SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report
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June 26, 2000
INFe.com, Inc..
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(Exact name of registrant as specified in its Charter)
Florida
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(State or other jurisdiction of incorporation)
000-28729
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(Commission File Number)
11-3144463
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(IRS Employer Identification No.)
8000 Towers Crescent Drive
Suite 640
Vienna, VA 22182
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(Address of principal executive offices) (Zip Code)
(703) 734-5650
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(Registrant's telephone number, including area code)
Current Report Pursuant to Section 13 or 15(d) of The Securities Exchange
Act of 1934
<PAGE>
TABLE OF CONTENTS
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Item 2. Acquisition or Disposition of Assets.......................... 3
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits for CLUBCOMPUTER.COM, INC. ...................... 3
Independent Auditor's Report.................................. 4
Statements of Operations and Retained Deficit................. 5
December 31, 1999 and December 31, 1998
Schedules of Operating Cash Flows............................. 6
December 31, 1999 and December 31, 1998 - CLUBCOMPUTER.COM
Notes to Financial Statements................................. 7
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits for INFe.com, Inc. .............................. 10
Pro Forma Condensed Consolidated Balance Sheet (Unaudited).... 10
Pro Forma Condensed Consolidated Statements of
Operations (Unaudited)........................................ 11
Notes to Financial Statements................................. 12
Signatures............................................................. 13
Exhibit 23.1
Consent of Hoffman, Morrison & Fitzgerald, P.C.
<PAGE> 2
Item 2. Acquisition or Disposition of Assets
The purpose of this Amendment is to amend Item 2 and Item 7 to provide
certain financial information with respect to the Merger (as defined below),
which information was impracticable to provide at the time the Registrant
filed the Current Report on Form 8-K dated April 28, 2000.
On April 10, 2000, Infe.com, Inc. (the "Company") completed the
acquisition of a significant number of assets from ClubComputer.com, Inc. of
Nellysford, Va., pursuant to an Agreement for Sale of Assets. The terms
provided for in the agreement are that the Seller will receive shares of the
Company's common stock as consideration for the assets being purchased. A
copy of the Agreement for Sale of Assets was attached to the 8-K filed on
April 28, 2000 and marked as Exhibit "2.1" in the exhibit index.
ClubComputer.com, Inc. is a business to consumer E commerce company that
specializes in selling computer products and software over the internet.
ClubComputer.com, Inc. has an active customer base of over 25,000 active
subscribers and 100,000 total users. The Company purchased assets of
ClubComputer.com, Inc. consisting as described in Exhibit 2.1, herein.
Included within the purchase, is a perpetual license to use
ClubComputer.com, Inc.'s Java based proprietary E commerce software
platform.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) The audited Statements of operations of ClubComputer.com as of
December 31, 1999 and December 31, 1998 with reports thereon are
included herein.
<PAGE> 3
CLUBCOMPUTER.COM, INC.
STATEMENTS OF OPERATIONS AND RETAINED DEFICIT
AS OF DECEMBER 31, 1999 AND DECEMBER 31, 1998
AND REPORT THEREON
INDEPENDENT AUDITORS' REPORT
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TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
INFe.com, Inc.
Vienna, Virginia
We have audited the accompanying statements of operations and retained
deficit of CLUBCOMPUTER.COM, INC., (the "Company") for the years ended
December 31, 1999 and 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on the 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 statements of operations and
retained deficit are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the statements of operations and retained deficit. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the statements
of operations and retained deficit. We believe that our audits of the
statements of operations and retained deficit provide a reasonable basis for
our opinion.
In our opinion, the statements of operations and retained deficit referred
to above present fairly, in all material respects, the results of operations
of CLUBCOMPUTER.COM, INC. for the years ended December 31, 1999 and 1998 in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note F to the
financial statements, the Company's significant operating losses raise
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
Our audits were conducted for the purpose of forming an opinion on the
financial statements taken as a whole. The schedule of cash flows is
presented for purposes of additional analysis and is not a required part of
the financial statements. The schedule of cash flows has been subjected to
the auditing procedures applied during the audit of the financial statements
and, in our opinion, is fairly stated in all material respects in relation
to the financial statements taken as a whole.
McLean, Virginia
June 9, 2000
<PAGE> 4
ClubComputer.com, Inc.
