-----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, Q4BGx07FKdaUbeevXPmE64qAFSrG1I7b88eKL7yXr0zFwAbbfWpBfNYBsh53qsjm QGWqUEIR5BmLCJhVIVzxOw== 0001116502-01-501452.txt : 20020411 0001116502-01-501452.hdr.sgml : 20020411 ACCESSION NUMBER: 0001116502-01-501452 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20011112 ITEM INFORMATION: Changes in control of registrant ITEM INFORMATION: Other events FILED AS OF DATE: 20011116 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TARGITINTERACTIVE INC CENTRAL INDEX KEY: 0001078629 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 510347728 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-27391 FILM NUMBER: 1794189 BUSINESS ADDRESS: STREET 1: 155 COMMERCE WAY CITY: PORTSMOUTH STATE: NH ZIP: 03801 BUSINESS PHONE: 6037668300 MAIL ADDRESS: STREET 1: 155 COMMERCE WAY STREET 2: -- CITY: PORTSMOUTH STATE: NH ZIP: 03801 FORMER COMPANY: FORMER CONFORMED NAME: GOURMETMARKET COM INC/CA DATE OF NAME CHANGE: 19990723 8-K/A 1 targitinteractive8ka.txt AMENDMENT NO. 2 ON 8-K/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A (Amendment No. 2) Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): July 27, 2001 TARGITINTERACTIVE, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 0-27391 51-0347728 - --------------- ---------------- ------------------- (State or other (Commission File (IRS Employer jurisdiction of Number) Identification No.) incorporation) 155 Commerce Way, Portsmouth, NH 03801 ----------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (603) 766-8300 -------------------------------------------------------------- (Former name or former address, if changed since last report.) TargitInteractive, Inc., a Delaware corporation, is filing this Amendment to its Form 8-K dated July 27, 2001 in order to provide Item 7. (a) Financial Statements of Businesses Acquired and (b) Pro Forma Financial Information. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial Statements of Businesses Acquired. The audited financial statements of Williams Software, Inc. for the fiscal year ended December 31, 2000 are attached. The unaudited condensed interim financial statements of Williams Software, Inc. from January 1, 2001 to June 30, 2001 are attached. (b) Pro Forma Financial Information. The pro forma balance sheet for the period ended June 30, 2000 and the statements of operations for the year ended December 31, 2000 and the six months ended June 30, 2001 are attached. 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. TARGITINTERACTIVE. INC., INC. Date: November 19, 2001 By: /s/ James Baker ----------------------------- James Baker, President TABLE OF CONTENTS Report of Independent Certified Public Accountants..........................1 Financial Statements Balance Sheet as of December 31, 2000.......................................2 Statementof Operations for the year ended December 31, 2000 and the for the period November 1, 1999 to December 31, 1999.........3 Statement of Shareholders' Deficit the year ended December 31, 2000 and for the period November 1, 1999 to December 31, 1999........4 Statement of Cash Flows for the year ended December 31, 2000 and for the period November 1, 1999 to December 31, 1999................5 Notes to Financial Statements...............................................6 Unaudited Balance Sheet as of June 30, 2001................................12 Unaudited Statement of Operations for the interim periods ended June 30, 2001 and 2000........................................13 Unaudited Statement of Cash Flows for the interim periods ended June 30, 2001 and 2000........................................14 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Board of Directors and Stockholders Williams Software, Inc. We have audited the accompanying balance sheet of Williams Software, Inc. (a development stage company) as of December 31, 2000 and the related statements of operations, shareholders' deficit and cash flows for the period from November 1, 1999 (inception) through December 31, 1999, and for the year ended December 31, 2000. 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 audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Williams Software, Inc. as of December 31, 2000 and the results of its operations and its cash flows for the period from November 1, 1999 (inception) through December 31, 1999, and for the year ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. The financial statements referred to above have been prepared assuming that Williams Software, Inc. will continue as a going concern. As more fully described in Note 2, the company has incurred operating losses, negative cash flows from operating activities and has a working capital deficit. