-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KdtfEB6tW/Eo1STEp26zdWL6tvrJ75Y17OB/5WcwC5Lr2rsVqkamzbVJZ1kOwMrp naWMYPPiLsJBJrFGYYCJQQ== 0001127855-03-000489.txt : 20030929 0001127855-03-000489.hdr.sgml : 20030929 20030926174845 ACCESSION NUMBER: 0001127855-03-000489 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20030924 ITEM INFORMATION: Changes in control of registrant ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030929 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VERDISYS INC CENTRAL INDEX KEY: 0001141197 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 223755993 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-64122 FILM NUMBER: 03913301 BUSINESS ADDRESS: STREET 1: 11650 IBERIA PL SUITE 201 CITY: SAN DIEGO STATE: CA ZIP: 92128 BUSINESS PHONE: 8586181085 MAIL ADDRESS: STREET 1: 11650 IBERIA PLACE SUITE 201 CITY: SAN DIEGO STATE: CA ZIP: 92128 8-K/A 1 verdisys8k092603.txt VERDISYS 8K/A, 09.24.03 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K Amendment #1 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report: September 24, 2003 Date of Earliest Event Reported: July 18, 2003 Verdisys, Inc. ------------------------------------------------------ (Exact Name of Registrant as Specified in its Charter) California 333-64122 22-3755993 - ---------------------- ------------------------ ------------------- (State of Organization) (Commission File Number) (I.R.S. Employer Identification No.) 10600 N. De Anza Boulevard, Suite 250 Cupertino, California 95014 ---------------------------------------- (Address of Principal Executive Offices) (858) 618-1085 ---------------------------- Registrants Telephone Number Reconstruction Data Group, Inc. 11650 Iberia Place, Suite 201 San Diego, California 92128 (858) 618-1085 -------------------------------------- (Former Name or Address of Registrant) Page 1 of 4 Verdisys, Inc. (formerly Reconstruction Data Group, Inc.) Report on Form 8-K Item 1. Changes in Control of Registrant - ---------------------------------------- On April 24, 2003 Reconstruction Data Group, Inc. (the "Company") entered into an Agreement and Plan of Merger (the "Agreement") with Verdisys, Inc. (a California Corporation) ("Verdisys ") to acquire all of the issued and outstanding common stock of Verdisys, subject to the completion of mutual due diligence examinations and the completion of the acquisition of Verdisys, Inc. by Reconstruction Data Group, Inc. The closing of the Agreement occurred on July 18, 2003, subject to processing of the appropriate state filings required to complete the transaction. In connection with the Agreement, the Company will issue an aggregate of 25,202,539 shares of its restricted common stock, par value $0.001 per share, to the shareholders of Verdisys in exchange for the 25,202,539 shares of Verdisys common stock owned by approximately 350 shareholders. In connection with Closing of the Agreement, the Company is changing its name to "Verdisys, Inc." and is changing the OTCBB symbol under which our common stock trades on the Over-The-Counter Bulleting Board. The current directors and officers shall resign their positions as directors and officers of the Company. As a result, the Company will have experienced a change in control. In connection with reorganization, at or prior to Closing (i) certain shareholders of the Company have agreed to have canceled an aggregate 2,151,500 shares of common stock, representing approximately 58.92% of our 3,651,500 shares of common stock currently outstanding, leaving 1,500,000 shares of common stock outstanding, and (ii) the Company will issue 25,202,539 newly issued, restricted shares of common stock in exchange for all of the issued and outstanding shares of Verdisys. Following the Closing of the transaction Verdisys Shareholders will own approximately 95.6% of the issued and outstanding shares of the Company. Following the share exchange, Reconstruction Data Group, Inc. will have 26,702,539 common shares issued and outstanding. The following are the Officers, Directors and the shareholders that will beneficially own five percent or more of Reconstruction Data Group, Inc.
Number of % of Total Name Class of Shares Shares Held Outstanding - ----------------------------------- --------------- ----------- ----------- Dan Williams, CEO/President Common Stock 591,667 2.22 25045 I-45 North #525 The Woodlands, TX 77380 David Mauz, COO Common Stock 394,222 1.48 25045 I-45 N. #525 The Woodlands, TX 77380 Andrew Wilson, CFO Common Stock 25,208 0.09 201 Tipperary Lane Alameda, CA 94502 Mark Crone, Secretary/ General Counsel Common Stock 0 0.0 28 Woodland Drive Granby, Connecticut 06035 Paul Schroeder, Controller Common Stock 65,000 0.24 10600 N. De Anza Blvd. #250 Cupertino, CA 95014 Ron Robinson, Chairman/Director Common Stock 300,000 1.11 10600 N. De Anza Blvd. #250 Cupertino, CA 95014 John Block, Director Common Stock 90,000 0.34 655 15th NW Suite 700 Washington, DC 20005 Joe Penbera, Director Common Stock 1,163,952 4.37 4921 N. Van Ness Fresno, CA 93704 Fred Ruiz, Director Common Stock 130,000 0.49 P.O. Box 37 Dinuba, CA 93618 Page 2 of 4 Verdisys, Inc. (formerly Reconstruction Data Group, Inc.) Report on Form 8-K Number of % of Total Name Class of Shares Shares Held Outstanding - ----------------------------------- --------------- ----------- ----------- James Woodward III, Director Common Stock 122,000 0.46 2909 W. Fallbrook Ave. Fresno, CA 93711 Eric McAfee, Director Common Stock 125,000 0.47 10600 N. De Anza Blvd. #250 Cupertino, CA 95014 Berg McAfee Companies Common Stock 8,394,271 31.55 (an entity controlled by Eric McAfee and Clyde Berg) 10600 N. De Anza Blvd. #250 Cupertino, CA 95014 Clyde Berg Common Stock 375,000 1.41 10600 N. De Anza Blvd. #250 Cupertino, CA 95014
