8-K/A 1 0001.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A AMENDED CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of Earliest Event Reported): June 1, 2000 iSHOPPER.COM, INC. (Exact name of registrant as specified in this Charter) Nevada 033-03275-D 87-0431533 --------------------------- ----------------------- ---------------- State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 8722 South 300 West, Suite 106 Sandy, Utah 84070 ----------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (801) 984-9300 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. On June 1, 2000, iShopper.com, Inc. acquired Atlantic Technologies International, Inc. and Internet Software Solutions, Inc. The financial statements of Atlantic Technologies International, Inc. are filed herewith as Exhibit 99.1. (a) Financial Statements. See Exhibit Index, Exhibit 99.1 (b) Pro forma financial information See Exhibit Index, Exhibit 99.1 (c) Exhibits. The following exhibits are incorporated herein by this reference: Exhibit No. Description of Exhibit ------------ -------------------------------------------------- 2.5* Stock Exchange Agreements dated as of June 1, 2000 among the Registrant and Atlantic Technologies International, Inc. and Internet Software Solutions, Inc. 99.1** Pro forma financial information. 99.1** Financial statements of Atlantic Technologies International, Inc. ____________________________ * Incorporated by reference to the Company's Report on Form 8-K, as filed on June 16, 2000 ** Filed herewith 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. iSHOPPER.COM, INC. Date: August 22, 2000 By: /S/ Douglas S. Hackett ------------------------------- Douglas S. Hackett, President, Chief Executive Officer and Director EXHIBIT INDEX Exhibit No. Description of Exhibit 2.5* Stock Exchange Agreements dated as of June 1, 2000 among the Registrant and Atlantic Technologies International, Inc. and Internet Software Solutions, Inc. 99.1** Pro forma financial information 99.1** Financial statements of Atlantic Technologies International, Inc. ____________________________ * Incorporated by reference to the Company's Report on Form 8-K, as filed on June 16, 2000 ** Filed herewith iSHOPPER.COM, INC. INDEX TO FINANCIAL STATEMENTS Page Unaudited Pro Forma Condensed Consolidated Financial Statements F-2 Unaudited Pro Forma Condensed Consolidated Statements of Operations for the Six Months Ended June 30, 2000 and for the Year Ended December 31, 1999 F-3 Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements F-5 Atlantic Technologies International, Inc. Financial Statements Report of Independent Certified Public Accountants F-6 Balance Sheets - March 31, 2000 (Unaudited) and December 31, 1999 F-7 Statements of Operations for the Three Months Ended March 31, 2000 and 1999 (Unaudited) and for the Years Ended December 31, 1999 and 1998 F-8 Statements of Stockholders' Equity (Deficit) for the Years Ended December 31, 1998 and 1999 and for the Three Months Ended March 31, 2000 (Unaudited) F-9 Statements of Cash Flows for the Three Months Ended March 31, 2000 and 1999 (Unaudited) and for the Years Ended December 31, 1999 and 1998 F-10 Notes to Financial Statements F-11 F-1 iSHOPPER.COM, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION On June 1, 2000, iShopper.com, Inc. (the Company) completed agreements (the Agreements) acquiring Atlantic Technologies International, Inc. (Atlantic) and Internet Software Solutions, Inc. (ISSI), both Florida corporations. Atlantic is involved in the business of assembling and selling computers. ISSI was newly formed to provide computer services. ISSI had only nominal operations prior to the acquisition. Under the terms of the Agreements, Atlantic and ISSI were acquired by the Company issuing 298,200 restricted shares of common stock and options to purchase 1,800 common shares at $0.10 per share. In addition, 198,800 common shares and 1,200 options will be issued upon Atlantic and ISSI meeting