<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A-1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 1, 2000
THE SOUTHSHORE CORPORATION
-------------------------------------
(Exact name of registrant as specified in its charter)
Colorado 0-19949 84-1153522
- --------------------- ----------------- -------------------
(State or other jurisdiction (Commission file number) (IRS Employer
incorporation or organization) Identification No.)
5373 North Union Boulevard, Suite 100, Colorado Springs, Colorado 80918
--------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (719) 590-4900
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
<PAGE>
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
Pursuant to Item 7(a)(4), the Registrant files herewith the following
financial statements of the acquired business:
Report of Independent Certified Public Accountants
Coach & Campers of Knoxville, LLC Balance Sheets as of December 31, 1999
and 1998
Coach & Campers of Knoxville, LLC Statements of Operations for the years
ended December 31, 1999 and from February 9, 1998 (inception) to December
31, 1998
Coach & Campers of Knoxville, LLC Statements of Cash Flows of the years
ended December 31, 1999 and from February 9, 1998 (inception) to December
31, 1998
Coach & Campers of Knoxville, LLC Notes to Financial Statements
(b) Audited Financial Statements
Pursuant to Item 7(b) and Item 7(a)(4), the Registrant files herewith the
following audited financial information:
Report of Independent Certified Public Accountants
iRV, Inc. Consolidated Balance Sheet as of December 31, 1999
iRV, Inc. Consolidated Statement of Operations for the period August 1,
1999 (inception) to December 31, 1999
iRV, Inc. Consolidated Statement of Stockholders' Equity for the year
ended December 31, 1999
iRV, Inc. Consolidated Statement of Cash Flows for the period August 1,
1999 (inception) through December 31, 1999
iRV, Inc. Notes to Consolidated Financial Statements
(c) Pro Forma Financial Information
Pursuant to Item 7(b) and Item 7(a)(4), the Registrant files herewith the
following unaudited pro forma consolidated financial information:
Introduction to Proforma Financial Information
Southshore Corporation and Subsidiaries Pro Forma Condensed Consolidated
Balance Sheet for the year ended December 31, 1999
Southshore Corporation and Subsidiaries Pro Forma Condensed Consolidated
Statement of Operations for the years ended December 31, 1999 and 1998
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Members
Coach & Campers of Knoxville, LLC
We have audited the accompanying balance sheets of Coach & Campers of
Knoxville, Inc. (a Limited Liability Company) as of December 31, 1999 and
1998, and the related statements of operations and members' deficit, and cash
flows for the year ended December 31, 1999, and the period February 9, 1998
(inception) through December 31, 1998. 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 Coach & Campers of Knoxville,
LLC (a Limited Liability Company) as of December 31, 1999 and 1998, and the
results of its operations and its cash flows for the year ended December 31,
1999 and for the period February 9, 1998 (inception) through December 31,
1998, in conformity with generally accepted accounting principles.
March 16, 2000
Westminster, Colorado
<PAGE>
<PAGE>
COACH & CAMPERS OF KNOXVILLE, LLC
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
----------------------
1999 1998
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 57,763 $ -
Accounts receivable, no allowance
deemed necessary 2,364 18,731
Inventories 664,676 1,433,193
Prepaid assets - 2,240
Total current assets 724,803 1,454,164
Property and equipment, net 107,597 17,195
Deposits and other 5,130 4,705
---------- ----------
112,727 21,900
---------- ----------
Total assets $ 837,530 $1,476,064
========== ==========
LIABILITIES AND MEMBERS' DEFICIT
Current liabilities:
Checks written in excess of bank balance $ - $ 24,562
Vehicle floor financing 550,896 1,332,307
Vehicle floor financing in default 67,762 47,705
Notes payable to members 181,489 50,000
Accounts payable 165,224 29,498
Accrued liabilities 43,594 38,152
---------- ----------
Total current liabilities 1,008,965 1,522,224
---------- ----------
Commitments - -
Members' deficit:
Members' capital 3,500 3,500
Accumulated deficit (174,935) (49,660)
---------- ----------
Total members' deficit (171,435) (46,160)
---------- ----------
Total liabilities and members' deficit $ 837,530 $1,476,064
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
COACH & CAMPERS OF KNOXVILLE, LLC
STATEMENTS OF OPERATIONS AND MEMBERS' DEFICIT
<TABLE>
<CAPTION> Period From
February 9, 1998
Year Ended (Inception) to
December 31, December 31,
1999 1998
----------- ----------
<S> <C> <C>
Revenues:
Sales, net $2,564,518 $1,574,658
Warranty 21,868 6,079
Parts and service 14,899 5,388
Other 4,841 700
----------- ----------
2,606,126 1,586,825
----------- ----------
Cost of goods sold 2,346,666 1,398,334
----------- ----------
Gross profit 259,460 188,491
----------- ----------
Operating expenses:
Sales and marketing 30,925 28,277
Wages and benefits 156,796 76,302
Rent 65,481 23,948
General and administrative 68,855 33,313
Depreciation and amortization 13,155 3,164
Professional fees 7,626 18,881
----------- ----------
Total operating expenses 342,838 183,885
----------- ----------
Income (loss) from operations (83,378) 4,606
Other income (expense):
Interest expense (81,617) (69,724)
Participation income 39,720 15,458
----------- ----------
(41,897) (54,266)
----------- ----------
Net loss (125,275) (49,660)
Members' contributions 3,500
Members' deficit, beginning (46,160) -
----------- ----------
Members' deficit, ending $ (171,435) $ (46,160)
=========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
COACH & CAMPERS OF KNOXVILLE, LLC
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION> Period From
February 9, 1998
Year Ended (Inception) to
December 31, December 31,
1999 1998
----------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (125,275) $ (49,660)
----------- ----------
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization 13,155 3,164
Changes in operating assets and
liabilities:
Accounts receivable 16,367 (18,731)