Statements of Operations and Retained Deficit
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<TABLE>
<CAPTION>
For the year ended December 31,
1999 1998
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<S> <C> <C>
SALES, net $ 4,163,716 $ 268,037
COST OF SALES 4,645,743 261,108
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Gross profit (482,027) 6,929
Selling, general and administrative
expenses 3,766,213 292,340
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LOSS FROM OPERATIONS (4,248,240) (285,411)
OTHER INCOME (EXPENSE):
Interest income 55 -
Interest expense (20,493) (16,735)
Gain on sale of investments 189,835 -
Other income 25,076 -
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Total other income (expense) 194,473 (16,735)
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LOSS BEFORE PROVISION (BENEFIT)
FOR INCOME TAXES (4,053,767) (302,146)
Provision (benefit) for income taxes - -
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NET LOSS (4,053,767) (302,146)
RETAINED DEFICIT, BEGINNING OF PERIOD (309,363) (7,217)
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RETAINED DEFICIT, END OF PERIOD $ (4,363,130) $ (309,363)
============= =============
</TABLE>
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The accompanying notes are an integral part of these financial statements.
<PAGE> 5
ClubComputer.com, Inc.
Schedules of Operating Cash Flows
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<TABLE>
<CAPTION>
For the year ended December 31,
1999 1998
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 4,325,249 $ 270,890
Cash paid to employees and vendors (5,555,715) (168,918)
Interest received 55 -
Interest paid (17,833) (15,199)
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Net cash provided by (used in)
operating activities $ (1,248,244) $ 86,773
============= =============
</TABLE>
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The accompanying notes are an integral part of these financial statements.
<PAGE> 6
CLUBCOMPUTER.COM, INC.
Notes to Financial Statements
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A. ORGANIZATION
Club Computer, Inc., (the "Company"), was incorporated in the state of
Maryland on November 15, 1997. The Company is engaged in marketing and
selling computer systems, software and other related peripherals to
individual members via their Internet web site, www.clubcomputer.com.
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting - The accounts of the Company are maintained on the
accrual basis of accounting whereby revenue is recognized when earned, and
costs and expenses are recognized when incurred.
Basis of presentation - The financial statements, notes and additional
schedules of operating cash flows are being presented based on reporting
requirements of the Securities and Exchange Commission for businesses
acquired. Other financial statements, including the balance sheets and the
complete statements of cash flows, have been omitted, with the consent of
the Securities and Exchange Commission, because the business purchase did
not include the acquisition or assumption by the purchaser of any assets or
liabilities reflected on the Company's historical balance sheet.
Use of estimates and assumptions - Management uses estimates and assumptions
in preparing financial statements in accordance with generally accepted
accounting principles. Those estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities, and the reported revenues and expenses. Actual results could
vary from those estimates.
Accounts receivable - The Company uses the direct write-off method, which
approximates generally accepted accounting principles, to account for
amounts, if any, of its accounts receivable which are considered
uncollectible.
Inventory - Inventory consists of computer systems, software and other
related peripherals held for resale and is stated at lower of cost (on a
first-in, first-out basis) or market.
Depreciation and amortization - Property and equipment are stated at cost.
Depreciation and amortization is determined using the straight-line method
over estimated useful lives of three years.
Advertising - The Company expenses all advertising costs as incurred. For
the years ended December 31, 1999 and 1998, the total amount of advertising
expense incurred was $2,139,164 and $42,402.
Comprehensive Income - Effective for financial statements for periods ending
after December 15, 1997, the Financial Accounting Standards Board issued
SFAS No. 130, "Reporting Comprehensive Income," which establishes standards
for reporting comprehensive income and its components. Entities that do not
have items of other comprehensive income in any period presented are not
required to report comprehensive income, accordingly the Company has not
made any such disclosure in the statements presented herein.
Revenue recognition - Revenue is principally derived from memberships and
sales of goods to members. Memberships are deferred and recognized over the
term of the membership agreement, which is generally one year. Revenue from
purchase transactions through the Company's web site is recognized when the
product is shipped from a third-party vendor to the member.
Software development costs - SOP 98-1, "Accounting for Costs of Computer
Software Developed or Obtained for Internal Use", requires capitalization of
external direct costs of materials and services consumed in developing or
obtaining internal-use software. Amortization of software development
costs will begin when the software is ready for its intended use, which is
generally after all substantial testing is complete.
<PAGE> 7
CLUBCOMPUTER.COM, INC.
Notes to Financial Statements Contd..
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Segment Information - Effective for financial statements for periods
beginning after December 15, 1997, the FASB issued SFAS No. 131, "Disclosure
about Segments of an Enterprise and Related Information." This
pronouncement requires enterprises to report certain information about
operating segments, including products and services, geographic areas of
operations, and major customers. The Company has determined that it does
not have any separately reportable business segments for the years ended
December 31, 1999 and 1998.
Income Taxes - The Company, a C-corporation, accounts for income taxes
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
basis 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. Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized. The principal
items relate primarily to differences between the accumulated depreciation
and amortization for tax and book purposes.
