SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[FEE REQUIRED]
For the fiscal year ended: June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
[NO FEE REQUIRED]
For the transition period from __________ to __________
Commission File No. 33-33939
LINDSEYTECHNOLOGIES.COM, INC. (formerly Lindsey Technologies, Inc.)
_________________________________________________________________
(Exact name of small business issuer as specified in its charter)
Colorado 84-1121635
_______________________________ __________________
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
3025 South Parker Road, Suite 109
Aurora, Colorado 80014
___________________________________________________________
(Address of principal executive offices, including zip code)
Issuer's Telephone Number: (303) 306-1988
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: None
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
___ ___
As of June 30, 1999, 19,146,460 shares of common stock were outstanding, and the
aggregate market value of the common stock of the Registrant held by non
affiliates was approximately $-0-.
Documents incorporated by reference: None
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
State Issuer's revenues for its most recent fiscal year: $38,919
This Form 10-KSB consists of 29 pages. The Exhibit Index begins on page 11.
<PAGE>
TABLE OF CONTENTS
Form 10-KSB Annual Report - 1999
LindseyTechnologies.com, Inc.
(formerly Lindsey Technologies, Inc.)
<TABLE>
<CAPTION>
Page
Facing Page
Index
<S> <C>
PART I
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . 2
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . 3
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . 3
Item 4. Submission of Matters to a Vote of Security Holders. 3
PART II
Item 5. Market For Registrant's Common Equity
And Related Shareholder Matters . . . . . . . . . . . 4
Item 6. Management's Discussion And Analysis Or Plan Of
Operations. . . . . . . . . . . . . . . . . . . . . . 5
Item 7. Financial Statements. . . . . . . . . . . . . . . . . 8
Item 8. Disagreements On Accounting And Financial Disclosures 8
PART III
Item 9. Directors And Executive Officers Of The Registrant. . 8
Item 10. Executive Compensation. . . . . . . . . . . . . . . . 9
Item 11. Security Ownership Of Certain Beneficial Owners And
Management. . . . . . . . . . . . . . . . . . . . . . 10
Item 12. Certain Relationships And Related Transactions. . . . 10
PART IV
Item 13. Exhibits, Financial Statement Schedules, And
Reports On Form 8-K . . . . . . . . . . . . . . . . . 11
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
-1-
<PAGE>
PART I
FORWARD-LOOKING STATEMENTS
IN ADDITION TO HISTORICAL INFORMATION, THIS FORM 10-KSB CONTAINS FORWARD-
LOOKING STATEMENTS. IN THIS FORM 10-KSB, THE WORDS "EXPECTS," "ANTICIPATES,"
"BELIEVES," "INTENDS," "WILL" AND SIMILAR EXPRESSIONS IDENTIFY FORWARD-LOOKING
STATEMENTS, WHICH ARE BASED UPON INFORMATION CURRENTLY AVAILABLE TO THE COMPANY,
SPEAK ONLY AS OF THE DATE HEREOF AND ARE SUBJECT TO CERTAIN RISKS AND
UNCERTAINTIES. THE COMPANY ASSUMES NO OBLIGATION TO UPDATE ANY FORWARD-LOOKING
STATEMENTS. THE COMPANY'S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THE RESULTS
DISCUSSED IN SUCH FORWARD-LOOKING STATEMENTS. FACTORS THAT MAY CAUSE SUCH A
DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN THIS SECTION
ENTITLED "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION --FACTORS
THAT MAY AFFECT FUTURE RESULTS." READERS SHOULD CAREFULLY REVIEW THE RISK
FACTORS DESCRIBED IN OTHER DOCUMENTS THAT THE COMPANY FILES FROM TIME TO TIME
WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION"), INCLUDING THE
QUARTERLY REPORTS ON FORM 10-Q TO BE FILED BY THE COMPANY IN FISCAL 2000. ALL
PERIOD REFERENCES ARE TO THE COMPANY'S FISCAL YEARS ENDED JUNE 30, 1999, 1998
AND 1997, UNLESS OTHERWISE INDICATED.
Item 1. Business
Lindsey Technologies.com, Inc. (formerly Lindsey Technologies, Inc.) (the
"Company" or the "Registrant") was organized under the laws of the state of
Colorado on August 17, 1989 for the primary purpose of engaging in a merger
with, joint venture with, or acquisition of a small number of private or public
firms. Such firms may be private or public corporations, partnerships, or sole
proprietorships. The Company's name was changed from L.M. Capital, Inc. to
Lindsey Technologies, Inc. on November 22, 1996 and to LindseyTechnologies.com,
Inc on July 20, 1999.
On June 21, 1996 the Company entered into a joint venture with a team of French
software engineers (the "Associates") and their wholly owned French corporation,
Helvetius Ingenierie. The Company and the Associates formed Heldol Corporation
(Heldol) on October 25, 1996, a United States corporation for the purpose of
developing and marketing software for industrial, medical, and commercial
business applications.
For the last two years, the Company has undertaken the development of its own
software solution implementing business to business E-commerce as an
application software provider with its own set of tools, notably Key-Qual (TM).
Key-Qual is a net-based tool for the organization and certification of all
existing production processes. It covers Industry, Services, Administration and
Medical sectors.
The system enables the user to fully describe all the desired functions of
production processes taking into account all the particularities of any
connected end user.
Through normalization professional individuals will be able to communicate and
interact in the most effective way.
By connecting and running Key-Qual quality system application, a company will
have all of its production and know-how online. Thus lies a great enhancement of
productivity and added value to the whole organization.
Any user will be able to ask or be asked relevant information regarding
production.
The system will help perform all relevant analyses and cross-reference them with
clients' procedures, production cycle and accompanying knowledge database.
-2-
<PAGE>
On November 5th 1998, the Company acquired Distributed Quality Corp ('DQC'), a
Colorado based company involved in marketing Networking and CORBA framework
software platforms for distributing quality related knowledge throughout
organizations using Internet technology, for $2,700,000 consisting of 540,000
restricted common shares of the Company valued at $5 per share and assumption of
$865,000 in liabilities. DQC was acquired in a merger transaction pursuant to
the terms of a merger agreement, dated November 5th 1998.
On August 31, 1998 DQC signed an agreement with Stellarx SA, a French software
startup company that provides software infrastructure for developing Internet
based application software solutions.
