===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange
Act of 1934.
June 12, 2000
Date of Report (Date of earliest event reported)
CCC GLOBALCOM CORPORATION
(Name of Small Business Issuer as specified in its charter)
Nevada 36-36939936
------------ ---------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
SEC File Number 33-30365-C
----------------------------
16350 Park Ten Place, Suite 241, Houston, TX 77084
----------------------------------------------------
(Address of principal executive offices)
Registrant's telephone no., including area code: (281) 599-7878
Emerald Capital Investments, Inc.
536 North 100 West, Heber City, UT 84032
-------------------------------------------------
(Former name or former address, if changed since last report)
1
<PAGE>
THIS AMENDED FORM 8-K IS FILED TO INCLUDE THE FINANCIAL STATEMENTS REQUIRED BY
ITEM 7.
Item 1. Change in Control of Registrant
As a result of the Merger and related actions described in Item 2 below,
the Company's shareholders have elected two new directors and two of the
previous directors resigned. The officers and directors of the Company are
currently as follows:
Ziad A. Hakim CEO/President/Director
Paul Licata Vice President/Secretary/Director
Douglas P. Morris Director
As a result of the Merger and related actions described in Item 2 below,
there are currently 31,693,435 issued and outstanding. The following table sets
forth information regarding shares of our Common Stock beneficially owned as of
June 14, 2000 by: (1) each of our officers and directors; (ii) all officers and
directors as a group; and (iii) each person known by CCC Globalcom Corporation
to beneficially own five percent or more of the outstanding shares of its common
stock.
Name of Amount and Nature Percent of
Beneficial Owner Beneficial Ownership(1) Class
-------------------------------------------------------------------------------
Ziad A. Hakim (2) 15,500,000 49%
Paul Licata (3) 2,000,000 6%
Douglas P. Morris (4) 3,683,813 12%
CCC Communications, LTD.(5) 3,000,000 9%
AMT Trading (5) 7,000,000 22%
(1) Excludes shares which may be issued upon the exercise of options owned by
the above-referenced persons which are described elsewhere in this
Memorandum.
(2) Mr. Hakim is the owner of 5,500,000 of these shares. A total of 3,000,000
of these shares will be owned by CCC Communications, LTD., and 7,000,000 of
these shares will be owned by AMT Trading, both of which companies are
affiliates of Mr. Hakim.
(3) A total of 1,000,000 of these shares are owned by Paul Licata, P.C. and
1,000,000 of these shares are owned by 1999 DC Trust, both of which are
affiliates of Mr. Licata.
(4) These shares are owned by Mr. Morris or his affiliates as follows: (i)
Douglas P. Morris - 1,033,813 shares; (ii) Douglas P. Morris - IRA -
300,000 shares; (iii) Hyacinth Resources, Inc. - 1,350,000 shares; and (iv)
H&M Capital Investment, Inc. - 3,400,000 Shares.
(5) These shares are also included in the shares attributed to Mr. Hakim (see
footnote 2).
2
<PAGE>
Item 2. Acquisitions or Disposition of Assets
On May 3, 2000, Emerald Capital Investments, Inc. (the "Company") entered
into an Agreement and Plan of Merger (the "Agreement") to acquire CCC Globalcom,
Inc.("CCC Texas") in a merger transaction. A copy of the Agreement was filed
with the Securities and Exchange Commission as an attachment to a Form 8-K filed
May 22, 2000.
On June 9, 1999, a Special Meeting of the Company's Stockholders was held
to consider and vote upon the following proposals:
1. A proposal to effect a 1-for-20 reverse split of the issued and
outstanding shares of the Company's common stock.
2. A proposal to reincorporate the Company in the State of Nevada and in
connection therewith to change the Company's name to CCC Globalcom
Corporation.
3. A proposal to approve an Agreement and Plan of Merger (the "Merger
Agreement") between the Company and CCC Texas and the acquisition
("Merger") of CCC Texas by the Company.
4. Subject to stockholder approval of Proposal 3, to consider and vote upon
the election of directors.
All of the proposals were approved by the shareholders of the Company. On
June 12, 2000, the following action was taken:
o Pursuant to the terms of a reincorporation merger agreement,
Articles of Merger were filed in the State of Nevada and a
Certificate of Ownership and Merger was filed in the State of
Delaware and in connection therewith:
o the Company changed its domicile from the State Delaware to
the State of Nevada;
o the Company changed its name from Emerald Capital Investments,
Inc. to CCC Globalcom Corporation; and
o the Company effected a 1-for-20 reverse stock split.
o the Company (now named CCC Globalcom Corporation) acquired CCC Texas
in a reverse triangular merger whereby Emerald Merger Sub, Inc., a
wholly-owned subsidiary of the Company, merged into CCC Texas and
all of the shares of common stock of CCC Texas were converted into
30,250,000 shares of the Company's common stock (calculated after
the 1-for-20 reverse stock split);
3
<PAGE>
o the officers and directors of the Company prior to the Merger,
resigned and the following persons were elected as directors of the
Company: Ziad A. Hakim, Paul Licata and Douglas P. Morris.
The Company files reports with the Securities Exchange Commission under
Section 15(d) of the Securities Exchange Act of 1934, as amended and as a
result, is not subject to the Proxy Rules. Therefore, no Proxy Statement was
filed in connection with the transaction. However, attached hereto is a copy of
the Proxy Statement distributed to the Company's stockholders.
Item 6. Resignation of Registrant's Directors
In connection with the Merger described it Item 2 above, Frank Ross and
Henry Obartuch, resigned as officers and directors of the Company effective June
12, 2000. The resignations were pursuant to the terms of the Agreement and not
as the result of any disagreement.
Item 7. Financial Statements and Exhibits
Financial Statements. The following financial statements are filed herewith:
Proforma Financial Statement................................................6
Emerald Capital Investments, Inc. - 12/31/99 Audited Financial Statements..11
CCC Globalcom, Inc. - 12/31/99 Audited Financial Statements................24
Ciera Network Systems, Inc. - 12/31/99 Audited Financial Statements........32
Exhibits.