INCOME TAXES
The provision (benefit) for income taxes for the years ended December 31,
1999 and 1998 are as follows:
1999 1998
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Current $ - $ -
Deferred - -
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Total provision (benefit)
for income taxes $ - $ -
========= =========
Deferred tax assets consisted of the following at December 31:
1999 1998
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Deferred tax assets:
Net operating loss carryforwards $ 1,600,224 $ 117,157
Depreciation and amortization 877 -
Accrued vacation 55,412 570
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Gross deferred tax assets 1,656,513 117,727
Deferred tax liabilities:
Depreciation and amortization ( -) (433)
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Valuation allowance ( 1,656,513) (117,294)
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Net deferred taxes $ - $ -
============ ============
The Company has net operating loss carryforwards totaling approximately
$4,211,000 for Federal and state income tax purposes that expire through the
year 2019.
The net change in the valuation allowance for the years ended December 31,
1999 and 1998 was $1,539,219 and $117,294, respectively.
<PAGE> 8
CLUBCOMPUTER.COM, INC.
Notes to Financial Statements Contd..
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CONCENTRATIONS
The source for virtually all of the Company's merchandise sold on their
Internet web site comes from one vendor.
E. RELATED PARTY TRANSACTIONS
During 1999 and 1998, the Company was assisted by a related party to fund
current operations through working capital advances and by obtaining other
financing agreements for the Company.
F. GOING CONCERN
As shown in the accompanying financial statements, the Company incurred a
net loss of approximately $4.1 million during the year ended December 31,
1999, and as of that date, the Company has a retained deficit of
approximately $4.4 million. The financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as
a going concern.
SUBSEQUENT EVENT
On April 10, 2000, the Company closed on an agreement with INFe.com, Inc.
(the "Buyer") to sell them a significant number of intangible assets
relating to the Company's current operating activities in exchange for the
Buyer's common stock valued at approximately $1.6 million. The Buyer has
determined that the sale qualifies as the sale of a business under Item 310
of Regulation S-B.
<PAGE> 9
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Unaudited Pro Forma Condensed Consolidated Financial
Information are included herein.
INFe.COM, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
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<TABLE>
<CAPTION>
November 30, 1999 Pro Forma Pro Forma
INFe.com, Inc. Adjustments As Adjusted
----------------- ----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 117,227 $ - $ 117,227
Certificate of deposit - restricted 50,000 - 50,000
Trade accounts receivable, net 32,880 - 32,880
Note receivable - - -
---------- ----------- -----------
Total current assets 200,107 - 200,107
PROPERTY AND EQUIPMENT, net 24,246 - 24,246
OTHER ASSETS 69,038 1,613,612 (1) 1,682,650
---------- ----------- -----------
$ 293,391 $ 1,613,612 $ 1,907,003
========== =========== ===========
LIABILITIES AND
STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Line of credit - bank $ 45,000 $ - $ 45,000
Note payable 12,245 - 12,245
Capital lease obligation 4,589 - 4,589
Accounts payable 122,958 - 122,958
Loan payable - shareholder 41,616 - 41,616
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Total current liabilities 226,408 - 226,408
NON CURRENT LIABILITIES 313,258 1,613,612 (2) 1,606,620
(320,250)(3)
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Total liabilities 539,666 1,293,362 1,833,028
COMMITMENTS AND CONTINGENCIES - - -
STOCKHOLDERS' DEFICIT (246,275) 320,250 (3) 73,975
---------- ----------- -----------
$ 293,391 $ 1,613,612 $ 1,907,003
========== =========== ===========
</TABLE>
<PAGE> 10
INFe.COM, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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<TABLE>
<CAPTION>
For the For the
Nine Months Ended Nine Months Ended
November 30, 1999 December 31, 1999 Pro Forma Pro Forma
INFe.com, Inc. ClubComputer.com, Inc. Adjustments As Adjusted
----------------- ------------------ ----------- -----------
<S> <C> <C> <C> <C>
REVENUE $ 392,701 $ 3,005,125 $ - $ 3,397,826
COST OF REVENUES 234,832 3,489,752 - 3,724,584
-------------- --------------- ----------- --------------
Gross profit 157,869 (484,627) - (326,758)
OPERATING EXPENSES 829,380 3,455,841 - 4,285,221
-------------- --------------- ----------- --------------
Loss from operations (671,511) (3,940,468) - (4,611,979)
OTHER (INCOME) EXPENSES:
Bad debts 2,000 10,298 - 12,298
Depreciation and amortization 9,449 47,468 403,403 (4) 460,320
Gain on sale of investment - (189,835) - (189,835)
Other income - (25,030) - (25,030)
Interest income - (55) - (55)
Interest expense 1,731 16,975 126,709 (5) 145,415
-------------- --------------- ----------- --------------
Total other (income) expenses 13,180 (140,179) 530,112 403,113
-------------- --------------- ----------- --------------
NET LOSS $ (684,691) $ (3,800,289) $ (530,112) $ (5,015,092)
============== =============== =========== ==============
Net loss per common share (basic) $ -0.09 $ -0.60 (6)
============== ==============
Weighted average number of common
shares outstanding 7,767,629 8,321,492
============== ==============
Net loss per common share (diluted) $ -0.09 $ -0.60 (6)
============== ==============
Weighted average number of common
shares outstanding 7,767,629 8,321,492
============== ==============
</TABLE>
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(1) To adjust assets acquired and liabilities assumed to their preliminary
estimated fair values as of April 10, 2000, the closing date of the
acquisition, based on the following allocation:
Fair value of assets acquired:
Intangibles $ 1,613,612
Fair value of liabilities assumed ( - )
----------------
Total purchase price $ 1,613,612
================
(2) To record the consideration issued by the Company to consummate the
acquisition. Acquisition consideration consisted of the following:
Common stock to be issued or issued
at closing $ 1,814,750
Present value discount (discounted
at 15% per annum) (201,238)
----------------
$ 1,613,612
================
(3) To record the issuance of the Company's common stock at closing.