This agreement stipulates that DQC buy the Stellarx Framework Development
toolkit (TM) license for a price of $300,000. This software environment includes
an XML document manager and repository, a workflow engine and an application
designer. It also includes a Versant (TM) ODMS development license. (Versant is
a trademark of Versant Corp.; Stellarx is a trademark of Stellarx S.A.).
Under the terms of this agreement, DQC also has a right to integrate Stellarx
and Versant ODBMS runtime software pieces in its own application software and
distribute the whole as a package to its clients. This right is worldwide,
unlimited in time and exclusive for application software related to quality,
regardless of the business sector.
Item 2. Properties
The Company maintains its offices in Aurora, Colorado in office space
provided by one of the Directors of the Company.
Item 3. Legal Proceedings
The Company was involved in no legal proceedings during the fiscal year
ended June 30, 1999.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a shareholder vote during the fourth
quarter of the fiscal year ended June 30, 1999.
-3-
<PAGE>
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
(a) Principal Market or Markets: During the fiscal year ended June 30,
1999, no separate market developed for the Company's common stock, units, or any
outstanding warrants. The Company currently has no outstanding trading market.
High and low bids for the Company's common stock units for the previous eight
quarters are shown below.
<TABLE>
<CAPTION>
BID
Quarter Ended High Low
<S> <C> <C> <C> <C>
Units Sept. 30, 1997 No Bid
Units Dec. 31, 1997 No Bid
Units Mar. 31, 1998 No Bid
Units June 30, 1998 No Bid
Units Sept. 30, 1998 No Bid
Units Dec. 31, 1998 No Bid
Units Mar. 31, 1999 No Bid
Units June 30, 1999 No Bid
</TABLE>
(b) Common Stock: On June 30, 1999 there were 19,146,460 shares of
common stock issued and outstanding, which were held by 89 shareholders of
record excluding individuals holding securities in street name. In addition,
there were 413,000 (A) warrants and 413,000 (B) warrants outstanding held by 30
persons, and 415 Reg S (A) warrants and 415 Reg S (B) warrants outstanding.
The Company has never paid cash dividends on its common stock and currently
intends to continue its policy of retaining all of its earnings for use in its
business.
(c) Convertible Preferred Stock: Out of the authorized preferred stock,
the Company has designated a Series A Convertible Preferred Stock ("Series A").
The designated number of shares of the Series A is 5,000. One share of Series A
may be converted into 1,600 common shares of the Company at the election of the
holder anytime beginning September 1, 1994. The holders of outstanding shares of
Series A shall not be entitled to receive any dividends. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Company, the holder of each share of Series A shall be entitled to
receive, from the assets of the Company available for distribution to its
stockholders, before any payment or distribution shall be made on the common
stock, an amount equal per share to $100. If the assets and funds to be
distributed among the holders of the Series A shall be insufficient to permit
the payment of the full aforesaid preferential amount to such holders, then the
entire assets and funds of the Company legally available for the distribution
shall be distributed among the holders of the Series A in proportion to the
aggregate preferential amount of all shares of Series A held by them.
After payment has been made to the holders of the Series A, the holders of the
common stock shall be entitled to share ratably in the remaining assets on the
basis of the number of shares of common stock held by them at the time of such
liquidation. The holder of each share of Series A stock shall have the right to
1,600 votes for each share standing in his name on the books of the Company and
shall have the right to vote at all meetings of the stockholders. These votes
will be aggregated with the votes of the holders of the Company's common stock
and will not be treated as a separate class. As if June 30, 1999 there were
4,200 Series A shares outstanding held by 2 individuals.
-4-
<PAGE>
Item 6. Management's Discussion and Analysis or Plan of Operations
The following discussion should be read in conjunction with the Financial
Statements and notes thereto included herein.
THE COMPANY PROJECT
For the last two years, the Company has undertaken the development of its own
software solution implementing business to business E-commerce as an
application software provider with its own set of tools, notably Key-Qual .
Key-Qual is a net-based tool for the organization and certification of all
existing production processes. It covers Industry, Services, Administration and
Medical sectors.
The system enables the user to fully describe all the desired functions of
production processes taking into account all the particularities of any
connected end user.
Through normalization professional individuals will be able to communicate and
interact in the most effective way.
By connecting and running Key-Qual quality system application, a company will
have all of its production and know-how online. Thus lies a great enhancement of
productivity and added value to the whole organization.
Any user will be able to ask or be asked relevant information regarding
production.
The system will help perform all relevant analyses and cross-reference them with
clients' procedures, production cycle and accompanying knowledge database.
WHO MAY BE INTERESTED
All small and large organizations concerned in raising customer satisfaction by
improving quality throughout its processes.
Industrial and corporate environment,
- ----------------------------------------
The Company is currently working on a generic industrial Key-Qual application.
Key-Qual has the ambition to cover all non computerized personnel in any given
company regardless of its business activity.
In the industry sector, actually only 15-20% of the employees of a company use a
desktop system with access to information systems mainly for administrative
tasking. We presume the same model prevails in any other sectors at large :
health care, services, administration. The 80-85% remaining employees are
affected to production within the company.
Professionals and individuals and specific fields of expertise
- ---------------------------------------------------------------------
The Company's business model is to release a packaged Key-Qual title for any
professional and business activity that can generate over 3 years a minimum of
ten thousand basic $380/month contracts and set up the portal for delivery and
servicing worldwide through Internet Providers and Portal companies.
These titles can be marketed through the setup of subsidiaries with partners and
investors.
The Company is currently working on
- - a Key-Qual application for the certification of software editors and
independent developers,
- - a Key-Qual application for dentists and orthodontists,
The Company is planning to work on
- - a Key-Qual application for managing and normalizing on the Web the information
stored in databases and ERP systems i.e. SAP(R), BAAN(R), JD Edwards(R), etc.
-5-
<PAGE>
ADVANTAGES
The resulting interaction between the system and its users will eliminate most
of the cost associated with the back and forth running between all different
activities running in the company.
The likely outcome of using Key-Qual is huge productivity gains, turbo charged
R&D and management of internal know-how for corporations and greater quality
service and knowledge for individuals.
