-----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, GtvaxuXDfMoXbn08We2xigWRILDvIUfMb/OD8MSf2S0JH+M4j2goHN4hw8DJ/JrH eJmnDI7ILStr4+nTF8dIFA== 0001116502-03-001164.txt : 20030626 0001116502-03-001164.hdr.sgml : 20030626 20030626171809 ACCESSION NUMBER: 0001116502-03-001164 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20030411 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030626 FILER: COMPANY DATA: COMPANY CONFORMED NAME: XSTREAM BEVERAGE GROUP INC CENTRAL INDEX KEY: 0000853833 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 621386351 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 033-30158-A FILM NUMBER: 03759191 BUSINESS ADDRESS: STREET 1: 805 E. HILLSBORO BLVD. STREET 2: 2ND FLOOR CITY: DEERFIELD BEACH STATE: FL ZIP: 33441 BUSINESS PHONE: 954-725-8988 FORMER COMPANY: FORMER CONFORMED NAME: GEYSER GROUP LTD DATE OF NAME CHANGE: 20010418 FORMER COMPANY: FORMER CONFORMED NAME: THEME FACTORY INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: EAST END INVESTMENTS INC DATE OF NAME CHANGE: 19900131 8-K/A 1 xstream-8ka.txt AMENDED CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: April 11, 2003 XSTREAM BEVERAGE GROUP, INC ----------------------------------- (Name of Registrant as specified in its charter) NEVADA 33-30158-A 62-1386351 -------- ------------ ----------- (State or other jurisdiction of (Commission File (IRS Employer incorporation or organization) No.) Identification No.) 621 NW 53rd Street, Suite 141, Boca Raton, Florida 33431 (Address and telephone number of principal executive offices) ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On April 11, 2003, we closed on the acquisition of two companies. We acquired all of the issued and outstanding shares of common stock of Total Beverage Network, Inc. in exchange for the issuance of one million shares of our common stock. Its two shareholders, Jerry Pearring and Barry Willson have agreed, subject to Board approval to become officers and directors of Xstream. After approval by our Board, we anticipate that Mr. Willson will assume the position of chief executive officer and Mr. Pearring will assume the position of president/chief operating officer. Steve Haglund, our current chief executive officer will become co-chairman and Edward Arioli will become executive vice president. Total Beverage System is a developmental stage company whose focus is the targeting of beverage companies and distributors for acquisitions. Also on April 11, 2003, Total Beverage Network, now a wholly owned subsidiary of Xstream, acquired substantially all of the assets of Universal Florida Beverage Distributors, Inc. in exchange for the issuance to Universal of 550,000 shares of our common stock. Universal is a distributor with distribution routes in the south Florida area. We anticipate utilizing these routes to increase our revenue base and as a means to distribute our Yohimbe Energy Drink. ITEM 7. EXHIBITS AND REPORTS ON FORM 8-K Financial Statements of Acquired Entities: Financial Statements for Total Beverage Network, Inc. Financial Statements for Universal Florida Beverage Distributors, Inc. 10.1 Stock Exchange Agreement between Xstream Beverage Group, Inc. and the shareholders of Total Beverage Network, Inc. *Previously Filed. 10.2 Purchase and Sale Agreement between Total Beverage Network, Inc. and Universal Florida Beverage Distributors, Inc. *Previously Filed. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Xstream Beverage Group, Inc. /s/Theodore Farnsworth - -------------------------------- BY: Theodore Farnsworth, chairman Dated: This 26th day of June 2003 TOTAL BEVERAGE NETWORK, INC. D/B/A BEVERAGE NETWORK OF SOUTH FLORIDA FINANCIAL STATEMENTS FOR THE PERIOD JANUARY 26, 2003 (INCEPTION) THROUGH APRIL 9, 2003 Total Beverage Network, Inc. d/b/a Beverage Network of South Florida Contents Page(s) ------- Independent Auditors' Report F-2 Balance Sheets F-3 Statements of Operations F-4 Statements of Cash Flows F-5 Statements of Changes in Shareholder's Deficiency F-6 Notes to Financial Statements F-7 - F-11 F-1 Independent Auditors' Report ---------------------------- To the Board of Directors of: Total Beverage Network, Inc. d/b/a Beverage Network of South Florida Ft Lauderdale, Florida We have audited the accompanying balance sheet of Total Beverage Network, Inc. d/b/a Beverage Network of South Florida as of April 9, 2003 and the related statements of operations, changes in shareholder's deficiency and cash flows for the period from January 26, 2003 (inception) to April 9, 2003. 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 Total Beverage Network, Inc. d/b/a Beverage Network of South Florida as of April 9, 2003, and the results of its operations and its cash flows from January 26, 2003 (inception)to April 9, 2003, 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 6 to the financial statements, the Company's net loss in the period from January 26, 2003 (inception)to April 9, 2003 of $158 and accumulated deficit of $158 at April 9, 2003, raises substantial doubt about its ability to continue as a going concern. Management's Plan in regards to these matters is also described in Note 6. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. SALBERG & COMPANY, P.A. Boca Raton, Florida June 25, 2003 F-2 TOTAL BEVERAGE NETWORK, INC. D/B/A BEVERAGE NETWORK OF SOUTH FLORIDA BALANCE SHEET April 9, 2003 -------- ASSETS Current Assets: Cash $ 392 Advances 24,450 -------- Total Current Assets 24,842 -------- TOTAL ASSETS $ 24,842 ======== SHAREHOLDER'S DEFICIENCY Common Stock $0.0001 par value, 100,000,000 authorized, 1,000 shares issued and outstanding -- Preferred Stock $0.0001 par value, 100,000,000 authorized, no shares issued and outstanding -- Additional Paid-In Capital 25,000 Accumulated Deficit (158) -------- Total Shareholder's Deficiency 24,842 -------- TOTAL SHAREHOLDER'S DEFICIENCY $ 24,842 ======== See accompanying notes to financial statements. F-3 TOTAL BEVERAGE NETWORK, INC. D/B/A BEVERAGE NETWORK OF SOUTH FLORIDA STATEMENT OF OPERATIONS
