,000 45 7,455 -
Issued for cash at $0.17 per
share
29,570 shares of common stock 29,570 30 147,818 -
Issued for cash at $5.00 per
share
4,000 shares of common stock 4,000 4 108,457 -
Issued for equipment at $27.14
per share
Loss from Inception on
August 4, 1987 to
December 31, 1994 - - - (263,899)
Balance, December 31, 1994 78,570 79 263,820 (263,899)
Net loss for the year ended
December 31, 1995 - - - -
Balance, December 31, 1995 78,570 79 263,820 (263,899)
Net loss for the year ended
December 31, 1996 - - - -
Balance, December 31, 1996 78,570 79 263,820 (263,899)
100,000 shares of common
stock issued for cash at
$0.10 per share 100,000 100 9,900 -
1,771 shares of common stock
issued in conjunction with a
100-for-1 reverse stock split 1,771 1 (1) -
Net loss for the year ended
December 31, 1997 - - - (5,145)
Balance, December 31, 1997 180,341 $ 180 $273,719 $(269,044)
</TABLE>
<TABLE>
PANDORA'S GOLDEN BOX
(A Development Stage Company)
Statements of Cash Flows
<CAPTION>
From
Inception on
August 4,
For the Years Ended 1987, through
December 31, December 31,
1997 1996 1995 1997
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss $ (5,145) $ - $ - $(269,044)
Increase in accounts payable 957 - - 957
Net Cash Provided (Used)
by Operating Activities (4,188) - - (268,087)
CASH FLOWS FROM
INVESTING ACTIVITIES - - - -
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from issuance
of common stock 10,000 - - 273,899
Net Cash Provided (Used)
by Financing Activities 10,000 - - 273,899
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS 5,812 - - 5,812
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD - - - -
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 5,812 $ - $ - $ 5,812
SUPPLEMENTAL DISCLOSURES
OF CASH FLOW INFORMATION
Interest paid $ - $ - $ - $ -
Income taxes paid $ - $ - $ - $ -
NON-CASH FINANCING ACTIVITIES:
Common stock issued for
equipment $ - $ - $ - $ 108,461
</TABLE>
PANDORA'S GOLDEN BOX
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The financial statements presented are those of Pandora's Golden Box. The
Company was incorporated on August 4, 1987 in the State of Nevada for the
purpose of acquiring interests in various business opportunities.
The Company is currently inactive, and is seeking other business opportunities
through mergers and acquisitions.
b. Accounting Method
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a December 31 year end.
c. Net Loss Per Share
The computation of net loss per share of common stock is based on the weighted
average number of shares outstanding during the period.
d. Cash Equivalents
For purposes of the Statement of Cash Flows, the Company considers all highly
liquid investments with an original maturity of three months or less to be
cash equivalents.
e. Provision for Taxes
The Company accounts for income taxes using Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." Under Statement 109, the
liability method is used in accounting for income taxes.
As of December 31, 1997, the Company had net operating loss carryforwards of
approximately $5,000 that may be offset against future taxable income through
2012. The tax benefit of the net operating loss carryforwards is offset by a
valuation allowance of the same amount due to the uncertainty that the
carryforwards will be used before they expire.
f. Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company does not have significant cash or other
material assets, nor does it have an established source of revenues sufficient
to cover its operating costs and to allow it to continue as a going concern.
It is the intent of the Company to seek a merger with an existing, operating
company. Currently, the stockholders are committed to covering all operating
expenses and other costs until a merger has occurred.
NOTE 3 - STOCK SPLIT/CHANGE IN AUTHORIZED SHARES
On December 31, 1997, the Company reverse split its common shares on a one
share for one hundred shares basis. This reverse split of the Company's
common stock has been retroactively reflected in the financial statements. No
shareholder was reduced below 100 shares so 1,771 shares were issued.
<PAGE>
EXHIBIT B-1
PANDORA'S GOLDEN BOX.