Most processes and transactions in industry, healthcare and services are
duplicative and paper based, clobbering the value added process of all
participants. Normalization in these activities are particularly well suited for
internet use.
The growing number of users on the Internet is becoming more and more important
for business to business as well as business to consumer interaction.
HOW IT WORKS
Key-Qual is a mission critical application that can be deployed on the Internet,
Extranet and Intranet platform.
It uses the most up to date technological standards such as a modular tiered
Corba based architecture so any connected user can interact without the need for
expensive hardware.
It runs on any desktop system with a browser, is self deploying and requires
zero client maintenance. Thanks to Java technology, it will work on most server
platforms available on the market for large application software.
It carries services like scalability, interoperability, fault tolerance and
security and can handle high volumes of transactions.
Key-Qual allows the integration of diverse applications.
CURRENT SITUATION
The conception phase started about two years ago, all Research and Development
expenses recorded until December, 1998 have been geared towards conception only.
This means engineering, industry and quality management specialists are paid for
coming up with a satisfactory solution for encapsulating know-how. Then this
will be translated into a workable system software application.
The modeling phase is currently under way. It consists of creating a model which
will be used for the development of the application software. The model must
show all the layers of what the application software will be.
Key-Qual global model should be completed in the fall 1999. The Company is also
working with experts in specific fields in order to create models for specific
application.
The development of the final prototype product will take into consideration the
architecture of the application, its functions, ergonomics and GUI. The
specification for basic engines for the application are being currently written.
The Company expects to have a commercially viable prototype in the spring 2000.
By merging with DQC, the Company will have access to Stellarx's (TM) and
Versant's (TM) technologies, which shall have substantial beneficial effects on
the development time and costs of its application software.
Moreover, the Company believes that the limited amount of fees to be paid to
Stellarx for runtime distribution will considerably reduce future costs of
revenues when installing application software and Database Management Systems
runtimes on the Company's customers' computers.
-6-
<PAGE>
IMPACT OF YEAR 2000
The Company has determined that the purchased software applications it uses and
software applications developed internally are Year 2000 compliant. However,
there is no guarantee that other systems of other companies on which the
Company's systems rely will be timely converted and would not have an adverse
effect on the Company's systems.
LIQUIDITY AND CAPITAL RESOURCES
(a) Liquidity :
The Registrant's securities are currently not liquid. There is one market maker
in the Company's securities. The Company's management is attempting to interest
market makers in the Company's securities, so as to provide limited liquidity
for holders of the free trading units. The Company anticipates that liquidity of
its stock will be enhanced by the soon to come initial releases of its software
product currently being developed. Such liquidity, though not a certainty, would
in all likelihood stem from interest in the Company's product(s) and business.
The Company cannot insure liquidity at any time in the future, regardless of
whether or not it conducts successful future business operations.
(b) Capital Resources :
The Company expects to continue to incur substantial expenses related to further
Research and Development of its technologies and products, increased staffing
levels, acquisition and support of patent rights, additional capital equipment
for Research and Development activities, starting commercial activities. The
Company may incur additional losses in the near term.
The Company does not anticipate large expenditures for capital goods such as
plant and large equipment at any time in the foreseeable future. This
expectation is subject to change based on the Company's possible capital
requirements for software development.
The Company estimates that Research and Development expenses required for
completing the development of the Key-Qual application software will be covered
with issuance of stock as compensation for such services.
If the Company's currently available funds and internally generated cash flow
are not sufficient to satisfy its financing needs, the Company would be required
to seek additional funding through other arrangements with collaborative
partners, through bank borrowings and through public or private sales of its
securities, including equity securities through a Private Placement. There can
be no assurance that additional funds, if required, will be available to the
Company on favorable terms, if at all.
POTENTIAL FLUCTUATIONS IN OPERATING RESULTS
The Company's operating results have varied significantly in the past and may do
so in the future. Factors affecting the Company's operating results include, but
are not limited to important Research & Development expenses to finish
development of software product, delays in commercializing the software, the
degree of acceptance of the Company's products; by the markets and industries
served by the Company.
The Company expects that fluctuations in its operating results will continue for
the foreseeable future. Consequently, the Company believes that period-to-period
comparisons of its financial results should not be relied upon as an indication
of future performance.
The Company intends to continue making significant expenditures on Research and
Development to finish development of current product and develop new products.
While the Company believes that these current Research and Development
expenditures will be beneficial in the long term development of its business,
there can be no assurances that the development of products will be successful
or will not be rendered obsolete by future technology acquisitions or
developments. Research and Development expenditures are incurred substantially
in advance of related revenue and in some cases may not result in the generation
of revenue.
-7-
<PAGE>
Item 7. Financial Statements
The Report of the Independent Certified Public Accountant appearing at page F-1
and the Financial Statements and Notes to Financial Statements appearing at
pages F-2 through F-14 are incorporated herein by reference.
Item 8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act
The Directors and Officers of the Registrant as of the date of this report are
as follows:
<TABLE>
<CAPTION>
Name Age Position Served as a
Director Since
<S> <C> <C> <C>
Lionel Mauclaire. . . 38 President, Treasurer, Director August 17, 1989
Jean-Michel Mauclaire 42 Director September, 1995
Robert Mauclaire. . . 70 Director November, 1996
Ronald R. Chadwick. . 44 Director, Secretary August 17, 1989
</TABLE>
Family Relationships: The Company's President and Director, Lionel Mauclaire
and Jean-Michel Mauclaire, a Director, are brothers, and Robert Mauclaire, a
Director, is the father of Lionel Mauclaire and Jean-Michel Mauclaire.
All Directors of the Company will hold office until the next annual meeting of
the shareholders, and until successors have been elected and qualified. Officers
of the Company are elected by the Board of Directors at the first meeting of the
Company's shareholders, and hold office until their death, resignation, or
removal from office.
Lionel Mauclaire. President, Treasurer, and a Director. Mr. Mauclaire has been
President, Treasurer, and a Director of the Company since August, 1989. Since
September, 1987, Mr. Mauclaire has conducted his business under the name L.M.
International, Inc., a company which was formed for the purpose of engaging in
financing, investment banking, mergers and acquisitions. From May, 1985 to
November, 1986 he was employed as a marketing executive with I.M.M., S.A., a
Paris, France based company engaged in the business of robots. From February,
1983 to July, 1985 he was employed by Malterie Mauclaire, S.A., a family
business which supplied breweries with barley. Mr. Mauclaire received his
business degree in 1982 from IMAC, Paris, France.