Number of shares beneficially owned by officers and directors as a group: 11,401,320 representing 42.86% of the issued and outstanding common shares. Mr. Scott Baker will resign as the President and will resign as a director of the Company. Executive officers and directors of Verdisys will be appointed to fill vacancies created by the resignations. Dan Williams will be our Chief Executive Officer and President of the Company and the remaining appointments are being made as indicated in the above table of ownership. Pursuant to the Agreement and Plan of Merger, vested options to purchase common stock in Verdisys, Inc. at $0.10 per share will be converted to corresponding options to purchase Reconstruction Data group common shares at equivalent terms. These options if converted would result in the issuance of 1,764,082 common shares. Some of these options are held by the officers and directors of Verdisys, Inc. The Company knows of no other arrangement or events, the happening of which will result in a change in control. Item 2. Acquisition or Disposition of Assets. - --------------------------------------------- Agreement and Plan of Merger with Verdisys, Inc. - ------------------------------------------------ On April 24, 2003, Reconstruction Data Group, Inc. (the "Company") entered into an Agreement and Plan of Merger (the "Agreement") with Verdisys, Inc. ("Verdisys ") to acquire all of the issued and outstanding common stock of Verdisys, discussed previously in item 1 of this current report. Reconstruction Data Group, Inc. will deliver to the Verdisys Shareholders stock certificates in accordance with Agreement totaling 25,202,539 shares of Reconstruction Data Group, Inc. Common Stock, in exchange for 100% of Verdisys issued and outstanding common stock. The Board considered, including but not limited to the following factors when determining the amount of consideration for this Agreement. The historic losses of the company, lack of current net profits, limited liquidity of the company's Common Stock and the current lack of available capital resources were considered when making its valuation of the compensation related to the Agreement. The Board further considered the current level development of Verdisys, Inc.'s existing operations, their potential to expand operations, the experience of its management team, and believes this agreement will be beneficial to the shareholders. Verdisys, Inc. and its management had no prior relationship with the registrant, any affiliates of the registrant, any director or officer of the registrant, or any associate of any such director or officer. Reconstruction Data Group, Inc. sought potential opportunities to expand operations and initiated contact with Verdisys, Inc. In connection with the Agreement and Plan of Merger, all assets and liabilities of the ARC network are intended to be acquired by Scott Baker, the former president in consideration for the cancellation of 1,485,000 shares of common stock currently held by Mr. Baker. The development of the Arc Network as an industry forum for Accident Reconstruction is shifting potentially toward a non-profit type entity. The ARC Network operations have benefited little from the public entity and have been burdened by the expense. This is disposition of assets is subject to applicable approvals. Page 3 of 4 Verdisys, Inc. (formerly Reconstruction Data Group, Inc.) Report on Form 8-K Item 7. Financial Statements and Exhibits - ----------------------------------------- Financial Statements - -------------------- Verdisys, Inc. (formerly, Reconstruction Data Group, Inc.) provides by attachment to this current report the required financial statements. Exhibits - -------- Verdisys, Inc. (formerly, Reconstruction Data Group, Inc.) incorporates by reference Current Report on Form 8-K as filed July 18, 2003 with the Securities and Exchange Commission, including Exhibit (2) - Agreement and Plan of Reorganization - Dated April 24, 2003, as amended June 30, 2003, attached and incorporated into such report. SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. VERDISYS, INC. ------------------------------ Date: September 24, 2003 By: \s\ Dan Williams, President ---------------------------------------- Dan Williams, President Principal Executive Officer Date: September 24, 2003 By: \s\ David Mauz, COO ---------------------------------------- David Mauz, Chief Operations Officer Date: September 24, 2003 By: \s\ Andrew Wilson, CFO ---------------------------------------- Andrew Wilson, Chief Financial Officer Principal Accounting Officer Page 4 of 4 Verdisys, Inc. (formerly Reconstruction Data Group, Inc.) Report on Form 8-K Attachment Verdisys, Inc. Financial Statements Table of Contents Page Number ----------- Section 1 Balance Sheet for the period ending June 30, 2003 2 Statements of Operations 3 Three and Six Months Ended June 30, 2003 and 2002 Statements of Cash Flow 4 Six Months Ended June 30, 2003 and 2002 Notes to Financial Statements 5 Section 2 Independent Auditors' Report 7 Balance Sheet as of December 31, 2002 8 Statements of Operations 9 Years Ended December 31, 2002 and 2001 Statements of Stockholders' Deficit 10 Years Ended December 31, 2001 and 2002 Statements of Cash Flow 12 Years Ended December 31, 2002 and 2001 Notes to Financial Statements 13 Section 3 Pro Forma Consolidated Condensed Balance Sheet 20 Notes to Pro Forma Consolidated Condensed Balance Sheet 21 Page 1 Verdisys, Inc. (formerly Reconstruction Data Group, Inc.) Report on Form 8-K Attachment VERDISYS, INC. BALANCE SHEET June 30, 2003 (Unaudited) ASSETS Current Assets Cash $ 97,542 Accounts receivable, net 309,417 Other current assets 34,551 -------------- Total Current Assets 441,510 -------------- Property and equipment, net of accumulated depreciation of $42,713 2,874 License, net of accumulated amortization of $45,834 2,704,166 -------------- Total Assets $ 3,148,550 ============== LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities Accounts payable $ 440,116 Accrued expenses 486,237 Deferred revenue 52,873 Notes payable to stockholders 324,106 Note payable on license 2,553,114 -------------- Total Current Liabilities 3,856,446 ============== Long Term Liabilities Deferred revenue, less current portion 187,898 -------------- Total Liabilities 4,044,344 -------------- Commitments & Contingencies Stockholders' Deficit Convertible preferred stock, no par value, 40,000,000 shares authorized Series A, 2,000,000 shares allocated, none outstanding Series B, none issued and outstanding Common stock, no par value, 60,000,000 shares authorized, 25,202,539 shares issued and outstanding 8,678,475 Additional paid in capital 3,006,988 Accumulated deficit (12,581,257) -------------- Total Stockholders' Deficit (895,794) -------------- Total Liabilities and Stockholders' Deficit $ 3,148,550 ============== Page 2 Verdisys, Inc. (formerly Reconstruction Data Group, Inc.) Report on Form 8-K Attachment