UNAUDITED BALANCE SHEET AND STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
PANDORA'S GOLDEN BOX
(A Development Stage Company)
Balance Sheets
<CAPTION>
ASSETS
September 30, December 31,
1998 1997
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 2,564 $ 5,812
Total Current Assets 2,564 5,812
TOTAL ASSETS $ 2,564 $ 5,812
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 8,070 $ 957
Total Current Liabilities 8,070 957
TOTAL LIABILITIES 8,070 957
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock: 50,000,000 shares authorized
of $0.001 par value, 180,341 and 180,341
shares issued and outstanding, respectively 180 180
Additional paid-in capital 273,719 273,719
Deficit accumulated during the development stage (279,405) (269,044)
Total Stockholders' Equity (Deficit) (5,506) 4,855
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 2,564 $ 5,812
</TABLE>
<TABLE>
PANDORA'S GOLDEN BOX
(A Development Stage Company)
Statements of Operations
(Unaudited)
<CAPTION>
From
Inception on
July 26,
For the Three Months Ended For the Nine Months Ended 1983 Through
September 30, September 30, September 30,
1998 1997 1998 1997 1998
<S> <C> <C> <C> <C> <C>
REVENUES $ - $ - $ - $ - $ -
EXPENSES 1,047 - 10,361 - 279,405
NET LOSS $ (1,047) $ - $ (10,361) $ - $(279,405)
BASIC NET LOSS PER
SHARE OF COMMON
STOCK $ (0.01) $ - $ (0.06) $ -
BASIC WEIGHTED
OUTSTANDING SHARES 180,341 180,341 180,341 180,341
</TABLE>
<TABLE>
PANDORA'S GOLDEN BOX
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
<CAPTION>
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Stage
<S> <C> <C> <C> <C>
Inception on August 4, 1987 - $ - $ - $ -
45,000 shares of common stock
issued for cash at $0.17 per
share 45,000 45 7,455 -
29,570 shares of common stock
issued for cash at $5.00 per
share 29,570 30 147,818 -
4,000 shares of common stock
issued for equipment at $27.11
per share 4,000 4 108,547 -
Loss from inception on
August 4, 1987
to December 31, 1994 - - - (263,899)
Balance, December 31, 1994 78,570 79 263,820 (263,899)
Net loss for the year ended
December 31, 1995 - - - -
Balance, December 31, 1995 78,570 79 263,820 (263,899)
Net loss for the year ended
December 31, 1996 - - - -
Balance, December 31, 1996 78,570 79 263,820 (263,899)
100,000 shares of common stock
issued for cash at $0.10 per
share 100,000 100 9,900 -
1,711 shares of common stock
issued in conjunction with a
100-for-1 reverse stock split 1,771 1 (1) -
Net loss for the year ended
December 31, 1997 - - - (5,145)
Balance, December 31, 1997 180,341 180 273,719 (269,044)
Net loss for the nine months
ended September 30, 1998
(unaudited) - - - (10,361)
Balance, September 30, 1998
(unaudited) 180,341 $ 180 $ 273,719 $ (279,405)
</TABLE>
<TABLE>
PANDORA'S GOLDEN BOX
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<CAPTION>
From
Inception on
July 26,
For the Three Months Ended For the Nine Months Ended 1983 Through
September 30, September 30, September 30,
1998 1997 1998 1997 1998
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss $(1,047) $ - $(10,361) $ - $(279,405)
Increase in accounts
payable 203 - 7,113 - 8,070
Net Cash Provided
(Used) by Operating
Activities (844) - (3,248) - (271,335)
CASH FLOWS FROM
INVESTING ACTIVITIES - - - - -
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from issuance
of common stock - - - - 273,899
Net Cash Provided
(Used) by Financing
Activities - - - - 273,899
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS (844) - (3,248) - 2,564
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 3,408 - 5,812 - -
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 2,564 $ - $ 2,564 $ - $ 2,564
SUPPLEMENTAL DISCLOSURES
OF CASH FLOW INFORMATION
Interest paid $ - $ - $ - $ - $ -
Income taxes paid $ - $ - $ - $ - $ -
NON-CASH FINANCING ACTIVITIES:
Common stock issued for
equipment $ - $ - $ - $ - $ 108,461
</TABLE>
PANDORA'S GOLDEN BOX
(A Development Stage Company)
Notes to the Financial Statements
September 30, 1998 and December 31, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The financial statements presented are those of Pandora's Golden Box.
The Company was incorporated on August 4, 1987 in the State of Nevada for the
purpose of acquiring interests in various business opportunitities.
b. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting. The Company has elected a December 31 year end.
c. Net Loss Per Share
The computation of net loss per share of common stock is based on the
weighted average number of shares outstanding during the period.
d. Cash Equivalents
For purposes of the Statement of Cash Flows, the Company considers all
highly liquid investments with an original maturity of three months or less to
be cash equivalents.
e. Provision for Taxes
The Company accounts for income taxes using Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." Under Statement
109, the liability method is used in accounting for income taxes.
