SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported): March 27, 2000
E*MACHINERY.NET, INC.
Delaware 033-26344 75-2254748
State of Incorporation Commission File No. (I.R.S. Employer
Identification No.)
1400 Medford Plaza
Route 70 & Hartford Road
Medford, New Jersey 08055
(Address of Principal Offices)
Telephone Number: (609) 953-7985
HARVARD FINANCIAL SERVICES CORP.
(Former Name)
This report on Form 8-K/A provides financial statements and pro forma
financial statements required pursuant to Item 7 of Form 8-K resulting from
the acquisition of e*machinery, inc. by e*machinery.net, inc. (the "Company"
or the "Registrant"). Information required pursuant to Item 2. Acquisition
or Disposition of Assets, is included in Form 8-K filed by the Registrant
on March 29, 2000.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
A. Financial Statements:
e*machinery, inc.
(A Development Stage Company)
PERIOD FROM SEPTEMBER 29, 1999 (INCEPTION) TO DECEMBER 31, 1999
CONTENTS
Page(s)
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS
Balance Sheet 2
Statement of Operations 3
Statement of Stockholders' Equity 4
Statement of Cash Flows 5
Notes to Financial Statements 6-9
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
e*machinery, inc.
1400 Medford Plaza
Medford, N.J. 08055
We have audited the accompanying balance sheet of e*machinery, inc.
(a development stage company) as of December 31, 1999, and the related
statements of operations, stockholders' equity and cash flows for the period
from September 29, 1999 (inception) to December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of e*machinery, inc. (a
development stage company) as of December 31, 1999, and the results of its
operations and its cash flows for the period from September 29, 1999
(inception) to December 31, 1999 in conformity with generally accepted
accounting principles.
BARATZ & ASSOCIATES, P.A.
May 2, 2000
e*machinery, inc.
(A Development Stage Company)
BALANCE SHEET
DECEMBER 31, 1999
Assets
______
Cash $ 200,861
---------
Total Current Assets 200,861
____________________
Software development cost 446,500
Deferred tax asset 13,785
---------
Total Assets $ 661,146
____________ ---------
Liabilities and
Stockholders' Equity
______________________
Current Liabilities
___________________
Accounts payable $ 521,500
---------
Stockholders' Equity
____________________
Common stock, $.0001 par value,
50,000,000 shares authorized;
8,800,000 shares issued and
outstanding at December 31, 1999 880
Additional paid-in capital 200,120
Deficit accumulated during the development stage ( 61,354)
---------
Total Stockholders' Equity 139,646
__________________________ ---------
Total Liabilities and
Stockholders' Equity $ 661,146
____________________________ =========
The accompanying notes are an integral part of these financial statements.
e*machinery, inc.
(A Development Stage Company)
STATEMENT OF OPERATIONS
PERIOD FROM SEPTEMBER 29, 1999 (INCEPTION) TO DECEMBER 31, 1999
Revenue $ -
Expenses
- --------
Software development 75,000
Bank charges 139
--------
Total Expenses 75,139
-------------- --------
Loss Before Income Taxes/(Benefit) (75,139)
- ----------------------------------
Income Taxes/(Benefit) (13,785)
- --------------------- --------
Net Loss $(61,354)
- ------- ========
Net Loss Per Common Share $( .007)
========
Weighted Common Shares Outstanding 8,648,936
=========
Pro Forma Net Loss Per Common Share (see note 5) $( .007)
========
The accompanying notes are an integral part of these financial statements.
e*machinery, inc.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
PERIOD FROM SEPTEMBER 29,1999 (INCEPTION) TO DECEMBER 31, 1999
Additional
Common Stock Paid-In
Shares Amount Capital Deficit Total
------ ------ ------- ------- -----
Stock issued for cash:
Stock issued to founders
at inception 8,600,000 $ 860 $ 140 $ $ 1,000
Stock issued in private placement
at December 9, 1999 200,000 20 199,980 200,000
Net Loss for the period (61,354) (61,354)
--------- ----- --------- -------- -------
Balance,
December 31, 1999 8,800,000 $ 880 $ 200,120 $(61,354) $ 139,646
========= ===== ========= ======== ========
The accompanying notes are an integral part of these financial statements.