No. Description
--------------------------------------------------------------------
3.1 Articles of Incorporation - State of Nevada*
3.2 Bylaws - CCC Globalcom Corporation*
99.1 Proxy Statement*
99.2 Press Release*
*Previously filed
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Dated: August 8, 2000 CCC GLOBALCOM CORPORATION.
By /s/ Ziad A. Hakim
-------------------------------------------
Ziad A. Hakim, CEO/President
5
<PAGE>
CCC Globalcom Corporation
Pro Forma Combined Financial Statements
(Unaudited)
The following unaudited pro forma combined balance sheet at June 30, 2000 and
statements of operations for the six months ended June 30, 2000 and the year
ended December 31, 1999 are presented as though the entities had been together
since January 1, 1999 and aggregate the unaudited balance sheet and statement of
operations at June 30, 2000 of CCC Globalcom Corporation (formerly Emerald
Capital Investments, Inc.) (Emerald) as of June 30, 2000, and the unaudited
balance sheet and statement of operations of CCC Globalcom, Inc. (CCC) as of
June 30, 2000, giving effect to a transaction which was completed on June 9,
2000, wherein Emerald acquired CCC (the "Acquisition"). The business combination
is treated as a recapitalization of Emerald with Emerald issuing common stock in
exchange for all of the issued and outstanding shares of CCC. The following pro
forma balance sheet and statements of operations used management assumptions as
described in the notes and the historical financial information available at
June 30, 2000. The financial statements of Emerald and CCC included in the
December 31, 1999 pro forma operations statement were audited as of December 31,
1999. The format and amounts used in these pro forma financial statements are
based on those financial statements.
The pro forma combined financial statements are not necessarily indicative of
the combined balance sheet and statements of operations which might have existed
for the period indicated or the results of operations as they may be now or in
the future.
6
<PAGE>
CCC GLOBALCOM, INC.
Pro Forma Combined Balance Sheet
June 30, 2000 (Unaudited)
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<TABLE>
<CAPTION>
Emerald
CCC Capital Pro Forma
Globalcom, Investments, Increase Pro Forma
Inc. Inc. (Decrease) Combined
------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash $ 1,100,582 $ 796 $ - $1,101,378
Accounts receivable 430,057 - - 430,057
Inventory 375 - - 375
Prepaid expense 14,250 - - 14,250
Total current assets 1,545,264 796 - 1,546,060
Property, plant and equipment - net 94,522 - - 94,522
Intangible asset - net 465,510 - - 465,510
Total assets $ 2,105,296 $ 796 $ - $2,106,092
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 287,325 $ - $ - $287,325
Accrued liabilities 39,132 - - 39,132
Notes payable 308,650 - - 308,650
Total current liabilities 635,107 - - 635,107
Long-term note payable 8,025 - - 8,025
Total liabilities 643,132 - - 643,132
Stockholders' equity:
Common stock, 100,000,000 shares
authorized, 31,693,435 shares
issued and outstanding, $.001
par value 2,485 6,869 22,339 31,693
Paid-in capital 2,471,514 2,633,596 (2,662,008) 2,443,102
Accumulated deficit (1,011,835) (2,639,669) 2,639,669 (1,011,835)
----------------------------------------------------
Total stockholders' equity 1,462,164 796 - 1,462,960
Total liabilities and
stockholders' equity $2,105,296 $ 796 $ - $2,106,092
</TABLE>
<PAGE>
CCC GLOBALCOM, INC.
Pro Forma Combined Statement of Operations
For the Six Months Ended June 30, 2000 (Unaudited)
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<TABLE>
<CAPTION>
Emerald
CCC Capital Pro Forma
Globalcom, Investments, Increase Pro Forma
Inc. Inc. (Decrease) Combined
------------------------------------------------
<S> <C> <C> <C> <C>
Operating revenues $ 625,636 $ - $ - $625,636
Cost of goods sold 440,848 - - 440,848
------------------------------------------------
Gross margin 184,788 - - 184,788
General and administrative expense (461,960) (5,847) (467,807)
------------------------------------------------
Operating income (loss) (277,172) (5,847) (283,019)
Other income (expense):
Interest expense (4,409) - - (4,409)
Interest income (2,575) - - (2,575)
Other expense 1,878 - - 1,878
------------------------------------------------
Loss before income taxes (282,278) (5,847) (288,125)
Income tax benefit - - - -
------------------------------------------------
Net loss $(282,278) (5,847) $ - $(288,125)
------------------------------------------------
Net loss per common share - basic and diluted $ (.01)
--------------
Weighted average shares outstanding 30,892,335
--------------
</TABLE>
The accompanying notes are an integral part of the pro forma combined
financial statements
7
<PAGE>
CCC GLOBALCOM, INC.
Pro Forma Combined Statement of Operations
For the Year Ended December 31, 1999 (Unaudited)
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Emerald
CCC Capital Pro Forma
Globalcom, Investments, Increase Pro Forma
Inc. Inc. (Decrease) Combined
------------------------------------------------
<S> <C> <C> <C> <C>
Operating revenues $ 51,301 $ - $ - $ 51,301
Cost of goods sold 66,564 - - 66,564
------------------------------------------------
Gross margin (15,263) - - 15,263
General and administrative expense (662,502) (6,735) - (669,237)
------------------------------------------------
Operating loss (677,765) (6,735) (684,500)
Other income (expense):
Other income 32,006 - - 32,006
Other expense (91,092) - - (91,092)
Interest income 7,293 - - 7,293
------------------------------------------------
Loss before income taxes (729,558) (6,735) (736,293)
Income tax benefit - - - -
------------------------------------------------
Net loss $(729,558) (6,735) $ - $(736,293)
------------------------------------------------
Net loss per common share - basic and diluted $ (.02)
--------------
Weighted average shares outstanding 30,592,687
--------------
</TABLE>
The accompanying notes are an integral part of the pro forma combined
financial statements
8
<PAGE>
Notes to Pro Forma Combined Financial Statements
(1) On June 9, 2000, CCC Globalcom Corporation (formerly Emerald Capital
Investments, Inc.) (Emerald) merged in CCC Globalcom, Inc. (CCC) (a
nonoperating entity which had previously merged in Ciera Network Systems,
Inc. (Ciera) (the Operating Company) (the Acquiree) (collectively the
Company). The terms of the agreement provide that the stockholders of the
Acquiree received 30,250,000 shares (post reverse split) of Emerald common
stock.