VERDISYS, INC. STATEMENTS OF OPERATIONS Three and Six Months Ended June 30, 2003 and 2002 (Unaudited) Three Months Six Months Ended June 30, Ended June 30, 2003 2002 2003 2002 ---------------- ---------------- ---------------- ---------------- Revenue $ 487,843 $ 127,878 $ 624,291 $ 206,823 Cost of services provided 281,500 109,697 390,064 197,454 Selling, general & administrative 957,595 526,735 1,187,693 863,475 Depreciation & amortization 46,274 2,176 46,714 4,890 Impairment 1,000,000 1,000,000 Debt forgiveness income (460,235) (460,235) ---------------- ---------------- ---------------- ---------------- Total operating expenses 1,825,134 638,608 2,164,236 1,065,819 Operating loss (1,337,291) (510,730) (1,539,945) (858,996) ---------------- ---------------- ---------------- ---------------- Other expense Interest expense (60,197) (41,007) (96,838) (62,878) ---------------- ---------------- ---------------- ---------------- NET LOSS $ (1,397,488) $ (551,737) $ (1,636,783) $ (921,874) ================ ================ ================ ================ Basic and diluted net loss per share $ (.08) $ (.04) $ (.10) $ (.07) Weighted average shares outstanding 18,376,272 13,553,139 16,199,706 13,553,139
Page 3 Verdisys, Inc. (formerly Reconstruction Data Group, Inc.) Report on Form 8-K Attachment
VERDISYS, INC. STATEMENTS OF CASH FLOW Six Months Ended June 30, 2003 and 2002 (Unaudited) 2003 2002 ---------------- ---------------- Cash Flows from Operating Activities Net loss $ (1,636,783) $ (921,874) Adjustments to reconcile net loss to net cash used in operating activities: Stock issued for services 315,929 Issuance of options and warrants for services 545,551 315,127 Depreciation and amortization 46,714 4,890 Impairment expense 1,000,000 Debt forgiveness income (460,235) Changes in: Accounts receivable (299,015) (125,208) Other current assets 8,070 Accounts payable (2,323) 83,590 Accrued expenses (112,595) 156,316 Deferred revenue 104,224 112,875 ---------------- ---------------- Net Cash Used In Operating Activities (490,463) (374,284) ---------------- ---------------- Cash Flows from Investing Activities Purchase of property and equipment (5,286) Cash payments for license (100,000) ---------------- ---------------- Net Cash Used Investing Activities (100,000) (5,286) ---------------- ---------------- Cash Flows from Financing Activities Proceeds from sales of common stock 764,150 Proceeds from exercise of warrants 56,500 Payments on notes payable to stockholders (35,894) Payments on note payable on license (96,886) Proceeds from sales of preferred stock 380,000 ---------------- ---------------- Net Cash Provided by Financing Activities 687,870 380,000 ---------------- ---------------- Net change in cash 97,407 430 Cash at beginning of period 135 3,397 ---------------- ---------------- Cash at end of period $ 97,542 $ 3,827 ================ ================ Non-cash transactions: Purchase of license with note payable $ 2,650,000 Conversion of notes payable and accrued interest to investors to common stock 1,506,190 Conversion of Series B preferred stock to common 705,000 Warrant exercised with accounts payable 95,000 Stock issued for accounts payable 16,666 Warrant exercised with notes payable to investors 20,000
Page 4 Verdisys, Inc. (formerly Reconstruction Data Group, Inc.) Report on Form 8-K Attachment VERDISYS, INC. NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited interim financial statements of Verdisys, Inc. ("Verdisys") have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in Verdisys' Annual Report filed with the SEC on Form 8-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for 2002 as reported in the 8-K have been omitted. NOTE 2 - STOCK OPTIONS AND WARRANTS Stock options and warrants. Verdisys accounts for non-cash stock-based compensation issued to non-employees in accordance with the provisions of SFAS No. 123 and EITF No. 96-18, Accounting for Equity Investments That Are Issued to Non-Employees for Acquiring, or in Conjunction with Selling Goods or Services. Common stock issued to non-employees and consultants is based upon the value of the services received or the quoted market price, whichever value is more readily determinable. Verdisys accounts for stock options and warrants issued to employees under the intrinsic value method. Under this method, Verdisys recognizes no compensation expense for stock options or warrants granted when the number of underlying shares is known and the exercise price of the option or warrant is greater than or equal to the fair market value of the stock on the date of grant. The following table illustrates the effect on net loss and net loss per share if Verdisys had applied the fair value provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation. In April 2003, Verdisys issued 1,280,000 10 year $.10 options to employees. 30,000 options vest monthly over three months, 750,000 options vest quarterly over three years, 300,000 options vest quarterly over one year and 200,000 options vest quarterly over two years. The intrinsic value of these options totals $193,250. In April 2003, Verdisys issued 100,000 $.10 warrants that expire in January 2007. During the summer of 2003, Verdisys negotiated settlements with 9 vendors plus the two original founders for various debts carried on the books. One of the founders was issued 150,000 warrants exercisable at $.10 and valued at $.40 or $60,000.
