-----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, WAXjdczmoJ6kPTDlSG3Dn7cT27VTmdiO3BGH/ps7L7Bg3hqCnNCrT7VYwt4zQS02 yG9Ylwg4s+Bbr4ZYv083aw== 0000930413-05-004159.txt : 20050611 0000930413-05-004159.hdr.sgml : 20050611 20050606165824 ACCESSION NUMBER: 0000930413-05-004159 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20050606 ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050606 DATE AS OF CHANGE: 20050606 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTH SHORE CAPITAL IV INC CENTRAL INDEX KEY: 0001102005 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 541964054 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-30383 FILM NUMBER: 05881010 BUSINESS ADDRESS: STREET 1: 5627 BELVINGTON AVE CITY: SPRINFIELD STATE: VA ZIP: 22151 BUSINESS PHONE: 7033072562 MAIL ADDRESS: STREET 1: 5627 BELLINGTON AVENUE CITY: SPRINGFIELD STATE: VA ZIP: 22151 8-K/A 1 c37667.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 JUNE 6, 2005 (Date of Report) NORTH SHORE CAPITAL IV INC. (Exact name of registrant as specified in its charter) COLORADO 000-30383 54-1964054 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 2208 PERSHING AVENUE SHEBOYGAN, WISCONSIN 53083 (Address of principal executive offices) 920-207-7772 (Registrant's telephone number, including area code) 203 YOAKUM PARKWAY # 916 ALEXANDRIA, VIRGINIA 22304 (Former name or former address, if changed since last report.) This is Amendment No.3 to the Current Report on Form 8-K dated December 17, 2004 and filed with the Securities and Exchange Commission on December 21, 2004 (the "Original Filing") and amended in its entirety on February 22, 2005 and April 15, 2005, for the purpose of filing financial statements and pro forma financial information. Except as indicated below and filed herewith, the exhibits listed below were filed as exhibits to the Original Filing. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial information Gridline Communications Corp. Financial Statements for the year ended December 31, 2004 with independent auditors report (including Balance Sheets, Statement of Operations, Statements of Stockholders' Equity, Statement of Cash Flows, and Notes to Financial Statements for the period July 2, 2004 (date of inception) through December 31, 2004) (filed as Exhibit 99.1 hereto). (b) Pro forma financial information Unaudited Pro Forma Consolidated Financial Statements of Gridline Communications Corp. (including Unaudited Pro Forma Consolidated Balance Sheet) as of April 30, 2005 (filed as Exhibit 99.2 hereto). (c) Exhibits Exhibit 23.1 Consent of R.E. Bassied & Co., Certified Public Accountants, dated May 23, 2005. Exhibit 99.1 Gridline Communications Corp. Financial Statements for the year ended December 31, 2004 with independent auditors report (including Balance Sheets, Statement of Operations, Statements of Stockholders' Equity, Statement of Cash Flows, and Notes to Financial Statements). Exhibit 99.2 Unaudited Pro Forma Consolidated Financial Statements of Gridline Communications Corp. (including Unaudited Pro Forma Consolidated Balance Sheet as of April 30, 2005). SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. DATED: JUNE 6, 2005 NORTH SHORE CAPITAL IV INC, By: /s/ Gerard Werner --------------------------------- Name: Gerard Werner Title: President and Chief Executive Officer EX-23.1 2 c37667_ex231.txt EXHIBIT 23.1 R. E. BASSIE & CO. CERTIFIED PUBLIC ACCOUNTANTS - -------------------------------------------------------------------------------- 6671 Southwest Freeway, Ste 550 Houston, Texas 77074-2220 Tel: (713) 272-8500 Fax: (713) 272-8515 E-Mail: Rebassie@aol.com CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the use in this Registration Statement on Form 8-K/A for North Shore Capital IV, Inc. of our report dated April 15, 2005 on the financial statements of Gridline Communications Corp., which is part of this Registration Statement. /s/ R. E. Bassie and Co. Houston, Texas May 23, 2005 EX-99.1 3 c37667_ex991.txt EXHIBIT 99.1 GRIDLINE COMMUNICATIONS CORP. INDEX TO FINANCIAL STATEMENTS
Page: Report of Independent Registered Public Accounting Firm A-2 Financial Statements: Balance Sheet - December 31, 2004 A-3 Statement of Operations - For period from July 2, 2004 (date of inception) A-4 through December 31, 2004 Statement of Stockholders' Equity - For period from July 2, 2004 (date of inception) A-5 through December 31, 2004 Statement of Cash Flows - For period from July 2, 2004 (date of inception) A-6 through December 31, 2004 Notes to Financial Statements A-7