The pro forma combined financial statements at June 30, 2000 and December
31, 1999 assume the acquisition of Emerald by the Acquiree, occurred
January 1, 1999. Because the shares issued in the acquisition of the
Acquiree represent control of the total shares of Emerald's common stock
issued and outstanding immediately following the acquisition, the Acquiree
is deemed for financial reporting purposes to have acquired Emerald in a
reverse acquisition. The business combination has been accounted for as a
recapitalization of Emerald giving effect to the acquisition of 100% of
the outstanding common shares of the Acquiree. The surviving entity
reflects the assets and liabilities of Emerald and the Acquiree at their
historical book value and the historical operations of the Company is that
of the Acquiree's. The issued common stock is that of Emerald and the
accumulated deficit is that of the Acquiree.
(2) During the period ended June 30, 2000 the Company had a reverse stock
split of 1 share for 20 shares. All earnings (loss) per share reflect the
reverse stock split as if it had taken place January 1, 1999.
(3) The unaudited financial statements include the accounts of CCC Globalcom,
Inc. and subsidiaries and include all adjustments (consisting of normal
recurring items) which are, in the opinion of management, necessary to
present fairly the financial position as of June 30, 2000 and the results
of operations and changes in financial position for the six months then
ended. The results of operations for the six months ended June 30, 2000
are not necessarily indicative of the results to be expected for the
entire year.
(4) Loss per common share is based on the weighted average number of shares
outstanding during the period.
9
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and
Stockholders of Emerald Capital Investments, Inc.
We have audited the accompanying balance sheet of Emerald Capital Investments,
Inc., (a development stage company) as of December 31, 1999 and the related
statements of operations, stockholders' equity (deficit), and cash flows for the
years ended December 31, 1999 and 1998 and the cumulative amounts since December
29, 1995 (commencement of development stage). 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 audits 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 Emerald Capital Investments,
Inc. (a development stage company) as of December 31, 1999, and the results of
its operations and its cash flows for the years ended December 31, 1999 and 1998
and the cumulative amounts since December 29, 1995 (commencement of development
stage), 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 has suffered recurring losses that raise
substantial doubt about its ability to continue as a going concern. Management's
plans regarding those matters also are described in Note 2. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
TANNER + CO.
Salt Lake City, Utah
March 24, 2000
10
<PAGE>
EMERALD CAPITAL INVESTMENTS, INC.
(A Development Stage Company)
Balance Sheet
December 31, 1999
------------------------------------------------------------------------------
Assets
Current assets -
cash $ 6,643
------------
Total assets $ 6,643
============
------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current liabilities $ -
------------
Commitments -
Stockholders' equity:
Common stock - $.001 par value. 100,000,000 shares
authorized; 6,868,698 shares issued and outstanding 6,869
Additional paid-in capital 2,633,596
Accumulated deficit (2,633,822)
------------
Total stockholders' equity 6,643
------------
Total liabilities and stockholders' equity $ 6,643
============
------------------------------------------------------------------------------
See accompanying notes to financial statements.
11
<PAGE>
EMERALD CAPITAL INVESTMENTS, INC.
(A Development Stage Company)
Statement of Operations
Years Ended December 31, and Cumulative Amounts
------------------------------------------------------------------------
Cumulative
1999 1998 Amounts
------------------------------------
Revenue $ - $ - $ -
Selling, general and administrative
expense 6,735 19,895 50,692
------------------------------------
Loss from continuing operations (6,735) (19,895) (50,692)
------------------------------------
Loss before income taxes (6,735) (19,895) 50,692
Income tax expense - - -
------------------------------------
Net loss $ (6,735) $(19,895) $ (50,692)
====================================
Net loss per share $ (.00) $ (.00) $ (.00)
====================================
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See accompanying notes to financial statements.
12
<PAGE>
EMERALD CAPITAL INVESTMENTS, INC.
(A Development Stage Company)
Statement of Stockholders' Equity (Deficit)
Period December 29, 1995 Through December 31, 1999
------------------------------------------------------------------------------
Common Stock Additional
--------------------- Paid-In Accumulated
Shares Amount Capital Deficit Total
-----------------------------------------------------
Balance January 1, 1996 5,808,698 $ 5,809 $2,600,656 $(2,583,130) $ 23,335
Net loss - - - (10,597) (10,597)
-----------------------------------------------------
Balance,
December 31, 1996 5,808,698 5,809 2,600,656 (2,593,727) 12,738
Net loss - - - (13,465) (13,465)
-----------------------------------------------------
Balance,
December 31, 1997 5,808,698 5,809 2,600,656 (2,607,192) (727)
Common stock issued for
services 800,000 800 7,200 - 8,000
Net loss - - - (19,895) (19,895)
-----------------------------------------------------
Balance,
December 31, 1998 6,608,698 6,609 2,607,856 (2,627,087) (12,622)
Common stock issued
for cash 260,000 260 25,740 - 26,000
Net loss - - - (6,735) (6,735)
-----------------------------------------------------
Balance,
December 31, 1999 6,868,698 $ 6,869 $2,633,596 $(2,633,822) $ 6,643
=======================================================
------------------------------------------------------------------------------
See accompanying notes to financial statements.
13
<PAGE>
EMERALD CAPITAL INVESTMENTS, INC.