As of September 30, 1998, the Company had net operating loss
carryforwards of approximately $10,000 that may be offset against future
taxable income through 2013. The tax benefit of the net operating loss
carryforwards is offset by a valuation allowance of the same amount due to the
uncertainty that the carryforwards will be used before they expire.
f. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
g. Unaudited Financial Statements
The accompanying unaudited financial statements include all of the
adjustments which, in the opinion of management, are necessary for a fair
presentation. Such adjustments are of a normal, recurring nature.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. However, the Company does not have significant
cash or other material assets, nor does it have an established source of
revenues sufficient to cover its operating costs and to allow it to continue
as a going concern. It is the intent of the Company to seek a merger with an
existing, operating company. Currently, the stockholders are committed to
covering all operating expenses and other costs until a merger has occurred.
NOTE 3 - STOCK SPLIT/CHANGE IN AUTHORIZED SHARES
On December 31, 1997, the Company reverse split its common shares on a
one share for one hundred shares basis. This reverse split of the Company's
common stock has been retroactively reflected in the financial statements. No
shareholder was reduced below 100 shares so 1,771 shares were issued.
EXHIBIT C
None.
<PAGE>
EXHIBIT D
ELECTRONIC SERVICE, CO.
UNAUDITED BALANCE SHEET AND INCOME STATEMENT
FOR THE PERIOD ENDED DECEMBER 31, 1997
<TABLE>
YEAR ENDED DECEMBER 31, 1997
BALANCE SHEET
<CAPTION>
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash in Bank-Southwestern -64,144.48
Cash in Bank-Liberty -5,304.11
BancFirst 27,123.31
American State Bank 3,020.78
Accounts Receivable 60,334,68
Employee Advances -325.00
SWEEP 338.14
Bank One Savings 5,622.76
Inventory 212,000.00
TOTAL CURRENT ASSETS
238,666.08
FIXED ASSETS
Fixtures & Equipment 48,295.77
Transportation Equipment 24,631.75
Accumulated Depreciation -13,978.00
TOTAL FIXED ASSETS 58,949.52
OTHER ASSETS 0.00
TOTAL OTHER ASSETS 0.00
TOTAL ASSETS 297,615.60
LIABILITIES
CURRENT LIABILITIES
Accounts Payable 11,915.52
Notes Payable S/T 24,413.39
Federal Payroll Taxes 17,528.08
State Payroll Tax 3,571.11
Accrued Unemployment Tax 270.87
Sales Tax Payable 32,025.85
TOTAL CURRENT LIABILITIES
89,724.82
LONG TERM LIABILITIES
Note Payable Long Term 134,253.75
Due Officers -1,647.86
TOTAL LONG TERM LIABILITIES
132,605.89
TOTAL LIABILITIES
222,330.71
EQUITY
Retained Earnings -31,675.03
PROFIT 106,959.92
TOTAL EQUITY 75,284.89
TOTAL LIABILITY AND EQUITY
595,231.20
- Subsidiary Ledger -
NOTES PAYABLE S/T
EFCU S/T 3,421.46
American State Bank S/T 8,557.06
American State Bank 2 S/T 10,226.88
Union Acceptance S/T 2,207.99
TOTAL SHORT TERM
24,413.39
- Subsidiary Ledger -
NOTES PAYABLE LONG TERM
EFCU Long Term 826.01
American State Bank L/T 33,309.49
American State Bank 2 L/T 83,915.36
Union Acceptance L/T 16,202.89
TOTAL LONG TERM NOTES
134,253.75
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
OPERATING STATEMENT
Year End
Final Percent
<S> <C> <C>
OTHER INCOME
Interest Income 1,080.26
0.0
TOTAL OTHER INCOME 1,080.26 0.0
OTHER EXPENSE
OTHER EXPENSE ACCOUNT 50,000.00
1.1
TOTAL OTHER EXPENSES 50,000.00
1.1
NET PROFIT/(LOSS) 106,959.92
2.4
</TABLE>
<PAGE>
EXHIBIT D-1
ELECTRONIC SERVICE, CO.