certain performance criteria. The acquisitions were accounted for by the purchase method of accounting based upon the fair value of the common stock issued. The common stock issued was valued at $1,335,936, or $4.48 per share and the options issued were valued at $8,064, or $4.48 per share. The contingently issuable common shares and options were not included in the purchase price but will be recorded at their fair value if and when the contingency is resolved. The additional cost of the acquisition, if recorded, will increase goodwill. The purchase price was allocated to the net assets of Atlantic and ISSI based upon their fair value with the $1,376,903 excess of the purchase price allocated to goodwill. Goodwill is being amortized over a period of five years by the straight-line method. Any additional goodwill recognized upon the contingently issuable common shares and options are issued will be amortized over the remaining estimated life of the goodwill. The following unaudited pro forma condensed consolidated statements of operations have been prepared to present the results of operations of the Company assuming the acquisitions occurred on January 1, 1999. The amounts presented for the Company have been derived from the Company's historical consolidated financial statements for the six months ended June 30, 2000 and for the year ended December 31, 1999. The amounts presented for the acquired companies were derived from their historical financial statements through the dates they were acquired. The accompanying pro forma financial statements have been prepared for comparative purposes. Had the acquisitions occurred on January 1, 1999, actual results of operations would likely have differed from the amounts presented in these pro forma financial statements. In addition, the pro forma results of operations presented in the accompanying pro forma financial statements are not necessarily indicative of the results that may be expected for the remainder of the year ending December 31, 2000. iSHOPPER.COM, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2000
Atlantic Tech- KT Pro Forma Pro Forma iShopper Uniq nologies Solutions Adjustments Results ----------- ---------- ---------- ---------- ---------- ----------- Revenues $ 2,781,309 $ 121,500 $1,065,840 $ 62,954 $ - $ 4,031,603 Cost of Sales 1,568,858 1,300 910,292 7,211 - 2,487,661 ----------- ---------- --------- --------- ---------- ----------- Gross Profit 1,212,451 120,200 155,548 55,743 - 1,543,942 ----------- ---------- --------- --------- ----------- ----------- Operating Expenses General and administrative 2,432,736 181,505 166,307 114,469 C 33,878 2,928,895 Bad debt 82,666 - 21,662 - 104,328 Depreciation 25,463 - 15,473 - D 1,748 42,684 Amortization of software costs 150,000 - - - B 155,738 305,738 Amortization of goodwill 404,621 2,180 - 325 A 283,457 C 114,366 E 360,670 1,165,619 ----------- ----------- ----------- ---------- ----------- ----------- Total Operating Expenses 3,095,486 183,685 203,442 114,794 949,857 4,547,264 ----------- ----------- ---------- --------- ---------- ----------- Loss from Operations (1,883,035) (63,485) (47,894) (59,051) (949,857) (3,003,322) Other expense (267) - - (9,550) - (9,817) Interest income 14,674 - 1,161 2,627 - 18,462 Interest expense (33,953) (777) (23,215) (4,197) - (62,142) ------------ ---------- --------- -------- ----------- ----------- Loss Before Income Taxes (1,902,581) (64,262) (69,948) (70,171) (949,857) (3,056,819) Income Tax Benefit (Expense) (236,060) - 5,080 - - (230,980) ------------- ----------- -------- -------- ---------- ----------- Net Loss $ (2,138,641) $ (64,262) $(64,868) $(70,171) $ (949,857) $(3,287,799) ============= =========== ======== ======== ========== =========== Basic and Diluted Loss Per Common Share $ (0.18) $ (0.25) ============= ========== Weighted Average Number of Common Shares Used in Per Share Calculation 11,574,232 13,408,135 ============= ==========