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans as to these matters are also described in Note 2. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that might result from the outcome of this uncertainty. Miami Beach, Florida November 12, 2001 CERTIFIED PUBLIC ACCOUNTANTS WILLIAMS SOFTWARE, INC. (A Development Stage Company) BALANCE SHEET December 31, 2000 ASSETS Current assets: Cash $ 109,869 Prepaid royalty expense 137,500 Other current assets 6,346 --------- Total current assets 253,715 Property and equipment, net of accumulated depreciation 119,486 Other assets 6,915 --------- Total assets $ 380,116 ========= LIABILITIES AND SHAREHOLDERS' DEFICIT Current liabilities: Accounts payable and accrued expenses $ 35,229 Convertible notes payable - shareholders 212,345 Deferred revenue 130,000 Current portion of obligations under capital leases 16,245 --------- Total current liabilities 393,819 Obligations under capital leases, net of current portion 17,400 Total liabilities 411,219 Commitments Shareholders' deficit: Common stock; $0.001 par value; 100,000,000 shares authorized, 10,110,808 issued and outstanding 10,111 Additional paid-in capital 824,093 Unearned compensation (47,104) Accumulated deficit (818,203) --------- Total shareholders' deficit (31,103) --------- Total liabilities and shareholders' deficit $ 380,116 ========= See accompanying notes to financial statements 2 WILLIAMS SOFTWARE, INC. (A Development Stage Company) STATEMENTS OF OPERATIONS
Period from November 1, 1999 Year Ended (inception) through December 31, December 31, 2000 1999 ------------ ------------ Revenues $ 2,959 $ -- Costs and expenses: Costs of revenues 1,040 -- Depreciation and amortization 26,926 413 Payroll, benefits and related expense 430,151 38,748 General and administrative 284,973 36,315 ------------ ------------ Total costs and expenses 743,090 75,476 Loss from operations (740,131) (75,476) Other income (expense): Interest expense (5,754) -- Interest income 2,879 279 ------------ ------------ Total other income (expense) (2,875) 279 ------------ ------------ Net loss (743,006) (75,197) ============ ============ Basic and diluted loss per common share: Basic and diluted loss per common share $ (0.07) $ (0.06) ============ ============ Weighted average number of common shares outstanding 10,449,317 1,343,329 ============ ============
See accompanying notes to financial statements. 3 WILLIAMS SOFTWARE, INC. (A Development Stage Company) STATEMENTS OF SHAREHOLDERS' DEFICIT
Common Stock Additional Total ---------------------- Paid-In Subscriptions Unearned Accumulated Shareholders' Shares Amount Capital Receivable Compensation Deficit Deficit ----------- -------- ---------- ---------- --------- --------- -------- Balance at November 1, 1999 (inception) 10 $ -- $ -- $ -- $ -- $ -- $ -- Issuance of common stock for consulting services 4,999,990 5,000 -- -- -- -- 5,000 Issuance of common stock in $.02 private placement 2,655,000 2,655 50,445 (3,100) -- -- 50,000 Issuance of common stock in $.35 private placement 500,001 500 174,500 -- -- -- 175,000 Stock options granted to employees for Compensation -- -- 66,500 -- (66,500) -- -- Amortization of unearned compensation -- -- -- -- 2,771 -- 2,771 Net loss -- -- -- -- -- (75,197) (75,197) ----------- -------- ---------- -------- --------- --------- -------- Balance at December 31, 1999 8,155,001 $ 8,155 $ 291,445 $ (3,100) $ (63,729) $ (75,197) $157,574 Proceeds from subscriptions receivable -- -- -- 3,100 -- -- 3,100 Issuance of common stock in $.35 private placement 1,471,432 1,472 513,528 -- -- -- 515,000 Conversion of debt through issuance of common stock 484,375 484 18,891 -- -- -- 19,375 Options issued for services -- -- 229 -- -- -- 229 Amortization of unearned compensation -- -- -- -- 16,625 -- 16,625 Net loss -- -- -- -- -- (743,006) (743,006) ----------- -------- ---------- -------- --------- --------- -------- Balance at December 31, 2000 10,110,808 $ 10,111 $ 824,093 $ -- $ (47,104) $(818,203) $(31,103) =========== ======== ========= ======== ========== ========= ========
See accompanying notes to financial statements. 4 WILLIAMS SOFTWARE, INC. (A Development Stage Company) STATEMENTS OF CASH FLOWS