Inventories 768,517 (1,433,193)
Prepaid assets 2,240 (2,240)
Accounts payable 135,726 29,498
Accrued expenses 5,442 38,152
----------- ----------
941,447 (1,383,350)
----------- ----------
Net cash provided by (used in)
operating activities 816,172 (1,433,010)
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment - (17,859)
Increase in deposits and other (425) (4,705)
----------- ----------
Net cash used in investing
activities (425) (22,564)
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from vehicle floor financing 2,099,741 2,679,326
Payments on vehicle floor financing (2,861,095) (1,299,314)
Checks written in excess of bank balance (24,562) 24,562
Members' capital contribution - 1,000
Proceeds from borrowings from members 32,960 50,000
Payments on borrowings from members (5,028) -
----------- ----------
Net cash provided by (used in)
financing activities (757,984) 1,455,574
----------- ----------
Net increase in cash and cash equivalents 57,763 -
Cash and cash equivalents at beginning of
period - -
----------- ----------
Cash and cash equivalents at end
of period $ 57,763 $ -
=========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid (received) during the year-
Interest expense $ 89,836 $ 53,995
=========== ==========
Participation income $ (39,720) $ (15,458)
=========== ==========
SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING ACTIVITIES:
Property and equipment contributed by
members $ 2,500
===========
Property and equipment purchased with
borrowings $ 103,557
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE>
COACH & CAMPERS OF KNOXVILLE, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business and Significant Accounting Policies
Coach & Campers of Knoxville, LLC (a Limited Liability Company) ("the
Company") was formed in the State of Tennessee on February 9, 1998. The
Company sells and services Recreational Vehicles (RV) through its dealership
in Knoxville, Tennessee.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with an original
maturity of three months or less to be cash equivalents.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of cash equivalents and
accounts receivable. All of the Company's cash equivalents are held at high
credit quality financial institutions. Accounts receivables are typically
unsecured and are derived from revenues earned from the sales and service of
RV units. The Company performs ongoing credit evaluations of its client's
financial condition and maintains reserves for potential credit losses based
upon the expected collectibility of total accounts receivable. To date,
losses resulting from uncollectible receivables have not exceeded management's
expectations.
Revenue Recognition
The Company records revenue on the sale of an RV when cash is received
and the customer takes possession of the unit. Other revenues consist
primarily of income earned from warranty repairs and the sales of parts. The
Company recognizes revenue on other revenues when the services are performed
or when the parts are sold.
Warranties
The Company does not provide for any additional warranties on new RVs
other than those that are provided for by the manufacturer. No warranties are
provided for on used RVs. The Company historically has not experienced any
losses associated with warranties.
Inventories
Inventories are stated at the lower of cost or market, using the specific
identification method. Management of the Company gives appropriate
consideration to deterioration, obsolescence and other factors in evaluating
net realizable value.
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed
using the straight-line method over the estimated useful life of three to five
years.
Advertising Costs
Advertising costs are charged to operations when incurred.
Income Taxes
The Company is treated as a partnership for income tax purposes and as
such, does not pay federal or state income taxes on its taxable income.
Instead, the members are liable for individual federal and state income taxes
based on their respective ownership percentages. The Company prepares its
financial statements on the accrual basis of accounting; however uses the cash
basis of accounting for income tax purposes. The primary difference between
financial and income tax reporting is that expense are recorded for financial
statement purposes as they are incurred, while expenses for income tax
purposes are recognized when paid.
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 revenue and expenses during the
reported period. Actual results could differ from those estimates.
Comprehensive Income
The Company follows Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income." SFAS 130 establishes standards for
reporting and display of comprehensive income and its components in the
financial statements. There were no differences between reported net income
and comprehensive income.
Fair Value of Financial Instruments
Financial instruments that are subject to fair value disclosure
requirements are carried in the consolidated financial statements at amounts
that approximate fair value and include cash and cash equivalents accounts
receivable, inventories, and accounts payable. Fair values are based on
quoted market prices and assumptions concerning the amount and timing of
estimated future cash flows and assumed discount rates reflecting varying
degrees of perceived risk.
2. Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
December 31,
-----------------------
1999 1998
---------- ----------
<S> <C> <C>
New recreational vehicles $ 550,896 $1,332,307
Used recreational vehicles 113,780 100,886
---------- ----------
$ 664,676 $1,433,193
========== ==========
</TABLE>
3. Property and Equipment
Property and equipment consist of the following:
<TABLE>
<CAPTION>
December 31,
-----------------------
1999 1998
---------- ----------
<S> <C> <C>
Leasehold improvements $ 16,961 $ 16,961
Equipment 3,398 3,398
Rental equipment 103,557 -
---------- ----------
123,916 20,359
Less: accumulated depreciation
and amortization (16,319) (3,164)
---------- ----------
$ 107,597 $ 17,195
========== ==========
</TABLE>
Depreciation expense for the year ended December 31, 1999 and the period
ended December 31, 1998 was $13,155 and $3,164, respectively.