A-1 R. E. BASSIE & CO. CERTIFIED PUBLIC ACCOUNTANTS - -------------------------------------------------------------------------------- 6671 Southwest Freeway, Suite 550 Houston, Texas 77074-2220 Tel: (713) 272-8500 Fax: (713) 272-8515 E-Mail: Rebassie@aol.com REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders Gridline Communications Corp.: We have audited the accompanying balance sheet of Gridline Communications Corp. (a development stage company - the Company) as of December 31, 2004, and related statements of operations, stockholders' equity, and cash flows for the period from July 2, 2004 (date of inception) through December 31, 2004. 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 the standards of the Public Company Accounting Oversight Board (United States). 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 Gridline Communications Corp. as of December 31, 2004, and the results of its operations and its cash flows for period from July 2, 2004 (date of inception) through December 31, 2004, in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 4 to the financial statements, the Company is a development stage corporation with limited capital. Successful development and marketing of the Company's products and the procurement of additional financing is necessary for the Company to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ R. E. Bassie & Co. Houston, Texas April 15, 2005 A-2 GRIDLINE COMMUNICATIONS CORP. BALANCE SHEET December 31, 2004 (A Development Stage Company)
ASSETS Current assets: Cash $ 4,527 Prepaid expenses 2,698 ---------------- Total current assets 7,225 ---------------- Property and Equipment 1,065 Less accumulated depreciation 29 ---------------- Net property and equipment 1,036 ---------------- Total assets $ 8,261 ================ LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Accounts payable and accrued expenses $ 186,485 Accrued interest payable 19,770 Convertible notes payable 1,169,000 ---------------- Total liabilities - current 1,375,255 ---------------- Stockholders' equity (deficit): Preferred stock, $0.0001 par value, 20,000,000 shares authorized. None issued - Common stock, $.0001 par value. Authorized 230,000,000 shares: 96,700,000 shares issued and outstanding at December 31, 2004 9,670 Deficit accumulated during the development stage (1,376,664) ---------------- Total stockholders' equity (deficit) (1,366,994) ---------------- Total liabilities and stockholders' equity $ 8,261 ================
See accompanying notes to financial statements. A-3 GRIDLINE COMMUNICATIONS CORP. STATEMENT OF OPERATIONS For the period from July 2, 2004 (date of inception) through December 31, 2004 (A Development Stage Company) Revenues $ - Costs and expenses: Research and development costs 760,223 Selling, general and administrative 596,671 ----------------- Total cost and expenses 1,356,894 ----------------- Operating loss (1,356,894) Other expenses - interest expense (19,770) ----------------- Net loss $ (1,376,664) ================= See accompanying notes to financial statements. A-4 GRIDLINE COMMUNICATIONS CORP. STATEMENT OF STOCKHOLDERS' EQUITY For the period from July 2, 2004 (date of inception) through December 31, 2004 (A Development Stage Company)
DEFICIT ACCUMULATED DURING TOTAL THE STOCKHOLDERS' PREFERRED STOCK COMMON STOCK DEVELOPMENT EQUITY SHARES AMOUNT SHARES AMOUNT STAGE (DEFICIT) -------- -------- -------- -------- ------ --------- Balance, July 2, 2004 - $ - - $ - $ - $ - Issuance of common shares under private placement - - 96,700,000 9,670 - 9,670 Net loss - - - - (1,376,664) (1,376,664) ----------- ----------- ----------- ----------- ----------- ----------- Balance, December 31, 2004 - $ - 96,700,000 $ 9,670 $(1,376,664) $(1,366,994) =========== =========== =========== =========== =========== ===========
See accompanying notes to financial statements. A-5 GRIDLINE COMMUNICATIONS CORP. STATEMENT OF CASH FLOWS For the period from July 2, 2004 (date of inception) through December 31, 2004 (A Development Stage Company) Cash flows from operating activities: Net loss $ (1,376,664) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation expense 29 (Increase) decrease in operating assets: Prepaid expenses (2,698) Increase (decrease) in operating liabilities: Accounts payable and accrued expenses 186,485 Accrued interest payable 19,770 ----------------- Net cash used in operating activities (1,173,078) ----------------- Cash flows from investing activities Capital expenditure for equipment (1,065) ----------------- Net cash used in investing activities (1,065) ----------------- Cash flows from financing activities: Proceeds from issuance of common shares under private placement 9,670 Proceeds from sale of convertible notes 1,169,000 ----------------- Net cash provided by financing activities 1,178,670 ----------------- Net increase in cash 4,527 Cash at July 2, 2004 (date of inception) - ----------------- Cash at end of year $ 4,527 =================