Period from November 1, 1999 Year Ended (inception) to December 31 December 31, 2000 1999 --------- --------- OPERATING ACTIVITIES Net loss $(743,006) $ (75,197) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 26,926 413 Amortization of unearned compensation 16,625 2,771 Options issued for services 229 -- Common stock issued for services -- 5,000 Changes in operating assets and liabilities: Other current assets 557 (6,903) Prepaid royalty expense (137,500) -- Other assets (385) (6,530) Accounts payable and accrued expenses 20,782 14,447 Deferred revenue 130,000 -- --------- --------- Net cash used in operating activities (685,772) (65,999) --------- --------- INVESTING ACTIVITIES Purchase of property and equipment (75,316) (31,549) --------- --------- Net cash used in investing activities (75,316) (31,549) --------- --------- FINANCING ACTIVITIES Proceeds from convertible notes 212,345 -- Proceeds from issuance of common stock 537,475 225,000 Payments under capital lease obligations (6,315) -- --------- --------- Net cash provided by financing activities 743,505 225,000 --------- --------- Net increase (decrease) in cash (17,583) 127,452 Cash at beginning of period 127,452 -- --------- --------- Cash at end of period $ 109,869 $ 127,452 ========= ========= Supplemental disclosures of cash flow information: Cash paid during the period for interest $ 2,506 $ -- Supplemental disclosures of non-cash investing and financing activities: Property and equipment acquired through capital lease agreements $ 39,960 $ --
See accompanying notes to financial statements. 5 WILLIAMS SOFTWARE, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS NOTE 1 - DESCRIPTION OF BUSINESS Williams Software, Inc. d/b/a FirstPop.com was incorporated in the state of Florida in 1996, and was dormant until November 1999. FirstPop.com was established as a wholly owned division of Williams Software, Inc. in November of 1999, to develop software for Internet utilities and marketing applications commercialize the technology. The Company is developing a technology for Internet based advertising. This technology provides the ability to place an advertisement to a subscriber that appears first and on top of any web site. This is accomplished without being associated with any web site or their I.S.P. (Internet Service Provider). NOTE 2 - GOING CONCERN - UNCERTAINTY As shown in the accompanying financial statements, the Company has incurred operating losses, negative cash flows from operating activities and has a working capital deficit. The conditions raise substantial doubt about the Company's ability to continue as a going concern. The Company has initiated several actions to generate working capital and improve operating performance including equity and debt financing. There can be no assurance that the Company will be able to successfully implement its plans, or if such plans are successfully implemented, that the Company will achieve its goals. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that might result from the outcome of this uncertainty. NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash Equivalents The Company considers all highly liquid debt instruments with original maturities of three months or less to be cash equivalents. For the year ended December 31, 2000 and the period from November 1, 1999 to December 31, 1999, there were no cash equivalents. Use of Estimates The preparation of financial statements in conformity with accounting principles general accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Fair Value of Financial Instruments The Company's financial instruments consist mainly of cash and cash equivalents, accounts payable and notes payable. The carrying amounts of the Company's financial instruments approximate their fair values. Property and Equipment Property and equipment is recorded at cost. Depreciation and amortization on property and equipment are computed using the straight-line method over the expected useful lives of the assets, which range from three to five years. Internally Developed Software The Company has adopted SOP 98-1, Accounting for Costs of Computer Software Developed or Obtained For Internal Use, which requires that costs incurred during the application development stage be capitalized. This stage was determined to be from November 1, 1999 to June 30, 2000 and consisted of wages related to employees who were involved in the development. At December 31, 2000, the Company had capitalized $48,860 of wages. 