4. Vehicle Floor Financing
The vehicle floor financing consists of notes payable to finance
companies, secured by inventory, principal payable upon the sale of inventory,
interest payable monthly. Interest is computed at prime plus 2%, and the
notes are guaranteed by certain members of the Company. The outstanding
balances of these financing notes were $618,658 and $1,380,012 at December 31,
1999 and 1998, respectively. At December 31, 1999 and 1998, the Company had
not advanced funds, in accordance with the terms of the notes, to the
financing companies for inventory sold totaling $67,762 and $47,705,
respectively.
Interest expense associated with the vehicle floor financing was $74,276
and $66,938 for the year ended December 31, 1999 and the period ended December
31, 1998, respectively.
5. Notes Payable, Members
Notes payable to members consist of the following:
<TABLE>
<CAPTION>
December 31,
----------------------
1999 1998
---------- ----------
<S> <C> <C>
Prime plus 1%, note payable to members,
interest payable monthly, due March 1999,
collateralized by essentially all the
assets of Company $ - $ 50,000
Prime plus 1%, note payable to members,
interest payable monthly, due March 2000,
collateralized by essentially all the
assets of the Company 26,000 -
Prime plus 1%, note payable to members,
interest payable monthly, due March 1999,
collateralized by essentially all the
assets of the Company 23,919 -
9.74% note payable to member, payable
in monthly installments of $705, due
September 2000, collateralized by a
recreational vehicle 66,134 -
9.75% note payable to member, payable
in monthly installments of $641, due
September 2000, collateralized by a
recreational vehicle 60,036 -
Advances from members, no stated interest,
no stated repayment terms, without
collateral 5,400 -
---------- ----------
$ 181,488 $ 50,000
=========== ==========
</TABLE>
Interest expense pursuant to notes payable members was $7,341 and $2,786
for the year ended December 31, 1999 and the period ended December 31, 1998,
respectively.
6. Lease Commitment
The Company leases land and a building under a non-cancelable operating
lease. The lease requires monthly payments of $6,000 and expires in August
2003. Additionally, the Company leases, on a month-to-month basis, a trailer
that serves as the corporate office, and requires monthly payments of $394.
Future minimum payments under noncancelable operating leases are as
follows:
<TABLE>
<CAPTION>
Year Amount
---------- ----------
<S> <C>
2000 $ 72,000
2001 72,000
2002 72,000
2003 45,000
-----------
$ 261,000
===========
</TABLE>
The rental expense for these facilities for the year ended December 31,
1999 and the period ended December 31, 1998, was $65,481 and $23,948,
respectively.
7. Capital Structure
In February 1998, the members contributed $1,000 in cash as capital.
Additionally, in February 1998, certain members contribution equipment in the
amount of $2,500, that approximately the members' cost.
8. Subsequent Events
Management Agreement
On January 25, 2000, the Company entered into a Management Agreement
with iRV, Inc, whereby the Company, retained iRV, Inc. for a three months
period, to serve as business manager of the Company's operations. The
Management Agreement provided that iRV, Inc. would perform all the business
functions for and on behalf of the Company while the parties negotiated a
purchase contract for the assets of the Company.
Purchase Agreement and Floor Financing
On March 8, 2000, the Company executed an Asset Purchase and Sale
Agreement (the "Purchase Agreement") whereby the Company sold essentially all
of its assets to iRV, Inc. In connection with the Purchase Agreement, the
Company received approximately $888,000 in cash and iRV, Inc. assumed
liabilities of approximately $176,000.
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
iRV, Inc.
We have audited the accompanying consolidated balance sheet of iRV, Inc. (a
Development Stage Company) as of December 31, 1999 and the related
consolidated statements of operations, stockholders' equity and cash flows for
the period August 1, 1999 (inception) through December 31, 1999. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
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 iRV, Inc. (a Development
Stage Company) as of December 31, 1999, and the results of their operations
and their cash flows for the period August 1, 1999 (inception) through
December 31, 1999, in conformity with generally accepted accounting
principles.
The accompanying consolidated financial statements have been prepared assuming
that iRV, Inc. will continue as a going concern. As more fully described in
Note 1, the Company is in the development stage and has incurred a net loss of
$1,694,400 from inception through December 31, 1999. This raises substantial
doubt about the Company's ability to continue as a going concern.
Management's plans with regard to these matters are also described in Note 1.
The consolidated financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and classification
of assets or the amounts and classification of liabilities that may result
from the outcome of this uncertainty.