See accompanying notes to financial statements. A-6 GRIDLINE COMMUNICATIONS CORP. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENT December 31, 2004 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION, OWNERSHIP AND BUSINESS Gridline Communications Corp. (the "Company"), formerly Halocom, Inc., was incorporated under the laws of the State of Delaware on July 2, 2004. The Company is a development stage company formed to provide integrated distribution of broadband signaling and connectivity through electrical power lines, to homes, and offices. The company plans to provide Power Line Communication (PLC), (which the company may refer to as BPL or broadband over powerline), method of communications using existing electric power transmission and electricity distribution lines. It means the company may use powerline communications (PLC) or broadband over powerline (BPL), interchangeably. PLC technology will allow the Company, through the utilities companies, to send or communicate more robust data and voice over standard 50 or 60 Hz voltage frequency. The Company has realized that the dominant policy trend across the United States and the entire rest of the Globe remains deregulation, liberalization, and privatization of the telecommunications sector, and services. This global transformation is precipitating a high volume of data Internet traffic, which is exceeding the volume of voice traffic. Broadband over Power Line (BPL) communications may become the most optimal means of getting broadband signaling, and broadband-enabled value-added services (such as Voice over Internet Protocol, Video On Demand, Real-time Interactive Video, etc.), into homes and offices, in areas or communities that have electricity, but are lacking in Internet fiber optic backbone, due to their location, or costs associated with deploying fiber optic infrastructure, or other attributes. ACCOUNTS RECEIVABLE Accounts receivable consist primarily of trade receivables, net of a valuation allowance for doubtful accounts. INVENTORIES Inventories are valued at the lower-of-cost or market on a first-in, first-out basis. INVESTMENT SECURITIES The Company accounts for its investments in accordance with Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Management determines the appropriate classification of its investments in A-7 marketable securities at the time of purchase and reevaluates such determination at each balance sheet date. Securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities. Debt securities for which the Company does not have the intent or ability to hold to maturity and equity securities not classified as trading securities are classified as available-for-sale. The cost of investments sold is determined on the specific identification or the first-in, first-out method. Trading securities are reported at fair value with unrealized gains and losses recognized in earnings, and available-for-sale securities are also reported at fair value but unrealized gains and losses are shown in the caption "unrealized gains (losses) on shares available-for-sale" included in stockholders' equity. Management determines fair value of its investments based on quoted market prices at each balance sheet date. PROPERTY, EQUIPMENT AND DEPRECIATION Property and equipment are recorded at cost less accumulated depreciation. Upon retirement or sale, the cost of the assets disposed of and the related accumulated depreciation are removed from the accounts, with any resultant gain or loss being recognized as a component of other income or expense. Depreciation is computed over the estimated useful lives of the assets (5-20 years) using the straight-line method for financial reporting purposes and accelerated methods for income tax purposes. Maintenance and repairs are charged to operations as incurred. Advertising Costs The cost of advertising is expensed as incurred. RESEARCH AND DEVELOPMENT Research and development costs are expensed as incurred. INCOME TAXES The Company is a taxable entity and recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to be in effect when the temporary differences reverse. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in income in the year that includes the enactment date of the rate change. A valuation allowance is used to reduce deferred tax assets to the amount that is more likely than not to be realized. MANAGEMENT'S ESTIMATES AND ASSUMPTIONS 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, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses. A-8 Actual results could differ from these estimates. STOCK-BASED COMPENSATION The Company has chosen to continue to account for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related Interpretations and to elect the disclosure option of SFAS No. 123, "Accounting for Stock-Based Compensation." Accordingly, compensation cost for stock options issued to employees is measured as the excess, if any, of the quoted market price of the Company's stock at the date of the grant over the amount an employee must pay to acquire the stock. