SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
______________
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) May 25, 2001
------------
NEW CENTURY COMPANIES, INC.
--------------------------------------------------------------------------------
(Exact name of Registrant as Specified in Charter)
Delaware 0-7722 061034587
--------------------------------------------------------------------------------
(State of Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
9515 Sorensen Avenue Santa Fe Springs, CA 90670
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(Address of Principal Executive Offices)
Registrant's telephone number, including area code (562) 906-8455
__________________________
INTERNETMERCADO.COM, INC.
--------------------------------------------------------------------------------
(Former name or Former Address, if Changed Since Last Report)
Item 7. Financial Statement, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired.
The financial statements are for the acquisition of New Century
Remanufacturing, Inc., by the Registrant pursuant to an Agreement and Plan
of Merger, dated as of May 25, 2001.
[Insert the auditors reports; the financial statements; notes to the financial
statement; notes to pro forma financial statements]]
NEW CENTURY REMANUFACTURING, INC.
(A WHOLLY OWNED SUBSIDIARY OF
NEW CENTURY COMPANIES, INC.)
CONTENTS
December 31, 2000
--------------------------------------------------------------------------------
Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 3
FINANCIAL STATEMENTS
Balance Sheet 4 - 5
Statements of Operations 6
Statements of Shareholders' Equity 7
Statements of Cash Flows 8 - 9
Notes to Financial Statements 10 - 18
Proforma Financial Statements 19
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors
New Century Remanufacturing, Inc.
(a wholly owned subsidiary of New Century Companies, Inc.)
We have audited the accompanying balance sheet of New Century Remanufacturing,
Inc. (a wholly owned subsidiary of New Century Companies, Inc.) as of December
31, 2000, and the related statements of operations, shareholders' equity, and
cash flows for each of the two years in the period 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 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 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 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 New Century Remanufacturing,
Inc. (a wholly owned subsidiary of New Century Companies, Inc.) as of December
31, 2000, and the results of its operations and its cash flows for each of the
two years in the period ended December 31, 2000 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 2 to the
financial statements, the Company's current liabilities exceeds its current
assets. This raises substantial doubt about the Company's ability to continue
as a going concern. Management's plan in regard to these matters is also
described in Note 2. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
Santa Ana, California
January 25, 2001, except for
Note 5 and Notes 2 and 7,
as to which the dates are
March 9, 2001 and July
30, 2001, respectively
NEW CENTURY REMANUFACTURING, INC.
(A WHOLLY OWNED SUBSIDIARY OF
NEW CENTURY COMPANIES, INC.)
BALANCE SHEET
December 31, 2000
================================================================================
ASSETS
Current assets
Cash $ 230,945
Contracts receivable 259,000
Inventory 689,839
Costs and estimated earnings on contracts in
progress in excess of billings 92,140
Prepaid expenses and other current assets 27,932
----------
Total current assets 1,299,856
Property and equipment, net 885,639
Loans to shareholders 358,324
Deposits 9,177
----------
Total assets $2,552,996
==========
The accompanying notes are an integral part of these financial statements.
NEW CENTURY REMANUFACTURING, INC.
(A WHOLLY OWNED SUBSIDIARY OF
NEW CENTURY COMPANIES, INC.)
BALANCE SHEET
December 31, 2000
================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of notes payable $ 261,722
Current portion of capital lease obligations 30,580
Accounts payable 877,719
Accrued expenses 84,512
Billings in excess of costs and estimated earnings on
contracts in progress 849,805
----------
Total current liabilities 2,104,338
Notes payable, net of current portion 162,125
Capital lease obligations, net of current portion 68,028
----------
Total liabilities 2,334,491
----------
Commitments
Shareholders' equity
Common stock, $1 par value
1,000,000 shares authorized
18,000 shares issued and outstanding 18,000
Additional paid-in capital 72,000
Retained earnings 128,505
----------
Total shareholders' equity 218,505
----------
Total liabilities and shareholders' equity $2,552,996
==========
The accompanying notes are an integral part of these financial statements.
NEW CENTURY REMANUFACTURING, INC.
(A WHOLLY OWNED SUBSIDIARY OF
NEW CENTURY COMPANIES, INC.)