April 6, 2000
Westminster, Colorado
<PAGE>
<PAGE>
iRV, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
December 31, 1999
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 253,571
Advances due from related parties 50,910
-----------
Total current assets 304,481
-----------
Property and equipment, net 9,629
Intangible assets, net 57,788
Investment in restricted common stock 40,000
-----------
107,417
-----------
Total assets $ 411,898
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable-
Related parties $ 32,653
Other 33,645
-----------
Total current liabilities 66,298
-----------
Commitments -
Stockholders' equity:
Preferred stock; $.001 par value; 50,000,000
shares authorized; no shares issued
and outstanding -
Common stock; $.001 par value; 100,000,000
shares authorized; 5,100,000 shares issued
and outstanding 5,100
Additional paid in capital 2,034,900
Deficit accumulated during the development
stage (1,694,400)
-----------
Total stockholders' equity 345,600
-----------
Total liabilities and stockholders'
equity $ 411,898
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE>
iRV, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD AUGUST 1, 1999 (INCEPTION)
THROUGH DECEMBER 31, 1999
<TABLE>
<CAPTION>
<S> <C>
Operating expenses:
Internet website development $ 62,385
Corporate development 27,500
Consulting-
Related parties 96,046
Other 14,000
Travel and entertainment 49,760
Rent 6,421
Stock compensation 1,400,000
Depreciation and amortization 3,078
Legal fees, related party 16,795
Other 18,415
-----------
Total operating expenses 1,694,400
-----------
Net loss $1,694,400
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE>
iRV, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the
---------------------- Paid In Development
Shares Amount Capital Stage Total
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance, August 1,
1999 (inception) - $ - $ - $ - $ -
Issuance of common
stock for cash at
$.05 per share,
November and
December 1999 3,000,000 3,000 147,000 - 150,000
Stock compensation
in connection with
the issuance of
stock at $.05
per share, November
1999 - - 1,050,000 - 1,050,000
Issuance of common
stock for cash at
$.40 per share,
Nov and Dec 1999 1,000,000 1,000 399,000 - 400,000
Compensation expense
associated with the
issuance of common
stock for services
November 1999 100,000 100 39,900 - 40,000
Debt converted into
common stock at
$.05 per share,
November 1999 1,000,000 1,000 49,000 - 50,000
Stock compensation
in connection with
conversion of debt,
November 1999 - - 350,000 - 350,000
Net loss for the - - - (1,694,400) (1,694,400)
period
---------- --------- -------- ---------- ---------
Balance, December 31,
1999 5,100,000 $ 5,100 $2,034,900$(1,694,400) $ 345,600
========== ========= ======== ========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE>
iRV, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD AUGUST 1, 1999 (INCEPTION)
THROUGH DECEMBER 31, 1999
<TABLE>
<CAPTION>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,694,400)
------------
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization 3,078
Stock compensation 1,400,000
Stock issued for services 40,000
Changes in operating assets and liabilities-
Accounts payable 66,298
------------
1,509,376
------------
Net cash used in operating activities (185,024)
------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (10,195)
Purchase of intangible asset (60,300)
Purchase of restricted common stock (40,000)
Advances to related parties (50,910)
------------
Net cash used in investing activities (161,405)
------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings from related parties 50,000
Proceeds from sale of stock, net of offering costs 550,000
------------
Net cash provided by financing activities 600,000
------------
Net increase in cash and cash equivalents 253,571
Cash and cash equivalents, beginning -
Cash and cash equivalents, ending $ 253,571
============
SUPPLEMENTAL DISCLOSURE OF NON CASH
FINANCING ACTIVITIES:
Conversion of debt into 1,000,0000 shares of common
stock $ 50,000
============
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
iRV, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business and Significant Accounting Policies
iRV, Inc. ("the Company") is a development stage company. The Company
was incorporated in Colorado on August 1, 1999, as RV Holiday.com, Inc. The
Company changed its name to iRV, Inc. in December 1999. Development stage
activities have consisted of raising equity capital, the development of the
Company's Internet web site, and evaluating potential acquisitions of
recreational vehicle ("RV") dealerships. Through December 31, 1999, the
Company had not generated any revenues.
Basis of Presentation
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. The Company is in
the development stage and has incurred a net loss of $1,694,400 from inception
through December 31, 1999. This raises substantial doubt as to the Company's
ability to continue as a going concern. Management is attempting to raise
additional equity capital to complete the development of its Internet web site
and continue the evaluation of potential acquisitions of RV dealerships. In
order for the Company to emerge out of the development stage and to continue
as a going concern, the Company must generate sufficient cash flows from its
proposed Internet activities or successfully acquire RV dealerships that will
enable the Company to achieve a level of operations sufficient to meet its
cash flow requirements. The financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from the outcome of this uncertainty.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries, iRV.com, Inc. and iRV-
Dealerships, Inc. Internet development activities are conducted through
iRV.com, Inc., while the evaluation of potential acquisitions of RV
dealerships is conducted through iRV-Dealerships, Inc. All material
intercompany accounts have been eliminated in consolidation.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with an original
maturity of three months or less to be cash equivalents.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of cash equivalents and
investment in restricted common stock. All of the Company's cash equivalents
are held at high credit quality financial institutions. The Company evaluates
the carrying value of the restricted common stock and maintains reserves for
potential impairments of its investment. To date, there has been no
impairment loss recorded on the investment in restricted common stock.
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed
using the straight-line method over the estimated useful life of three years.
Intangible Assets
Intangible assets consist of the cost the Company incurred to acquire
various Internet domains (Web sites). Amortization is computed using the
straight-line method over its estimated useful life of three years.