For the Period from January 26, 2003 (inception) to April 9, 2003 --------------------------------------------- Sales $ -- Cost of Goods Sold -- ------- Gross Profit -- General & Administrative Expenses 158 ------- Net Loss $ (158) ======= Net Loss per share - Basic and diluted $ -- Weighted Average Shares Outstanding -Basic and diluted 1,000 =======
See accompanying notes to financial statements. F-4 TOTAL BEVERAGE NETWORK, INC. D/B/A BEVERAGE NETWORK OF SOUTH FLORIDA STATEMENT OF CASH FLOWS
For the Period from January 26, 2003 (inception) to April 9, 2003 --------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $ (158) Adjustments to reconcile net cash used in operations: Changes in Operating Assets and Liabilities: -------- Net cash used in Operating Activities (158) CASH FLOWS FROM INVESTING ACTIVITIES: Advances (24,450) -------- Net cash used in Investing Activities (24,450) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from Common Stock 25,000 -------- Net cash provided by Financing Activities 25,000 -------- Net cash increase 392 Cash at beginning of period -- -------- Cash at end of period $ 392 ======== SUPPLEMENTAL DISCLOSURE Interest paid $ -- ========
See accompanying notes to financial statements. F-5 TOTAL BEVERAGE NETWORK, INC. D/B/A BEVERAGE NETWORK OF SOUTH FLORIDA STATEMENT OF CHANGES IN SHAREHOLDER'S DEFICIENCY FOR THE PERIOD FROM JANUARY 26, 2003 (INCEPTION)TO APRIL 9, 2003
Common Stock ------------ Additional Accumulated Shares Amount Paid-in Capital Deficit Total ------------------------------------------------------------------- Initial Capitalization, January 26, 2003 1,000 $ -- $25,000 $ -- $25,000 Net Loss for period ended April 9, 2003 (158) (158) -------------------------------------------------------------------- Balance, April 9, 2003 1,000 $ -- $25,000 $ (158) $24,842 ====================================================================
See accompanying notes to financial statements. F-6 TOTAL BEVERAGE NETWORK, INC. D/B/A BEVERAGE NETWORK OF SOUTH FLORIDA NOTES TO FINANCIAL STATEMENTS APRIL 9, 2003 ------------- NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - -------------------------------------------------------------------- (A) ORGANIZATION AND NATURE OF BUSINESS In January 2003, Total Beverage Network, Inc. d/b/a Beverage Network of South Florida (the "Company" or "BNSF") was incorporated in Florida and acquired the assets and operations of Universal Florida Beverage Distributors, Inc. on April 9, 2003. Also, on April 9, 2003, the Company was acquired by Xstream Beverage Group, Inc., a publicly held company. The Company, with principal offices in Ft Lauderdale, Florida, is a distributor to the South Florida market of beverage products consisting primarily of water, juices and ready to drink teas. (B) CASH AND CASH EQUIVALENTS For purposes of the cash flow statement, the Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. (C) REVENUE RECOGNITION The Company recognizes revenue upon acceptance of delivery of its product by its customers at agreed prices. Based on market conditions, the Company or its suppliers may choose to promote certain brands by offering free product or case volume discounts. The cost of any supplier sponsored promotion is recoverable in whole or in part from the supplier. The Company follows the guidance of Emerging Issues Task Force (EITF) Issue 01-9 "Accounting for Consideration Given by a Vendor to a Customer". Accordingly, the Company does not recognize revenue on free promotional product or discounts. Further, the Company recognizes as a cost of sale, the cost of free promotional product net of any available chargebacks to the suppliers. (D) INCOME TAXES The Company accounts for income taxes under the Financial Accounting Standards Board Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes" ("Statement 109"). Under Statement 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under Statement 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period, which includes the enactment date. (E) NET LOSS PER COMMON SHARE Basic net income (loss) per common share (Basic EPS) excludes dilution and is computed by dividing net income (loss) available to common F-7 TOTAL BEVERAGE NETWORK, INC. D/B/A BEVERAGE NETWORK OF SOUTH FLORIDA NOTES TO FINANCIAL STATEMENTS APRIL 9, 2003 ------------- stockholder by the weighted-average number of common shares outstanding for the period. Diluted net income per share (Diluted EPS) reflects the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. For the period from January 26, 2003 to April 9, 2003, diluted loss per share is the same as basic loss per share since there are no options or common stock equivalents outstanding. (F) USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets 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 those estimates. (G) CONCENTRATIONS The Company concentrates its customer base in the South Florida region and may therefore be subject to economic fluctuations that may affect that region. (H) RECENT ACCOUNTING PRONOUNCEMENTS Recent pronouncements which have been adopted or may effect the Company in the future are as follows: SFAS 144 Accounting for the Impairment or Disposal of Long-Lived Asset ("SFAS 144") supercedes SFAS. 121 Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of ("SFAS 121"). Though it retains the basic requirements of SFAS 121 regarding when and how to measure an impairment loss, SFAS 144 provides additional implementation