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company estimates the fair value of its financial instruments using available market information and appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the Company estimates of fair value are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The use of different market assumption and/or estimation methodologies may have a material effect on the estimated fair value amounts. The interest rates payable by the Company on its notes payable approximate market rates. The Company believes that the fair value of its financial instruments comprising accounts receivable, notes receivable, accounts payable, and notes payable approximate their carrying amounts. NEW PRONOUNCEMENTS In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 153. This statement addresses the measurement of exchanges of nonmonetary assets. The guidance in APB Opinion No. 29, "ACCOUNTING FOR NONMONETARY TRANSACTIONS," is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. The guidance in that opinion; however, included certain exceptions to that principle. This statement amends Opinion 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. This statement is effective for financial statements for fiscal years beginning after JUNE 15, 2005. Earlier application is permitted for nonmonetary asset exchanges incurred during fiscal years beginning after the date of this statement is issued. Management believes the adoption of this statement will have no impact on the financial statements of THE COMPANY. In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 152, which amends FASB statement No. 66, "ACCOUNTING FOR SALES OF REAL ESTATE," to reference the financial accounting and reporting A-9 guidance for real estate time-sharing transactions that is provided in AICPA Statement of Position (SOP) 04-2, "ACCOUNTING FOR REAL ESTATE TIME-SHARING TRANSACTIONS." This statement also amends FASB Statement No. 67, "ACCOUNTING FOR COSTS AND INITIAL RENTAL OPERATIONS OF REAL ESTATE PROJECTS," to state that the guidance for (a) incidental operations and (b) costs incurred to sell real estate projects does not apply to real estate time-sharing transactions. The accounting for those operations and costs is subject to the guidance in SOP 04-2. This statement is effective for financial statements for fiscal years beginning after JUNE 15, 2005. Management believes the adoption of this statement will have no impact on the financial statements of THE COMPANY. In November 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 151, "INVENTORY COSTS-- AN AMENDMENT OF ARB NO. 43, CHAPTER 4." This statement amends the guidance in ARB No. 43, Chapter 4, "INVENTORY PRICING," to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that "UNDER SOME CIRCUMSTANCES, ITEMS SUCH AS IDLE FACILITY EXPENSE, EXCESSIVE SPOILAGE, DOUBLE FREIGHT, AND REHANDLING COSTS MAY BE SO ABNORMAL AS TO REQUIRE TREATMENT AS CURRENT PERIOD CHARGES." This statement requires that those items be recognized as current-period charges regardless of whether they meet the criterion of "SO ABNORMAL." In addition, this statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. This statement is effective for inventory costs incurred during fiscal years beginning after JUNE 15, 2005. Management does not believe the adoption of this statement will have any immediate material impact on THE COMPANY. In May 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 150, "ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH LIABILITIES AND EQUITY" (hereinafter "SFAS NO. 150"). SFAS No. 150 establishes standards for classifying and measuring certain financial instruments with characteristics of both liabilities and equity and requires that those instruments be classified as liabilities in statements of financial position. Previously, many of those instruments were classified as equity. SFAS No. 150 is effective for financial instruments entered into or modified after MAY 31, 2003 and otherwise is effective at the beginning of the first interim period beginning after JUNE 15, 2003. THE COMPANY has determined the adoption of this statement will have no effect on THE COMPANY's financial statements. (2) CONVERTIBLE NOTES PAYABLE Convertible notes payable (the Notes) represent 8% convertible notes that will mature on September 10, 2005. The notes bear interest at the rate of 8% per annum and will be payable on the maturity date. The notes are convertible into the Company's common stock, in whole or in part, at the election of the holder, at any time prior to the maturity date, at a conversion price of $.10 per share, unless previously redeemed, subject to certain conditions. The notes are redeemable, in whole or in part, at the option of the Company, at any time prior to the maturity date, for a cash amount equal to the redemption price (105% of principal amount thereof, together with accrued interest to the redemption date). A-10 The Company offered the Note only to "accredited investors" (as defined by Regulation D under the Securities Act of 1933, as amended). (3) RELATED