Ronald R. Chadwick, Secretary and a Director. Mr. Chadwick has served as
Secretary and a Director since August, 1989. From 1993 until present he has
operated his own certified public accounting firm, Ronald R. Chadwick, P.C. From
1986 until present he has been President and a Director of Petramerica Oil,
Inc., an oil and gas company. Mr. Chadwick received an MBA degree in finance
from Arizona State University in 1980 and a Bachelor of Science degree from
Oregon State University in 1979.
-8-
<PAGE>
Jean-Michel Mauclaire, a Director. Mr. Mauclaire resides in Paris, France. He is
a graduate of Ecole Superieure de Commerce de Paris (1980), holds a graduate
degree in international business from Paris University (1983) and a French
Certified Public Accountant degree (1993). After 5 years in an international
accounting firm, Mr. Mauclaire has held several executive positions in the
Lafarge Group, a worldwide marker of cement products, in the finance,
information systems and European business development areas.
Robert Mauclaire, a Director. Mr. Mauclaire received his Baccalaureate degree
in 1950 and Law degree in 1954 from Paris University. From 1957 to 1968 he
served first as a sales representative at IBM France, then as International
Accounts Manager at IBM World Trade Europe and Oil Industry Debt Manager at IBM
France. From 1969 to 1987 Mr. Mauclaire served in an executive capacity
(including as CEO from 1981-1987) to the Mauclaire family malting business,
Malterie Mauclaire, S.A. From 1987 to 1993 Mr. Mauclaire was counsel to the CEO
of Soufflet Group, a French company with annual sales of approximately $4
billion. From 1992 to present he has served as a Judge at the local Tribunal of
Commerce. For the past 20 years Mr. Mauclaire has held a number of highly
regarded civil positions including Chairman of the Finance Committee of the
Chamber of Commerce of the District of Aube, membership on the Board of Banque
Populaire de Champagne, Chairman of the Finance Committee of the Regional
Chamber of Commerce of Champagne-Ardennes, Vice President of the National
Committee of Business Legal and Fiscal Studies of the Association of French
Chambers of Commerce, membership on the Committee of Counsels of the Banque de
France, and Vice President of the Board of Banque Populaire de Champagne.
Item 10. Executive Compensation
Compensation paid to Officers and Directors is set forth in the Summary
Compensation Table below. The Company may reimburse its Officers and Directors
for any and all out-of-pocket expenses incurred relating to the business of the
Company.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Name and Fiscal Salary Bonus Other Annual
Principal Position Year Compensation
<S> <C> <C> <C> <C>
Lionel Mauclaire,. 1996 - - -
President, CEO . . 1997 - - -
1998 - - -
1999 - - -
</TABLE>
-9-
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of the date of this Report, the stock
ownership of each person known by the Registrant to be the beneficial owner of
five percent or more or the Registrant's common stock, each Officer and Director
individually and all Directors and Officers of the Registrant as a group:
<TABLE>
<CAPTION>
NAME CLASS NO. OF % OF
SHARES CLASS
<S> <C> <C> <C>
Lionel Mauclaire. . . . . Common 14,471,968 (1) 75.59
3025 S. Parker Rd (S) 109 Preferred 4,000 (2) 95.24
Aurora, Colorado 80014
Ronald Chadwick . . . . . Common 400,000 2.01
3025 S. Parker Rd (S) 109
Aurora, Colorado 80014
Jean-Michel Mauclaire . . Common 1,118,560 5.84
3025 S. Parker Rd (S) 109
Aurora, Colorado 80014
Directors and . . . . . . Common 15,990,528 83.52
Officers as a Group . . . Preferred 4,000 95.24
<FN>
(1) In addition to the 14,471,968 common shares currently owned by him, Lionel
Mauclaire also owns 326,000 A warrants and 326,000 B warrants. If exercised
these warrants, each of which convert into eight shares of common stock, would
give Mr. Mauclaire ownership of an additional 5,226,560 shares of common stock.
He also holds warrants to purchase a further 198,240 common shares.
(2) Each share of preferred stock is convertible into 1,600 shares of the
Company's common stock anytime beginning September 1, 1994.
</TABLE>
Item 12. Certain Relationships and Related Transactions
None.
-10-
<PAGE>
PART IV
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits
-- The following Exhibits were filed with the Securities and Exchange
Commission in the Exhibits to Form S-18 on March 26, 1990, and are incorporated
by reference herein:
3.1 Articles of Incorporation
3.2 By Laws
(b) Reports on Form 8-K
-- The following reports were filed on Form 8-K during the fourth
quarter of the fiscal year ended June 30, 1999:
8-K filed April 24, 1999 for amended merger with Distributed Quality
Corp.
-11-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized, on October 18, 1999.
LINDSEYTECHNOLOGIES.COM, INC.
(formerly Lindsey Technologies, Inc.)
By: /s/Lionel Mauclaire
Lionel Mauclaire, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the Registrant in
the capacities indicated, on October 18, 1999.
Principal Executive Officer, Financial Officer, Accounting Officer and Director:
/s/Lionel Mauclaire
Lionel Mauclaire
Directors:
/s/Ronald R. Chadwick
Ronald R. Chadwick
/s/Jean-Michel Mauclaire
Jean-Michel Mauclaire
/s/Robert Mauclaire
Robert Mauclaire
-12-
<PAGE>
LindseyTechnologies.com, Inc. and Subsidiaries
(formerly Lindsey Technologies, Inc.)
Financial Statements
June 30, 1999
<TABLE>
<CAPTION>
Table of Contents
Page
<S> <C>
Independent Auditor's Report . . . . . . . . . . . F-1
Financial Statements
Consolidated Balance Sheet. . . . . . . . . . . F-2
Consolidated Statements of Operations . . . . . F-3
Consolidated Statements of Stockholders' Equity F-4
Consolidated Statements of Cash Flows . . . . . F-5
Notes to Financial Statements. . . . . . . . . . . F-6 - F-14
</TABLE>
<PAGE>
LARRY O'DONNELL, CPA, P.C.