Impairment of Long-Lived Assets
Management of the Company periodically reviews the carrying value of
long-lived assets for potential impairment by comparing the carrying value of
those assets with their related, expected future net cash flows. Should the
sum of the related, expected future net cash flows be less than the carrying
value, management would determine whether an impairment loss should be
recognized. An impairment loss would be measured by the amount by which the
carrying value of the assets exceeds the future discounted cash flows.
Investment in Restricted Common Stock
Investment in restricted common stock consists of an equity investment in
Kinetiks.com, Inc., a publicly traded entity, and is recorded at cost.
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock issued to
Employees." Accordingly, no compensation expense is recorded for options
issued in fixed amounts and with fixed exercise prices at least equal to the
fair market value of the Company's common stock at the date of grant.
Internet Web site Development
The Company expenses all costs associated with the development of its
Internet Web site in accordance with Statement of financial Accounting
Standards No. 86, "Accounting for the Costs of Computer Software to be Sold,
Leased or Otherwise Marketed." SFAS 86 requires capitalization of certain
software development costs subsequent to the establishment of technological
feasibility. Based upon the Company's product development process,
technological feasibility is established upon completion of a working model.
At December 31, 1999, the Company did not have a working model of its
software.
Income Taxes
Income taxes are accounted for under Statement of financial Accounting
Standards No. 109 "Accounting for Income Taxes." Under this method, deferred
tax assets and liabilities are determined based on differences between the
financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse.
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 revenue and expenses during the
reported period. Actual results could differ from those estimates.
Comprehensive Income
The Company follows Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income." SFAS 130 establishes standards for
reporting and display of comprehensive income and its components in the
financial statements. There were no differences between reported net income
and comprehensive income.
Fair Value of Financial Instruments
Financial instruments that are subject to fair value disclosure
requirements are carried in the consolidated financial statements at amounts
that approximate fair value and include cash and cash equivalents, investments
in restricted common stock, and accounts payable. Fair values are based on
quoted market prices and assumptions concerning the amount and timing of
estimated future cash flows and assumed discount rates reflecting varying
degrees of perceived risk.
2. Property and Equipment
Property and equipment consist of the following:
<TABLE>
<CAPTION>
December 31,
1999
----------
<S> <C>
Computer equipment $ 10,195
Less accumulated depreciation (566)
----------
$ 9,629
==========
</TABLE>
Depreciation expense for the period ended December 31, 1999, was $566.
3. Intangible Asset
Intangible asset consists of the following:
<TABLE>
<CAPTION>
December 31,
1999
----------
<S> <C>
Internet domain names $ 60,300
Less accumulated depreciation (2,512)
----------
$ 57,788
==========
</TABLE>
Amortization expense for the period ended December 31, 1999, was $2,512.
4. Lease Commitment
The Company leases a residence and furniture on a temporary basis for an
officer of the Company under a non-cancelable operating lease. The lease
requires monthly payments of $1,700 and expires in May 2000. Rent expense for
the period ended December 31, 1999, was $6,421. Total future minimum lease
payments under this operating lease are $8,500.
Subsequent to December 31, 1999, the Company entered into a lease
agreement for office space. The lease requires monthly payments of $4,174 and
can be canceled by the Company at any time by providing the landlord thirty
days notice of the Company's intent to vacate the premises.
5. Capital Structure
In November and December 1999, the Company issued 3,000,000 shares of its
common stock in exchange for cash at $.05 per share and received net proceeds
of $150,000.
In November and December 1999, the Company issued 1,000,000 shares of its
common stock in exchange for cash at $.40 per share and received proceeds of
$400,000.
In connection with the issuance of 3,000,000 shares of the Company's
common stock, the Company recorded stock compensation in the amount of
$1,050,000. This amount represents the difference between the estimated fair
market value of the stock on the date of the sale and the consideration paid.
During August through October, a stockholder and an entity controlled by
a stockholder advanced funds to the Company for working capital purposes in
the amount of $26,448 and $23,552, respectively. The advances did not bear
interest, had no fixed repayment terms and were unsecured. In November 1999,
the Company converted these advances into 1,000,000 shares of the Company's
common stock at the rate of $.05 per share. In connection with this
conversion the Company recorded stock compensation in the amount of $350,000
which represents the difference between the estimated fair market value of the
stock issued and the debt converted into equity.
In February 2000, effective August 31, 1999, the Company entered into an
employment agreement with an officer. The agreement provided for the issuance
of 500,000 shares of the Company's common stock of which 100,000 shares vested
immediately with the remaining shares vesting at the rate of 100,000 shares
per year commencing February 1, 2001 and expiring in February 2004. In
connection with the issuance of the initial 100,000 shares, the Company
recorded consulting expense in the amount of $40,000, which approximated the
fair market value on the date of grant.
In December 1999, the Company granted 310,000 options to certain
consultants to acquire shares of the Company's common stock at $1.00 per
share, which was in excess of the fair market value on the date of grant.
These options expire in December 2006.
On December 20, 1999, the Company's board of directors approved a stock
option plan (the "Plan") under which up to 1,000,000 shares of the Company's
common stock may be issued. Under the Plan, incentive and nonqualified stock
options may be granted to employees, directors, and consultants of the
Company. Incentive stock options are granted at an exercise price of not less
than 100% (110% for individuals owning 10% or more of the Company's common
stock at the time of grant) of the stock's fair market value at the time of
grant. Nonqualified stock options may be granted at an exercise price
determined by the Company.