See the accompanying notes to the unaudited condensed consolidated pro forma financial statements. F-3 iSHOPPER.COM, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999
Atlantic Tech- KT Pro Forma Pro Forma iShopper Uniq nologies Solutions Adjustments Results ------------ --------- ----------- ----------- ------------- ----------- Net Sales $ 3,924,869 $ 295,974 $ 4,702,838 $ 872,445 $ - $ 9,796,126 Cost of Sales 276,600 23,385 4,316,526 113,221 - 4,729,732 ------------ --------- ----------- ----------- ------------- ----------- Gross Profit 3,648,269 272,589 386,312 759,224 - 5,066,394 ------------ --------- ----------- ----------- ------------- ----------- Operating Expenses General and administrative 3,912,542 513,410 316,040 1,027,586 - 5,769,578 Research and development - - 39,639 - - 39,639 Bad debt 653,702 - 191,742 - - 845,444 Loss from write-off of goodwill 229,713 - - - - 229,713 Depreciation 23,543 - 28,425 8,803 D 4,209 64,980 Amortization of software Costs - - - - B 600,000 600,000 Amortization of goodwill - - - - A 1,092,055 - C 275,381 E 360,670 1,728,106 ------------ --------- ----------- ------------ ------------- ---------- Total Operating Expenses 4,819,500 513,410 575,846 1,036,389 2,332,315 9,277,460 ------------ --------- ----------- ------------ ------------- ---------- Loss from Operations (1,171,231) (240,821) (189,534) (277,165) (2,332,315) (4,211,066) Interest income 28,567 - 2,234 - - 30,801 Interest expense (5,197) (38,744) (47,077) (56,193) - (147,211) ------------ --------- ----------- ------------ ------------- ------------ Loss Before Income Taxes (1,147,861) (279,565) (234,377) (333,358) (2,332,315) (4,327,476) Income Tax Benefit 233,810 - 40,012 - - 273,822 ------------ --------- ----------- ------------ ------------- ------------ Loss Before Extraordinary Item $ (914,051) $(279,565)$ (194,365) $ (333,358) $ (2,332,315) $ (4,053,654) ============ ========= ========== ============ ============= ============ Basic and Diluted Loss Before Extraordinary Item Per Common Share $ (0.68) $ (1.29) ============ =========== Weighted Average Number of Common Shares Used In Per Share Calculation 1,349,234 3,147,434 ============ ==========
F-4 See the accompanying notes to the unaudited condensed consolidated pro forma financial statements. iSHOPPER.COM, INC. AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS A- To recognize amortization of Uniq goodwill ($5,460,273), acquired on April 4, 2000, over a period of five years by the straight-line method. B- To recognize amortization of Uniq capitalized software costs ($3,000,000) acquired on April 4, 2000, over a period of five years by the straight-line method. C- To recognize amortization of the Atlantic goodwill ($1,074,225) acquired on June 1, 2000, over a period of five years, to recognize the amortization of the ISSI goodwill ($302,678) over a period of five years, and to recognize $33,878 of expenses recognized by ISSI prior to the acquisition not shown elsewhere. D- To recognize depreciation of increased carrying value of Atlantic's property and equipment ($21,046) acquired on June 1, 2000, over five years by the straight-line method. E- To recognize amortization of the KT Solutions goodwill ($4,342,278) acquired on June 1, 2000, over a period of five years. F-5 HANSEN, BARNETT & MAXWELL A Professional Corporation CERTIFIED PUBLIC ACCOUNTANTS (801) 532-2200 Member of AICPA Division of Firms Fax (801) 532-7944 Member of SECPS 345 East 300 South, Suite 200 Member of Summit International Associates Salt Lake City, Utah 84111-2693 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Board of Directors and the Stockholders iShopper.com, Inc. We have audited the accompanying balance sheet of Atlantic Technologies International, Inc. (the Company) as of December 31, 1999 and the related statements of operations, stockholders' equity (deficit), and cash flows for the years ended December 31, 1999 and 1998. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. 