(A Development Stage Company)
Statement of Cash Flows
Years Ended December 31, 1999 and 1998 and Cumulative Amounts
------------------------------------------------------------------------------
Cumulative
1999 1998 Amounts
---------------------------------
Cash flows from operating activities:
Net loss $ (6,735) $(19,895) $(50,692)
Adjustment to reconcile net loss to
net cash used in operating activities:
Common stock issued for services - 8,000 8,000
Decrease in accounts receivable - - 30,000
Increase (decrease) in accounts payable (13,108) 5,108 (6,665)
---------------------------------
Net cash used in
operating activities (19,843) (6,787) (19,357)
---------------------------------
Cash flows from investing activities - - -
---------------------------------
Cash flows from financing activities-
proceeds from issuance of common stock 26,000 - 26,000
---------------------------------
Net cash provided by
financing activities 26,000 - 26,000
---------------------------------
Net increase in cash 6,157 (6,787) 6,643
Cash, beginning of period 486 7,273 -
---------------------------------
Cash, end of period $ 6,643 $ 486 $ 6,643
=================================
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See accompanying notes to financial statements.
14
<PAGE>
EMERALD CAPITAL INVESTMENTS, INC.
(A Development Stage Company)
Statement of Cash Flows
Continued
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Supplemental disclosures of cash flow information:
Years Ended
December
------------------------ Cumulative
1999 1998 Amounts
------------------------------------
Cash paid during the year for:
Interest $ - $ - $ -
------------------------------------
Income taxes $ - $ - $ -
------------------------------------
------------------------------------------------------------------------------
See accompanying notes to financial statements.
15
<PAGE>
EMERALD CAPITAL INVESTMENTS, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999 and 1998
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1. Organization and Summary of Significant Accounting Policies
Organization
Emerald Capital Investments, Inc. (the Company) was organized under the laws of
the state of Delaware on March 22, 1989. On January 10, 1994, the Company
entered into an agreement whereby the Company issued 1,862,427 shares of its
common stock for all of the issued and outstanding shares of Waste Reduction
Technologies, Inc., (WRTI) and its wholly owned subsidiary Continental Tire
Recycles, Inc. (CTR).
Effective December 29, 1995 the Company sold its common stock of WRTI. The
Company ultimately received $30,000 cash from the sale of the WRTI stock. The
purchaser was a company in which a shareholder and former officer of Emerald
Capital Investments, Inc., is a part owner.
Effective with the sale of WRTI on December 29, 1995, the Company became a
development stage company. The Company is considered a development stage Company
as defined in SFAS No. 7. The Company has, at the present, time, not paid any
dividends and any dividends that may be paid in the future will depend upon the
financial requirements of the Company and other relevant factors.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to be
cash equivalents.
Loss Per Common Share
Loss per share of common stock is calculated based on the weighted average
number of shares outstanding during each year and the period December 31, 1995
through December 31, 1999. Stock options were not included in the calculation of
loss per share as the effect would be antidilutive.
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16
<PAGE>
EMERALD CAPITAL INVESTMENTS, INC.
(A Development Stage Company)
Notes to Financial Statements
Continued
------------------------------------------------------------------------------
1. Organization and Summary of Significant Accounting Policies (Continued)
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 reporting period.
Actual results could differ from those estimates.
2. Going Concern
The accompanying financial statements of Emerald Capital Investments, Inc., have
been prepared on a going-concern basis, which contemplates profitable operations
and the satisfaction of liabilities in the normal course of business. There are
uncertainties that raise substantial doubt about the ability of the Company to
continue as a going concern. As shown in the statement of operations, the
Company reported losses for the years ended December 31, 1999 and 1998, and has
net cash outflows from operations.
The Company's continuation as a going concern is dependent upon its ability to
develop sufficient cash flows for operations to meet its obligations. Management
is seeking viable business opportunities and is contemplating potential
strategies for financing the Company's operations. The financial statements do
not include any adjustments that might result from the outcome of these
uncertainties.
------------------------------------------------------------------------------
17
<PAGE>
EMERALD CAPITAL INVESTMENTS, INC.
(A Development Stage Company)
Notes to Financial Statements
(Continued)
------------------------------------------------------------------------------
3. Income Taxes
The income taxes computed at statutory rates differ from the amount in the
financial statement as follows:
Years Ended
December 31,
------------------- Cumulative
1999 1998 Amounts
-----------------------------
Benefit for income taxes
at statutory rates $ 1,000 $ 3,000 $ 8,000
Change in valuation allowance (1,000) (3,000) (8,000)
-----------------------------
$ - $ - $ -
=============================
The Company has a deferred tax asset, which consists of the net operating loss
carryforwards of approximately $895,000. A valuation allowance has been
established for the total amount of the deferred tax asset, due to the
uncertainty of realization.
As of December 31, 1999, the Company had a net operating loss carryforward of
approximately $2,634,000 available to offset future income for income tax
reporting purposes. This amount begins to expire in 2004. The ability of the
Company to utilize the net operating loss is dependent upon the tax laws in
effect at the time such loss carryforwards can be utilized. The Tax Report Act
of 1986 significantly limits the annual amount that can be utilized of these
carryforwards as a result of a change in ownership.
4. Stock Options
Options
As of December 31, 1999 and 1998, the Company had 1,100,000 options outstanding
to purchase shares of the Company's common stock. The options are exercisable at
amounts of $.25 anytime prior to the expiration date. The options expire
beginning at various dates through December 31, 2002.
Changes in stock options were as follows:
------------------------------------------------------------------------------
18
<PAGE>
EMERALD CAPITAL INVESTMENTS, INC.
(A Development Stage Company)
Notes to Financial Statements
Continued
------------------------------------------------------------------------------
Price Range
Shares Per Share
-------------------------
1999
Granted - $ -
Expired or canceled - $ -
Exercised - $ -
Total outstanding at December 1,100,000 $ .25
Total exercisable at December 1,100,000 $ .25
1998
Granted 1,100,000 $ .25
Expired or canceled 1,530,900 $ .25
Exercised - $ -
Total outstanding at December 1,100,000 $ .25
Total exercisable at December 1,100,000 $ .25
5. Earnings Per Share
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 (SFAS 128) "Earnings Per Share," which
requires companies to present basic earnings per share (EPS) and diluted
earnings per share, instead of the primary and fully diluted EPS as previously
required. The new standard also requires additional informational disclosures,
and makes certain modifications to the previously applicable EPS calculations
defined in Accounting Principles Board No. 15. The new standard is required to
be adopted by all public companies for reporting periods ending after December
15, 1997, and requires restatement of EPS for all prior periods reported. During
the year ended December 31, 1998, the Company adopted this standard.