The stock option activity under this Plan is set for the below for the
period August 1, 1999 (inception) through December 31, 1999:
<TABLE>
<CAPTION>
Shares Under Option
Option Price
---------- ----------
<S> <C> <C>
Granted 310,000 $1.00
Forfeited - -
---------- ----------
Outstanding, December 31, 1999 310,000 $1.00
========== ==========
</TABLE>
At December 31, 1999, 107,500 options were exercisable.
In January 2000, the Company granted an officer options to acquire 50,000
shares of the Company's common stock at $1.00 per share that expire in January
2005. The exercise price was below the fair market value of the Company's
common stock on the date of grant. Accordingly, the Company recorded
compensation expense and additional paid in capital in the amount of $188,466.
In January 2000, the Company entered into a consulting agreement with
Access 1 Financial, a nonaffiliate to serve as the Company's financial advisor
and provide public relations. In lieu of a consulting fee, the Company paid
to Access 1 Financial as full and complete consideration, stock options to
purchase up to 200,000 shares of the Company's common stock at an exercise
price of $3.25 per share, which exceeded the fair market value at the date of
grant. The shares are exercisable immediately and expire in January 2001.
In February 2000, the Company granted to certain directors, one of which
is a stockholder, options to acquire 150,000 shares of the Company's common
stock at an exercise price of $3.88, which approximated the fair market value
on the date of grant. The options expire February 2005.
6. Related Party Transactions
In addition to the related party transactions discussed in Note 5 above,
the Company advanced funds in the amount of $50,912 to an entity that is
controlled by a stockholder of the Company. The advances were made not
pursuant to any written agreement, bore no interest and had no fixed repayment
terms. These amounts were repaid in February 2000. During the period ended
December 31, 1999, the Company advanced $80,000 to an entity that is
controlled by a stockholder of the Company. These advances were not made
pursuant to any written agreement, bore no interest, had no fixed repayment
terms and were repaid prior to December 31, 1999.
The Company incurred legal expenses in the amount of $16,645 payable to
law firm that is owned by a stockholder of the Company. These amounts remain
unpaid at December 31, 1999 and are included in accounts payable, related
parties in the consolidated financial statements.
7. Income Taxes
Losses incurred from operations from August 1, 1999 (inception) through
December 31, 1999 have created deferred tax assets of approximately $86,000.
A valuation allowance was established for the full amount of these deferred
tax assets because the future realization of the cumulative tax benefits is
not assured. The Company has a net operating loss carryforward of
approximately $253,000 that expires in 2014.
As further described in Note 8, the Company has entered into an Agreement
and Plan of Merger. When more than a 50% change in ownership occurs, over a
three year period, as defined, the Tax Reform Act of 1986 limits the
utilization of net operating loss ("NOL") carryforwards in the years following
the change in ownership. Therefore, it is possible that the Company'
utilization of its NOL carryforwards may be partially reduced as a result of
the changes in stock ownership. No determination has been made as of December
31, 1999, as to what implications, if any, there will be in the net operating
loss carryforwards of the Company.
8. Subsequent Events
Management Agreement
On January 25, 2000, the Company entered into a Management Agreement
with Coach & Campers of Knoxville, LLC ("Coach & Campers"), an RV dealership
located in Knoxville, Tennessee, whereby Coach & Campers retained the Company,
for a three months period, as business manager of Coach & Campers operations.
The Management Agreement provided that the Company would perform all the
business functions for and on behalf of Coach & Campers while the parties
negotiated a purchase contract for the assets of Coach & Campers.
Merger Agreement
On December 20, 1999, the Company entered into an Agreement and Plan of
Merger (the "Agreement") whereby the Company would merge into a wholly owned
subsidiary of The Southshore Corporation ("Southshore"). Pursuant to the
Agreement, the Company would receive 5,500,000 shares of Southshore stock.
The closing of the Agreement was contingent on the parties conducting due
diligence and among other things, the Company's completion of a private
offering of its common stock that grosses $600,000 and the acquisition of
certain URL names (Web sites). The Agreement required the resignation of the
current Southshore officers and directors and the appointment of three new
directors designated by the Company. On February 1, 2000, the Agreement was
completed and the Company received 5,500,000 shares of Southshore stock.
Purchase Agreement and Floor Financing
On March 8, 2000, the Company executed an Asset Purchase and Sale
Agreement (the "Purchase Agreement") with Coach & Campers. In connection with
the Purchase Agreement, the Company paid approximately $648,000 in cash and
issued 7,500 shares of Southshore stock in the amount of $22,500 which
approximated the fair market value of the stock on March 8, 2000. The Company
accounted for the acquisition as a purchase and recorded approximately
$199,000 as goodwill, which represents the excess of the purchase price over
the net assets acquired.
Concurrent with the closing of the Purchase Agreement, the Company
entered into a floor financing agreement with Deutsche Financial Services
pursuant to which the Company may draw up to $2,000,000 to purchase inventory
in connection with the operation of the dealership. In connection with
obtaining the floor financing, an entity controlled by a stockholder of the
Company provided an irrevocable letter of credit in favor of Deutsche
Financial Services in the amount of $300,000. In consideration of providing
the irrevocable letter of credit, Southshore agreed to grant this entity
warrants to purchase 2,500 shares of Southshore common stock at $2.00 per
share for each month that the letter of credit is issued and outstanding, and
are exercisable over a three year period.