Telephone (303) 745-4545
2280 South Xanadu Way - Suite 370
Aurora, Colorado 80014
Board of Directors
LindseyTechnologies.com, Inc.
Aurora, Colorado
Independent Auditor's Report
I have audited the accompanying consolidated balance sheet of
LindseyTechnologies.com, Inc. and Subsidiaries (formerly Lindsey Technologies,
Inc.) as of June 30, 1999 and the related consolidated statements of operations
and other comprehensive income, stockholders' equity and cash flows for the
years ended June 30, 1999 and 1998. 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 consolidated financial position of
LindseyTechnologies.com, Inc. and Subsidiaries (formerly Lindsey Technologies,
Inc.) as of June 30, 1999, and the consolidated results of its operations and
its cash flows for the years ended June 30, 1999 and 1998 in conformity with
generally accepted accounting principles.
Larry O'Donnell, CPA, P.C.
September 28, 1999
F-1
<PAGE>
LindseyTechnologies.com, Inc. and Subsidiaries
(formerly Lindsey Technologies, Inc.)
Consolidated Balance Sheet
June 30, 1999
<TABLE>
<CAPTION>
Assets
Current assets
<S> <C>
Cash in bank. . . . . . . . . . . . . . . . . . . . . . . . $ 41,469
Accounts receivable . . . . . . . . . . . . . . . . . . . . 11,371
Investments in securities less unrealized losses of $2,607. 5,337
Other assets. . . . . . . . . . . . . . . . . . . . . . . . 514
------------
Total current assets. . . . . . . . . . . . . . . . . . . . 58,691
Property and equipment
Computer equipment, less accumulated depreciation of $4,989 8,655
Costs in excess of acquired net assets. . . . . . . . . . . 57,932
------------
$ 125,278
============
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable. . . . . . . . . . . . . . . . . . . . . . $ 910,266
Accounts payable-related parties. . . . . . . . . . . . . . 23,342
Notes payable- shareholders . . . . . . . . . . . . . . . . 148,727
------------
Total current liabilities . . . . . . . . . . . . . . . . . 1,082,335
------------
Stockholders' equity
Preferred stock, no par value, 20,000,000
total; 5,000 Series A shares authorized
4,200 issued and outstanding. . . . . . . . . . . . . . . . 304,257
Common stock, no par value,
100,000,000 shares authorized,
19,146,460 issued and outstanding . . . . . . . . . . . . . 14,422,772
Underwriter's warrants 20,000 issued, and outstanding . . . 120
Accumulated other comprehensive income. . . . . . . . . . . (10,653)
Accumulated deficit . . . . . . . . . . . . . . . . . . . . (15,673,553)
------------
(957,057)
------------
Total Liabilities and Stockholders' Equity. . . . . . . . . $ 125,278
============
See Notes to Financial Statements.
</TABLE>
F-2
<PAGE>
LindseyTechnologies.com, Inc. and Subsidiaries
(formerly Lindsey Technologies, Inc.)
Consolidated Statements of Operations
Years Ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Revenues. . . . . . . . . . . . . . . . . $ 38,918 $ 9,948
------------- -------------
General & Administrative expenses . . . . 53,962 171,102
Research & Development. . . . . . . . . . 8,015,967 6,909,282
------------- -------------
8,069,929 7,080,384
------------- -------------
Net (loss) from operations. . . . . . . . (8,031,011) (7,070,436)
------------- -------------
Other income (expense):
Share of loss of Heldol Corporation . . . (14,356) (100,862)
Amortization. . . . . . . . . . . . . . . (32,642) (21,546)
Gain on sale of trade securities. . . . . 686 164
------------- -------------
(46,312) (122,244)
------------- -------------
Net income (loss) . . . . . . . . . . . . $ (8,077,323) $ (7,192,680)
------------- -------------
Other comprehensive income
Unrealized loss on securities . . . . . . (2,800)
Foreign currency translation. . . . . . . (1,092) (4,025)
------------- -------------
Other comprehensive income. . . . . . . . (3,892) (4,025)
------------- -------------
Total comprehensive income. . . . . . . . $ (8,081,215) $ (7,196,705)
============= ==============
Net income (loss) per share . . . . . . . $ (.44) $ (.44)
Total comprehensive income per share. . . $ (.44) $ (.44)
========= ==========
Weighted average number of common shares
and equivalent units outstanding. . . . . 18,335,876 16,318,017
============= ==============
See Notes to Financial Statements.
</TABLE>
F-3
<PAGE>
LindseyTechnologies.com, Inc. and Subsidiaries
(formerly Lindsey Technologies, Inc.)
Consolidated Statements of Stockholders' Equity
Years Ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
Common Stock Preferred Stock Accumulated Accumulated
Shares Amount Shares Amount Deficit Other
Comprehensive
Income
<S> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1997 . . . 16,001,260 $ 233,493 4,200 $ 304,257 $ (403,550) $ (2,736)
Common stock issued for cash 21,200 88,360
Common stock issued
for services . . . . . . . . 1,602,000 7,014,000
Net loss for the year (7,192,680) (4,025)
----------- ---------- ------ -------- ------------- ----------
Balance, June 30, 1998 . . . 17,624,460 $ 7,335,853 4,200 $ 304,257 $ (7,596,230) $ (6,761)
Common stock issued for cash 17,000 75,624
Common stock issued
For services . . . . . . . . 865,000 4,325,000
Common stock issued for
subsidiaries . . . . . . . . 640,000 2,686,295
Net loss for the year (8,077,323) (3,892)
----------- ---------- ------ -------- ------------- ----------
Balance, June 30, 1999 . . . 19,146,460 $14,422,772 4,200 $ 304,257 $ (15,673,553) $ (10,653)
=========== ========== ====== ======== ============= ==========
</TABLE>
See Notes to Financial Statements
F-4
<PAGE>
LindseyTechnologies.com, Inc. and Subsidiaries
(formerly Lindsey Technologies, Inc.)