2003 2002 -------------- -------------- Net loss as reported $ (1,636,783) $ (921,874) Less: stock based compensation determined under fair valued-based method 0 0 -------------- -------------- Pro forma net loss $ (1,636,783) $ (921,874) ============== ============== Basic and diluted net loss per common share: As reported $ (.10) $ (.07) Pro forma (.10) (.07)
The weighted average fair value of the stock options granted during 2003 and 2002 was $.50 and $.50, respectively. Variables used in the Black-Scholes option-pricing model include (1) 5.0% risk-free interest rate, (2) expected option life is the actual remaining life of the options as of each year end, (3) expected volatility is zero, and (4) zero expected dividends. Page 5 Verdisys, Inc. (formerly Reconstruction Data Group, Inc.) Report on Form 8-K Attachment VERDISYS, INC. NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 3 - LATERAL DRILLING LICENSE In April 2003, an individual licensed his lateral drilling technology and equipment to Verdisys. Verdisys is required to pay $2,750,000 plus 10 percent of related gross revenue. $100,000 was due upon signing and a note payable for $2,650,000 plus 8 percent is to be paid out from May 2003 through March 2004 for a total payout of $2,970,000. NOTE 4 - DEBT FORGIVENESS INCOME During the summer of 2003, Verdisys negotiated settlements with 9 vendors plus the two original founders for various debts carried on the books at $1,096,501 for $71,600 cash, 33,333 shares of stock (valued at $.50 or $16,666) and 150,000 warrants exercisable at $.10 and valued at $.40 or $60,000. $460,235 is shown in 2003 as debt forgiveness income for the vendors and the $548,000 related to the original founders is shown in 2003 as a contribution to capital. NOTE 5 - SOFTWARE IMPAIRMENT Verdisys reviews the carrying value of its long-lived assets annually or whenever events or changes in circumstances indicate that the historical cost-carrying value of an asset may no longer be appropriate. Verdisys assesses recoverability of the carrying value of the asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset's carrying value and fair value. In April 2003, Verdisys issued 2,000,000 shares of common stock for software. The shares were valued at $1,000,000. The software has been determined to not be useful and was fully impaired as of June 30, 2003. Page 6 Verdisys, Inc. (formerly Reconstruction Data Group, Inc.) Report on Form 8-K Attachment INDEPENDENT AUDITORS' REPORT To the Board of Directors Verdisys, Inc. Houston, Texas We have audited the accompanying balance sheet of Verdisys, Inc. as of December 31, 2002 and the related statements of operations, stockholders' deficit and cash flows for each of the two years then ended. These financial statements are the responsibility of Verdisys' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 Verdisys, Inc. as of December 31, 2002 and the results of its operations and cash flows for each of the two years then ended in conformity with accounting principles generally accepted in the United States of America. MALONE & BAILEY, PLLC www.malone-bailey.com Houston, Texas May 27, 2003, except Notes 11 and 12, for which the date is September 18, 2003 Page 7 Verdisys, Inc. (formerly Reconstruction Data Group, Inc.) Report on Form 8-K Attachment VERDISYS, INC. BALANCE SHEET December 31, 2002 ASSETS Current Assets Cash $ 135 Accounts receivable, net 10,402 Employee advances 42,620 -------------- Total Current Assets 53,157 -------------- Property and equipment, net of accumulated depreciation of $41,833 3,755 -------------- Total Assets $ 56,912 ============== LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities Accounts payable $ 1,562,339 Accrued expenses 905,461 Deferred revenue 56,180 Notes payable to stockholders 1,579,562 -------------- Total Current Liabilities 4,103,542 Long Term Liabilities Deferred revenue, less current portion 80,367 -------------- Total Liabilities 4,183,909 -------------- Commitments & Contingencies Stockholders' Deficit Convertible preferred stock, no par value, 40,000,000 shares authorized Series A, 2,000,000 shares allocated, none outstanding Series B, 1,410,000 shares issued and outstanding 705,000 Common stock, no par value, 60,000,000 shares authorized 13,553,139 shares issued and outstanding 4,199,040 Additional paid in capital 1,913,437 Accumulated deficit (10,944,474) -------------- Total Stockholders' Deficit (4,126,997) -------------- Total Liabilities and Stockholders' Deficit $ 56,912 ============== See accompanying summary of accounting policies and notes to financial statements. Page 8 Verdisys, Inc. (formerly Reconstruction Data Group, Inc.) Report on Form 8-K Attachment
VERDISYS, INC. STATEMENTS OF OPERATIONS Years Ended December 31, 2002 and 2001 2002 2001 ---------------- ---------------- Revenue $ 287,190 $ 162,406 Cost of services provided 276,454 157,984 Selling, general & administrative 3,002,470 2,145,651 Bad debts 9,368 12,984 Depreciation 11,380 13,434 ---------------- ---------------- Total operating expenses 3,299,672 2,330,053 ---------------- ---------------- Operating loss (3,012,482) (2,167,647) ---------------- ---------------- Other income and (expense) Interest income 21 4,350 Interest expense (116,321) (333,823) ---------------- ---------------- NET LOSS $ (3,128,782) $ (2,497,120) ================ ================ Basic and diluted net loss per share $ (.23) $ (.19) Weighted average shares outstanding 13,553,139 13,108,389
See accompanying summary of accounting policies and notes to financial statements. Page 9 Verdisys, Inc. (formerly Reconstruction Data Group, Inc.) Report on Form 8-K Attachment
VERDISYS, INC. STATEMENT OF STOCKHOLDERS' DEFICIT Years Ended December 31, 2001 and 2002 Preferred Series A Preferred Series B Shares Amount Shares Amount -------------- -------------- -------------- -------------- Balances, December 31, 2000 148,761 $ 72,374 Shares issued for cash Series B preferred shares issued for cash 650,000 $ 325,000 Conversion of Series A to common stock (148,761) (72,374) Options issued for services Warrants issued for interest Net loss -------------- -------------- -------------- -------------- Balances, December 31, 2001 0 0 650,000 325,000 Series B preferred shares issued for cash 760,000 380,000 Options issued for services Warrants issued for services Warrants issued for interest Net loss -------------- -------------- -------------- -------------- Balances, December 31, 2002 0 $ 0 1,410,000 $ 705,000 ============== ============== ============== ==============
See accompanying summary of accounting policies and notes to financial statements. Page 10 Verdisys, Inc. (formerly Reconstruction Data Group, Inc.) Report on Form 8-K Attachment
