FORM 8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
Date of Report (Date of earliest event reported): May 5, 1999
VIRTUAL ENTERPRISES INC.
(Exact name of registrant as specified in its charter.)
Nevada
(State of incorporation or organization)
33-23430-D
(Commission File Number)
84-1091271
(I.R.S. Employee Identification No.)
4695 MacArthur Court, Suite 530, Newport Beach, California
(Address of principal executive offices)
92660
(Zip Code)
Registrant's telephone number, including area code: (714) 475-6755
2 Park Plaza, Suite 470, Irvine, California 92614
(Former name or former address, if changed since last report)
[VEI\8K:MAY5MET]-3
<PAGE>
Item 1. Changes in Control of Registrant
N/A
Item 2. Acquisition or Disposition of Assets
On May 5, 1999, the Registrant entered into an Asset Purchase Agreement
and Plan Of Reorganization (the ?Agreement@) with Metroplex Web Inc., a Texas
corporation (AMetroplex@) whereby the Registrant acquired certain assets,
property, business interests and intellectual rights owned by Metroplex for
securities consisting of Ten Million (10,000,000) shares of the Registrant=s
$.01 par value common stock, causing Metroplex to have voting control and become
the principal stockholder of the Registrant.
Item 3. Bankruptcy or Receivership
N/A
Item 4. Changes in Registrant's Certifying Accountant
On May 5, 1999, the auditing practice of Kang, Yu & Jun, CPA's, resigned as
the Registrant's independent accountant. Kang, Yu & Jun previously issued an
unqualified report dated September 25, 1998, assuming the Company will continue
as going concern, which did not contain any adverse opinion or disclaimer of
opinion, or any qualification as to uncertainty, audit scope of accounting
principles. There were no disagreements with Kang, Yu & Jun on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure during the period from March 31, 1995 to the date of their
resignation.
Item 5. Other Events
N/A
Item 6. Change in Registrant's Directors
Item 7. Financial Statements and Exhibits
(a) Financial Statements
Set forth on pages 5 through 8 is pro forma financial information
required to be set forth in the Registrant's Current Report.
- Pro Forma Consolidated Balance Sheet (Unaudited) -
February 28, 1999.
- Pro Forma Consolidated Statement of Operations (Unaudited)
For the nine months ended February 28, 1999.
- Notes to Pro Forma Consolidated Financial Statements
(Unaudited).
Item 8. Change in Registrant's Fiscal Year
N/A
[VEI\8K:MAY5MET]-3
2
<PAGE>
SIGNATURE
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.
Virtual Enterprises, Inc.
(Registrant)
Dated: May 21, 1999 By: /s/ Fred G. Luke
------------------------------
Fred G. Luke,
Chairman of the Board
and President
[VEI\8K:MAY5MET]-3
3
<PAGE>
<TABLE>
<CAPTION>
VIRTUAL ENTERPRISES, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
As of February 28, 1999
(Unaudited)
Virtual Pro Forma Pro Forma
Enterprises, Inc. MetroplexWeb, Inc. Adjustments Totals
--------------------- --------------------- --------------------- ----------------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 1 $ 10,971 $ 0 $ 10,972
Total Current Assets $ 1 $ 10,971 $ 0 $ 10,972
---------------------- ---------------------- ---------------------- ---------------------
Property and Equipment, at Cost:
Computer Systems $ 0 $ 245,965 0 $ 245,965
Other equipment 0 29,798 0 29,798
Client Lists 0 1,000,000 0 1,000,000
---------------------- ---------------------- ---------------------- ---------------------
1,275,763 0 1,275,763
Accumulated Depreciation
& Amortization 0 0 0 0
---------------------- ---------------------- ---------------------- ---------------------
Total Property &
Equipment $ 0 $ 1,275,763 $ 0 $ 1,275,763
---------------------- --------------------- --------------------- ---------------------
Other Assets
Goodwill 0 0 1,071,202 1,071,202
---------------------- ---------------------- ---------------------- ---------------------
TOTAL ASSETS $ 1 $ 1,286,734 $ 1,071,202 $ 2,357,937
====================== ====================== ====================== =====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current:
Accounts payable - trade $ 45,382 $ 35,694 $ 0 $ 81,076
Due to affiliates 25,821 0 0 25,821
Accrued expenses 0 4,523 0 4,523
Notes Payable Current 0 285,000 0 285,000
---------------------- ---------------------- ---------------------- ---------------------
Total Current Liabilities $ 71,203 $ 325,217 $ 0 $ 396,420
---------------------= ---------------------= ---------------------- ---------------------
Notes Payable - Long Term 0 1,200,000 0 1,200,000
---------------------- ---------------------- ---------------------- ---------------------
Total Liabilities $ 71,203 $ 1,525,217 $ 0 $ 1,596,420
---------------------- ---------------------- ---------------------- ---------------------
Stockholders' Equity:
Preferred Stock $ 0 $ 0 $ 0 $ 0
Common stock 50,694 0 100,000 150,694
Additional paid-in capital 867,170 800 (17,864) 850,106
Accumulated deficit (964,221) (239,283) 964,221 (239,283)
Treasury Stock (24,845) 0 24,845 0
Total Stockholders' $ (71,202) $ (238,483) $ 1,071,202 $ 761,517
Equity ====================== ====================== ====================== =======================
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $ 1 $ 1,286,734 $ 1,071,202 $ 2,357,937
====================== ====================== ====================== =====================
</TABLE>
See accompanying notes to pro forma consolidated financial statements.