6 NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Income Taxes The Company accounts for income taxes under Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes". Under SFAS 109, deferred income tax assets and liabilities are determined based upon differences between financial reporting and tax bases of assets and liabilities and are measured using currently enacted tax rates. SFAS 109 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Stock Compensation The Company has adopted Statement of Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based Compensation." SFAS 123 encourages the use of a fair-value-based method of accounting for stock-based awards under which the fair value of stock options is determined on the date of grant and expensed over the vesting period. Under SFAS 123, companies may, however, measure compensation costs of those plans using the methods prescribed by Accounting Principles Board Opinion No. 25 ("APB No. 25"), "Accounting for Stock Issued to Employees." Companies that apply APB No. 25 are required to include pro forma disclosures of net earnings and earnings per share as if the fair-value-based method of accounting had been applied. The Company elected for such plans under the provisions of APB No. 25. Loss Per Share Basic loss per share is computed by dividing loss available to common shareholders by the weighted-average number of common shares for the period. The computation of diluted loss per share is similar to basic loss per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares, such as options, had been issued. Diluted loss per share is not presented because the effects would be anti-dilutive. New Accounting Pronouncements On June 29, 2001, the Financial Accounting Standards Board unanimously approved the issuance of Statements of Financial Accounting Standards No. 141, Business Combinations (Statement 141), and No. 142, Goodwill and Other Intangible Assets (Statement 142). Statement 141 eliminates the pooling-of-interests method of accounting for business combinations except for qualifying business combinations that were initiated prior to July 1, 2001. Statement 141 changes the criteria to recognize intangible assets apart from goodwill. The requirements of Statement 141 are effective for any business combination accounted for by the purchase method that is completed after June 30, 2001. Under Statement 142, goodwill and indefinite lived intangible assets are no longer amortized but are reviewed annually, or more frequently if impairment indicators arise, for impairment. Identifiable intangible assets will continue to be amortized over their estimated useful lives. Early adoption is permitted for companies with fiscal years beginning after March 15, 2001, provided that their first quarter financial statements have not been issued. NOTE 4 - PREPAID ROYALTY EXPENSE On May 22, 2000, the Company executed a licensing agreement with a third party for rights to certain titles for promotional software offers. The terms of the agreement required the Company to prepay certain royalty amounts. At December 31, 2000, the Company had paid $137,500 in prepaid royalties related to this agreement. NOTE 5 - PROPERTY AND EQUIPMENT Property and equipment consist of the following at December 31, 2000: 7 NOTE 5 - PROPERTY AND EQUIPMENT (CONTINUED) USEFUL LIVES (YEARS) Furniture and fixtures 5 $ 12,488 Computer hardware and software 3 71,460 Office equipment 5 14,018 Internally developed software 3 48,860 ----------- Property and equipment $ 146,826 ----------- Less accumulated depreciation and amortization (27,340) ----------- Property and equipment, net $ 119,486 =========== Depreciation expense for the year ended December 31, 2000 and for the period from November 1, 1999 to December 31, 1999 was $18,783 and $413, respectively. Amortization of the internally developed software was $8,143 for the year ended December 31, 2000. The amortization period began July 1, 2000, the date at which the software was at the operational stage. NOTE 6 - CONVERTIBLE NOTES PAYABLE - SHAREHOLDERS In October 2000, the Company issued several convertible notes payable totaling $212,345 to existing shareholders of the Company. These notes were due on April 30, 2001 and accrued interest at 10% per annum. The notes were convertible into shares of common stock at $.04 per share. Accrued interest related to the notes was $3,199 at December 31, 2000. NOTE 7 - DEFERRED REVENUE The Company executed fulfillment agreements with third parties to provide goods and services in connection with joint promotion agreements that are to take place in 2001. Prepayments for certain goods were made in the aggregate amount of $130,000 as of December 31, 2000. Upon completion and shipment of the goods, the prepayments will be recognized as revenue. NOTE 8 - COMMITMENTS Leases The Company has entered into several operating and capital lease agreements for its facility and certain equipment, which expire at various dates through June 2003. The future minimum lease payments under operating and capital leases at December 31, 2000 are as follows: Capital Operating Leases Leases 2001 $ 15,969 $ 38,870 2002 15,969 40,816 2003 7,009 3,415 ---------- --------- Total minimum lease payments $ 38,947 $ 83,101 ========== ========= Less amount representing interest at 12% to 13% 5,302 ---------- Present value of net minimum lease payments 33,645 Less current portion (16,245) ---------- Long-term obligation $ 17,400 ========== Rent expense for the year ended December 31, 2000 and for the period from November 1, 1999 to December 31, 1999 was $36,077 and $37, respectively. 