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 Atlantic Technologies International, Inc. as of December 31, 1999 and the results of its operations and its cash flows for the years ended December 31, 1999 and 1998 in conformity with accounting principles generally accepted in the United States. HANSEN, BARNETT & MAXWELL Salt Lake City, Utah August 9, 2000 F-6 ATLANTIC TECHNOLOGIES INTERNATIONAL, INC. BALANCE SHEETS ASSETS Current Assets Cash $ - $ 23,120 Short-term investments 81,718 80,715 Trade accounts receivable, net of allowance for doubtful accounts of $168,390 and $168,390, respectively 116,542 161,428 Other accounts receivable 73,890 73,890 Inventory 162,929 163,639 Prepaid expenses 3,000 3,000 --------- ------------ Total Current Assets 483,079 505,792 --------- ------------ Property and Equipment Furniture and equipment 62,123 62,123 Computers 31,228 31,228 Automobiles 37,300 37,300 Land 294,525 294,525 Buildings 166,704 166,704 Less: accumulated depreciation (85,611) (78,347) Net Property and Equipment 506,269 513,533 --------- ----------- Other Assets 4,140 4,140 --------- ----------- Total Assets $ 948,488 $ 1,023,465 ========= =========== LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities Checks drawn in excess of cash in bank $ 15,254 $ - Notes payable - current portion 284,669 260,129 Note payable to related party 42,067 46,382 Accounts payable 267,191 344,730 Accrued liabilities 9,810 2,392 --------- ----------- Total Current Liabilities 618,991 653,633 --------- ----------- Long-Term Liabilities Notes payable 396,221 400,004 --------- ----------- Stockholders' Deficit Common stock - $1.00 par value; 10,000 shares authorized; 1,000 shares issued and outstanding 1,000 1,000 Additional paid-in capital 33,214 33,214 Retained earnings (deficit) (100,938) (64,386) --------- ----------- Total Stockholders' Deficit (66,724) (30,172) --------- ----------- Total Liabilities and Stockholders' Deficit $ 948,488 $ 1,023,465 ========= =========== The accompanying notes are an integral part of these financial statements. F-7 ATLANTIC TECHNOLOGIES INTERNATIONAL, INC. STATEMENTS OF OPERATIONS
For the Three Months For the Years Ended Ended March 31, December 31, ---------------------- ------------------------ 2000 1999 1999 1998 ---------- ---------- ----------- ----------- (Unaudited) Net sales $ 673,381 $ 882,385 $ 4,702,838 $ 3,376,286 Cost of goods sold 558,702 805,480 4,316,526 2,771,472 ---------- ---------- ----------- ----------- Gross Profit 114,679 76,905 386,312 604,814 ---------- ---------- ----------- ----------- Operating Expenses General and Administrative Expense 124,078 100,179 316,040 524,684 Research and development expense - - 39,639 - Bad debt expense 13,158 - 191,742 55,012 Depreciation expense 7,264 - 28,425 18,465 ---------- ---------- ----------- ----------- Total Operating Expenses 144,500 100,179 575,846 598,161 ---------- ---------- ----------- ----------- Income (Loss) From Operations (29,821) (23,274) (189,534) 6,653 Interest Income 1,096 804 2,234 1,902 Interest Expense (12,907) (11,476) (47,077) (14,299) ---------- ---------- ----------- ----------- Net Loss Before Income Taxes (41,632) (33,946) (234,377) (5,744) Income Tax Benefit (Expense) 5,080 - 40,012 (7,124) ---------- ---------- ----------- ----------- Net Loss $ (36,552) $ (33,946) $ (194,365) $ (12,868) ========== ========== =========== =========== Basic and Diluted Loss Per Common Share $ (36.55) $ (33.95) $ (194.37) $ (12.87) ========== ========== =========== =========== Weighted Average Shares Used in Per Share Calculation 1,000 1,000 1,000 1,000 ========== ========== =========== ===========
The accompanying notes are an integral part of these financial statements. F-8 ATLANTIC TECHNOLOGIES INTERNATIONAL, INC. STATEMENTS OF STOCKHOLDERS' DEFICIT