UNAUDITED BALANCE SHEET
FOR THE PERIOD ENDED
MAY 31, 1998
<TABLE>
BALANCE SHEET
<CAPTION>
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash in Bank-Southwestern -212,281.22
Cash in Bank-Liberty -1,380.43
BancFirst -15,863.97
American State Bank 3,062.79
Accounts Receivable 66,156.42
Employee Advances 1,117.39
SWEEP 17.87
Bank One Savings 5,622.76
Peoples State Bank 1,788.35
Inventory 526,480.98
TOTAL CURRENT ASSETS
374,720.94
FIXED ASSETS
Leasehold Improvements 1,906.86
Fixtures & Equipment 48,295.77
Transportation Equipment 45,099.75
Accumulated Depreciation -14,941.71
TOTAL FIXED ASSETS 80,360.67
OTHER ASSETS 0.00
TOTAL OTHER ASSETS 0.00
TOTAL ASSETS 455,081.61
LIABILITIES
CURRENT LIABILITIES
Accounts Payable 6,225.07
Notes Payable S/T 28,691.84
Federal Payroll Taxes 18,161.47
State Payroll Tax 2,775.12
Accrued Unemployment Tax 667.66
Sales Tax Payable 45,174.85
TOTAL CURRENT LIABILITIES
101,696.01
LONG TERM LIABILITIES
Note Payable Long Term 140,640.45
Due Officers -1,846.74
TOTAL L.T. LIABILITIES
138,793.71
TOTAL LIABILITIES
240,489.72
EQUITY
Retained Earnings -31,675.03
Unadjusted Prior Year P/L 27,751.87
PROFIT 218,515.05
TOTAL EQUITY 214,591.89
TOTAL LIABILITY & EQUITY 455,081.61
- Subsidiary Ledger -
NOTES PAYABLE S/T
EFCU S/T 3,024.76
American State Bank S/T 8,557.06
American State Bank 2 S/T 10,226.88
Union Acceptance S/T 2,207.99
N/P GMAC 4,675.15
TOTAL SHORT TERM NOTES
28,691.84
- Subsidiary Ledger -
NOTES PAYABLE LONG TERM
American State Bank L/T 29,817.21
American State Bank 2 L/T 80,438.40
Union Acceptance L/T 15,278.31
N/P GMAC 15,106.53
TOTAL LONG TERM NOTES
140,640.45
</TABLE>
<PAGE>
EXHIBIT E
None.
<PAGE>
EXHIBIT F
Pandora's Golden Box
11944 FM 3005 #403
Galveston, Texas 77554
Re: Exchange of common stock and subscriptions to purchase
common stock of Electronic Service Co., Inc., an
Oklahoma corporation ("ESCI"), for shares of Pandora's
Golden Box, a Nevada corporation ("Pandora's" or the
"Company")
Dear Ladies and Gentlemen:
Pursuant to that certain Agreement and Plan of Reorganization (the
"Plan") between the undersigned, ESCI, the other equity interest holders of
ESCI and Pandora's, I acknowledge that I have approved this exchange; that I
am aware of all of the terms and conditions of the Plan; that I have received
and personally reviewed a copy of the Plan and any and all material documents
regarding the Company, including, but not limited to the 10-KSB Annual Report,
the 10-QSB Quarterly Reports and all other Reports of the Company filed with
the Securities and Exchange Commission during the past twelve months. I
represent and warrant that I have sufficient knowledge and experience to
understand the nature of the exchange and am fully capable of bearing the
economic risk of the loss of my entire cost basis.
I further understand that immediately prior to the completion of
the Plan, Pandora's had no assets and no liabilities, of any measurable value,
and that in actuality, the completion of the Plan and the exchange of my
shares of ESCI for shares of Pandora's results in a decrease in the actual
percentage of ownership that my shares of ESCI represented in ESCI prior to
the completion of the Plan.
I understand that you have and will make books and records of your
Company available to me for my inspection in connection with the contemplated
exchange of my shares, options or warrants, and that I have been encouraged to
review the information and ask any questions I may have concerning the
information of any director or officer of the Company or of the legal and
accounting firms for the Company. I understand that the accountant for the
Company is Jones, Jensen & Company, 50 South Main Street, Suite #1450, Salt
Lake City, Utah 84144, Telephone (801) 328-4408; and that legal counsel for
Pandora's is Leonard W. Burningham, Esq., 455 East 500 South, #205, Salt Lake
City, Utah 84111, Telephone (801) 363-7411. I further understand that, upon
the completion of the Plan, no accountant, attorney, employee or consultant
will have any claim of any kind against the Company for any event or
occurrence on or prior to the completion of the Plan.