<PAGE>
<PAGE>
INTRODUCTION TO PROFORMA FINANCIAL INFORMATION
On December 20, 1999, The Southshore Corporation ("Southshore") entered
into an Agreement and Plan of Merger (the "Agreement") whereby a wholly owned
subsidiary of Southshore would merge with iRV, Inc. Pursuant to the
Agreement, the Company would issue to iRV, Inc. 5,500,000 shares of
Southshore stock. The closing of the Agreement was contingent on the parties
conducting due diligence and among other things, iRV, Inc.'s completion of a
private offering of its common stock that grosses $600,000 and the acquisition
of certain URL names (Web sites). The Agreement required the resignation of
the current Southshore officers and directors and the appointment of three new
directors designated by iRV, Inc. On February 1, 2000, the Agreement was
completed and Southshore issued 5,500,000 shares of stock.
On January 25, 2000, the iRV, Inc. entered into a Management Agreement
with Coach & Campers of Knoxville, LLC ("Coach & Campers"), an RV dealership
located in Knoxville, Tennessee, whereby Coach & Campers retained the iRV,
Inc. for a three months period, as business manager of Coach & Campers
operations. The Management Agreement provided that the iRV, Inc. would
perform all the business functions for and on behalf of Coach & Campers while
the parties negotiated a purchase contract for the assets of Coach & Campers.
On March 8, 2000, the iRV, Inc. executed an Asset Purchase and Sale
Agreement (the "Purchase Agreement") with Coach & Campers. In connection with
the Purchase Agreement, the iRV, Inc. paid approximately $648,000 in cash and
issued 7,500 shares of Southshore stock in the amount of $22,500, which
approximated the fair market value of the stock on March 8, 2000. The iRV,
Inc. accounted for the acquisition as a purchase and recorded approximately
$199,000 as goodwill, which represents the excess of the purchase price over
the net assets acquired.
The following proforma financial information presents the proforma
condensed consolidated balance sheet at December 31, 1999 and the statement of
operations for the years ended December 31, 1999 and 1998. Southshore
utilizes a year end of March 31, while iRV, Inc. and Coach & Campers utilize a
December 31, year end.
<PAGE>
<PAGE>
SOUTHSHORE CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
HISTORICAL
------------------------
Coach &
Southshore iRV, Campers of Proforma Proforma
Corporation Inc. Knoxville Adjustments Combined
----------- ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash
equivalents $ 102,484 $ 253,571 $ 57,763 $(224,488) 1 $189,330
Accounts receivable,
no allowance
deemed necessary - - 2,364 (2,364) 1 -
Inventories - - 664,676 (124,708) 1 539,968
Advances due from
related parties - 50,910 - 50,910
----------- ---------- ---------- --------- -----------
Total current
assets 102,484 304,481 724,803 (351,560) 780,208
----------- --------- ----------- ---------- -----------
Property and
equipment, net - 9,629 107,597 117,226
Intangible assets,
net - 57,788 - 198,671 1 236,592
(19,867)3
Other assets 17,245 40,000 5,130 62,375
----------- ---------- ---------- --------- -----------
17,245 107,417 112,727 178,804 416,193
----------- ---------- ---------- --------- -----------
Total assets $ 119,729 $ 411,898 $ 837,530 $(172,756) $ 1,196,401
=========== ========== ========== ========= ===========
CURRENT LIABILITIES:
Vehicle floor
financing $ - $ - $ 618,658 $(132,687) 1 $485,971
Notes payable - - 181,489 (5,319) 1 176,170
Accounts payable - 66,298 165,224 (165,224) 1 66,298
Accrued expenses 14,158 - 43,594 (43,594) 1 14,158
----------- ---------- ---------- --------- -----------
Total current
liabilities 14,158 66,298 1,008,965 (346,824) 742,597
----------- ---------- ---------- --------- -----------
STOCKHOLDERS' EQUITY:
Common stock 2,611 5,100 3,500 8 1 7,719
(3,500) 1
Preferred stock - - - -
Additional paid in
capital 4,377,574 2,034,900 22,492 1 2,160,352
(4,274,614)2
Accumulated
deficit (4,274,614) (1,694,400) (174,935) 174,935 1 (1,714,267)
4,274,614 2
(19,867) 3
----------- ---------- ---------- --------- -----------
Total stockholders'
equity 105,571 345,600 (171,435) 174,068 453,804
----------- ---------- ---------- --------- -----------
Total liabilities
and stockholders'
equity $ 119,729 $ 411,898 $ 837,530 $(172,756) $1,196,401
=========== ========== ========== ========= ===========
</TABLE>
- -------------------
PRO FORMA ADJUSTMENTS
(1) To record the purchase of certain assets and certain liabilities of Coach
& Campers of Knoxville, LLC by iRV, Inc.
(2) To record the merger with Southshore Acquisition Company, a wholly owned
subsidiary of The Southshore Corporation, with the survivor of the merger
being iRV, Inc.
(3) To record amortization expense on goodwill resulting from the purchase of
Coach & Campers of Knoxville, LLC.