Total Common Stock Additional Retained Stockholders' ---------------------- Paid-In Earnings Equity Shares Amount Capital (Deficit) (Deficit) ---------- ---------- ---------- ---------- ---------- Balance - December 31, 1997 1,000 $ 1,000 $ 33,214 $ 142,847 $ 177,061 Net loss - - - (12,868) (12,868) ---------- ---------- ---------- ---------- ---------- Balance - December 31, 1998 1,000 1,000 33,214 129,979 164,193 Net loss - - - (194,365) (194,365) ---------- ---------- ---------- ---------- ---------- Balance - December 31, 1999 1,000 1,000 33,214 (64,386) (30,172) Net loss (unaudited) - - - (36,552) (36,552) ---------- ---------- ---------- ---------- ---------- Balance - March 31, 2000 (Unaudited) 1,000 $ 1,000 $ 33,214 $ (100,938) $ (66,724) ========== ========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements. F-9 ATLANTIC TECHNOLOGIES INTERNATIONAL, INC. STATEMENTS OF CASH FLOWS
For the Three Months For the Years Ended Ended March 31, December 31, ---------------------- ------------------------ 2000 1999 1999 1998 ---------- ---------- ----------- ----------- (Unaudited) Cash Flows From Operating Activities Net income $ (36,552) $ (33,946) $ (194,365) $ (12,868) Depreciation 7,264 - 28,177 20,542 Changes in current assets and liabilities: Accounts Receivables 44,886 (19,703) (78,814) (116,226) Allowance for Doubtful Account - 42,098 168,390 - Other Accounts Receivable - - (73,890) - Inventories 710 22,025 88,100 (180,089) Prepaids - - - (3,000) Accounts payable (77,539) (90,363) (9,536) 87,085 Accrued liabilities 7,418 (34,011) (136,044) (16,108) ---------- ---------- ----------- ----------- Net Cash Used In Operating Activities (53,813) (113,900) (207,982) (220,664) ---------- ---------- ----------- ----------- Cash Flows From Investing Activities Cash paid for property and equipment - - (19,205) (487,509) Short-term investments (1,003) - (3,823) 86,119 Increase in other assets - - - 855 ---------- ---------- ----------- ----------- Net Cash Used In Investing Activities (1,003) - (23,028) (400,535) ---------- ---------- ----------- ----------- Cash Flows From Financing Activities Capital contributions - - - 8,604 Payments on related party borrowings (4,315) (37,348) (13,200) (3,581) Proceeds from related party borrowings - - - 61,982 Payments on borrowings (3,658) (4,199) (14,758) (12,194) Proceeds on borrowings 39,669 - 94,988 528,335 ---------- ---------- ----------- ----------- Net Cash Provided (Used) In Financing Activities 31,696 (41,547) 67,030 583,146 ---------- ---------- ----------- ----------- Net Decrease In Cash (23,120) (155,447) (168,980) (38,053) Cash - Beginning of Period 23,120 187,100 187,100 225,153 ---------- ---------- ----------- ----------- Cash - End of the Period $ - $ 31,653 $ 23,120 $ 187,100 ========== ========== =========== =========== Supplemental Cash Flow Information Cash Paid for Interest $ 12,907 $ 11,476 $ 47,077 $ 14,299 ========== ========== ========== ===========
The accompanying notes are an integral part of these financial statements. F-10 ATLANTIC TECHNOLOGIES INTERNATIONAL, INC. NOTES TO FINANCIAL STATEMENTS (Information with Respect to March 31, 2000 and for the Three Months Ended March 31, 2000 and 1999 is Unaudited) NOTE 1 - ORGANIZATION On May 16, 1990 Atlantic Technologies International, Inc. was formed as a corporation under the laws of the State of Florida. The Company was formed for the purpose of assembling and marketing of desk top computers. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Financial Instruments - The carrying amount reported in the accompanying consolidated financial statements for cash, investments, accounts payable, accrued liabilities, and notes payable approximate fair values because of the immediate or short_term maturities of these financial instruments. Inventory - Inventory is stated at the lower of cost (using the first_in, first_out method) or market value. Inventory consists of computer components available for sale. Property & Equipment - Property and equipment are stated at cost and consist of computer equipment, automobiles and various other equipment. Maintenance and repairs are charged to operations