STATEMENTS OF OPERATIONS
For the Years Ended December 31,
================================================================================
2000 1999
---------- ----------
Net sales $7,432,400 $5,737,349
Cost of sales 6,951,107 4,942,404
---------- ----------
Gross profit 481,293 794,945
Operating expenses 819,350 794,039
---------- ----------
Income (loss) from operations (338,057) 906
---------- ----------
Other income (expense)
Interest expense (67,839) (49,783)
Interest income 11,621 -
---------- ----------
Total other income (expense) (56,218) (49,783)
---------- ----------
Loss before provision for income taxes (394,275) (48,877)
Provision for income taxes 800 800
---------- ----------
Net loss $ (395,075) $ (49,677)
========== ==========
Basic and diluted loss per share $ (21.95) $ (2.76)
========== ==========
Weighted-average shares outstanding 18,000 18,000
========== ==========
The accompanying notes are an integral part of these financial statements.
NEW CENTURY REMANUFACTURING, INC.
(A WHOLLY OWNED SUBSIDIARY OF
NEW CENTURY COMPANIES, INC.)
STATEMENTS OF SHAREHOLDERS' EQUITY
For the Years Ended December 31,
================================================================================
Additional
Common Stock Paid-in Retained
---------------------
Shares Amount Capital Earnings Total
----------- -------- ---------- ---------- ---------
Balance, December
31, 1998 18,000 $ 18,000 $ 72,000 $ 573,257 $ 663,257
Net loss (49,677) (49,677)
----------- -------- ---------- ---------- ---------
Balance, December
31, 1999 18,000 18,000 72,000 523,580 613,580
Net loss (395,075) (395,075)
----------- -------- ---------- ---------- ---------
Balance, December
31, 2000 18,000 $ 18,000 $ 72,000 $ 128,505 $ 218,505
=========== ======== ========== ========= =========
The accompanying notes are an integral part of these financial statements.
NEW CENTURY REMANUFACTURING, INC.
(A WHOLLY OWNED SUBSIDIARY OF
NEW CENTURY COMPANIES, INC.)
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
--------------------------------------------------------------------------------
2000 1999
--------- -----------
Cash flows from operating activities
Net loss $(395,075) $ (49,677)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities
Depreciation and amortization 129,500 42,570
Interest income (11,621) -
Inventory reserves for obsolescence (50,000) 50,000
(Increase) decrease in
Contracts receivable (156,500) 549,245
Inventory 590,348 (1,200,846)
Costs and estimated earnings on contracts in
progress in excess of billings 43,806 (113,614)
Prepaid expenses and other current assets (16,001) 6,469
Increase (decrease) in
Accounts payable (182,482) 521,331
Accrued expenses (68,224) (111,106)
Billings in excess of costs and estimated earnings on
contracts in progress 676,548 173,257
--------- -----------
Net cash provided by (used in) operating activities 560,299 (132,371)
--------- -----------
Cash flows from investing activities
Purchase of property and equipment (34,042) (79,005)
Loans to shareholders (251,824) (106,500)
--------- -----------
Net cash used in investing activities (285,866) (185,505)
--------- -----------
Cash flows from financing activities
Net proceeds from line of credit - 100,000
Proceeds from note payable - 250,000
Principal payments on note payable (116,208) (6,944)
Principal payments on capital lease obligations (26,358) (15,060)
--------- -----------
Net cash provided by (used in) financing activities (142,566) 327,996
--------- -----------
Net increase in cash 131,867 10,120
Cash, beginning of year 99,078 88,958
--------- -----------
Cash, end of year $ 230,945 $ 99,078
========= ===========
The accompanying notes are an integral part of these finacial statements.
NEW CENTURY REMANUFACTURING, INC.
(A WHOLLY OWNED SUBSIDIARY OF
NEW CENTURY COMPANIES, INC.)
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
--------------------------------------------------------------------------------
2000 1999
------- -------
Supplemental disclosures of cash flow information
Interest paid $67,839 $49,783
======= =======
Income taxes paid $ 800 $ 5,669
======= =======
Supplemental schedule of non-cash investing and financing activities
During the years ended December 31, 2000 and 1999, the Company acquired $88,000
and $40,200, respectively, of property and equipment under capital lease
obligations.
During the year ended December 31, 2000, the Company transferred $730,710 of
inventory to property and equipment.
The accompanying notes are an integral part of these finacial statements.
NEW CENTURY REMANUFACTURING, INC.
(A WHOLLY OWNED SUBSIDIARY OF
NEW CENTURY COMPANIES, INC.)
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
--------------------------------------------------------------------------------
NOTE 1 - NATURE OF BUSINESS
New Century Remanufacturing, Inc. (the "Company"), a California
corporation, was incorporated March 1996 and is located in Southern
California. The Company provides after-market services, including
rebuilding, retrofitting, and remanufacturing of metal cutting machinery.
Once completed, a remanufactured machine is "like new" with state-of-the-
art computers, and the cost to the Company's customers is approximately 40%
to 50% of that of a new machine.