Consolidated Statements of Cash Flows
Years Ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
Cash flows from operating activities:
<S> <C> <C>
Net income (loss). . . . . . . . . . . . . . . . . . $ (8,077,323) $ (7,192,680)
Adjustments to reconcile net income to net cash
provided by operations:
Share of loss of Heldol Corporation. . . . . . . . . 14,356 100,862
Depreciation and amortization. . . . . . . . . . . . 32,729
Foreign currency translation adjustment. . . . . . . (1,092) (4,025)
Common stock issued for services and software. . . . 7,025,000 7,014,000
(Increase) decrease in: (net of acquisitions)
Accounts receivable. . . . . . . . . . . . . . . . . 5,232 (9,886)
Prepaid expenses . . . . . . . . . . . . . . . . . . 8
Increase (decrease) in: (net of acquisitions)
Accounts payable . . . . . . . . . . . . . . . . . . 879,249 16,837
------------ ------------
Net cash provided by (used in) operating activities. (121,841) (53,346)
------------ ------------
Cash flows from investing activities:
Acquisition of Heldol Corporation. . . . . . . . . . (1,815)
Investment in Heldol Corporation . . . . . . . . . . (35,930) (22,031)
Purchase of securities . . . . . . . . . . . . . . . (8,137)
------------ ------------
Net cash used in investing activities. . . . . . . . (45,882) (22,031)
------------ ------------
Cash flows from financing activities:
Due to shareholder . . . . . . . . . . . . . . . . . 115,748
Sale of common stock . . . . . . . . . . . . . . . . 75,624 88,360
------------ ------------
Net cash flow provided by financing activities . . . 191,372 88,360
------------ ------------
Net increase in cash equivalents . . . . . . . . . . 23,649 12,983
Cash at beginning of year. . . . . . . . . . . . . . 17,820 4,837
------------ ------------
Cash at end of year. . . . . . . . . . . . . . . . . $ 41,469 $ 17,820
============ ============
Supplemental disclosure of non cash investing
and financing activities
Common stock issued for services . . . . . . . . . . $ 4,325,000 $ 7,014,000
Common stock issued for subsidiaries . . . . . . . . $ 2,686,295
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE>
LindseyTechnologies.com, Inc. and Subsidiaries
(formerly Lindsey Technologies, Inc.)
Notes to Financial Statements
1. Organization and Summary of Significant Accounting Policies:
Organization - The Company was organized as L.M. Capital, Inc. under the laws of
the state of Colorado on August 17, 1989. On November 8, 1996, the Company
changed its name to Lindsey Technologies, Inc. On July 20, 1999 the Company
changed its name to LindseyTechnologies.com, Inc. The Company is developing
software and marketing software for industrial, medical, and commercial
operations.
The Company operates in Europe and North America. The consolidated financial
statements include the Company and its wholly owned subsidiaries, Heldol
Corporation and Distributed Quality Corp.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect 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 differ from those estimates.
Loss Per Common Share - Loss per common share is computed on the basis of the
weighted average number of common shares during the respective periods.
Cash Equivalents - For the purposes of reporting cash flow, the Company
considers cash and savings deposits to be cash equivalents.
Foreign Currency Translation - Financial statements for the Company's
subsidiaries outside the United States are translated in U.S. dollars at
year-end exchange rates for assets and liabilities and weighted average exchange
rates for income and expenses. The resulting translation adjustments are
recorded as a separate component of shareholders' equity.
Amortization- The Company's investment in Heldol Corporation includes the
unamortized excess of the Company's investment over its equity in Heldol's net
assets. This excess was $58,974 at June 30, 1999, and is being amortized on a
straight-line basis over its estimated useful life of five years.
Principles of consolidation- The consolidated financial statements include the
accounts of the Company and its subsidiaries. Significant intercompany accounts
and transactions have been eliminated.
F-6
<PAGE>
LindseyTechnologies.com, Inc. and Subsidiaries
(formerly Lindsey Technologies, Inc.)
Notes to Financial Statements (continued)
1. Organization and Summary of Significant Accounting Policies (continued)
Investment in marketable securities - The Company classifies its marketable
debt and equity securities as "available for sale". Securities classified as
available for sale are carried in the financial statements at fair value.
Realized gains and losses, determined using the average cost method, are
included in earnings; unrealized holding gains and losses are reported as a
other comprehensive income.
Property and equipment - Property and equipment are stated at cost, net of
accumulated depreciation. Depreciation is provided primarily by the
straight-line method.
2. Investment In Heldol
On June 21, 1996, the Company entered into a joint venture with a team of French
software engineers (the Associates) and their wholly owned French corporation,
Helvetius Ingenierie.
The Company and the Associates formed Heldol Corporation (Heldol) a United
States corporation, on October 25, 1996. The Company capitalized Heldol for
$70,000 giving the Company 35% of Heldol and the Associates 65%. As of June 30,
1998, the Company had invested $211,286 and owned 50% of Heldol. The Company
accounted for the investment under the equity method.
On May 31, 1999, the Company Acquired all of the Associates stock by issuing
100,000 shares of its common stock. The purchase price was allocated as follows;
<TABLE>
<CAPTION>
<S> <C>
Cash . . . . . . . . . $ (1,815)
Accounts receivable. . 6,717
Property and equipment 8,745
Prepaid expenses . . . 522
Goodwill . . . . . . . 58,914
Accounts payable . . . (7,993)
---------
$ 65,090
=========
</TABLE>
The accompanying consolidated financial statements include operations of
Heldol for the one month ended June 30, 1999.
F-7
<PAGE>
LindseyTechnologies.com, Inc. and Subsidiaries
(formerly Lindsey Technologies, Inc.)
Notes to Financial Statements (continued)
2. Investment In Heldol (continued)
The following unaudited pro-forma results of operations assume that the purchase
occurred on July 1, 1998 and 1997, respectively.
<TABLE>
<CAPTION>
<S> <C> <C>
1998 1997
Revenues. . . . . . . . . . . . . . $ 80,419 -
Net income (loss) . . . . . . . . . (8,106,033) $(7,394,404)
Net income (loss) per common share. $ (.44) $ (.45)
</TABLE>
Condensed financial information of Heldol Corporation as of and for the period
ended May 31,1999 and the year ended June 30, 1998.
Set forth below is condensed financial information of Heldol Corporation as of
and for the period ended May 31,1999 and as of for the year ended June 30, 1998.