5. Earnings Per Share
Financial accounting standards requires companies to present basic earnings per
share (EPS) and diluted earnings per share along with additional informational
disclosures. Information related to earnings per share is as follows:
------------------------------------------------------------------------------
19
<PAGE>
EMERALD CAPITAL INVESTMENTS, INC.
(A Development Stage Company)
Notes to Financial Statements
Continued
------------------------------------------------------------------------------
Cumulative
Year Ended Amounts
December 31, Since
1999 1998 Inception
-----------------------------------
Basic EPS
Net income available to
common stockholders $ (6,735) $ (19,895) $ (50,692)
-----------------------------------
Weighted average
common shares 6,853,739 6,582,000 6,714,610
-----------------------------------
Net income per share $ (.00) $(.00) (.01)
-----------------------------------
Diluted EPS:
Net income available to
common stockholders $ (6,735) $ (19,895) $ (50,692)
-----------------------------------
Weighted average
common shares 6,853,739 6,582,000 6,714,610
-----------------------------------
Net income per share $ (.00) $ (.00) (.01)
-----------------------------------
------------------------------------------------------------------------------
20
<PAGE>
EMERALD CAPITAL INVESTMENTS, INC.
(A Development Stage Company)
Notes to Financial Statements
Continued
------------------------------------------------------------------------------
6. Stock Based
Compensation
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS
123) which established financial accounting and reporting standards for
stock-based compensation. The new standard defines a fair value method of
accounting for an employee stock option or similar equity instrument. This
statement gives entities the choice between adopting the fair value method or
continuing to use the intrinsic value method under Accounting Principles Board
(APB) Opinion No. 25 with footnote disclosures of the pro forma effects if the
fair value method had been adopted. The Corporation has opted for the latter
approach. Accordingly, no compensation expense has been recognized for the stock
option plans. Had compensation expense for the Corporation's stock option plans
been determined based on the fair value at the grant date for awards in 1999 and
1998 consistent with the provisions of SFAS No. 123, the Corporation's results
of operations would have been reduced to the pro forma amounts indicated below:
Years Ended
December 31,
------------------------
1999 1998
------------------------
Net loss - as reported $ (6,735) $ (19,895)
Net loss - pro forma $ (6,735) $ (19,895)
Loss per share - as reported $ (.00) $ (.00)
Loss per share - pro forma $ (.00) $ (.00)
------------------------
The fair value of each option grant is estimated in the date of grant using the
Black-Scholes option pricing model with the following assumptions:
December 31,
------------------------
1999 1998
------------------------
Expected dividend yield $ -0- $ -0-
Expected stock price volatility .01% .01%
Risk-free interest rate 4.50% 4.50%
Expected life of options 4 years 4 years
------------------------
------------------------------------------------------------------------------
21
<PAGE>
The weighted average fair value of options granted during 1999 and
1998 are $.00 and $.00, respectively.
6. Stock Based Compensation Continued
The following table summarizes information about stock options outstanding at
December 31, 1999:
Options Outstanding Options Exercisable
-------------------------------------------------------------------------------
Weighted
Average
Number Remaining Weighted Number Weighted
Range of Outstanding Contractual Average Exercisable Average
Exercise at Life Exercise at Exercise
Prices 12/31/99 (Years) Price 12/31/99 Price
-------------------------------------------------------------------------------
$ .25 1,100,000 4.0 .25 1,100,000 $ .25
-------------------------------------------------------------------------------
22
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of CCC Globalcom, Inc.
We have audited the accompanying balance sheet of CCC Globalcom, 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 August 9,
1999 (date of inception) through December 31, 1999. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CCC Globalcom, Inc. (a
development stage company) as of December 31, 1999, and the results of its
operations, stockholders' equity and cash flows for the period from August 9
(date of inception) through December 31, 1999, in conformity with generally
accepted accounting principles.
TANNER + CO.
Salt Lake City, Utah
September 1, 2000
23
<PAGE>
CCC GLOBALCOM, INC.
(A Development Stage Company)
Balance Sheet
December 31, 1999
------------------------------------------------------------------------------
Assets
Total assets $ -
------------
------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Total liabilities -
------------
Stockholders' equity:
Common stock, $0.0001 par value, 50,000,000 shares
authorized; 17,500,000 shares issued and outstanding 1,750
Deficit accumulated during the development stage (1,750)
------------
Total stockholders' equity -
------------
$ -
============
------------------------------------------------------------------------------
See accompanying notes to financial statements. 24
<PAGE>
CCC GLOBALCOM, INC.
(A Development Stage Company)
Statement of Operations
August 9, 1999 (Date of Inception) Through December 31,
------------------------------------------------------------------------------
Cumulative
1999 Amounts
------------------------
Revenues $ - $ -
General and administrative expenses 1,750 1,750
------------------------
Loss before income taxes (1,750) (1,750)
Income taxes - -
------------------------
Net loss $ (1,750) $ (1,750)
========================
Net loss per share - basic and diluted $ (.00) $ (.00)
========================
Weighted average shares -
basic and diluted 17,500,000 17,500,000
========================
------------------------------------------------------------------------------
See accompanying notes to financial statements.
25
<PAGE>
CCC GLOBALCOM, INC.
(A Development Stage Company)
Statement of Stockholders' Equity
August 9, 1999 (Date of Inception) Through December 31, 1999
------------------------------------------------------------------------------
Common Stock
--------------------- Accumulated
Shares Amount Deficit Total
--------------------------------------------
Balance,
August 9, 1999 - $ - $ - $ -
Issuance of common stock for:
Cash 15,500,000 1,550 - 1,550
Services 2,000,000 200 - 200
Net loss - - (1,750) (1,750)
--------------------------------------------
Balance,
December 31, 1999 17,500,000 $ 1,750 $ (1,750) $ -
--------------------------------------------
------------------------------------------------------------------------------
See accompanying notes to financial statements.