8 NOTE 8 - COMMITMENTS (CONTINUED) Litigation The Company may be subject to lawsuits and claims arising in the ordinary course of business. In the Company's opinion, as of December 31, 2000, there are no such matters that would have a material adverse effect on the Company's financial position or its results of operations. NOTE 9 - DEFERRED INCOME TAXES At December 31, 2000, the Company has available net operating loss carryforwards of approximately $913,000 that will expire through 2018. After consideration of all the evidence, both positive and negative, management has determined that a valuation allowance is necessary to reduce the deferred tax assets to the amount that will more likely than not be realized due to substantial uncertainty. Accordingly, components of the Company's net deferred income taxes at December 31, 2001 are as follows: Deferred tax assets: Net operating loss carryforwards $ 356,000 Valuation allowance (356,000) --------- Total $ -- ========= The increase in the valuation allowance for the year ended December 31, 2000 is $290,000. NOTE 10 - COMMON STOCK In November 1999, the Company issued 4,999,990 founders shares of common stock to three officers of the Company. The Company recorded expense based on the par value of the shares issued. Due to the issuance of the shares, the Company recorded $5,000 in selling, general and administrative expenses in the statement of operations as of December 31, 1999. In November 1999, the Company commenced a private offering to the Company's directors for $.02 per share, for which 2,655,000 shares were issued and an aggregate of $53,100 was raised. A second private offering to the public commenced in November 1999, for $.35 per share, for which 1,971,433 shares were issued and an aggregate of $690,000 was raised, $175,000 during the period ended December 31, 1999 and $515,000 during the year ended December 31, 2000. On October 31, 2000, 484,375 shares were issued to an existing shareholder for $.04 per share or net proceeds of $19,375. This issuance was in lieu of executing a convertible note payable (See Note 5). NOTE 11 -STOCK OPTIONS STOCK OPTIONS In accordance with APB No. 25, compensation expense is recognized for employee stock options when the market price of the underlying stock exceeds the exercise price on the date of grant. The Company issued stock options to employees related to their employment agreements in November 1999 that were below the market price. The value given to these options was $66,500. The Company is expensing the fair value of the options granted (as determined at the grant date) over the service period of the options. The Company recognized $16,625 and $2,771 in stock based compensation expense related to these options for the year ended December 31, 2000 and the period from November 1, 1999 to December 31, 1999, respectively. During December 31, 2000, the exercise price of stock options issued to employees equaled the fair value of the underlying stock on the date of grant. The market price of the underlying stock was determined by management, based on, 9 NOTE 11 -STOCK OPTIONS (CONTINUED) among other things, transactions with third party investors. Accordingly, the Company did not record any compensation expenses related to these grants. For options issued to consultants, the Company expensed the fair value of the options granted (as determined at the grant date) over the service or vesting period of the options. The Company recognized $229 in stock based compensation expense for the year ended December 31, 2000. The Company did not recognize any compensation expense for the period from November 1, 1999 to December 31, 1999. All options vest over a three to four year period and are exercisable over a one to five year period after the date of grant. Of the options issued to employees and the options issued to consultants, 3,520,000 and 3,810 respectively, are currently exercisable. Subsequent to December 31, 2000, all of the issued stock options were converted, along with the outstanding warrants and common stock, into a $300,000 convertible note as a result of the merger agreement with TargitInteractive, Inc. (see