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Current assets . . . . . . . . . . . . . . . . . . . . . $ 5,424 $ 8,489
Other. . . . . . . . . . . . . . . . . . . . . . . . . . 8,745 140
---------- -----------
Total assets . . . . . . . . . . . . . . . . . . . . . . 14,169 8,629
========== ===========
Current liabilities. . . . . . . . . . . . . . . . . . . 41,579 8,539
Stockholders' equity . . . . . . . . . . . . . . . . . . (27,410) 90
---------- -----------
Total liabilities and stockholders' equity . . . . . . . $ 14,169 $ 8,629
========== ===========
Revenues . . . . . . . . . . . . . . . . . . . . . . . . 41,500
Allowance for loss on investment in Helvetius Ingenierie (175,772)
Operating expenses . . . . . . . . . . . . . . . . . . . (70,211) (25,952)
---------- -----------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . $ (28,711) $ (201,724)
========== ===========
</TABLE>
3. Investment in Distributed Quality Corp.
On November 5th 1998, the Company acquired Distributed Quality Corp ('DQC'), a
Colorado based company involved in marketing Networking and CORBA framework
software platforms for distributing quality related knowledge throughout
organizations using Internet technology, for $2,700,000 consisting of 540,000
restricted common shares of the Company valued at $5 per share and assumption of
$865,000 in liabilities. DQC was acquired in a merger transaction pursuant to
the terms of a merger agreement, dated November 5th 1998.
F-8
<PAGE>
LindseyTechnologies.com, Inc. and Subsidiaries
(formerly Lindsey Technologies, Inc.)
Notes to Financial Statements (continued)
3. Investment in Distributed Quality Corp. (continued)
The acquisition was accounted for under the purchase method, and the purchase
price was allocated to the process technology. Prior to completing the
acquisition, the Company conducted reviews in order to determine the fair market
value of the organization and technology to be acquired. These reviews consisted
of an evaluation of existing products, Research and Development in process
(projects that had not reached technological feasibility and had no alternative
future use), customers, financial position and other matters. The acquired in
process Research and Development represent unique and emerging technologies.
On August 31, 1998 DQC signed an agreement with Stellarx SA, a French software
startup company that provides software infrastructure for developing Internet
based application software solutions.
This agreement stipulates that DQC buy the Stellarx Framework Development
toolkit (TM) license for a price of $300,000. This software environment includes
an XML document manager and repository, a workflow engine and an application
designer. It also includes a Versant (TM) ODMS development license. (Versant is
a trademark of Versant Corp.; Stellarx is a trademark of Stellarx S.A.).
Under the terms of this agreement, DQC also has a right to integrate Stellarx
and Versant ODBMS runtime software pieces in its own application software and
distribute the whole as a package to its clients. This right is worldwide,
unlimited in time and exclusive for application software related to quality,
regardless of the business sector. DQC is required to pay 10% of its application
license revenues and 5% of its license maintenance revenues to Stellarx as
compensation for this right and to contribute to Research and Development costs
of Stellarx for each year ended December 31 as follows: 1998: $15,000; 1999:
$100,000; 2000: $200,000; 2001: $250,000.
Prior to the transaction, the Company had evaluated the establishment of
technological feasibility of acquired in process technology. Due to the early
stage of completion at the date of acquisition, the Company has concluded that
it could not determine, with any reasonable degree of accuracy, technological
feasibility until the acquired in process technology was delivered and tested.
The purchased software was not fully delivered to DQC at the date of the merger
transaction.
In conformity with SFAS NO. 86, "Accounting for the Costs of Computer Software
to be sold, Leased or otherwise Marketed", the total purchase price of DQC has
been allocated to Research and Development expenses. The purchase price and
costs directly attributable to completion of the acquisition were not
significant. No significant adjustments were required to conform the accounting
policies of the acquired companies.
The Company may continue to incur charges for acquired in process technology in
connection with future acquisitions, which will increase operating and net
losses for the periods in which the acquisitions are consummated.
F-9
<PAGE>
LindseyTechnologies.com, Inc. and Subsidiaries
(formerly Lindsey Technologies, Inc.)
Notes to Financial Statements (continued)
4. Research and Development expenses
The Company conforms to the requirements of SFAS no 86, "Accounting for the
Costs of Computer Software to be sold, Leased or otherwise Marketed", which
requires capitalization of costs incurred in developing new software once
technological feasibility, as defined, has been reached. Costs of developing
software and Research and Development are expensed as incurred. The Company did
not capitalize any software development costs during the years ended June 30,
1999 and 1998.
Except for the expenses related to the merger transaction with DQC, Research and
Development expenses for all periods presented consisted primarily of
compensation and consulting fees to support Research and Development for
conception, modeling and development of the Company's application software
called Key-Qual, a net based tool for certification and organization of all
existing production processes covering industry, services, administration and
medical sectors.
These expenses may vary from one period to the other because expenses are
recorded when cooperation contracts have been signed and stock issuances have
been authorized by a board meeting, which does not occur everyday. Such wide
variation of expenses may occur in the future.
The Company believes it has budgeted adequate Research and Development resources
to complete the contemplated projects over time periods ranging from six to
eighteen months form the dates of acquisition in order to finalize development
of finished application software.
5. Marketable securities
Unrealized gains and losses of marketable equity securities available for sale
as of June 30, 1999 and 1998 are as follows.
<TABLE>
<CAPTION>
Amortized Gross Gross Fair
Cost Unrealized Unrealized Value
Gains Losses
June 30, 1999:
Available for
<S> <C> <C> <C> <C>
sale equity securities $ 7,944 - $ (2,607) $5,337
</TABLE>
F-10
<PAGE>
LindseyTechnologies.com, Inc. and Subsidiaries
(formerly Lindsey Technologies, Inc.)
Notes to Financial Statements (continued)
6. Related Party Transactions
A Company wholly owned by the secretary was reimbursed for out of pocket
expenses in the amount of $24,000 and $14,500 for the years ended June 30, 1999
and 1998 respectively.
The Company reimbursed a family member of its president for out of pocket
expenses of $8,169 and $2,650 during the years ended June 30, 1999 and 1998
respectively.
The Company has borrowed and paid back funds from the major shareholder's wholly
owned company. These loans are at zero percent interest to the Company.
7. Public Offering
The Company completed a public offering of 20,650 units at $6.00 per unit in
March 1991, with gross proceeds of $123,900. Each unit consisted of twelve
common shares, no par value, plus twenty Class A and Class B warrants to
purchase common stock. The Class A warrants expired twelve months after the date
of the prospectus on September 13, 1990. The Board of Directors had extended the
time to exercise these warrants until June 30, 2000. However, these warrants
have not been exercised.