PARTY TRANSACTIONS During the period from July 2, 2004 (date of inception) through December 31, 2004, the Company paid a 10% ($116,900) commission on debt financing (convertible notes payable) to a firm owned by the Chairman of the Board. For the same period, the Company paid consulting expenses to the Chairman of the Board in the amount of $25,000. During the period from July 2, 2004 through December 31, 2004, the Company paid $755,000 to iGate, Inc., a company founded and controlled by one of the directors of Gridline Communications Corp. (4) INCOME TAXES A reconciliation of income taxes at the federal statutory rate to amounts provided for the period ended December 31, 2004 is as follows: Tax expense/(benefit) computed at statutory rate for continuing operations (468,066) Tax effect (benefit) of operating loss carryforwards 468,066 ------------- Tax expense/(benefit) for continuing operations - ============= The Company has a current net operating loss carryforwards in the amount of $1,376,664 as of December 31, 2004, to offset future taxable income, which expire 2024. At the statutory rate of 34%, the Company would have a tax benefit of $468,066. Deferred taxes are determined based on the temporary differences between the financial statement and income tax bases of assets and liabilities as measured by the enacted tax rates, which will be in effect when these differences reverse. The components of deferred income tax assets are as follows: Deferred tax assets: Net operating loss 468,066 ----------- Total deferred tax assets 468,066 Valuation allowance 468,066 ----------- Net deferred assets - =========== At December 31, 2004, the Company provided a 100% valuation allowance for the deferred tax asset because given the volatility of the current economic climate, it could not be determined whether it was more likely than not that the deferred tax asset/(liability) would be realized. A-11 (5) GOING CONCERN The Company is a development stage corporation with limited capital. Successful development and marketing of the Company's products and the procurement of additional financing is necessary for the Company to continue as a going concern. In view of these matters, realization of a major portion of the assets in the accompanying balance sheet is dependent upon continued operations of the Company. Management believes that actions presently being taken to obtain additional equity financing will provide the opportunity to continue as a going concern. A-12 EX-99.2 4 c37667_ex992.txt EXHIBIT 99.2 NORTH SHORE CAPITAL IV INC. UNAUDITED PROFORMA CONSOLIDATED FINANCIAL STATEMENTS Effective April 2005, North Shore Capital IV, Inc. acquired Gridline Communications Corp. by issuing 47,600,000 shares of its restricted common stock for all of the outstanding stock of Gridline Communications Corp. For accounting purposes, however, the acquisition has been treated as the recapitalization of Gridline Communications Corp. with Gridline Communications Corp. deemed the acquirer of North Shore Capital IV, Inc. in a reverse merger. The following unaudited proforma consolidated statements of operations for the four months ended April 30, 2005 and for the year ended December 31, 2004, assumes the acquisition of Gridline Communications Corp. had occurred on January 1, 2004 and include the historical unaudited consolidated statements of operations for the Registrant for the year ended December 31, 2004 and four months ended April 30, 2005, adjusted for the proforma effects of the acquisition. The unaudited proforma consolidated statements are not necessarily indicative of the results of operations that would actually have occurred if the transactions had been consummated as of January 1, 2004. These statements should be read in conjunction with the historical financial statements and related notes thereto of the Registrant, in its annual report on Form 10-KSB and Gridline Communications Corp.'s financial statements included herein. B-1 NORTH SHORE CAPITAL IV INC. UNAUDITED PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS Four months ended April 30, 2005
NORTH SHORE GRIDLINE CAPITAL COMMUNICATIONS PROFORMA PROFORMA IV, INC. CORP. ADJUSTMENTS CONSOLIDATED ----------------------------------------------------------------------------- Revenues $ - $ - $ - $ - Costs and expenses: Research and development costs - - - - General and administrative expenses - 114,143 - 114,143 Depreciation - 679 - 679 --------- --------- --------- --------- Total costs and expenses - 114,822 - 114,822 --------- --------- --------- --------- Operating income (loss) - (114,822) - (114,822) Other income (expenses): Interest expense - (37,162) - (37,162) --------- --------- --------- -------- Total other income (expenses) - (37,162) - - --------- --------- --------- -------- Net loss before provision for federal income taxes - (151,984) - (151,984) Income tax expense - - - - --------- --------- --------- --------- Net loss $ - $(151,984) $ - $(151,984) ========= ========= ========= =========