<PAGE>
e*machinery, inc.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
PERIOD FROM SEPTEMBER 29, 1999 (INCEPTION) TO DECEMBER 31, 1999
Cash Flows From Operating Activities
- ------------------------------------
Net loss for the period $( 61,354)
Changes In Operating Assets And Liabilities:
Increase in deferred tax asset ( 13,785)
Increase in accounts payable 75,000
---------
Net Cash Used In Operating Activities ( 139)
- -------------------------------------
Cash Flows Provided By Financing Activities
- -------------------------------------------
Proceeds from issuance of stock 201,000
---------
Net Increase In Cash 200,861
- --------------------
Cash, Beginning -
- --------------- ---------
Cash, Ending $ 200,861
- ------------ =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
e*machinery, inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
PERIOD FROM SEPTEMBER 29, 1999 (INCEPTION) TO DECEMBER 31, 1999
1. Summary of Significant Accounting Policies
------------------------------------------
Nature of Operations
The company is in the process of developing an internet based distribution
business for heavy machinery used primarily in the construction and mining
industries. Software development of a web site began in 1999 and is ongoing.
The intention is to develop an internet portal which will provide interplay
between major manufacturers, distributors, and providers of supportive goods
and services to the heavy machinery industry. Anticipated sources of revenue
include fees related to access to the information maintained on the web site
along with sales to be generated from distribution of heavy machinery.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the period.
Actual results could differ from those estimates.
Software Development
The company accounts for software development costs related to development
of its web site in accordance with AICPA Statement of Position (SOP) 98-1 which
provides guidance on accounting for the costs of computer software developed or
obtained for internal use. SOP 98-1 requires computer software costs incurred
in the preliminary project stage to be expensed. The preliminary project stage
relates to the planning of the project through the formulation, evaluation, and
final selection of alternatives. SOP 98-1 requires capitalization of costs
incurred during the application development phase when the preliminary project
stage is completed, management commits to funding the project, and it is
probable that the project will be completed and the software will be used for
the function intended. The application development stage relates to the
design, coding, installation, and testing of the software. The company
incurred an expense of $ 75,000 during the preliminary project stage and
capitalized costs of $ 446,500 related to application development during
the period from September 29, 1999 (inception) to December 31, 1999.
Income Taxes
The Company accounts for income taxes under the provisions of SFAS No. 109,
Accounting For Income Taxes, which requires an asset and liability approach for
financial accounting and reporting of income taxes. Under this approach,
deferred income taxes are recognized for the estimated taxes ultimately payable
or recoverable based on enacted tax law. Changes in enacted tax law will be
reflected in the tax provision as they occur.
Net Loss Per Common Share
The net loss per common share computation has been made in accordance with
Statement of Financial Accounting Standards No. 128. Net loss per common share
is computed using the weighted average number of common shares outstanding
during the period. Diluted net loss per common share is not presented because
the dilutive effect would be to reduce net loss per common share.
2. Income Taxes/(Benefit)
----------------------
No income tax expense was incurred during the period from September 29,
1999 (inception) to December 31, 1999. An income tax benefit of
$ 13,785 was recognized for the period from a deferred tax asset described
below.
Deferred income taxes reflect the net tax effects of (a) temporary
differences between carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes, and (b) net
operating loss carryforwards.
The only temporary difference relates to the higher carrying amount for
tax purposes of $ 521,639 for capitalized software development cost compared to
$446,500 reported on the balance sheet which results in a temporary difference
of $ 75,139. This resulted in a deferred tax asset of $ 13,785.
The company did not have a net operating loss carryforward at December 31,
1999.
3. Supplemental Cash Flow Information
----------------------------------
Capitalized software development costs of $ 446,500 are included in
accounts payable at December 31, 1999 representing the only noncash investing
and financing transaction during the period.
No cash payments were made during the period for interest or taxes.
4. Subsequent Events
-----------------
At March 27, 2000, the Company was acquired by e*machinery.net, inc.
(renamed at February 2000; formerly Harvard Financial Services Corporation)
through an exchange of stock at a 1 for 1 ratio whereas e*machinery.net, inc.
issued stock to the shareholders of e*machinery, inc. in exchange for stock
representing 100% of the outstanding shares of e*machinery, inc.
e*machinery.net, inc. is currently traded on the Nasdaq Over-The-Counter
Bulletin Board under the stock symbol "EMAC". Pursuant to the acquisition
agreement, the directors and officers of e*machinery.net, inc. resigned in
favor of the directors and officers of e*machinery, inc.
Immediately after the transaction, the stock ownership of e*machinery.net,
inc. is as follows:
Shares Percent
------ -------
Original Shareholders 1,200,000 9
(including public owners)
Former shareholders of e*machinery, inc. 11,935,000 91
---------- -----
Total 13,135,000 100
========== =====
Because the former owners of e*machinery, inc. acquire control of
e*machinery.net, inc., the transaction would normally be considered a "reverse
acquisition" by e*machinery, inc. for accounting purposes. However,
e*machinery.net, inc. did not have any ongoing business operations at the date
of the transaction. Since e*machinery.net, inc. had no business, the
transaction is not being treated as a business combination. Instead, the
transaction is treated for accounting purposes as a recapitalization of
e*machinery, inc. and an issuance of stock by e*machinery, inc. (represented
by the outstanding shares of e*machinery.net, inc.) for the assets and
liabilities of e*machinery.net, inc.