guidance. SFAS 144 excludes goodwill and intangibles not being amortized among other exclusions. SFAS 144 also supercedes the provisions of APB 30, "Reporting the Results of Operations," pertaining to discontinued operations. Separate reporting of a discontinued operation is still required, but SFAS 144 expands the presentation to include a component of an entity, rather than strictly a business segment as defined in SFAS 131, Disclosures about Segments of an Enterprise and Related Information. SFAS 144 also eliminates the current exemption to consolidation when control over a subsidiary is likely to be temporary. This statement is effective for all fiscal years beginning after December 15, 2001. The implementation of SFAS 144 did not have a material effect on the Company's financial position, results of operations or liquidity. SFAS 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections, ("SFAS 145") updates, clarifies, and simplifies existing accounting pronouncements. SFAS 145 rescinds Statement 4, which required all gains and losses from extinguishment of debt to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. As a result, the criteria in Opinion 30 will now be used to classify those gains and losses. Statement 64 amended Statement 4, and is no longer necessary because Statement 4 has been rescinded. Statement 44 was issued to F-8 TOTAL BEVERAGE NETWORK, INC. D/B/A BEVERAGE NETWORK OF SOUTH FLORIDA NOTES TO FINANCIAL STATEMENTS APRIL 9, 2003 ------------- establish accounting requirements for the effects of transition to the provisions of the Motor Carrier Act of 1980. Because the transition has been completed, Statement 44 is no longer necessary. SFAS 145 amends Statement 13 to require that certain lease modifications that have economic effects similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback transactions. This amendment is consistent with FASB's goal requiring similar accounting treatment for transactions that have similar economic effects. This statement is effective for fiscal years beginning after May 15, 2002. The adoption of SFAS 145 is not expected to have a material impact on the Company's financial position, results of operations or liquidity. SFAS 146, Accounting for Exit or Disposal Activities ("SFAS 146") addresses the recognition, measurement, and reporting of costs that are associated with exit and disposal activities that are currently accounted for pursuant to the guidelines set forth in EITF 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to exit an Activity (including Certain Cost Incurred in a Restructuring)," cost related to terminating a contract that is not a capital lease and one-time benefit arrangements received by employees who are involuntarily terminated-nullifying the guidance under EITF 94-3. Under SFAS 146, the cost associated with an exit or disposal activity is recognized in the periods in which it is incurred rather than at the date the Company committed to the exit plan. This statement is effective for exit or disposal activities initiated after December 31, 2002 with earlier application encouraged. The adoption of SFAS 146 is not expected to have a material impact on the Company's financial position, results of operations or liquidity. In November 2002, the FASB issued FASB Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN 45). FIN 45 requires that upon issuance of a guarantee, a guarantor must recognize a liability for the fair value of an obligation assumed under a guarantee. FIN 45 also requires additional disclosures by a guarantor in its interim and annual financial statements about the obligations associated with guarantees issued. The recognition provisions of FIN 45 are effective for any guarantees issued or modified after December 31, 2002. The disclosure requirements are effective for financial statements of interim or annual periods ending after December 15, 2002. The adoption of this pronouncement is not expected to have a material effect on the earnings or financial position of the Company. NOTE 2 ADVANCES - ----------------- On January 28, 2003 and March 3, 2003, the Company advanced $12,450 and $12,000 respectively to its pending acquisition candidate, Universal Florida Beverage Distributors, Inc., as interim financing. The advance was non-interest bearing and called for repayment from the proceeds of future positive operational cash flow, once achieved. Accordingly, the loan is classified as a current liability. NOTE 3 COMMITMENTS AND CONTINGENCIES - ------------------------------------- (A) LETTERS OF INTENT AND ACQUISITION AGREEMENTS On February 27, 2003, Universal Florida Beverage Distributors, Inc. "Universal" accepted the Company's letter of intent to acquire Universal's assets and certain of its liabilities. The agreement calls for a purchase price of $275,000 of Xstream Beverage Group, Inc. common stock valued at $.50 per share, consistent with the pricing of the Xstream Beverage Group, Inc. Private Placement Memorandum in F-9 TOTAL BEVERAGE NETWORK, INC. D/B/A BEVERAGE NETWORK OF SOUTH FLORIDA NOTES TO FINANCIAL STATEMENTS APRIL 9, 2003 ------------- circulation at the time. The transaction closing was effective at close of business on April 9, 2003. (B) OFFICE LEASE On May 1, 2003 the Company entered into a new office/warehouse lease expiring April 30, 2005 and stipulating monthly base rent of $4,500 for the first twelve months and $4,850 thereafter. Rent expense in 2003 was $0. Future minimum lease payments under non-cancelable operating leases with terms exceeding one year as of April 9, 2003 are as follows: Year ending December 31: 2003 $ 36,000 2004 56,800 2005 19,400 -------- $112,200 ======== NOTE 4 SHAREHOLDER'S DEFICIENCY - --------------------------------- In January 