(4) To record the amortization of intangibles over useful lives of three
years.
(5) To record the amortization of discount related to the Company's
liability for stock to be issued.
(6) Basic and diluted pro forma earnings per share is computed using the
weighted average number of Company common shares outstanding during
the period plus share of common stock issued as part of the
acquisition.
<PAGE> 11
INFe.COM, INC.
Notes to the Unaudited Pro Forma Condensed Consolidated Financial Information
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Basis of presentation
INFe.com, Inc. (the "Company") acquired from ClubComputer.com, Inc. ("Club
Computer") certain intangible assets, none of which were recorded on the
historical balance sheet of the Club Computer, for approximately $1.6
million in April 2000, which has all been allocated to intangible assets in
the Company's financial records. The pro forma adjustments reflect nine
months of amortization expense, assuming the transaction had occurred on the
first day of the nine months ended November 30, 1999. The value of the
intangible assets would have been approximately $1.6 million, based on the
preliminary estimated fair value of the common stock issued and to be
issued.
Effective April 10, 2000, the Company acquired the intangible assets from
Club Computer in exchange for acquisition consideration consisting of (1)
250,000 shares of the Company's restricted common stock at closing, and (2)
seven equal installments of $250,000 in the Company's restricted common
stock every three months from the date of closing. The acquisition will be
accounted for as a purchase in accordance with Accounting Principles Board
Opinion No. 16. Under the purchase method of accounting, the purchase price
is allocated to the assets acquired and liabilities assumed based on their
estimated fair values at April 10, 2000, the date of the acquisition.
Because the Company did not assume any liabilities of Club Computer, the
entire purchase price has been allocated to intangibles. The intangible
assets include the web site (www.clubcomputer.com), rights to user and
subscription lists, a membership list, trademarks, goodwill, etc.
Pro forma financial statements are based on the unaudited historical
information as of and for the nine months ended December 31, 1999. The
information contained therein is not necessarily indicative of that which
would have been attained had the transaction occurred at an earlier date and
should be read in conjunction with the historical financial statements used
in the preparation of such statements.
Pro forma adjustments
(1) To adjust assets acquired and liabilities assumed to their preliminary
estimated fair values as of April 10, 2000, the closing date of the
acquisition, based on the following allocation:
Fair value of assets acquired:
Intangibles $ 1,613,612
Fair value of liabilities assumed ( - )
----------------
Total purchase price $ 1,613,612
================
(2) To record the consideration issued by the Company to consummate the
acquisition. Acquisition consideration consisted of the following:
Common stock to be issued or issued at
closing $ 1,814,750
Present value discount (discounted at
15% per annum) (201,238)
----------------
$ 1,613,612
================
(3) To record the issuance of the Company's common stock at closing.
(4) To record the amortization of intangibles over useful lives of three
years.
(5) To record the amortization of discount related to the Company's
liability for stock to be issued.
(6) Basic and diluted pro forma earnings per share is computed using the
weighted average number of Company common shares outstanding during the
period plus share of common stock issued as part of the acquisition.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
2.1 Agreement for Sale of Assets dated as of April 10, 2000 (incorporated
by reference to Current Report on Form 8-K filed on April 28, 2000).
23.1 Consent of Hoffman, Morrison & Fitzgerald, P.C.
<PAGE> 12
SIGNATURES
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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.
INFe.com, Inc.
Date: June 26, 2000 By: /s/ Thomas M Richfield
------------------------------
Thomas M Richfield
Chief Executive Officer and
President
<PAGE> 13