Accounts payable of $521,500 due to Canterbury Information Technology,
Inc. was paid through the issuance of 278,333 shares of e*machinery.net, inc.
stock at March 27, 2000. Prior to March 27, 2000, Canterbury Information
Technology, Inc. was not a related party to e*machinery, inc.
5. Pro Forma Net Loss Per Common Share
---------------------------------
Pro forma net loss per common share is presented to give effect to the
March 27, 2000 acquisition of the company by e*machinery.net, inc., as set
forth in note 4, as if such transaction had occurred at December 31, 1999.
Had such transaction occurred at December 31, 1999, another 1,180,000 shares
of common stock would have been issued at December 31, 1999 represented by the
outstanding shares of e*machinery.net, inc. as described in note 4. This
would have resulted in a small increase in weighted common shares outstanding
from 8,648,936 (actual) to 8,661,489 on a pro forma basis. This small increase
in weighted common shares outstanding would have resulted in a fractional
reduction to net loss per common share. Therefore, net loss per common share
(actual) and pro forma net loss per common share are both stated as $.007 for
the period from September 29, 1999 (inception) to December 31, 1999.
<PAGE>
B. Pro forma Financial Statements
e*machinery.net, inc.
(Formerly Harvard Financial Services Corporation)
(A Development Stage Company)
PRO FORMA BALANCE SHEET (UNAUDITED)
DECEMBER 31, 1999
The Company's pro forma balance sheet gives effect to the March 27, 2000
acquisition of e*machinery, inc., as set forth in note (1), as if such
transaction had occurred at December 31, 1999. Because the former owners of
e*machinery, inc. acquire control of e*machinery.net, inc., the transaction
normally would be considered a "reverse acquisition" by e*machinery, inc. for
accounting purposes. However, e*machinery.net, inc. did not have any ongoing
business operations at March 27, 2000 or at any date in 1999. Therefore, the
transaction is not being treated as a business combination. Instead, the
transaction is treated for accounting purposes as a recapitalization of
e*machinery, inc. and an issuance of stock by e*machinery, inc. for the net
liabilities of e*machinery.net, inc.
The historical financial statements prior to March 27, 2000 are those of
e*machinery, inc. A pro forma statement of operations is not presented because
there would be no pro forma adjustment to the audited statement of operations
of e*machinery, inc. for the period from September 29, 1999 (inception) to
December 31, 1999. The pro forma balance sheet and accompanying notes 1 and 2
should be read in conjunction with a reading of the audited financial
statements of e*machinery, inc. as of December 31, 1999. All pro forma
adjustment note references pertain to note 2.
<TABLE>
<CAPTION>
Historical Pro Forma
e*machinery.net, inc. e*machinery, inc. Adjustments Pro Forma
(registrant)
-------------------- ---------------- ----------- ---------
</CAPTION>
<S> <C> <C> <C> <C>
Assets
------
Cash $ 4,362 $ 200,861 $(4,362)(b) $ 200,861
Receivables 11,466 - ( 11,466)(b) -
Prepaid expense 500 - ( 500)(b) -
Software development - 446,500 - 446,500
Property and equipment 6,959 - ( 6,959)(b) -
Deferred tax asset - 13,785 - 13,785
--------- --------- --------- ---------
Total Assets $ 23,287 $ 661,146 $( 23,287) $ 661,146
- ------------ ========= ========= ========= =========
</TABLE>
e*machinery.net, inc.
(Formerly Harvard Financial Services Corporation)
(A Development Stage Company)
PRO FORMA BALANCE SHEET (UNAUDITED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Historical Pro Forma
e*machinery.net, inc. e*machinery, inc. Adjustments Pro Forma (registrant)
-------------------- ---------------- ----------- ------
</CAPTION>
<S> <C> <C> <C> <C>
Liabilities and
Stockholders' Equity/(Deficit)
-------------------------------
Liabilities
- -----------
Accounts payable and
Accrued liabilities $ 148,952 $ 521,500 $(148,952)(a,b) $ 521,500
Unearned discounts 1,147 - ( 1,147)(b) -
Stockholder loans 273,000 - (123,000)(a) 150,000
Due to related party 121,840 - ( 71,840)(b) 50,000
--------- --------- ---------- ---------
Total Liabilities 544,939 521,500 (344,939) 721,500
--------- --------- ---------- ---------
Stockholders' Equity/(Deficit)
- -----------------------------
Common stock 116 880 2 998
Additional paid-in
capital 465,756 200,120 (665,874) 2
Accumulated Deficit (987,524) ( 61,354) 987,524 ( 61,354)
--------- --------- ---------- ---------
Total Stockholders'
Equity/(Deficit) (521,652) 139,646 321,652 (c) ( 60,354)
- ----------------- --------- --------- ---------- --------
Total Liabilities and
Stockholders' Equity/ $ 23,287 $ 661,146 $( 23,287) $661,146
(Deficit) ========= ========= ========= ========
- ---------------------
</TABLE>
e*machinery.net, inc.