[VEI\8K:MAY5MET]-3
4
<PAGE>
<TABLE>
<CAPTION>
VIRTUAL ENTERPRISES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Nine Months Ended February 28, 1999
(Unaudited)
Virtual
Enterprises, MetroplexWeb, Pro Forma Pro Forma
Inc. Inc. Adjustments Totals
---------------------- --------------------- -------------------- -------------------------
<S> <C> <C> <C> <C>
Sales $ 0 $ 509,262 $ 0 $ 509,262
Operating Expenses
General & Administrative $ 89,463 $ 581,204 $ 0 $ 670,667
Depreciation of Client
Lists 200,000 200,000
Amortization of Goodwill 80,340 80,340
Total Operating
Expenses $ 89,463 $ 581,204 $ 280,340 $ 951,007
---------------------- --------------------- --------------------- -------------------------
Loss from
operations $ (89,463) $ (71,942) $ (280,340) $ (441,745)
====================== ===================== ===================== ==========================
Pro forma loss per share $ (.02) $ N/A $ N/A $ (.03)
====================== ===================== ===================== ==========================
Pro forma weighted
average common shares
outstanding 5,069,372 N/A 10,000,000 15,069,372
====================== ===================== ===================== ==========================
</TABLE>
See Accompanying Notes to Pro Forma Consolidated Financial Statements.
[VEI\8K:MAY5MET]-3
5
<PAGE>
VIRTUAL ENTERPRISES, INC.
Notes to Pro Forma Financial Statements
(Unaudited)
Note 1. Basis of Presentation
On May 5, 1999, Virtual Enterprises, Inc. ("VEI") acquired the assets and
assumed certain liabilities of MetroplexWeb, Inc., a Texas corporation ("MWI").
The unaudited pro forma consolidated balance sheet as of February 28, 1999 of
VEI. reflects the acquisition of MWI on a pro forma basis assuming the
acquisition occurred February 28, 1999. The unaudited pro forma consolidated
statement of operations for the nine months ended February 28, 1999 of VEI
reflects the operations of VEI, on a pro forma basis assuming the acquisition
occurred June 1, 1998.
These unaudited pro forma consolidated financial statements do not purport to be
indicative of the results that actually would have been obtained if the
companies and their operations had actually been combined at February 28, 1999
for balance sheet presentation or June 1, 1998 for operating purposes, and this
presentation is not intended to be a projection of future results or trends.
Note 2. Background and Overview of the Transaction
Prior to the acquisition, VEI was an effectively inactive publicly traded
Company with limited assets and accumulated operating losses. The market
capitalization of VEI was approximately $1,000,000 based upon the average of the
bid and ask price for a period of approximately 90 days prior to the
acquisition.
MWI is a Internet Web Page designer and servicer with a client base of over
6,000 companies. MWI also has a proprietary product called "City Malls" where
internet users can search out sources for products and services in there local
geographic areas. Currently MWI has six City Malls operating with another two
opening within 30 days.
VEI purchased MWI through the issuance of 10,000,000 shares of common stock with
a value estimated to be $3,000,000. Such value was based upon the current
average of the bid and ask of approximately $0.20 and an assumption that such
average would increase approximately 50% upon consummation of the transaction.
However, since the sellers of MWI would be acquiring a controlling interest in
VEI, generally accepted accounting principles ("GAAP") require that the
transaction be accounted for as a reverse merger. Accordingly, the historical
balance sheet of MWI will be merged with the mark to market balance sheet of VEI
resulting in a goodwill balance of $1,071,203. If VEI were the acquiring entity,
the basis in the client lists and the City Malls would be presented at their
fair value of approximately $4.2 million with no goodwill.
Note 3. Adjustments to Proforma Financial Statements
Acquisition of MWI
As previously discussed, since the sellers of MWI will control VEI, GAAP
requires this transaction be accounted for as a reverse merger. The balance
adjustment is to record goodwill in the amount of the estimated marketed
capitalization of VEI for the period preceding the merger plus the negative
stockholders' equity. The adjustment records goodwill in the amount of
$1,071,202 offset by elimination of the additional paid in capital, accumulated
deficit and treasury stock of VEI with the net difference recorded as an
adjustment of additional paid in capital.
[VEI\8K:MAY5MET]-3
6
<PAGE>
Statement of Operations
As MWI had limited operations prior to March 1, 1998, the attached pro forma
Consolidated Statement of Operations for the nine months ended February 28, 1999
has been presented in order to provide more meaningful disclosure to the reader.
Management intends to amend this Form 8-K as soon as practical after the Form
10-KSB for the year ended May 31, 1999 is filed with the Securities and Exchange
Commission.
Depreciation and Amortization
The client list is being amortized over its estimated useful life of 5 years on
the straight line basis. Goodwill is being amortized on the straight line basis
over a period of 10 years. The pro forma Consolidated Statement of Operations
reflects an expense for amortization for the entire nine month period.
Loss Per Share
Pro forma loss per share is completed using the weighted average number of
shares of the Company's common stock issued and outstanding, assuming that the
shares issued in the transaction were outstanding for the entire period. Common
stock equivalents were not considered in the loss per share calculation as the
effect would have been anti-dilutive.
[VEI\8K:MAY5MET]-3
7