I also understand that I must bear the economic risk of ownership
of any of the Pandora's shares for a long period of time, the minimum of which
will be one (1) year, as these shares are "unregistered" shares and may not be
sold unless any subsequent offer or sale is registered with the United States
Securities and Exchange Commission or otherwise exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Act"), or other
applicable laws, rules and regulations.
I intend that you rely on all of my representations made herein
and those in the personal questionnaire (if applicable) I provided to ESCI for
use by Pandora's as they are made to induce you to issue me the shares of
Pandora's under the Plan, and I further represent (of my personal knowledge or
by virtue of my reliance on one or more personal representatives), and agree
as follows, to-wit:
1. That the shares being acquired are being received for
investment purposes and not with a view toward further distribution;
2. That I have a full and complete understanding of the phrase
"for investment purposes and not with a view toward further distribution";
3. That I understand the meaning of "unregistered" shares and
know that they are not freely tradeable;
4. That any stock certificate issued by you to me in connection
with the shares being acquired shall be imprinted with a legend restricting
the sale, assignment, hypothecation or other disposition unless it can be made
in accordance with applicable laws, rules and regulations;
5. I agree that the stock transfer records of your Company
shall reflect that I have requested the Company not to effect any transfer of
any stock certificate representing any of the shares being acquired unless I
shall first have obtained an opinion of legal counsel to the effect that the
shares may be sold in accordance with applicable laws, rules and regulations,
and I understand that any opinion must be from legal counsel satisfactory to
the Company and, regardless of any opinion, I understand that the exemption
covered by any opinion must in fact be applicable to the shares;
6. That I shall not sell, offer to sell, transfer, assign,
hypothecate or make any other disposition of any interest in the shares,
options or warrants being acquired except as may be pursuant to any applicable
laws, rules and regulations;
7. I fully understand that my shares which are being exchanged
for shares of the Company are "risk capital," and I am fully capable of
bearing the economic risks attendant to this investment, without
qualification; and
8. I also understand that without approval of counsel for
Pandora's, all shares of Pandora's to be issued and delivered to me in
exchange for my shares of ESCI shall be represented by one certificate only
and which such certificate shall be imprinted with the following legend or a
reasonable facsimile thereof on the front and reverse sides thereof:
The shares, options or warrants of stock represented
by this certificate have not been registered under the
Securities Act of 1933, as amended, and may not be
sold or otherwise transferred unless compliance with
the registration provisions of such Act has been made
or unless availability of an exemption from such
registration provisions has been established, or
unless sold pursuant to Rule 144 under the Act.
Any request for more than one stock certificate must be
accompanied by a letter signed by the requesting stockholder setting forth all
relevant facts relating to the request. Pandora's will attempt to accommodate
any stockholders' request where Pandora's views the request is made for valid
business or personal reasons so long as in the sole discretion of Pandora's,
the granting of the request will not facilitate a "public" distribution of
unregistered shares of Pandora's.
You are requested and instructed to issue a stock certificate as
follows, to-wit:
Cynthia A. Cole "JTRS" 100%
973 SW 54th
Oklahoma City, OK 73109
Date: 12/22/98 /s/ Homer O. Cole III
Cynthia S. Cole "JTRS"
973 SW 54th
Oklahoma City, OK 73109
Date: 12/23/98 /s/ Cynthia A. Cole
S.F. Hartley, D.P.M.
2201 Juanita
Deer Park, TX 77536
Date: 12/22/98 /s/ S.F. Hartley, D.P.M.
<PAGE>
EXHIBIT G
CERTIFICATE OF OFFICER PURSUANT TO
AGREEMENT AND PLAN OF REORGANIZATION
The undersigned, the President of Pandora's Golden Box, a Nevada
corporation ("Pandora's"), represents and warrants the following as required
by the Agreement and Plan of Reorganization (the "Plan") between Pandora's and
Electronic Service Co., Inc., an Oklahoma corporation ("ESCI"), and the ESCI
Stockholders, to-wit:
1. That the undersigned is the President of Pandora's and has
been authorized and empowered by its Board of Directors to execute and deliver
this Certificate to ESCI and the ESCI Stockholders;
2. Based upon the personal knowledge, information and belief of
the undersigned and opinions of counsel for Pandora's regarding the Plan:
(i) All representations and warranties of Pandora's
contained within the Plan are true and correct;
(ii) Pandora's has complied with all terms and provisions
required of it pursuant to the Plan; and
(iii) There have been no material adverse changes in the
financial position of Pandora's as set forth in its
financial statements for the years ended December 31,
1997 and 1996, and September 30, 1998, except as set
forth in Exhibit E to the Plan.