(Formerly Harvard Financial Services Corporation)
(A Development Stage Company)
NOTES TO PRO FORMA BALANCE SHEET (UNAUDITED)
DECEMBER 31, 1999
1. Acquisition of e*machinery, inc.
-------------------------------
At March 27, 2000, the Company (renamed e.machinery.net, inc. at February
2000; formerly Harvard Financial Services Corporation) acquired e*machinery,
inc. through an exchange of stock at a 1 for 1 ratio whereas e*machinery.net,
inc. issued stock to the shareholders of e*machinery, inc. in exchange for
stock representing 100% of the outstanding shares of e*machinery, inc.
e*machinery.net, inc. is currently traded on the Nasdaq Over-The-Counter
Bulletin Board under the stock symbol "EMAC". Pursuant to the acquisition
agreement, the directors and officers of e*machinery.net, inc. resigned in
favor of the directors and officers of e*machinery, inc.
Immediately after the transaction, the stock ownership of e*machinery.net,
inc. is as follows:
Shares Percent
------ -------
Original Shareholders 1,200,000 9
(including public owners)
Former shareholders of e*machinery, inc. 11,935,000 91
---------- -----
Total 13,135,000 100
========== =====
Because the former owners of e*machinery, inc. acquire control of
e*machinery.net, inc., the transaction would normally be considered a "reverse
acquisition" by e*machinery, inc. for accounting purposes. However,
e*machinery.net, inc. did not have any ongoing business operations at the date
of the transaction. Since e*machinery.net, inc. had no business, the
transaction is not being treated as a business combination. Instead, the
transaction is treated for accounting purposes as a recapitalization of
e*machinery, inc. and an issuance of stock by e*machinery, inc. (represented
by the outstanding shares of e*machinery.net, inc.) for the assets and
liabilities of e*machinery.net, inc. e*machinery.net, inc. had liabilities
of $200,000 with no assets based upon historical book value at March 27, 2000.
2.) Pro Forma Adjustments
---------------------
Subsequent to the period ended December 31, 1999 and prior to March 27,
2000, e*machinery.net, inc. entered into the following agreements which result
in pro forma adjustments to the balance sheet at December 31, 1999.
a.) An agreement with stockholders who were also creditors to accept an
aggregate payment of $150,000 in full satisfaction of loans payable of $273,000
and accrued interest of $141,457.
b.) An agreement with Canterbury Information Technology, Inc. to accept
$50,000 along with 15,419 shares of the company's post-split common stock and
assignment of remaining cash, accounts receivable, prepaid expense, property &
equipment, accounts payable, accrued liabilities, and unearned discounts at
their recorded values in full satisfaction of liabilities due to Canterbury in
the amount of $121,840.
Both of the aforementioned agreements related to debt cancellation were
prerequisites to the March 27, 2000 acquisition agreement. The $200,000 of
aggregate liabilities that remained pursuant to the aforementioned agreements
were paid at March 29, 2000. Pursuant to the aforementioned agreements,
e*machinery.net, inc. had no assets immediately prior to the acquisition
transaction at March 27, 2000. The pro forma balance sheet reflects
adjustments related to the two aforementioned agreements because these
agreements were prerequisite to the March 27, 2000 acquisition of e*machinery,
inc.
c.) The accounting treatment of the acquisition of e*machinery, inc. at
March 27, 2000 is a recapitalization of e*machinery, inc. and an issuance of
stock for the $200,000 of net liabilities of e*machinery.net, inc. as explained
in note 1. The historical financial statements are those of e*machinery, inc.
This results in a pro forma adjustment to reduce stockholders' equity recorded
by e*machinery, inc. by $200,000 to record the issuance of stock for
liabilities.
The net effect of these pro forma adjustments is to reduce the amount of assets
of e*machinery.net, inc. to $0 and the amount of liabilities to $200,000
pursuant to the aforementioned debt cancellation agreements and to present a
pro forma balance sheet which reflects the acquisition transaction for
accounting purposes as a recapitalization of e*machinery, inc. and an issuance
of stock by e*machinery, inc. for $200,000 of net liabilities of
e*machinery.net, inc. as if the transactions occurred at December 31, 1999.
C. Exhibits
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
E*MACHINERY.NET, INC.
BY: Kevin J. McAndrew
Kevin J. McAndrew
Chief Financial Officer and Secretary
Dated: May 26, 2000