Note 12). The fair value for these options was estimated at the date of grant using the minimum value option pricing model with the following assumptions; risk-free interest rates equal to the five year U.S. Treasury Bill rate on the grant date; expected dividends of $-0-; expected life equal to the life of the options; and market price of the stock on the date of grant ranging from $.02 to $.35. A summary of the Company's stock option activity through December 31, 2000 follows: EMPLOYEES CONSULTANTS ------------------------------------------------ AVERAGE NUMBER AVERAGE NUMBER EXERCISE OF EXERCISE OF PRICE SHARES PRICE SHARES ------------------------------------------------ Outstanding--December 31, 1998 $ -- -- $ -- -- Granted .001 3,500,000 -- -- Exercised -- -- -- -- Forfeited -- -- -- -- Expired/Cancelled -- -- -- -- ------------------------------------------------ Outstanding--December 31, 1999 .001 3,500,000 -- -- Granted .350 80,000 .350 3,810 Exercised -- -- -- -- Forfeited -- -- -- -- Expired/Cancelled -- -- -- -- ------------------------------------------------ Outstanding--December 31, 2000 $ .010 3,580,000 $ .350 3,810 ================================================ The weighted-average remaining contractual life of these options are 2.8 and 4.8 years at December 31, 2000, and 1999, respectively. The estimated weighted-average fair value of options granted during fiscal year ended December 31, 2000, with an estimated stock price equal to exercise price was $.08. The estimated weighted-average fair value of options with an estimated stock price less than exercise price for options granted during fiscal year ended December 31, 1999, was $.02 per share. Pro forma information regarding net loss is required by FASB Statement No. 123, as if the Company had accounted for its stock options issued to employees, directors and advisors under the fair value method is as follows: YEARS ENDED DECEMBER 31 ---------------------- 2000 1999 ------------------------------------ Pro forma net loss ($744,606) ($75,197) The pro forma effect on net loss is not representative of the pro forma effect on operational results in future years. 10 STOCK WARRANTS On December 31, 2000, the Company had 6,391,518 warrants outstanding, including the warrants issued in connection with the sale of stock (see Note 10), which were issued to NOTE 11 -STOCK OPTIONS (CONTINUED) investors for the purchase of an equal amount of shares of stock. No expense was recognized for the year ended December 31, 2000 or during the period from November 1, 1999 to December 31, 1999. Subsequent to December 31, 2000, all of the issued warrants were converted, along with the outstanding stock options and common stock, into a $300,000 convertible note as a result of the merger agreement with TargitInteractive, Inc. (see Note 12). NOTE 12 - SUBSEQUENT EVENTS On July 27, 2001, the Company entered into a merger agreement with TargitInteractive, Inc. The Company became a wholly owned subsidiary of TargitInteractive, Inc. As a result of the merger, all of the outstanding shares of common stock and granted stock options and warrants were converted into a $300,000 5% convertible note. The holders of the note may convert all or part of the outstanding principal and accrued interest into approximately 26% on an as-converted basis to shares of TargitInteractive, Inc. common stock which are outstanding immediately prior to the conversion. On August 15, 2001, the note was converted into 6,745,000 shares of TargitInteractive common stock. In addition to the convertible note, warrants were issued to purchase up to 5% of the TargitInteractive, Inc. common stock outstanding for an aggregate exercise price of $1,000,000. The warrants expire June 30, 2002 and are contingent upon the completion of a $2,000,000 private placement. TargitInteractive, Inc. also issued 300,000 shares to certain shareholders of FirstPop.com that contributed interim financing funds while the companies were in negotiations. 11 WILLIAMS SOFTWARE, INC. CONDENSED INTERIM BALANCE SHEET June 30, 2001 (Unaudited) ASSETS Current assets: Cash $ 84,094 Prepaid royalty expense 137,500 Other current assets 402 ----------- Total current assets 221,996 Property and equipment, net of accumulated depreciation 96,781 Other assets 720 ----------- Total assets $ 319,497 =========== LIABILITIES AND SHAREHOLDERS' DEFICIT Current liabilities: Accounts payable and accrued expenses $ 252,949 Deferred revenue 130,000 Current portion of obligations under capital leases 21,292 ----------- Total current liabilities 404,241 Obligations under capital leases, net of current portion 12,353 Total liabilities 416,594 Commitments Shareholders' deficit: Common stock; $0.001 par value;100,000,000 shares authorized, 35,532,000 issued and outstanding 35,532 Additional paid-in capital 1,466,401 Subscriptions receivable (230,616) Accumulated deficit (1,368,414) ----------- Total shareholders' deficit (97,097) ----------- Total liabilities and shareholders' deficit $ 319,497 =========== See accompanying notes to condensed interim financial statements. 