See accompanying notes to unaudited proforma consolidated financial statements. B-2 NORTH SHORE CAPITAL IV INC. UNAUDITED PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS Year ended December 31, 2004
NORTH SHORE GRIDLINE CAPITAL COMMUNICATIONS PROFORMA PROFORMA IV, INC. CORP. ADJUSTMENTS CONSOLIDATED ----------------------------------------------------------------------------- Revenues $ - $ - $ - $ - Costs and expenses: Research and development costs - 760,223 - 760,223 General and administrative expenses 1,337 596,642 - 597,979 Depreciation - 29 - 29 ----------- ----------- ----------- ----------- Total costs and expenses 1,337 1,356,894 - 1,358,231 ----------- ----------- ----------- ----------- Operating income (loss) (1,337) (1,356,894) - (1,358,231) Other income (expenses): Interest expense - (19,770) - (19,770) ----------- ----------- ----------- ----------- Total other income (expenses) - (19,770) - - ----------- ----------- ----------- ----------- Net loss before provision for federal income taxes (1,337) (1,376,664) - (1,378,001) Income tax expense - - - - ----------- ----------- ----------- ----------- Net loss $ (1,337) $(1,376,664) $ - $(1,378,001) =========== =========== =========== ===========
See accompanying notes to unaudited proforma consolidated financial statements. B-3 NORTH SHORE CAPITAL IV INC. UNAUDITED PROFORMA CONSOLIDATED BALANCE SHEET April 30, 2005
NORTH GRIDLINE SHORE COMMUNICATIONS PROFORMA PROFORMA CAPITAL CORP. ADJUSTMENTS CONSOLIDATED --------------------------------------------------------------------------------- ASSETS ------ Current assets: Cash $ - $ 869 $ - $ - $ 869 Employee advances - 19,839 - - 19,839 ---------- ---------- ---------- ---------- ---------- Total current assets - 20,708 - - 20,708 ---------- ---------- ---------- ---------- ---------- Property and equipment - 21,265 - - 21,265 Less accumulated depreciation - 708 - - 708 ---------- ---------- ---------- ---------- ---------- Net property and equipment - 20,557 - - 20,557 Other assets - 2,698 - - 2,698 ---------- ---------- ---------- ---------- ---------- Total assets $ - $ 43,963 $ - $ - $ 43,963 ========== ========== ========== ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Accounts payable and accrued expenses - 117,224 - - 117,224 Accrued interest payable - 53,617 - - 53,617 Loan payable to related party 1,747 - - - 1,747 Convertible notes payable - 1,391,500 - - 1,391,500 ---------- ---------- ---------- ---------- ---------- Total liabilities - current 1,747 1,562,341 - - 1,564,088 ---------- ---------- ---------- ---------- ---------- Stockholders' equity (deficit): Common stock, $.001 par value: Authorized 100,000,000 shares: 49,847,000 issued and outstanding at April 30, 2005 2,247 10,270 47,600 (10,270) 49,847 Additional paid-in capital (deficit) 49,653 - (101,247) 10,270 (41,324) Retained earnings (deficit) (53,647) (1,528,648) 53,647 - (1,528,648) ---------- ---------- ---------- ---------- ---------- Total stockholders' equity (deficit) (1,747) (1,518,378) - - (1,520,125) ---------- ---------- ---------- ---------- ---------- Total liabilities and stockholders' equity $ - $ 43,963 $ - $ - $ 43,963 ========== ========== ========== ========== ==========
See accompanying notes to unaudited proforma consolidated financial statements. B-4 GRIDLINE COMMUNICATIONS CORP. (A DEVELOPMENT STAGE COMPANY) NOTES TO UNAUDITED PROFORMA CONSOLIDATED FINANCIAL STATEMENTS (1) Basis of Presentation The unaudited Proforma Consolidated Statement of Operations for the four months ended April 30, 2005, included the unaudited historical results of operations for North Shore Capital IV, Inc. (North Shore) and Gridline Communications Corp. (Gridline) for the four months ended April 30, 2005, adjusted for the proforma effects of the acquisition assuming the acquisition occurred on January 1, 2004. The unaudited Proforma Consolidated Statement of Operations for the year ended December 31, 2004, included the audited historical results of operations of North Shore and Gridline, adjusted for the proforma effects of the acquisition assuming the acquisition occurred on January 1, 2004. The unaudited Proforma Balance Sheet at April 30, 2005, included the unaudited position of North Shore and Gridline as of April 30, 2005, assuming the acquisition occurred on April 30, 2005, adjusted for the proforma effects of the acquisition. A) The capital accounts of North Shore had been adjusted as of April 30, 2005 to report the effects of the acquisition (issuance of 47,600,000 shares of common stock to shareholders of Gridline), assuming the acquisition occurred on April 30, 2005. B) Adjustment was made to eliminate North Shore's accumulated deficit. C) Adjustment was made to eliminate Gridline's capital stock. B-5 -----END PRIVACY-ENHANCED MESSAGE-----