VERDISYS, INC. STATEMENT OF STOCKHOLDERS' DEFICIT Years Ended December 31, 2001 and 2002 Common Stock Retained Shares Amount Deficit Totals -------------- -------------- -------------- -------------- Balances, December 31, 2000 12,663,638 $ 4,596,521 $ (5,318,572) $ (649,677) Shares issued for cash 740,740 100,000 100,000 Series B preferred shares issued for cash 325,000 Conversion of Series A to common stock 148,761 72,374 0 Options issued for services 341,324 341,324 Warrants issued for interest 204,167 204,167 Net loss (2,497,120) (2,497,120) -------------- -------------- -------------- -------------- Balances, December 31, 2001 13,553,139 5,314,386 (7,815,692) (2,176,306) Series B preferred shares issued for cash 380,000 Options issued for services 401,291 401,291 Warrants issued for services 392,000 392,000 Warrants issued for interest 4,800 4,800 Net loss (3,128,782) (3,128,782) -------------- -------------- -------------- -------------- Balances, December 31, 2002 13,553,139 6,112,477 $ (10,944,474) $ (4,126,997) ============== ============== ============== ============== Less common stock 4,199,040 -------------- Additional paid in capital $ 1,913,437 ==============
See accompanying summary of accounting policies and notes to financial statements. Page 11 Verdisys, Inc. (formerly Reconstruction Data Group, Inc.) Report on Form 8-K Attachment
VERDISYS, INC. STATEMENTS OF CASH FLOW Years Ended December 31, 2002 and 2001 2002 2001 ---------------- ---------------- Cash Flows from Operating Activities Net loss $ (3,128,782) $ (2,497,120) Adjustments to reconcile net loss to net cash used in operating activities: Issuance of options and warrants for services 793,291 341,324 Issuance of stock options for interest expense 4,800 204,167 Depreciation 11,380 13,434 Bad debts 9,368 12,984 Changes in: Accounts receivable 47,490 (47,710) Other current assets (42,620) 3,152 Accounts payable 1,099,557 53,112 Accrued expenses 687,435 165,643 Deferred revenue 136,547 (29,500) ---------------- ---------------- Net Cash Used In Operating Activities (381,534) (1,780,514) ---------------- ---------------- Cash Flows from Investing Activities Purchase of property and equipment (5,286) ---------------- Cash Flows from Financing Activities Proceeds from notes payable to stockholders 3,558 1,130,994 Proceeds from sales of common stock 100,000 Proceeds from sales of preferred stock 380,000 325,000 ---------------- ---------------- Net Cash Provided by Financing Activities 383,558 1,555,994 ---------------- ---------------- Net change in cash (3,262) (224,520) Cash at beginning of year 3,397 227,917 ---------------- ---------------- Cash at end of year $ 135 $ 3,397 ================ ================ Cash paid during the year for: Interest $ 0 $ 0 Supplemental disclosure of non-cash transactions: Conversion of Series A preferred stock to common $ 72,374
See accompanying summary of accounting policies and notes to financial statements. Page 12 Verdisys, Inc. (formerly Reconstruction Data Group, Inc.) Report on Form 8-K Attachment VERDISYS, INC. NOTES TO FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF ACCOUNTING POLICIES Business. Verdisys, Inc. ("Verdisys") was formed in California on April 7, 1999 - --------- as TheAgZone, Inc. to build and operate an agricultural e-commerce website portal. This plan was pursued until fall of 2000 when funding was depleted. In January 2001 the name was changed to Verdisys, Inc. and the agricultural website portal operation was terminated. In May 2001, Verdisys began selling secure intra-company and wide-area network satellite communications systems. The 2002 business plan involved providing satellite linkages to energy companies to manage distant oil and gas pumping wells, power distribution and other equipment sites by remote computer control. In June 2003, Verdisys began a new line of business in lateral drilling for the search and production of oil and gas reserves using licensed technology acquired April 2003. Management estimates. The preparation of financial statements in conformity with - --------------------- accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as certain financial statement disclosures. While management believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from these estimates. Cash Equivalents. Highly liquid investments with original maturities of three - ----------------- months or less are considered cash equivalents. Revenue Recognition. Revenue is derived from sales of satellite hardware, - --------------------- satellite bandwidth and satellite service. Revenue from satellite hardware is recognized when the hardware is installed. Revenue from satellite bandwidth is recognized evenly over the term of the contract. Revenue from satellite service is recognized when the services are performed. Verdisys provides no warranty but sells commercially obtained 3 to 12 month warranties for satellite hardware. Verdisys has no return policy. Allowance for Doubtful Accounts. Bad debt expense is recognized based on - ----------------------------------- management's estimate of likely losses per year, based on past experience and an estimate of current year uncollectible amounts. The allowance was $22,352 as of December 31, 2002. Property and equipment is valued at cost. Additions are capitalized and - ---------------------------------------------- maintenance and repairs are charged to expense as incurred. Gains and losses on dispositions of equipment are reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are three years for computers and seven years for furniture. Impairment of Long-Lived Assets. Verdisys reviews the carrying value of its - ---------------------------------- long-lived assets annually or whenever events or changes in circumstances indicate that the historical cost-carrying value of an asset may no longer be appropriate. Verdisys assesses recoverability of the carrying value of the asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset's carrying value and fair value. Stock options and warrants. Verdisys accounts for non-cash stock-based - ------------------------------ compensation issued to non-employees in accordance with the provisions of SFAS No. 123 and EITF No. 96-18, Accounting for Equity Investments That Are Issued to Non-Employees for Acquiring, or in Conjunction with Selling Goods or Services. Common stock issued to non-employees and consultants is based upon the value of the services received or the quoted market price, whichever value is more readily determinable. Verdisys accounts for stock options and warrants issued to employees under the intrinsic value method. Under this method, Verdisys recognizes no compensation expense for stock options or warrants granted when the number of underlying shares is known and the exercise price of the option or warrant is greater than or equal to the fair market value of the stock on the date of grant. The following table illustrates the effect on net loss and net loss per share if Verdisys had applied the fair value provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation. Page 13 Verdisys, Inc. (formerly Reconstruction Data