2003, Total Beverage Network, Inc. issued 1,000 common shares for $25,000 to its founders. NOTE 5 INCOME TAXES - --------------------- There was no income tax expense for the period from January 26, 2003 (inception) to April 9, 2003 due to the Company's net loss. The Company's tax expense differs from the "expected" tax expense (benefit) for the period ended April 9, 2003, (computed by applying the Federal Corporate tax rate of 34% to loss before taxes), as follows: Computed "expected" tax expense (benefit) $(54) Reclassification of prior year temporary difference -- Change in valuation allowance 54 ---- $ -- ==== The effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities at April 9, 2003 are as follows: Deferred tax assets: Net operating loss carryforward $ 54 ---- Total gross deferred tax assets 0 Less valuation allowance (54) ---- Net deferred tax assets $ -- ==== F-10 TOTAL BEVERAGE NETWORK, INC. D/B/A BEVERAGE NETWORK OF SOUTH FLORIDA NOTES TO FINANCIAL STATEMENTS APRIL 9, 2003 ------------- The valuation allowance was $54 at April 9, 2003. The increase during 2003 was $54. The Company has a net operating loss carryforward of approximately $158 at April 9, 2003. NOTE 6 GOING CONCERN - --------------------- As reflected in the accompanying consolidated financial statements, the Company has continuing net losses in the period from January 26, 2003 (inception) to April 9, 2003 of $158 and accumulated deficit of $158 at April 9, 2003. The ability of the Company to continue as a going concern is dependent on the Company's ability to further implement its business plan, raise capital, and generate revenues. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. The Company's acquired the business, assets and certain liabilities of Universal Florida Beverage Distributors, Inc. on April 9, 2003. The Company expects to be funded by its parent as it strives to become a profitable operation. NOTE 7 SUBSEQUENT EVENTS - ------------------------- On February 27, 2003, Universal Florida Beverage Distributors, Inc. "Universal" accepted the Company's letter of intent to acquire Universal's assets and certain of it liabilities. The agreement calls for a purchase price of $275,000 of Xstream Beverage Group, Inc. common stock valued at $.50 per share, consistent with the pricing of the Xstream Beverage Group, Inc. Private Placement Memorandum in circulation at the time. The transaction closing was effective at close of business on April 9, 2003. F-11 UNIVERSAL FLORIDA BEVERAGE DISTRIBUTORS, INC. FINANCIAL STATEMENTS FOR THE PERIOD JANUARY 1, 2003 THROUGH APRIL 9, 2003, THE YEAR ENDED DECEMBER 31, 2002 AND FROM MARCH 9, 2001 THROUGH DECEMBER 31, 2001 Contents -------- Page(s) ------- Independent Auditors' Report F-13 Balance Sheets F-14 Statements of Operations F-15 Statements of Cash Flows F-16 Statements of Changes in Shareholder's Deficiency F-17 Notes to Financial Statements F-18 - F-24 F-12 Independent Auditors' Report To the Board of Directors of: Universal Florida Beverage Distributors, Inc. Ft Lauderdale, Florida We have audited the accompanying balance sheets of Universal Florida Beverage Distributors, Inc. as of April 9, 2003 and December 31, 2002 and 2001 and the related statements of operations, changes in shareholder's deficiency and cash flows for the period from January 1, 2003 to April 9, 2003, the year ended December 31, 2002 and for the period from March 9, 2001 to December 31, 2001. 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 of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly in all material respects, the financial position of Universal Florida Beverage Distributors, Inc. as of April 9, 2003, and December 31, 2002 and 2001, and the results of its operations and its cash flows from January 1, 2003 to April 9, 2003, for the year ended December 31, 2002 and from March 9, 2001 to December 31, 2001, 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 9 to the financial statements, the Company's continuing net losses in the period from March 9, 2001 to December 31, 2001 of $136,991, in 2002 of $112,504, and the period from January 1, 2003 to April 9, 2003 of $68,420 and accumulated deficit of $317,915 at April 9, 2003, raises substantial doubt about its ability to continue as a going concern. Management's Plan in regards to these matters is also described in Note 9. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. SALBERG & COMPANY, P.A. Boca Raton, Florida June 23, 2003 F-13 UNIVERSAL FLORIDA BEVERAGE DISTRIBUTORS, INC. BALANCE SHEETS
December 31, April 9, ------------ 2003 2002 2001 --------------------------------------- ASSETS Current Assets: Cash $ 10,927 $ 3,206 $ 14,702 Accounts Receivable, net 26,807 23,276 28,224 Inventory 29,976 55,592 68,186 Other Current Assets 269 5,000 -- --------------------------------------- Total Current Assets 67,979 87,074 111,112 --------------------------------------- Warehouse Equipment, net 4,304 5,164 8,606 Other Assets 350 350 -- --------------------------------------- TOTAL ASSETS $ 72,633 $ 92,588 $119,718 ======================================= LIABILITIES & SHAREHOLDER'S DEFICIENCY Liabilities: Current Liabilities: Accounts Payable $149,623 $173,014 $ 86,408 Advances 49,450 -- -- Accrued Expenses 6,775 3,969 10,201 Working Capital Loan 19,600 - - Line of Credit 165,000 165,000 160,000 --------------------------------------- Total Current Liabilities 390,448 341,983 256,609 Shareholder's Deficiency: Common Stock $0.01 par value, 30,000,000 authorized, 25 shares issued and outstanding 0 0 0 Additional Paid-In Capital 100 100 100 Accumulated Deficit (317,915) (249,495) (136,991) --------------------------------------- Total Shareholder's Deficiency (317,815) (249,395) (136,891) --------------------------------------- TOTAL LIABILITIES & SHAREHOLDER'S DEFICIENCY $ 72,633 $ 92,588 $119,718 =======================================