PANDORA'S GOLDEN BOX
By /s/ Sam Bono, President
<PAGE>
EXHIBIT H
CERTIFICATE OF OFFICER PURSUANT TO
AGREEMENT AND PLAN OF REORGANIZATION
The undersigned, the President of Electronic Service Co., Inc., an
Oklahoma corporation ("ESCI"), represents and warrants the following as
required by the Agreement and Plan of Reorganization (the "Plan") between
ESCI, the ESCI Stockholders and Pandora's Golden Box, a Nevada corporation
("Pandora's"), to-wit:
1. That she is the President of ESCI and has been authorized
and empowered by its Board of Directors to execute and deliver this
Certificate to Pandora's;
2. Based on her personal knowledge, information, belief:
(i) All representations and warranties of ESCI contained
within the Plan are true and correct;
(ii) ESCI has complied with all terms and provisions
required of it pursuant to the Plan; and
(iii) There have been no material adverse changes in the
financial position of ESCI as set forth in its balance
sheets dated December 31, 1997 and May 31, 1998,
except as set forth in Exhibit C to the Plan.
ELECTRONIC SERVICE CO., INC.
By /s/ Cynthia A. Cole, President
/s/ Cynthia A. Cole, Personally
CERTIFICATE OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
PANDORA'S GOLDEN BOX
We, the undersigned, Homer O. Cole III, President, and Cynthia A.
Cole, Secretary, of Pandora's Golden Box, a Nevada corporation (the
"Corporation"), do hereby certify:
I
Pursuant to Section 78.390 of the Nevada Revised Statutes, the
Articles of Incorporation of the Corporation shall be amended as follows:
The name of the Corporation is "Cole Computer Corporation."
II
The foregoing amendment was adopted by Unanimous Consent of the
Board of Directors pursuant to Section 78.315 of the Nevada Revised Statutes
and by Consent of Majority Stockholders pursuant to Section 78.320 of the
Nevada Revised Statutes.
III
Pursuant to resolutions adopted by the Board of Directors and the
Majority Stockholders as set forth in Paragraph II above, the 3,313,633
outstanding shares of the Corporation were forward split on a basis of three
for 1, retaining the authorized shares at 50,000,000 and the par value at one
mill ($0.001) per share, with appropriate adjustments being made in the
additional paid in capital and stated capital accounts of the Corporation.
IV
The number of shares entitled to vote on the amendment was
3,313,633.
V
The number of shares voted in favor of the amendment was
2,409,000, with none opposing and none abstaining.
/s/ Homer O. Cole III, President
/s/ Cynthia A. Cole, Secretary
STATE OF UTAH )
) ss
COUNTY OF SALT LAKE )
On the 28th day of January, 1999, Homer O. Cole III, duly
acknowledged to me that he is the President of Pandora's Golden Box, and that
he is authorized to and did execute the above instrument.
/s/ Sheryl Ross
NOTARY PUBLIC
(Notary Seal)
STATE OF OKLAHOMA )
) ss
COUNTY OF OKLAHOMA )
On the 29th day of January, 1999, personally appeared before me, a
Notary Public, Cynthia A. Cole, who acknowledged that she is the Secretary of
Pandora's Golden Box, and that she is authorized to and did execute the above
instrument.
/s/ Kristin L. Wolf
NOTARY PUBLIC
(Notary Seal)
[Letterhead of Jones, Jensen & Company]
January 13, 1999
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
Re: Pandora's Golden Box, a Nevada corporation (the "Company")
Ladies and Gentlemen:
We were previously the independent accountants for the Company and
on March 10, 1998, 1998, we reported on the financial statements of the
Company for the years ended December 31, 1997 and 1996. On January 11, 1999,
we were replaced as the independent accountants of the Company following a
reorganization with Electronic Service Co., Inc., an Oklahoma corporation
doing business as Computer Masters.
We have read the Company's statements included under Item 4 of its
Form 8-K dated December 23, 1998, and we agree with such statements, except
our report dated March 10, 1998 was modified as to going concern.
Very truly yours,
Jones, Jensen & Company