26
<PAGE>
CCC GLOBALCOM, INC.
(A Development Stage Company)
Statement of Cash Flows
Period From August 9, 1999 (Date of Inception) Through December 31,
------------------------------------------------------------------------------
Cumulative
1999 Amounts
----------------------
Cash flows from operating activities:
Net loss $ (1,750) $ (1,750)
Adjustments to reconcile net loss to
net cash used in operating activities:
Common stock issued for services 200 200
----------------------
Net cash used in
operating activities (1,550) (1,550)
----------------------
Cash flows from financing activities-
proceeds from issuance of common stock 1,550 1,550
----------------------
Net cash provided by
financing activities 1,550 1,550
----------------------
Net increase in cash - -
Cash, beginning of period - -
----------------------
Cash, end of period $ - $ -
======================
Supplemental disclosure of cash flow information:
Cumulative
1999 Amounts
---------------------
Cash paid during the year for:
Interest $ - $ -
======================
Income taxes $ - $ -
======================
------------------------------------------------------------------------------
See accompanying notes to financial statements.
27
<PAGE>
CCC GLOBALCOM, INC.
(A Development Stage Company)
Notes to Financial Statements
Continued
------------------------------------------------------------------------------
Notes to Financial Statements
December 31, 1999
------------------------------------------------------------------------------
1. Organization and Summary of Significant Accounting Policies Organization
CCC Globalcom, Inc. (a Texas corporation) (the Company) was organized on August
9, 1999, to offer communication services. As of December 31, 1999, the Company
had not commenced planned principal operations and is considered a development
stage company as defined in SFAS No. 7. The Company has, at the present time,
not paid any dividends and any dividends that may be paid in the future will
depend upon the financial requirements of the Company and other relevant
factors.
Cash and Cash Equivalents
For purposes of the statement of cash flows, cash includes all cash and
investments with original maturities to the Company of three months or less.
Income Taxes
Income taxes are determined in accordance with Statement of Financial Accounting
Standards ("SFAS") 109, which requires recognition of deferred income tax
liabilities and assets for the expected future tax consequences of events that
have been included in the financial statements or tax returns. Under this
method, deferred income tax liabilities and assets are determined based on the
difference between financial statement and tax bases of assets and liabilities
using estimated tax rates in effect for the year in which the differences are
expected to reverse. SFAS 109 also provides for the recognition of deferred tax
assets only if it is more likely than not that the asset will be realized in
future years.
Loss Per Common and Common Equivalent Share The computation of basic earnings
per common share is computed using the weighted average number of shares
outstanding during the period.
The computation of diluted earnings per common share is based on the weighted
average number of shares outstanding during the period plus common stock
equivalents which would arise from the exercise of stock options and warrants
outstanding using the treasury stock method and the average market price per
share during the period. Common stock equivalents are not included in the
diluted earnings per share calculation when their effect is antidilutive.
------------------------------------------------------------------------------
28
<PAGE>
CCC GLOBALCOM, INC.
(A Development Stage Company)
Notes to Financial Statements
Continued
------------------------------------------------------------------------------
1. Organization and Summary of Significant Accounting Policies Continued
Use of Estimates in the Preparation of Financial Statements 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.
Concentration of Credit Risk
The Company maintains its cash in bank deposit accounts which, at times, may
exceed federally insured limits. The Company has not experienced any losses in
such account and believes it is not exposed to any significant credit risk on
cash and cash equivalents.
2. Income Taxes
The difference between income taxes at statutory rates for the period from
August 9, 1999 through December 31, 1999 and the amount presented in the
financial statements is the increase in the tax valuation allowance, which
offsets the income tax benefit of the net operating loss. A valuation allowance
has been recorded to offset the deferred tax asset due to the uncertainty
surrounding its realization.
Deferred tax assets consist of the following:
December 31,
------------
1999
------------
Operating loss carryforwards $ 500
Valuation allowance (500)
------------
$ -
============
The Company has a net operating loss carryforward, which begins to expire in
2019. The amount of net operating loss carryforward that can be used in any one
year will be limited by the applicable tax laws which are in effect at the time
such carryforward can be utilized and any significant changes in the ownership
of the Company.
------------------------------------------------------------------------------
29
<PAGE>
CCC GLOBALCOM, INC.
(A Development Stage Company)
Notes to Financial Statements
Continued
------------------------------------------------------------------------------
3. Subsequent Events
In May, 2000, CCC Globalcom, Inc. (CCC) acquired Ciera Network Systems (Ciera),
Inc., in exchange for 3,700,000 shares of CCC common stock. Ciera, an operating
company, is a non-facilities based reseller of voice and data
telecommunications.
In June, 2000, CCC entered into a reverse merger, whereby it became the acquired
entity (the Acquiree). The terms of the agreement provide that the stockholders
of the Acquiree received 30,250,000 shares (post reverse split) of Emerald
Capital Investments, Inc. (Emerald) common stock. Emerald is a publicly held
corporation. Immediately after, the reverse merger, Emerald changed its name to
CCC Globalcom Corporation (Parent).
Because the shares issued in the acquisition of the Acquiree represent control
of the total shares of Emerald's common stock issued and outstanding immediately
following the acquisition, the Acquiree is deemed for financial reporting
purposes to have acquired Emerald in a reverse acquisition. The business
combination has been accounted for as a recapitalization of Emerald giving
effect to the acquisition of 100% of the outstanding common shares of the
Acquiree. The surviving entity reflects the assets and liabilities of Emerald
and the Acquiree at their historical book value and the historical operations of
the Company is that of the Acquiree's. The issued common stock is that of
Emerald and the accumulated deficit is that of the Acquiree.
Also in June, 2000, subsequent to the reverse merger, Parent purchased the
assets of Virtual Network & Co., which primarily consisted of a customer list.