<PAGE>
<PAGE>
SOUTHSHORE CORPORATION AND SUBSIDIARIES
PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
PERIOD AND YEAR ENDED DECEMBER 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
HISTORICAL
------------------------
Coach &
Southshore iRV, Campers of Proforma Proforma
Corporation Inc. Knoxville Adjustments Combined
----------- ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
Net Revenues $ - $ - $2,606,126 $ 2,606,126
Cost of goods sold - - 2,346,666 2,346,666
----------- ---------- ---------- --------- -----------
Gross profit - - 259,460 259,460
----------- ---------- ---------- --------- -----------
Expenses:
Sales and
marketing - 27,500 30,925 58,425
Wages and benefits 15,735 - 156,796 172,531
Consulting 24,550 110,046 - 134,596
Internet website
development - 62,385 - 62,385
Stock issuance
expense - 1,400,000 - 1,400,000
Travel and
entertainment - 49,760 - 49,760
Depreciation and
amortization - 3,078 13,155 19,867 1 36,100
General and
administrative - - 68,855 68,855
Rent - 6,421 65,481 71,902
Professional fees - 16,795 7,626 24,421
Other 9,812 18,415 - 28,227
----------- ---------- ---------- --------- -----------
50,097 1,694,400 342,838 19,867 2,107,202
----------- ---------- ---------- --------- -----------
Loss from
operations (50,097) (1,694,400) (83,378) (19,867) (1,847,742)
----------- ---------- ---------- --------- -----------
Other income (expense):
Interest expense (4,504) - (81,617) (86,121)
Participation income - - 39,720 39,720
Gain on sale of
assets 831,436 - - 831,436
Other (156,350) - - (156,350)
----------- ---------- ---------- --------- -----------
670,582 - (41,897) - 628,685
----------- ---------- ---------- --------- -----------
Net Income (loss)$620,485 $(1,694,400) $(125,275) $(19,867) $(1,219,057)
========== ========== =========== ========== ===========
Proforma Basic Loss
Per Share:
Net loss $(0.16)
=========
Proforma Diluted Loss
Per Share:
Net loss $(0.17)
=========
Proforma Earnings
per Share Disclosure
Loss Shares Per Share
(Numerator)(Denominator) Amount
---------- ---------- -----------
Proforma basic loss per share:
Net loss $(1,219,057) 7,711,091 $(0.16)
Effect of dilutive securities:
Warrants - 761 -
Options - 273,359 -
----------- ---------- -----------
Proforma diluted loss per share:
Net loss $(1,219,057) 7,985,211 $(0.17)
=========== ========== ===========
</TABLE>
<PAGE>
<PAGE>
SOUTHSHORE CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
PERIOD AND YEAR ENDED DECEMBER 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
HISTORICAL
------------------------
Coach &
Southshore iRV, Campers of Proforma Proforma
Corporation Inc. Knoxville Adjustments Combined
----------- ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
Net Revenues $1,000,320 $ - $1,586,825 $ 2,587,145
Cost of goods
sold 24,284 - 1,398,334 1,422,618
----------- ---------- ---------- --------- -----------
Gross profit 976,036 - 188,491 1,164,527
----------- ---------- ---------- --------- -----------
Expenses:
Sales and
marketing 65,803 - 28,277 94,080
Wages and
benefits 504,723 - 76,302 581,025
Consulting 33,289 - - 33,289
Internet website
development - - - -
Stock issuance
expense - - - -
Travel and
entertainment - - - -
Depreciation and
amortization 421,294 - 3,164 19,867 1 444,325
General and
administrative 253,303 - 33,313 286,616
Rent - - 23,948 23,948
Professional fees - - 18,881 18,881
Other - - - -
----------- ---------- ---------- --------- -----------
1,278,412 - 183,885 19,867 1,482,164
----------- ---------- ---------- --------- -----------
Income (loss)
from operations (302,376) - 4,606 (19,867) (317,637)
----------- ---------- ---------- --------- -----------
Other income (expense):
Interest expense (55,167) - (69,724) (124,891)
Participation
income - - 15,458 15,458
Other 9,257 - - 9,257
----------- ---------- ---------- --------- -----------
(45,910) - (54,266) - (100,176)
----------- ---------- ---------- --------- -----------
Net loss $ (348,286) $ - $ (49,660) $ (19,867) $ (417,813)
=========== ========== =========== ========== ===========
Proforma Basic
Loss Per Share:
Net loss $(0.05)
===========
Proforma Diluted
Loss Per Share:
Net loss $(0.05)
===========
Proforma Earnings per
Share Disclosure
Loss Shares Per-Share
(Numerator)(Denominator) Amount
---------- ---------- -----------
Proforma basic loss
per share:
Net loss (417,813) 7,711,091 $(0.05)
Effect of dilutive
securities:
Warrants - 761 -
Options - 273,359 -
---------- ---------- -----------
Proforma diluted
loss per share:
Net loss (417,813) 7,985,211 $(0.05)
=========== ========== ===========
</TABLE>
<PAGE>
<PAGE>
SIGNATURE
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.
iRV, INC.
Date: April 17, 2000 By: /s/ Bradley Smith
--------------------------------
Bradley Smith, Chief Financial
Officer