See accompanying notes to financial statements. F-14 UNIVERSAL FLORIDA BEVERAGE DISTRIBUTORS, INC. STATEMENTS OF OPERATIONS
For the Period From For the Year For the Period From January 1, 2003 to Ended March 9, 2001 to April 9, 2003 December 31, 2002 December 31, 2001 --------------------------------------------------------------- Sales $ 187,224 $ 868,454 $ 515,927 Cost of Goods Sold 146,659 679,693 386,280 ----------------------------------------------------- Gross Profit 40,565 188,761 129,647 Expense: Marketing & Sales: Contract Labor 11,610 13,231 600 Other Marketing & Sales 4,949 26,163 25,981 ----------------------------------------------------- Total Marketing & Sales 16,559 39,394 26,581 Warehouse & Delivery: Rent 21,796 60,660 60,805 Other Warehouse & Delivery Expense 7,636 12,415 10,303 ----------------------------------------------------- Total Warehouse & Delivery 29,432 73,075 71,108 General & Administrative: Payroll G&A 27,433 122,445 130,291 Professional Fees 20,057 38,857 7,327 Bad Debts 6,000 3,500 9,000 Other General & Administrative 8,346 32,410 31,004 ----------------------------------------------------- Total General & Administrative 61,836 197,212 177,622 ----------------------------------------------------- Total Operating Expense 107,827 309,681 275,311 ----------------------------------------------------- Loss From Operations (67,262) (120,920) (145,664) Other Income/Expense: Other Income 872 9,557 11,873 Other Expense (2,030) (1,141) (3,200) ----------------------------------------------------- Total Other Income/(Expense) (1,158) 8,416 8,673 ----------------------------------------------------- Net Loss $ (68,420) $(112,504) $(136,991) ===================================================== Net Loss per share - Basic and diluted $ (2,737) $ (4,500) $ (5,480) ===================================================== Weighted Average Shares Outstanding -Basic and diluted 25 25 25 =====================================================
See accompanying notes to financial statements. F-15 UNIVERSAL FLORIDA BEVERAGE DISTRIBUTORS, INC. STATEMENTS OF CASH FLOWS
For the Period From For the Year For the Period From January 1, 2003 to Ended March 9, 2001 to April 9, 2003 December 31, 2002 December 31, 2001 --------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $ (68,420) $(112,504) $(136,991) Adjustments to reconcile net cash provided used in operations: Depreciation 860 3,442 4,303 Bad debt 6,000 3,500 9,000 Changes in Operating Assets and Liabilities: Accounts Receivable (9,531) 1,448 (26,212) Inventory Asset 25,616 12,594 (115,455) Other Current Assets 4,732 (5,000) Other Assets -- (350) -- Accounts Payable (23,391) 86,606 64,014 Accrued Expenses 2,805 (6,232) 10,201 ----------------------------------------------------- Net cash used in Operating Activities (61,329) (16,496) (191,140) CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of Fixed Assets -- -- (12,909) ----------------------------------------------------- Net cash used in Investing Activities -- -- (12,909) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from Common Stock -- -- 100 Proceeds from Working Capital Loan 19,600 -- -- Proceeeds from Advances 49,450 -- -- Proceeds from Line of Credit -- 5,000 160,000 ----------------------------------------------------- Net cash provided by Financing Activities 69,050 5,000 160,100 ----------------------------------------------------- Net cash increase (decrease) 7,721 (11,496) (43,949) Cash at beginning of period 3,206 14,702 58,651 ----------------------------------------------------- Cash at end of period $ 10,927 $ 3,206 $ 14,702 ===================================================== SUPPLEMENTAL DISCLOSURE Interest paid $ -- $ -- $ -- =====================================================
See accompanying notes to financial statements. F-16 UNIVERSAL FLORIDA BEVERAGE DISTRIBUTORS, INC. STATEMENT OF CHANGES IN SHAREHOLDER'S DEFICIENCY FOR THE PERIOD JANUARY 1, 2001 TO APRIL 9, 2003, THE YEAR ENDED DECEMBER 31, 2002 AND THE PERIOD FROM MARCH 9, 2001 TO DECEMBER 31, 2001
Common Stock ------------ Additional Accumulated Shares Amount Paid-in Capital Deficit Total -------------------------------------------------------------------- Initial Capitalization, March 9, 2001 25 $ 0 $ 100 $ -- $ 100 Net Loss from March 9, 2001 to December 31, 2001 (136,991) (136,991) ----------------------------------------------------------------- Balance, December 31, 2001 25 0 100 (136,991) (136,891) Net Loss for year ended December 31, 2002 (112,504) (112,504) ----------------------------------------------------------------- Balance, December 31, 2002 25 0 100 (249,495) (249,395) Net Loss from January 1, 2003 to April 9, 2003 (68,420) (68,420) ----------------------------------------------------------------- Balance, April 9, 2003 25 $ 0 $ 100 $(317,915) $(317,815) =================================================================