These warrants allowed the holder to purchase eight common shares of stock at an
exercised price of twelve and one-half cents per share. As of June 30, 2000,
413,000 warrants were issued and outstanding. The other class of warrants, Class
B, has expired on September 13, 1992. The Board of Directors extended the period
to exercise the warrants through June 30, 2000. However these warrants have not
been exercised. The holder of these warrants could purchase eight common shares
of stock at an exercised price of eighteen and three-quarter cents per share. As
of June 30, 1999, 413,000 warrants were issued and outstanding.
The Company has the right to redeem these warrants upon a thirty day written
notice at a price of $.0001 per warrant commencing three months from the date
the prospectus becomes effective. As of June 30, 1999, the Company has redeemed
no warrants.
F-11
<PAGE>
LindseyTechnologies.com, Inc. and Subsidiaries
(formerly Lindsey Technologies, Inc.)
Notes to Financial Statements (continued)
8. Preferred Stock Series A
Out of the authorized preferred stock, the Company has designated a "Series A
Convertible Preferred Stock" (Series A) with 5,000 as the designated number of
shares. The Series A holders are not entitled to receive dividends but can
convert one share of Series A into 1,600 shares of common stock.
As a provision of the Series A - " In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company, the holder
of each share of Series A shall be entitled to receive, of the assets of the
Company available for distribution, an amount per share equal to $100."
If the assets and funds to be distributed among the holders of the Series A
shall be insufficient to permit the payment of the full foresaid preferential
amount to such holders then the entire assets and funds of the Company legally
available for distribution shall be distributed among the holders of the Series
A in proportion to the aggregate preferential amount of all shares held by them.
After payment has been made to the holders of the Series A, the holders of the
common stock shall be entitled to share ratably in the remaining assets on the
basis of the number or shares held by them.
The holder of each share of Series A shall have the right to two hundred votes
for each share standing in his name on the books of the Company. The holders
shall have the right to vote at all meetings of the stockholders held in respect
to any matter upon which voting is required, including the election of
directors. These votes will be aggregated with the votes of the holders of the
Company's common stock and will not be treated as a separate class.
9. Sale of Securities
The Company has sold its securities under a Regulation S Offshore Securities
Agreement. The securities may not be sold in the United States unless they
become registered under a securities act or under an exemption of a securities
act.
The securities are sold in units at $100 per unit. Each unit consists of 100
common shares, no par value, plus twenty Class A warrants to purchase common
stock at $7 per share and twenty Class B warrants to purchase common stock at $9
per share.
The class A warrants expire December 15, 1999. The Class B warrants expire
December 15, 2000. The Company sold 170 and 212 units during the years ended
June 30, 1999 and 1998, respectively.
F-12
<PAGE>
LindseyTechnologies.com, Inc. and Subsidiaries
(formerly Lindsey Technologies, Inc.)
Notes to Financial Statements (continued)
10. Incentive Stock Option Plan
On August 17, 1989, the Company adopted an Incentive Stock Option Plan under
which options are intended to qualify as "incentive stock options" under Section
422A of the Internal Revenue Code of 1954 as amended. The options to purchase up
to 500,000 shares of the Company's common stock may be granted to the employees
of the Company. The plan is administered by the Board of Directors, which are
empowered to determine the terms and conditions of each option, subject to the
limitation the exercise price cannot be less than the market value of the common
stock on the date of grant (110% of the market value in the case of options
granted to an employee who owns 10% of the Company's outstanding common stock)
and no option can have a term in excess of 10 years (5 years in the case of
options granted to employees who own 10% or more of the Company's common stock).
As of June 30, 1999 no options have been granted.
11. Income taxes
Deferred income taxes arise from the temporary differences between financial
statement and income tax recognition of net operating losses. These loss
carryovers are limited under the Internal Revenue Code should a significant
change in ownership occur.
A deferred tax asset arising from the net operating loss carryover of
approximately $5,500,000 has been offset by valuation allowance.
At June 30, 1999, the Company has approximately $15,000,000 of unused Federal
net operating loss carryforwards, which principally expire in the year in 2018.
12. Going Concern
The consolidated statement of operations presented in the financial statements
reflects a net loss for year ended June 30, 1999 of $8,077,323. This created an
uncertainty about the Company's ability to continue as a going concern. However,
the Company has been able to improve it's financial position through stock
offerings and has been able to raise $7,086,919 (including $7,025,000 in
services) in 1999 and $7,102,360 (including $7,014,000 in services) in 1998 and
through private placements.
F-13
<PAGE>
LindseyTechnologies.com, Inc. and Subsidiaries
(formerly Lindsey Technologies, Inc.)
Notes to Financial Statements (continued)
12. Going Concern (Continued)
Management believes that the company future success will be achieved through the
development under its own umbrella of a generic management information system
that produces and harmonizes norms and know-how with multi-media capabilities.
While Management believes the Company will be profitable in the future, there
can be no assurance of future success. The financial statements do not include
any adjustments that might be necessary if the Company is unable to continue as
a going concern.
13. Contingency
The Company issued shares for services during the year ended June 30, 1998 and
valued those shares at $5 per share. Should the trading price of those shares be
below that amount when the two year holding period expires, the Company must
make up the difference in cash. The total amount of the contingency is $80,000.
F-14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH 10KSB FOR THE YEAR ENDED 06/30/99.
</LEGEND>
<CAPTION>
<PERIOD-TYPE> YEAR
<S> <C>
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> JUN-30-1999
<CASH> 41469
<SECURITIES> 5337
<RECEIVABLES> 11371
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 58691
<PP&E> 13644
<DEPRECIATION> 4989
<TOTAL-ASSETS> 125278
<CURRENT-LIABILITIES> 1082335
<BONDS> 0
0
304257
<COMMON> 14422772
<OTHER-SE> (15684086)
<TOTAL-LIABILITY-AND-EQUITY> 125278
<SALES> 38918
<TOTAL-REVENUES> 38918
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 8120133
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (8081215)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8081215)
<EPS-BASIC> (0.44)
<EPS-DILUTED> (0.44)
</TABLE>