------------------------------------------------------------------------------
30
<PAGE>
Member American Institute of
Certified Public Accountants
Division for CPA Firms
DAVID HAMBLIN
Certified Public Accountant
17625 El Camino Real, Suite 390
Houston, Texas 77058
To The Board of Directors
Ciera Network Systems, Inc.
Houston, Texas
I have audited to accompanying statement of balance sheet of Ciera Network
Systems, Inc. as of December 31, 1999, and the related statements of income and
accumulated deficit, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Ciera Network Systems, Inc. at
December 31, 1999, and the results of its operation and it cash flows for the
year then ended in conformity with generally accepted accounting principles.
/s/ David E. Hamblin
DAVID E. HAMBLIN
Certified Public Accountant
May 20, 2000
------------------------------------------------------------------------------
31
<PAGE>
CIERA NETWORK SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET
December 31, 1999
------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 135,076
Accounts receivable 22,182
Inventory 375
Prepaid expense 2,358
---------------
TOTAL CURRENT ASSETS $ 159,991
FIXED ASSETS (net) 80,508
DEPOSITS 5,000
--------------
TOTAL ASSETS $ 245,499
==============
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable trade $ 54,293
Payroll bonus accrual 62,000
Customer deposits 1,625
Notes payable 26,389
--------------
TOTAL CURRENT LIABILITIES 144,307
EQUITY
Common stock 677
Additional paid-in-capital 828,323
Accumulated deficit (727,808)
--------------------
101,192
--------------------
TOTAL LIABILITIES AND EQUITY $ 245,499
====================
See accompanying notes and auditors report
------------------------------------------------------------------------------
32
<PAGE>
CIERA NETWORK SYSTEMS, INC.
CONSOLIDATED STATEMENT OF INCOME AND ACCUMULATED DEFICIT
Year ended December 31, 1999
------------------------------------------------------------------------------
SALES $ 51,301
COST OF SALES 66,564
-----------------
GROSS MARGIN (15,263)
RENT INCOME 32,006
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 660,752
-----------------
(644,009)
OTHER INCOME 7,293
OTHER EXPENSE (91,092)
NET LOSS (727,808)
RETAINED EARNINGS December 31, 1998 -
-----------------
ACCUMULATED DEFICIT December 31, 1999 $ (727,808)
=================
See accompanying notes and auditors report.
------------------------------------------------------------------------------
33
<PAGE>
CIERA NETWORK SYSTEMS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended December 31, 1999
------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss (727,808)
Adjustment to reconcile Net Loss to Cash
Provided by Operating Activities
Depreciation and amortization 17,188
(Increase) decrease in:
Accounts receivable (22,182)
Inventory (375)
Prepaid expense (2,358)
Increase (decrease) in:
Accounts payable trade 54,293
Payroll bonus accrual 62,000
Customer deposits 1,625
------------------
NET CASH (USED IN)
OPERATING ACTIVITIES (617,617)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (97,696)
Deposits (5,000)
NET CASH (USED IN)
INVESTING ACTIVITIES (102,696)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from equipment financing note 8,500
Proceeds from Shareholder loans 20,000
Proceeds from insurance premium financing 3,527
Repayment of equipment financing note (4,250)
Repayment of insurance premium financing (1,388)
Sale of Common Stock 829,000
-------------------
NET CASH PROVIDED BY
FINANCING ACTIVITI 855,389
NET INCREASE IN CASH 135,076
BEGINNING BALANCE CASH AND CASH EQUIVALENTS -
-------------------
ENDING BALANCE CASH AND CASH EQUIVALENTS $ 135,076
===================
See accompanying notes and auditor's report.
------------------------------------------------------------------------------
34
<PAGE>
CIERA NETWORK SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
Year ended December 31, 1999
------------------------------------------------------------------------------
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING PROCEDURES
Nature of Operations
Ciera Network Systems, Inc. and subsidiary (The Company) is in the business of
providing local telephone service, long distance telephone service, Internet
Service, paging service and other enhanced communications services to small
commercial and sophisticated residential customers.
Basis of Consolidation
Ciera Network Systems, Inc. was incorporated in the State of Texas on
December 30, 1998. During 1999 Ciera Business Center, Inc. was created as a
subsidiary corporation for the purpose of managing executive suites. The
accompanying consolidated financial statements include the parent company and
subsidiary, after elimination of intercompany accounts and transactions.
Cash and cash equivalents
For purposes of the statement of cash flows, the Company considers as cash
equivalents all highly liquid investments with a maturity at the date of
purchase of three months or less.
Inventories
The Company does maintain paging equipment and cellular equipment for resale and
lease to customers. Inventories, determined on first-in, first-out basis, are
stated at the lower of cost or market.
Property and equipment
Property and equipment are carried at cost. Depreciation of property and
equipment is provided using the straight-line methods for financial reporting
purposes at rates based on the following useful lives:
Years
---------
Furniture and fixtures 3-5
Office equipment 3-5
Computer equipment 3-5
Leasehold improvements 2
For federal income tax purposes, depreciation is computed using the accelerated
cost recovery system and the modified accelerated cost recovery system.
Expenditures for major renewals and betterment's that extend the useful lives of
------------------------------------------------------------------------------
35
<PAGE>
CIERA NETWORK SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
Year ended December 31, 1999
------------------------------------------------------------------------------
property and equipment are capitalized. Expenditures for maintenance and
repairs are charged to expense as they occur.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles require management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from these estimates.
Income Taxes
The Company accounts for income taxes using the asset and liability method as
required by Statement of Financial Accounting Standards No. 109. Deferred income
taxes are provided on temporary differences between book and tax income, arising
primarily from the use of differing methods of depreciation, and providing an
allowance for doubtful accounts, returns and discounts. An allowance is provided
when it is more likely than not that the Company the benefits of a deferred tax
asset will not be realize.