See accompanying notes to financial statements. F-17 UNIVERSAL FLORIDA BEVERAGE DISTRIBUTORS, INC. NOTES TO FINANCIAL STATEMENTS APRIL 9, 2003 AND DECEMBER 31, 2002 AND 2001 -------------------------------------------- NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - -------------------------------------------------------------------- (A) ORGANIZATION AND NATURE OF BUSINESS In February 2001, Universal Florida Beverage Distributors, Inc. (the "Company" or "Universal") was incorporated in Florida and acquired the assets and operations of the South Florida division of Universal Beverages on March 9, 2001. The Company, with principal offices in Ft Lauderdale Florida, is a distributor to the South Florida market of beverage products consisting primarily of water, juices and ready to drink teas. (B) CASH AND CASH EQUIVALENTS For purposes of the cash flow statement, the Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. (C) INVENTORIES Inventories consist primarily of case packed beverage product and are stated at lower of cost (first-in, first-out) or market. (D) WAREHOUSE EQUIPMENT Warehouse equipment is stated at cost and depreciation is computed using the straight-line method over the estimated economic useful life of 7 years. Maintenance and repairs are charged to expense as incurred. Major improvements are capitalized. (E) LONG-LIVED ASSETS The Company reviews long-lived assets and certain identifiable assets related to those assets for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recoverable. If the non-discounted future cash flows of the enterprise are less than their carrying amount, their carrying amounts are reduced to fair value and an impairment loss is recognized. (F) REVENUE RECOGNITION The Company recognizes revenue upon acceptance of delivery of its product by its customers at agreed prices. Based on market conditions, the Company or its suppliers may choose to promote certain brands by offering free product or case volume discounts. The cost of any supplier sponsored promotion is recoverable in whole or in part from the supplier. The Company follows the guidance of Emerging Issues Task Force (EITF) Issue 01-9 "Accounting for Consideration Given by a Vendor to a Customer". Accordingly, the Company does not recognize revenue on free promotional product or discounts. Further, the Company recognizes as a cost of sale, the cost of free promotional product net of any available chargebacks to the suppliers. F-18 UNIVERSAL FLORIDA BEVERAGE DISTRIBUTORS, INC. NOTES TO FINANCIAL STATEMENTS APRIL 9, 2003 AND DECEMBER 31, 2002 AND 2001 -------------------------------------------- (G) INCOME TAXES The Company accounts for income taxes under the Financial Accounting Standards Board Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes" ("Statement 109"). Under Statement 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under Statement 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period, which includes the enactment date. (H) NET LOSS PER COMMON SHARE Basic net income (loss) per common share (Basic EPS) excludes dilution and is computed by dividing net income (loss) available to common stockholder by the weighted-average number of common shares outstanding for the period. Diluted net income per share (Diluted EPS) reflects the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. For the period from January 1, 2003 to April 9, 2003, the year ended December 31, 2002 and the period from March 9, 2001 to December 31, 2001, diluted loss per share is the same as basic loss per share since there are no options or common stock equivalents outstanding. (I) USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets 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 those estimates. Significant estimates of the Company include the allowance for doubtful accounts. (J) FAIR MARKET VALUE OF FINANCIAL INSTRUMENTS Statement of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments," requires disclosures of information about the fair value of certain financial instruments for which it is practicable to estimate that value. For purposes of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The fair carrying amount reported in the balance sheets of cash, receivables, accounts payable and accrued liabilities, and lines of credit approximate fair value due to the relatively short-term maturity of these instruments. (K) CONCENTRATION OF CREDIT RISK AND OTHER CONCENTRATIONS Accounts receivable potentially subject the Company to concentration of credit risk. The Company's customer base is sufficiently diversified to F-19 UNIVERSAL FLORIDA BEVERAGE DISTRIBUTORS, INC. NOTES TO FINANCIAL STATEMENTS APRIL 9, 2003 AND DECEMBER 31, 2002 AND 2001 -------------------------------------------- mitigate any significant concentration of credit risk. The Company generally provides an allowance for potential credit losses with respect to accounts receivable collections. The Company concentrates its customer base in the South Florida region and may therefore be subject to economic fluctuations that may affect that region. (K) RECENT ACCOUNTING PRONOUNCEMENTS Recent pronouncements which have been adopted or may effect the Company in the future are as follows: SFAS 144 Accounting for the Impairment or Disposal of Long-Lived Asset ("SFAS 144") supercedes SFAS. 121 Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of ("SFAS 121"). Though it retains the basic requirements of SFAS 121 regarding when and how to measure an impairment loss, SFAS 144 provides additional implementation guidance. SFAS 144 excludes goodwill and intangibles not being amortized among other exclusions. SFAS 144 also supercedes the provisions of APB 30, "Reporting the Results of Operations," pertaining to discontinued operations. Separate reporting of a discontinued operation is still required, but SFAS 144 expands the presentation to include a component of an entity, rather than strictly a business segment as defined in SFAS 131, Disclosures about Segments of an Enterprise and Related Information. SFAS 144 also eliminates the current exemption to consolidation when control over a subsidiary is likely to be temporary. This statement is effective for all fiscal years beginning after December 15, 2001. The implementation of SFAS 144 did not have a material effect on the Company's financial position, results of operations or liquidity. SFAS 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections, ("SFAS 