The Company currently sells its services by direct sales and through a
network of machinery dealers across the United States. Its customers are
generally medium- to large-sized manufacturing companies in various
industries where metal cutting is an integral part of their businesses.
The Company grants credit to its customers who are predominately located in
the western United States.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Going Concern
-------------
The Company's financial statements have been presented on the basis that it
is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. As of
December 31, 2000, the Company had historically high levels of inventory,
its current liabilities exceeded its current assets, and it is not in
compliance with loan terms, which caused the Company liquidity issues. In
response to these problems, management has taken the following actions:
. The Company continues its aggressive program for selling inventory.
. The Company continues to implement plans to further reduce operating
costs.
. The Company merged with a public company in May 2001 (see Note 7).
. The Company is seeking investment capital through the public markets.
. The Company has secured approximately $5,168,000 worth of new orders
from January 2001 through July 2001.
The financial statements do not include any adjustments that might be
necessary should the Company be unable to implement any or all of these
plans.
NEW CENTURY REMANUFACTURING, INC.
(A WHOLLY OWNED SUBSIDIARY OF
NEW CENTURY COMPANIES, INC.)
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
--------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Method of Accounting for Long-Term Contracts
--------------------------------------------
The accompanying financial statements have been prepared using the
percentage-of-completion method of accounting and, therefore, take into
account the cost, estimated earnings, and revenue to date on fixed-fee
contracts not yet completed. This method is used because management
considers total cost to be the best available measure of progress on the
contracts. Because of inherent uncertainties in estimating costs, it is at
least reasonably possible that the estimates used will change within the
near term.
The amount of revenue recognized at the statement date is the portion of
the total contract price that the cost expended to date bears to the
anticipated final cost, based on current estimates of cost to complete. It
is not related to the progress billings to customers. Contract costs
include all materials, direct labor, machinery, subcontract costs, and
allocations of indirect overhead.
Because long-term contracts extend over one or more years, changes in job
performance, changes in job conditions, and revisions of estimates of cost
and earnings during the course of the work are reflected in the accounting
period in which the facts that require the revision become known. At the
time a loss on a contract becomes known, the entire amount of the estimated
ultimate loss is recognized in the financial statements.
Contracts that are substantially complete are considered closed for
financial statement purposes. Revenue earned on contracts in progress in
excess of billings (underbillings) is classified as a current asset.
Amounts billed in excess of revenue earned (overbillings) are classified as
a current liability.
Comprehensive Income
--------------------
The Company utilizes Statement of Financial Accounting Standards ("SFAS")
No. 130, "Reporting Comprehensive Income." This statement establishes
standards for reporting comprehensive income and its components in a
financial statement. Comprehensive income as defined includes all changes
in equity (net assets) during a period from non-owner sources. Examples of
items to be included in comprehensive income, which are excluded from net
income, include foreign currency translation adjustments and unrealized
gains and losses on available-for-sale securities. Comprehensive income is
not presented in the Company's financial statements since the Company did
not have any of the items of comprehensive income in any period presented.
NEW CENTURY REMANUFACTURING, INC.
(A WHOLLY OWNED SUBSIDIARY OF
NEW CENTURY COMPANIES, INC.)
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
--------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Inventory
---------
Inventory is comprised primarily of work in process and is valued at the
lower of cost (first-in, first-out method) or market. Cost components
include material, direct labor, machinery, subcontracts, and allocations of
indirect overhead.
Property and Equipment
----------------------
Property and equipment are stated at cost. The Company provides for
depreciation and amortization using the straight-line method over the
estimated useful lives of the various classes of property and equipment as
follows:
Machinery and equipment 5 years
Computer equipment 5 years
Capital lease equipment 5 years
Leasehold improvements 5 years
Maintenance and repair costs are expensed as they are incurred while
renewals and improvements of a significant nature are capitalized. At the
time of retirement or disposal of property and equipment, the cost and
related accumulated depreciation or amortization are removed from the
accounts, and any resulting gain or loss is reflected in the results of
operations.
Fair Value of Financial Instruments
-----------------------------------
The Company measures financial assets and liabilities in accordance with
generally accepted accounting principles. For the Company's financial
instruments, including cash, contracts receivable, accounts payable, and
accrued expenses, the carrying amounts approximate fair value due to their
short maturities. The amounts shown for notes payable and capital lease
obligations also approximate fair value because current interest rates
offered to the Company for debt of similar maturities are substantially the
same.
Advertising
-----------
Advertising expenses are charged to expense as incurred. For the year
ended December 31, 2000 and 1999, total advertising expense was $204,832
and $340,075, respectively.