while major improvements are capitalized. Upon retirement, sale, or other disposition, the cost and accumulated depreciation are eliminated from the accounts and gain or loss is included in operations. Depreciation is computed using the straight-line method over the estimated useful lives of the property and equipment, which are three to seven years. Depreciation expense for the three month period ended March 31, 2000 and the years ended December 31, 1999 and 1998 was $7264 , $28,425 and $18,465 respectively. Revenue Recognition - Revenue is recognized upon shipment of product. Net Loss per Common Share - The Company computes basic and diluted loss per common share by dividing net loss by the weighted average number of common shares outstanding. NOTE 3 - NOTES PAYABLE Notes payable at March 31, 2000 and December 31, 1999 consisted of the following: 2000 1999 ---------- ---------- Line of credit agreement with a bank, interest at 8.5% $ 269,415 $ 245,000 Note payable to a bank; interest at 8%; secured by land and building; monthly payment of $3,493 with a balloon payment due November 2008. 402,149 404,561 Notes payable to a bank; interest at 10.5%; secured by an automobile; monthly payment of $504 9,326 10,572 ---------- ---------- Total notes payable 680,890 660,133 Less current portion 284,669 260,129 ---------- ---------- Total notes payable-long term $ 396,221 $ 400,004 ========== ========== F-12 Annual maturities of long-term debt as of March 31, 2000 and December 31, 1999 for each of the next five years are as follows: Year Ending December 31: 2000 1999 ------------------------ --------- --------- 2000 $ 280,886 $ 260,129 2001 16,156 16,156 2002 11,663 11,663 2003 12,631 12,631 2004 13,680 13,680 Thereafter 345,874 345,874 NOTE 4 - RELATED PARTY TRANSACTIONS Related Party Note Payable - Notes payable to related parties consists of amounts owed to a shareholder. During the year ended December 31, 1998, a shareholder advanced the Company $63,163 for miscellaneous operating expenses. The Company repaid $3,581 for a balance due at December 31, 1998 of $59,582. During the three months ended March 31, 2000 and for the year ended December 31, 1999, the Company repaid $4,315 and $13,200 for balances due of $$42,067 and $46,382 respectively. These advances are due on demand and bear no interest. All amounts are considered current. NOTE 5 - LEASE OBLIGATIONS Operating lease - During the year ended December 31, 1999, the Company entered into an operating lease with a company for an automobile. The agreement calls for monthly rental payments of $479. Rent expense for the three months ended March 31, 2000 and for the year ended December 31, 1999 was $1,437 and $479 respectively. NOTE 6 - INCOME TAXES The Company recognizes an asset or liability for the deferred tax consequences of all temporary differences between the tax bases of assets or liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years when the reported amounts of the assets or liabilities are recovered or settled. These deferred tax assets or liabilities are measured using the enacted tax rates that will be in effect when the differences are expected to reverse. Deferred tax assets are reviewed periodically for recoverability and valuation allowances are provided, as necessary. The components of the deferred tax asset as of December 31, 1999 are as follows: Contributions carryforwards $ 5,586 NOL carryforwards 42,971 -------- Deferred Tax Assets 48,557 Valuation allowance (48,557) -------- Net Deferred Tax Assets $ - ======== F-12 The following is a reconciliation of income tax benefit to the amount computed using the federal statutory rate: 1999 1998 ---------- ---------- Tax at statutory rates (34%) $ (98,855) $ (1,953) Nondeductible expenses 1,744 1,953 State tax, net of federal benefit (9,595) - Effect of lower tax rate 21,711 - Change in valuation allowance 44,983 - ---------- ---------- Total Benefit from Income Taxes $ (40,012) $ - ========== ========== F-13