NOTE B - CASH AND CASH EQUIVALENTS
Cash and cash equivalents as December 31, 1999 include:
Cash in bank 12,477
Cash in money market accounts 105,561
Restricted cash 17,000
38
---------
135,076
---------
A supplier has required a $ 17,000 letter of credit that was issued by a bank on
June 24, 1999. The letter of credit expires June 30, 2000. Collateral for the
letter of credit is a certificate of deposit in the amount of $ 17,000.
Interest and dividends earned on the money market account totaled $ 4,763 for
the year ended December 31, 1999.
------------------------------------------------------------------------------
36
<PAGE>
CIERA NETWORK SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
Year ended December 31, 1999
------------------------------------------------------------------------------
NOTE C - ACCOUNTS RECEIVABLE
Accounts receivable at December 31, 1999 include:
Trade receivables - communications 19,003
Trade receivables - property management 1,167
Employee travel advance 3,500
--------
23,670
Allowance for doubtful accounts (1,488)
--------
22,182
NOTE D - PROPERTY AND EQUIPMENT
Property and equipment are summarized by major classifications at December 31,
1999 as follows:
Furniture and equipment 25,814 3,495
Office equipment 3,411 697
Computer equipment 54,587 9,081
Paging equipment 4,276 712
Leasehold improvements 9,608 3,203
-------- --------
97,696 17,188
======== ========
Depreciation expense for the year ended December 31, 1999 totaled $17,188.
NOTE E - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities at December 31, 1999 consist of:
Trade accounts payable 27,341
Accrued payroll taxes 11,585
Accrued franchise taxes 907
Accrued communications payable to
regulatory agencies 5,835
Accrued interest payable 600
Trade payable with stock options 8,025
-------
$ 54,293
-------
------------------------------------------------------------------------------
37
<PAGE>
CIERA NETWORK SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
Year ended December 31, 1999
------------------------------------------------------------------------------
In exchange for legal services the Company has agreed to pay $ 8,205 in cash or
Ciera Common Stock at a value of $ 0.60 per share (13,375 shares) at the option
of the attorney, no later than November 30, 2003.
NOTE F - ACCRUED BONUS
Accrued bonus as of December 31, 1999 consist of:
Bonus accrual - management 50,000
Bonus accrual - staff 12,000
------
62,000
------
NOTE G - NOTES PAYABLE
Notes payable as of December 31, 1999 consist of:
Notes payable to company that holds lease from which
Ciera Business Center, Inc. operates. Original note in the
amount of $ 8,500 dated June 29, 1999 payable in 12
installments of $ 708. Non interest bearing. 4,250
Note payable to stockholder dated October 29, 1999.
Payable on demand and bearing interest at 12% per
annum. 10,000
Note payable to stockholder dated October 29, 1999.
Payable on demand and bearing interest at 12% per
annum. 10,000
Note payable to insurance carrier. Original balance of
$ 3,527. Dated August 1999. Payable in monthly
installments of $ 325 including interest. 2,139
----------
$ 26,389
----------
NOTE H - STOCKHOLDER'S EQUITY
On December 28, 1998, the date of incorporation of Ciera Network Systems, Inc.,
the number of authorized shares of common stock was 100,000,000 shares at $
.0001 par value and 50,000,000 shares of preferred at $ .01 par value.
------------------------------------------------------------------------------
38
<PAGE>
CIERA NETWORK SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
Year ended December 31, 1999
------------------------------------------------------------------------------
As of December 31, 1999, Ciera Network Systems, Inc. had issued and outstanding
6,767,055 shares of common stock, of which 1,362,460 shares were sold via the
private placement memorandum at $ 0.50 per share. In a separate transaction,
2,278,289 shares were issued to Wireless Communications Technology, Inc. for its
contributions to the formation of Ciera Network Systems, Inc.
The fair market value of the shares of stock issued to Wireless
Communications Technology, Inc. was determined to be as follows:
Property and equipment $ 9,800
Fair value of cost expended in developing
communication "bundling" concept 90,200
----------------
$ 100,000
----------------
Cost of developing the communication "bundling" concept in the amount of $
90,200 have been expensed in the December 31, 1999 financial statements.
In connection with a private placement, 300,000 shares of warrants were issued
to an investment company with an exercise price of $ 0.50 per share. The option
expires on April 18, 2004 if not exercised sooner.
The Board has set aside 5,000,000 shares of common stock for issuance to
employees for performance and as incentive to attract employees that Ciera
desires.
NOTE I - INCOME TAXES
During this initial year of operation the Company has reported a loss in
operations. The net operating loss will be carried forward to future years.
Deferred tax benefits will not be recognized until such time as the recognition
of these benefits is assured.
NOTE J - OPERATING LEASES
The company conducts operation from administrative facilities that are leased
under an operating lease that expires in December 2000.
Future minimum rental payments required under the above operating lease as of
December 31, 1999 are as follows:
December 31, 2000 $ 80,400
------------------------------------------------------------------------------
39
<PAGE>
CIERA NETWORK SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
Year ended December 31, 1999
------------------------------------------------------------------------------
A portion of this facility was utilized as executive suites to outside companies
totaling $ 32,006 in revenues.
NOTE K - COMMITMENTS AND CONTINGENCIES
The Company has an agreement from a supplier to purchase long distance telephone
services. The Contract has an aggregate minimum usage requirement. As of the
date of this report, the contingent liability for the aggregate purchases under
the minimum total $ 38,685. The original one-year contract period has expired
and the agreement is continuing on a month-to-month basis. Management projects
aggregate growth in the sale of long distance service and the potential of the
service will not require this contingency to be paid.
NOTE L - SUBSEQUENT EVENTS
The Company has established a new corporation to develop a 'E-Commerce'
operation. The Board has approved a 66.67% ownership and a $ 27,000 initial
investment.
In May 2000, the Company signed a Letter of Intent to surrender all of the
outstanding stock of Ciera Network Systems, Inc. and its subsidiaries in
exchange for 3,700,000 common shares in the public company, CCC GlobalComCorp in
an acquisition by merger. In addition, CCC GlobalComCorp will provide $
1,000,000 for expansion of marketing activities of Ciera Network Systems, Inc.
and subsidiaries.
------------------------------------------------------------------------------
40