Group, Inc.) Report on Form 8-K Attachment 2002 2001 ------------- ------------- Net loss as reported $ (3,128,782) $ (2,497,120) Less: stock based compensation determined under fair value-based method 0 0 ------------- ------------- Pro forma net loss $ (3,128,782) $ (2,497,120) ============= ============= Basic and diluted net loss per common share: As reported $ (.23) $ (.19) Pro forma (.23) (.19) The weighted average fair value of the stock options granted during 2002 and 2001 was $.50 and $.25, respectively. Variables used in the Black-Scholes option-pricing model include (1) 5.0% risk-free interest rate, (2) expected option life is the actual remaining life of the options as of each year end, (3) expected volatility is zero, and (4) zero expected dividends. Income Taxes. Income tax expense is based on reported earnings before income - -------------- taxes. Deferred income taxes reflect the impact of temporary differences between assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes, and are measured by applying tax rates in effect in years in which the differences are expected to reverse. Basic and diluted earnings per share. Basic earnings per share equals net - ---------------------------------------- earnings divided by weighted average shares outstanding during the year. Diluted earnings per share include the impact of common stock equivalents using the treasury stock method when the effect is dilutive. There were no dilutive securities during the periods presented. Recently issued accounting pronouncements. Verdisys does not expect the adoption - ------------------------------------------ of recently issued accounting pronouncements to have a significant impact on their results of operations, financial position or cash flow. NOTE 2 - PROPERTY AND EQUIPMENT Property and equipment consisted of the following at December 31, 2002: Description Life Amount ----------- ---- ------ Computer equipment 3 years $ 28,065 Other equipment and furniture 7 years 17,523 Furniture and fixtures 7 years 2,195 -------- 45,588 Less: accumulated depreciation (41,833) -------- $ 3,755 ======== Depreciation expense totaled $11,380 and $13,434 in 2002 and 2001, respectively. Page 14 Verdisys, Inc. (formerly Reconstruction Data Group, Inc.) Report on Form 8-K Attachment NOTE 3 - DEFERRED REVENUE Typical satellite bandwidth contracts cover 36 months. Verdisys receives the cash up front, records deferred revenue and recognizes revenue evenly over the contract. $56,180 will be recognized in 2003 and $80,367 will be recognized during 2004 and 2005. NOTE 4 - NOTES PAYABLE TO STOCKHOLDERS Notes payable as of December 31, 2002 consists of the following: "Bridge debt" notes payable, with 10% interest, no collateral, convertible to Series B convertible preferred stock at conclusion of that financing, and due as follows: - amounts past due $ 590,000 - amount due after at least $1 million in Series B Preferred Stock sales 200,000 "Convertible notes," with 10% interest, no collateral, convertible to Series B convertible preferred stock at conclusion of that financing, and due in 2003 686,004 Note payable to a stockholder, with 8% interest and no collateral, and past due 103,558 ------------ $ 1,579,562 ============ The Series B convertible preferred stock financing was scheduled to expire in July 2002 but was extended and expired in July 2003. The "bridge debt" notes were issued from December 2000 to July 2001. A total of $1,100,000 was raised and $310,000 was converted to Convertible Notes, as summarized above. In connection with these issuances, 1,500,000 warrants were issued with exercise prices of $.10 to $.15 per share, and another 448,575 warrants were issued with exercises prices of $.75 to $2.00 per share. Related interest expense of $184,167 was recorded in 2001 for these bridge debt warrants and another $20,000 in interest expense was recorded for "convertible notes" as described below. The "convertible notes" were issued from February through May 2001 for total proceeds of $376,004. $310,000 in notes was transferred from "bridge debt" for total convertible notes of $686,004. In connection with these issuances, 231,998 warrants were issued with exercise prices of $2 per share. Since this exercise price was above the stock selling price at that time, no interest expense was recorded. Page 15 Verdisys, Inc. (formerly Reconstruction Data Group, Inc.) Report on Form 8-K Attachment NOTE 5 - INCOME TAXES Verdisys uses the liability method, where deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes. During 2002 and 2001, Verdisys incurred net losses and, therefore, has no tax liability. The net deferred tax asset generated by the loss carry-forward has been fully reserved. The cumulative net operating loss carry-forward is approximately $9,300,000 at December 31, 2002, and will expire in the years 2019 through 2022. At December 31, 2002, deferred tax assets consisted of the following: 2002 ---------------- Deferred tax assets Net operating losses $ 3,172,000 Less: valuation allowance (3,172,000) ---------------- Net deferred tax asset $ 0 ================ NOTE 6 - PREFERRED STOCK 3,436,996 shares of Series A preferred stock were issued in 1999 and 2000 at $1.50 per share, and all have been converted to common stock on a one-for-one basis. This Series had a stated $.15 noncumulative dividend, with a $1.50 per share liquidation preference and redemption price. They were convertible anytime by the holder at the current conversion price as stated, and convertible automatically 12 months after issuance. 650,000 and 760,000 shares of Series B preferred stock were issued in 2001 and 2002, respectively, for $.50 per share. There is a $.10 noncumulative dividend, with a $.50 per share liquidation preference and redemption price. They are convertible anytime by the holder into common shares on a one-for-one basis, and must be converted upon completion of an initial public offering. The conversion rate is adjustable on the occurrence of certain events such as a change in the offering price of Verdisys common stock. NOTE 7 - STOCK OPTIONS AND WARRANTS Verdisys follows the disclosure requirements of FASB Statement 123, Accounting for Stock Based Compensation Plans. Verdisys' Stock Option Plan provides for the grant of both qualified and non-qualified options to directors, employees and consultants. In addition, Verdisys issues stock warrants from time to time to employees, consultants, stockholders and creditors as additional financial incentives. The plans and warrants issuance are administered by the Board of Directors, who have substantial discretion to determine which persons, amounts, time, price, exercise terms, and restrictions, if any. Options differ from warrants only in that options are issued to employees and directors and warrants are issued to consultants and investors. Verdisys uses the intrinsic value method of calculating compensation expense for employees and directors, as