12 WILLIAMS SOFTWARE, INC. CONDENSED INTERIM STATEMENTS OF OPERATIONS (Unaudited) Six Months Ended Six Months Ended June 30, 2001 June 30, 2000 ------------ ------------ Revenues $ 34 $ 210 Costs and expenses: Payroll, benefits and related expense 340,047 143,115 General and administrative 194,341 130,738 ------------ ------------ Total costs and expenses 534,388 273,853 Loss from operations (534,354) (273,643) ------------ ------------ Other income (expense): (15,857) 755 ------------ ------------ Net loss (550,211) (272,888) ============ ============ Basic and diluted loss per common share: Basic and diluted loss per common share $(0.03) $(0.03) ============ ============ Weighted average number of common shares outstanding 16,774,726 8,493,627 ============ ============ See accompanying notes to condensed interim financial statements. 13 WILLIAMS SOFTWARE, INC. CONDENSED INTERIM STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended Six Months Ended June 30, June 30, 2001 2000 --------- --------- OPERATING ACTIVITIES Net loss $(550,211) $(272,888) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 22,704 4,761 Stock issued for note conversions 20,000 -- Amortization of unearned compensation 47,104 8,541 Changes in assets and liabilities: Other current assets 5,945 (30,939) Prepaid royalty expense -- (25,000) Other assets 6,195 -- Accounts payable and accrued expenses 217,720 (8,763) Deferred revenue -- 5,000 --------- --------- Net cash used in operating activities (230,543) (319,288) --------- --------- INVESTING ACTIVITIES Purchase of property and equipment -- (54,072) --------- --------- Net cash used in investing activities -- (54,072) --------- --------- FINANCING ACTIVITIES Proceeds from convertible notes 66,768 -- Proceeds from issuance of common stock 138,000 393,100 --------- --------- Net cash provided by financing activities 204,768 393,100 --------- --------- Net increase (decrease) in cash (25,775) 19,740 Cash at beginning of period 109,869 127,452 --------- --------- Cash at end of period $ 84,094 $ 147,192 ========= ========= Supplemental disclosures of non-cash investing and financing activities: Payment of interest through stock issuance $ 16,801 $ -- See accompanying notes to condensed interim financial statements. 14 WILLIAMS SOFTWARE, INC. NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED) Note 1. Basis of Presentation The unaudited interim financial statements of Williams Software, Inc. (the Company) as of June 30, 2001 and for the six-month periods ended June 30, 2001 and 2000 do not provide all the disclosures included in the annual financial statements. These interim financial statements should be read in conjunction with the audited financial statements and footnotes included therein. In the opinion of management, the accompanying interim financial statements reflect all adjustments necessary for a fair presentation of the financial position and results of operations of the Company. Note 2. Subsequent Events On July 27, 2001, the Company entered into a merger agreement with TargitInteractive, Inc. The Company became a wholly owned subsidiary of TargitInteractive, Inc. As a result of the merger, all of the outstanding shares of common stock and granted stock options and warrants were converted into a $300,000 5% convertible note. The holders of the note may convert all or part of the outstanding principal and accrued interest into approximately 26% on an as-converted basis to shares of TargitInteractive, Inc. common stock which are outstanding immediately prior to the conversion. On August 15, 2001, the note was converted into 6,745,000 shares of TargitInteractive common stock. In addition to the convertible note, warrants were issued to purchase up to 5% of the TargitInteractive, Inc. common stock outstanding for an aggregate exercise price of $1,000,000. The warrants expire June 30, 2002 and are contingent upon the completion of a $2,000,000 private placement. TargitInteractive, Inc. also issued 300,000 shares to certain shareholders of FirstPop.com that contributed interim financing funds while the companies were in negotiations. 15 -----END PRIVACY-ENHANCED MESSAGE-----