145") updates, clarifies, and simplifies existing accounting pronouncements. SFAS 145 rescinds Statement 4, which required all gains and losses from extinguishment of debt to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. As a result, the criteria in Opinion 30 will now be used to classify those gains and losses. Statement 64 amended Statement 4, and is no longer necessary because Statement 4 has been rescinded. Statement 44 was issued to establish accounting requirements for the effects of transition to the provisions of the Motor Carrier Act of 1980. Because the transition has been completed, Statement 44 is no longer necessary. SFAS 145 amends Statement 13 to require that certain lease modifications that have economic effects similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback transactions. This amendment is consistent with FASB's goal requiring similar accounting treatment for transactions that have similar economic effects. This statement is effective for fiscal years beginning after May 15, 2002. The adoption of SFAS 145 is not expected to have a material impact on the Company's financial position, results of operations or liquidity. SFAS 146, Accounting for Exit or Disposal Activities ("SFAS 146") addresses the recognition, measurement, and reporting of costs that are associated with exit and disposal activities that are currently accounted for pursuant to the guidelines set forth in EITF 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to exit an Activity (including Certain Cost Incurred in a F-20 UNIVERSAL FLORIDA BEVERAGE DISTRIBUTORS, INC. NOTES TO FINANCIAL STATEMENTS APRIL 9, 2003 AND DECEMBER 31, 2002 AND 2001 -------------------------------------------- Restructuring)," cost related to terminating a contract that is not a capital lease and one-time benefit arrangements received by employees who are involuntarily terminated-nullifying the guidance under EITF 94-3. Under SFAS 146, the cost associated with an exit or disposal activity is recognized in the periods in which it is incurred rather than at the date the Company committed to the exit plan. This statement is effective for exit or disposal activities initiated after December 31, 2002 with earlier application encouraged. The adoption of SFAS 146 is not expected to have a material impact on the Company's financial position, results of operations or liquidity. In November 2002, the FASB issued FASB Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN 45). FIN 45 requires that upon issuance of a guarantee, a guarantor must recognize a liability for the fair value of an obligation assumed under a guarantee. FIN 45 also requires additional disclosures by a guarantor in its interim and annual financial statements about the obligations associated with guarantees issued. The recognition provisions of FIN 45 are effective for any guarantees issued or modified after December 31, 2002. The disclosure requirements are effective for financial statements of interim or annual periods ending after December 15, 2002. The adoption of this pronouncement is not expected to have a material effect on the earnings or financial position of the Company. NOTE 2 ACCOUNTS RECEIVABLE - ---------------------------- Accounts receivable consist of the following:
April 9, 2003 December 31, 2002 December 31, 2001 ----------------------------------------------------- Accounts receivable $ 45,307 $ 35,776 $37,224 Allowance for doubtful accounts (18,500) (12,500) (9,000) --------------------------------------------- $ 26,807 $ 23,276 $28,224 =============================================
Bad debt expense was $6,000, $3,500 and $9,000 for the period from January 1, 2003 to April 9, 2003, the year ended December 31, 2002 and from March 9, 2001 to December 31, 2001, respectively. NOTE 3 INVENTORIES - -------------------- Inventories consist of the following:
April 9, 2003 December 31, 2002 December 31, 2001 ----------------------------------------------------- Case Packed Beverage Products $ 29,976 $ 55,592 $68,186 --------------------------------------------- $ 29,976 $ 55,592 $68,186 =============================================
NOTE 4 WAREHOUSE EQUIPMENT - ---------------------------- Warehouse Equipment consists of the following:
April 9, 2003 December 31, 2002 December 31, 2001 ----------------------------------------------------- Warehouse equipment $ 12,909 $ 12,909 $12,909 Less accumulated depreciation (8,605) (7,745) (4,303) --------------------------------------------- $ 4,304 $ 5,164 $ 8,606 =============================================
F-21 UNIVERSAL FLORIDA BEVERAGE DISTRIBUTORS, INC. NOTES TO FINANCIAL STATEMENTS APRIL 9, 2003 AND DECEMBER 31, 2002 AND 2001 -------------------------------------------- Depreciation expense was $860, $3,442 and $4,303 for the period from January 1, 2003 to April 9, 2003, for the year ended December 31, 2002 and from March 9, 2001 to December 31, 2001, respectively. NOTE 5 ADVANCES AND LOANS - --------------------------- In January through March 2003, the Company received advances from Total Beverage Network, Inc. and Xstream Beverage Group, Inc. in the amounts of $24,450 and $25,000, respectively, prior to the acquisition (see Note 6). The advances are non-interest bearing with no stipulated due date, and therefore classified as a current liability. On January 27, 2003, the Company borrowed $19,600 from an employee for working capital. The loan was non-interest bearing and called for repayment from the proceeds of a pending acquisition by Total Beverage Network. Accordingly, the loan is classified as a current liability. On March 29, 2001, the Company arranged a line of credit agreement with a third party company who was related to a company that subleased warehouse