described and recommended by APB Opinion 25, and allowed by FASB Statement 123. During the years ended December 31, 2002 and 2001, compensation expense of $401,291 and $341,324, respectively, was recognized for the issuance of options to employees and directors where exercise prices were below selling prices to investors at each date of grant. There has been no trading market for Verdisys stock as of May 27, 2003. During 2002 and 2001, interest expense of $4,800 and $204,167, respectively, was recognized for the issuance of warrants to investors where exercise prices were below selling prices to investors. Page 16 Verdisys, Inc. (formerly Reconstruction Data Group, Inc.) Report on Form 8-K Attachment During 2002, Verdisys issued warrants to consultants whose stock-based compensation must be recorded at fair value pursuant to FASB Interpretation Number 44. The compensation cost recorded for these warrants was $392,000 based on the Black-Scholes option pricing model as suggested by FASB Statement 123. No warrants were issued to consultants in 2001. Summary information regarding options and warrants is as follows:
Weighted Weighted average average Options Share Price Warrants Share Price ------------- ----------- ----------- ----------- Outstanding at December 31, 2000 1,455,372 $ . 12 558,029 $ . 61 Year ended December 31, 2001: Granted 3,963,827 . 10 2,110,242 . 44 Forfeited (431,370) . 10 ------------- ----------- ----------- ----------- Outstanding at December 31, 2001 4,987,829 . 11 2,668,271 . 47 Year ended December 31, 2002: Granted 7,155,001 . 10 1,100,000 . 10 Forfeited (717,973) . 10 (217,362) . 21 ------------- ----------- ----------- ----------- Outstanding at December 31, 2002 11,424,857 $ . 10 3,550,909 $ . 36 ============= =========== =========== ===========
Options outstanding and exercisable as of December 31, 2002: Outstanding Exercisable Number Remaining Number Exercise Price of Shares life of Shares -------------- --------- ---------- ------------- $.10 6,958,333 9 years 617,407 .10 2,190,833 8 years 1,301,908 .10 620,000 7 years 545,000 .15 700,000 7 years 700,000 .10 946,895 3 years 795,447 .10 8,796 2 years 8,796 ------------- ---------- ----------- ------------- 11,424,857 3,968,558 ========== ============= Warrants outstanding and exercisable as of December 31, 2002: Outstanding Exercisable Number Remaining Number Exercise Price of Shares life of Shares -------------- --------- ---------- ------------- $.10 1,000,000 5 years 1,000,000 .10 900,000 4 years 900,000 .15 841,667 4 years 841,667 .50 20,000 4 years 20,000 1.00 193,000 4 years 193,000 2.00 255,575 4 years 255,575 .15 58,333 3 years 58,333 2.00 50,000 3 years 50,000 .75 232,334 1 years 232,334 ------------- ---------- ----------- ------------- 3,550,909 3,550,909 ========= ============= Page 17 Verdisys, Inc. (formerly Reconstruction Data Group, Inc.) Report on Form 8-K Attachment NOTE 8 - MAJOR CUSTOMERS AND VENDORS One customer accounted for 87% and 21% of total revenues in 2002 and 2001, respectively. During 2001, Hughes Network Systems was the sole major satellite communications services and equipment vendor and it accounted for 13% of purchases in 2001. In mid-2002, services by this vendor were terminated and replaced by Spacenet who accounted for 87% of purchases in 2002. NOTE 9 - COMMITMENTS & CONTINGENCIES Verdisys's current office is in Houston, Texas. The offices for 2001 and part of 2002 were in Aliso Viejo, California. The Aliso Viejo lease was for $1,800 per month and expired August 2002. The Houston office was in the home of an employee on a monthly basis for $900 per month through August 2002. In September 2002, Verdisys signed a 13-month office lease for $1,483 per month. Future minimum lease payments under the lease as of December 31, 2002 are $13,343 in 2003. Verdisys also has a consulting agreement with its current majority stockholder for $10,000 per month through April 30, 2005, with $120,000 due during each of 2002, 2003 and 2004, and $40,000 in 2005. $138,000 was accrued and unpaid under this agreement as of December 31, 2002. In April 2002, Verdisys entered into a three-year employment agreement with its then CEO. The base salary under the agreement was $250,000 per year with quarterly performance bonuses and 2,000,000 stock options granted in 2002 and exercisable at $.10 per share and vesting quarterly over a two-year period. $400,000 and $175,000 in expense was incurred in 2002 relating to the vested portion of these options and unpaid salary, respectively. In November 2002, this CEO quit and Verdisys is now in negotiations over what portion of these amounts and also the unvested options, if any, is due. As of May 27, 2003, management believes the current accrual is adequate and that no further expense will be necessary on the unvested options. NOTE 10 - LITIGATION In August 2002, Verdisys settled a lawsuit filed against it in late 2001 for breach of promissory note and breach of security agreement, by agreeing to pay $228,494. Verdisys agreed to pay $15,000 on October 1, 2002 and $5,000 per month from November 2002 through August 2004. A balloon payment is due of the remaining amount in August 2004. As of May 27, 2003, $20,000 in monthly payments are delinquent. All amounts are accrued as of December 31, 2002. NOTE 11 - SUBSEQUENT FINANCING (unaudited) From April 2003 through June 2003, Verdisys sold 1,239,000 shares of common stock in private placements for $.50 per share and $.75 per share for total proceeds of $779,250 with $764,150 to Verdisys net of $15,100 cost of fundraising. In early 2003, Verdisys issued a convertible promissory note in the amount of $50,000 with 100,000 $.10 warrants that expire in January 2008. In early 2003, Verdisys converted 1,410,000 shares of Series B convertible preferred stock into 1,410,000 shares of common stock. From April 2003 through June 2003, Verdisys converted $1,506,190 of notes payable and accrued interest to investors to 2,877,776 shares of common stock. From April 2003 through June 2003, 2,409,291 options were exercised at $.10 per share for 2,409,291 shares of common stock. In lieu of cash, Verdisys agreed to expense the exercise price as compensation of $240,929. Page 18 Verdisys, Inc. (formerly Reconstruction Data Group, Inc.) Report on Form 8-K Attachment From April 2003 through June 2003, 1,580,000 warrants were exercised for 1,580,000 shares of common stock. $56,500 in cash was received for the exercise of 430,000 warrants, accounts payable was reduced by $95,000 for the exercise of 950,000 warrants and notes payable to investor was reduced by $20,000 for the exercise of 200,000 warrants. In April 2003, Verdisys issued 2,000,000 shares of common stock for software. The shares were valued at $1,000,000. The software has been determined to not be useful and was fully impaired as of June 30, 2003. In June 2003, 100,000 shares valued at $75,000 were issued to a consultant. In April 2003, Verdisys issued 100,000 $.10 warrants that expire in January 2007 for legal services. In April 2003, Verdisys issued 1,280,000 10 year $.10 options to employees. 30,000 options vest monthly over three months, 750,000 options vest quarterly over three years, 300,000 options vest quarterly over one year and 200,000 options vest quarterly over two years. The intrinsic value and the fair value of these options totals $193,250. Verdisys began selling stock at $2 per share in July 2003. As of September 18, 2003, $1,127,000 in cash had been received from this effort. NOTE 12 - SUBSEQUENT EVENTS (unaudited) In April 2003, an individual licensed his lateral drilling technology and equipment to Verdisys. Verdisys is required to pay $2,750,000 plus 10 percent of related gross revenue. $100,000 was due upon signing and a note payable for $2,650,000 plus 8 percent is to be paid out from May 2003 through March 2004 for a total payout of $2,970,000. In April 2003, Verdisys signed a drilling service contract with Energy 2000, whereby Energy 2000 will pay Verdisys a minimum of $1,800,000 for lateral drilling of 45 wells. This contract is a fixed fee contract with the total price depending on the number of wells drilled and offshoot lateral bores drilled. In addition, Verdisys will receive an 80 percent interest in the net operating income after payback from these properties and will also be reimbursed for 20 percent of its field costs. During the summer of 2003, Verdisys negotiated settlements with 9 vendors plus the two original founders for various debts carried on the books at $1,096,501 for $71,600 cash, 33,333 shares of stock (valued at $.50 or $16,666) and 150,000 warrants exercisable at $.10 and valued at $.40 or $60,000. $460,235 is shown in 2003 as debt forgiveness income for the vendors and the $548,000 related to the original founders is shown in 2003 as a contribution to capital. In June 2003, Verdisys settled a lawsuit filed against it in April 2001 for past due accounts payable. In July 2001, Verdisys had previously agreed to pay $10,277 to settle the account. Verdisys only paid $4,277 under the original settlement agreement. In June 2003, Verdisys issued 100,000 shares of Verdisys common stock to settle the remaining amount. On July 18, 2003, Verdisys signed an Agreement and Plan of Merger with Reconstruction Data Group, Inc. (RDGI), a publicly reporting inactive entity. The shareholders of Verdisys received 25,202,539 shares of RDGI in exchange for all of the 25,202,539 shares of Verdisys then outstanding. Verdisys became a wholly-owned subsidiary of RDGI. As of that transfer, Verdisys shareholders will now own 94.4% of the outstanding stock of the combined entity. Page 19 Verdisys, Inc. (formerly Reconstruction Data Group, Inc.) Report on Form 8-K Attachment Pro Forma Consolidated Condensed Balance Sheet ---------------------------------------------- The following pro forma balance sheet has been derived from the balance sheet of Reconstruction Data Group, Inc. ("RDGI") at December 31, 2002 and adjusts such information to give effect to the acquisition of Verdisys, Inc. ("Verdisys"), as if the acquisition had occurred at December 31, 2002. The pro forma balance sheet is presented for informational purposes only and does not purport to be indicative of the financial condition that would have resulted if the acquisition had been consummated at December 31, 2002. The pro forma balance sheet should be read in conjunction with the notes thereto and the financial statements and related notes thereto contained elsewhere in this filing. A pro-forma consolidated balance sheet is presented below.
RDGI Verdisys DR (CR) Pro Forma 12/31/02 12/31/02 Adjustments Combined -------------- -------------- -------------- -------------- Cash $ 11,920 $ 135 $ (11,920) $ 135 Accounts receivable, net 10,402 10,402 Employee advances 42,620 42,620 Property and equipment, net 19,934 3,755 (19,934) 3,755 Deposit 1,313 (1,313) -------------- -------------- -------------- $ 33,167 $ 56,912 $ 56,912 ============== ============== ============== Accounts payable and accrued liabilities $ 21,446 $ 2,467,800 21,446 $ 2,467,800 Current portion of notes payable 55,000 1,579,562 55,000 1,579,562 Current portion of deferred revenue 16,368 56,180 16,368 56,180 L-T portion of notes payable 5,000 5,000 L-T portion of deferred revenue 80,367 80,367 -------------- -------------- -------------- 97,814 4,183,909 4,183,909 -------------- -------------- -------------- Convertible preferred stock, 40,000,000 shares authorized - Series A, 2,000,000 shares allocated, none outstanding - Series B, 1,410,000 shares issued and outstanding 705,000 705,000 Common stock, no par value, 50,000,000 shares authorized, 3,651,500 and 14,963,139 shares issued and outstanding 323,825 323,825 (4,199,040) (705,000) 4,904,040 Common stock, no par value 60,000,000 shares authorized, 13,553,139 shares issued and outstanding 4,199,040 4,199,040 Additional paid in capital 19,167 1,913,437 19,167 1,913,437 Accumulated deficit (407,639) (10,944,474) (407,639) (10,944,474) -------------- -------------- -------------- (64,647) (4,126,997) (4,126,997) -------------- -------------- -------------- $ 33,167 $ 56,912 $ 56,912 ============== ============== ==============
Page 20 Verdisys, Inc. (formerly Reconstruction Data Group, Inc.) Report on Form 8-K Attachment Notes to Pro Forma Consolidated Condensed Balance Sheet ------------------------------------------------------- (1) The acquisition occurred July 18, 2003. (2) Issuance of 25,202,539 shares of common stock of RDGI for all of the outstanding stock of Verdisys. (3) Prior to the reorganization, RDGI canceled 2,151,500 common shares in an agreement with certain of its shareholders, including the spin-off of all prior RDGI operations, assets and liabilities. After this cancellation and immediately prior to its merger with Verdisys, RDGI shareholders will own 1,500,000 shares of RDGI. No prior RDGI business operations will continue in the surviving entity. (4) There were 13,553,139 shares issued and outstanding by Verdisys as of December 31, 2002. Shares issued from January 1 - July 18, 2003 are summarized as follows: Shares Value -------------- -------------- Cash 2,819,000 $ 935,650 Services 2,509,291 861,480 Conversion of preferred stock 1,410,000 705,000 Conversion of debt 2,911,109 1,556,190 Asset purchase 2,000,000 1,000,000 -------------- -------------- 11,649,400 $ 5,058,320 ============== Add: shares outstanding, December 31, 2002 13,553,139 RDGI shares 1,500,000 -------------- 26,702,539 ============== Shares included in the pro forma schedule are as follows: Balances, December 31, 2002 13,553,139 Conversion of preferred stock 1,410,000 -------------- 14,963,139 ============== After the merger, there will be 26,702,539 shares of common stock outstanding of RDGI, and Verdisys will cease to exist as a separate corporation. Page 21 End of Attachment -----END PRIVACY-ENHANCED MESSAGE-----