space from the Company. The credit line was unsecured and non-interest bearing with no stipulated due date. The Company executed a series of draws against the line in various traunches throughout 2001, taking the last draw on March 29, 2002. The balance was $165,000, $165,000 and $160,000 at April 9, 2003, December 31, 2002 and December 31, 2001. Accordingly, the balances are reflected as current liabilities. (see Note 6) NOTE 6 COMMITMENTS AND CONTINGENCIES - ------------------------------------- (A) LETTERS OF INTENT AND ACQUISITION AGREEMENTS On February 27, 2003, the Company accepted a letter of intent from Total Beverage Network, Inc. to acquire its business, assets and certain liabilities. Simultaneously, Xstream Beverage Group, Inc., a publicly held company, acquired Total Beverage Network, Inc. The Company sold its assets for 550,000 shares of Xstream Beverage Group, Inc. common stock valued at $275,000 or $.50 per share, consistent with the pricing of the Private Placement Memorandum in circulation at the time. The transaction closing was effective at close of business on April 9, 2003. (B) OFFICE LEASE On February 28, 2001 (the Effective Date"), the Company entered into a lease for office/warehouse space through March 31, 2003. During 2002, a portion of the net rent expense was shared with a sublessee through a sublease agreement calling for monthly rent of $2,500. Net rent expense during the period from January 1, 2003 to April 9, 2003 was $21,796. Rent expense in 2002 was $60,660 and rent from March 9, 2001 to December 31, 2001 was $60,805. (C) WAREHOUSING SERVICES From time to time, the Company agrees to store product for other distributors and suppliers based on agreed fees for warehousing services. Such fees are not material to operations. F-22 UNIVERSAL FLORIDA BEVERAGE DISTRIBUTORS, INC. NOTES TO FINANCIAL STATEMENTS APRIL 9, 2003 AND DECEMBER 31, 2002 AND 2001 -------------------------------------------- NOTE 7 SHAREHOLDER'S DEFICIENCY - --------------------------------- In February 2001, Universal Florida Beverage Distributors, Inc. issued 25 common shares for $100 to its founders. NOTE 8 INCOME TAXES - --------------------- There was no income tax expense for the period from January 1, 2003 to April 9, 2003, the year ended December 31, 2002, and the period from March 8, 2001 to December 31 2001 due to the Company's net losses. The Company's tax expense differs from the "expected" tax expense (benefit) for the period January 1, 2003 to April 9, 2003, the year ended December 31, 2002 Ende and for the period from March 9, 2001 to December 31, Dece January 1, 2001 (computed by applying the Federal Corporate tax 31, ber2003 to rate of 34% to loss before taxes), as follows:
From From January 1, 2003 to Year Ended March 9, 2001 to April 9, 2003 December 31, 2002 December 31, 2001 ---------------------------------------------------------- Computed "expected" tax benefit $(23,263) $(38,251) $(46,577) Reclassification of prior year temporary difference -- -- -- Change in valuation allowance 23,263 38,251 46,577 ------------------------------------------------- $ -- $ -- $ -- =================================================
The effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities at April 9, 2003, and December 31, 2002 and 2001 are as follows:
April 9, 2003 December 31, 2002 December 31, 2001 ---------------------------------------------------------- Deferred tax assets: Net operating loss carryforward $ 108,091 $ 84,828 $ 46,577 ------------------------------------------------- Total gross deferred tax assets 108,091 84,828 46,577 Less valuation allowance (108,091) (84,828) (46,577) ------------------------------------------------- Net deferred tax assets $ -- $ -- $ -- =================================================
The valuation allowance was $46,577 at December 31, 2001. The increase during 2002 was $38,251, and the increase for January 1, 2003 to April 9, 2003 was $23,263. The Company has a net operating loss carryforward of $317,915 at April 9, 2003, which is limited in usage due to the change in ownership, which occurred in April 2003. NOTE 9 GOING CONCERN - --------------------- As reflected in the accompanying consolidated financial statements, the Company has continuing net losses from March 9, 2001 to December 31, 2001 of $136,991, in 2002 of $112,504, and in the period from January 1, 2003 to April 9, 2003 of F-23 UNIVERSAL FLORIDA BEVERAGE DISTRIBUTORS, INC. NOTES TO FINANCIAL STATEMENTS APRIL 9, 2003 AND DECEMBER 31, 2002 AND 2001 -------------------------------------------- $68,420 and an accumulated deficit of $317,915 at April 9, 2003. The ability of the Company to continue as a going concern is dependent on the Company's ability to further implement its business plan, raise capital, and generate revenues. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. The Company's business, assets and certain liabilities were acquired by Total Beverage Network, Inc. on April 9, 2003. The Company expects to be funded by its parent as it strives to become a profitable operation (see Note 10). NOTE 10 SUBSEQUENT EVENTS - -------------------------- On February 27, 2003, the Company accepted a letter of intent from Total Beverage Network, Inc. to acquire its business, assets and certain liabilities. Simultaneously, Xstream Beverage Group, Inc., a publicly held company, acquired Total Beverage Network, Inc. The Company sold its assets for 550,000 shares of Xstream Beverage Group, Inc. common stock valued at $275,000 or $.50 per share, consistent with the pricing of the Private Placement Memorandum in circulation at the time. The transaction closing was effective at close of business on April 9, 2003. F-24 -----END PRIVACY-ENHANCED MESSAGE-----