NEW CENTURY REMANUFACTURING, INC.
(A WHOLLY OWNED SUBSIDIARY OF
NEW CENTURY COMPANIES, INC.)
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
--------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
------------
The Company's shareholders have elected "S" corporation status for income
tax purposes, which provides that, in lieu of corporate income taxes, the
shareholders separately account for the Company's items of income,
deductions, losses, and credits. The provision for income taxes in the
accompanying statements of operations represents the state franchise tax
applied to "S" corporations at a tax rate of the lesser of $800 or 1.5% of
taxable income.
Estimates
---------
The preparation of financial statements 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 revenue and
expenses during the reporting period. Actual results could differ from
those estimates.
Concentrations of Risk
----------------------
Financial instruments which potentially subject the Company to
concentrations of credit risk consist of cash and contracts receivable.
The Company places its cash with high credit, quality financial
institutions. At times, such cash may be in excess of the Federal Deposit
Insurance Corporation insurance limit of $100,000. At December 31, 2000,
the uninsured portions held at the financial institutions aggregated to
$281,792. The Company has not experienced any losses in such accounts and
believes it is not exposed to any significant credit risk on cash. With
respect to contracts receivable, the Company routinely assesses the
financial strength of its customers and, as a consequence, believes that
the receivable credit risk exposure is limited.
Major Customers
---------------
During the year ended December 31, 1999, the Company conducted business
with two customers whose sales comprised 18% and 11% of net sales. As of
December 31, 2000, five customers accounted for 26%, 23%, 16%, 15%, and 12%
of total contracts receivable.
Major Suppliers
---------------
During the years ended December 31, 2000 and 1999, the Company conducted
business with one supplier who accounted for 22% and 27% of total
purchases, respectively. As of December 31, 2000, one supplier accounted
for 29% of total accounts payable.
NEW CENTURY REMANUFACTURING, INC.
(A WHOLLY OWNED SUBSIDIARY OF
NEW CENTURY COMPANIES, INC.)
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
--------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recently Issued Accounting Pronouncements
-----------------------------------------
In December 1999, the Securities and Exchange Commission staff released
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in
Financial Statements," to provide guidance on the recognition,
presentation, and disclosure of revenue in financial statements. Changes
in accounting to apply the guidance in SAB No. 101 may be accounted for as
a change in accounting principle effective January 1, 2000. Management has
not yet determined the complete impact of SAB No. 101 on the Company;
however, management does not expect that application of SAB No. 101 will
have a material effect on the Company's revenue recognition and results of
operations.
In March 2000, the Financial Accounting Standards Board ("FASB") issued
FASB Interpretation No. 44, "Accounting for Certain Transactions Involving
Stock Compensation," (an Interpretation of Accounting Principles Bulletin
Opinion No. 25 ("APB 25")) ("FIN 44"). FIN 44 provides guidance on the
application of APB 25, particularly as it relates to options. The
effective date of FIN 44 is July 1, 2000, and the Company has adopted FIN
44 as of that date.
In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain
Instruments and Certain Hedging Activities." This statement is not
applicable to the Company.
In June 2000, the FASB issued SFAS No. 139, "Rescission of FASB Statement
No. 53 and Amendments to Statements No. 63, 89, and 121." This statement
is not applicable to the Company.
In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities, a
replacement of FASB Statement No. 125." This statement is not applicable
to the Company.
In July 2001, the FASB issued SFAS No. 141, "Business Combinations." This
statement addresses financial accounting and reporting for business
combinations and supersedes Accounting Principles Bulletin ("APB") Opinion
No. 16, "Business Combinations," and SFAS No. 38, "Accounting for Pre-
Acquisition Contingencies of Purchased Enterprises." All business
combinations in the scope of this statement are to be accounted for using
one method, the purchase method. The provisions of this statement apply to
all business combinations initiated after June 30, 2001. Use of the
pooling-of-interests method for those business combinations is prohibited.
This statement also applies to all business combinations accounted for
using the purchase method for which the date of acquisition is July 1, 2001
or later.
NEW CENTURY REMANUFACTURING, INC.
(A WHOLLY OWNED SUBSIDIARY OF
NEW CENTURY COMPANIES, INC.)
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
--------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recently Issued Accounting Pronouncements (Continued)
-----------------------------------------
In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets." This statement addresses financial accounting and reporting for
acquired goodwill and other intangible assets and supersedes APB Opinion
No. 17, "Intangible Assets." It addresses how intangible assets that are
acquired individually or with a group of other assets (but not those
acquired in a business combination) should be accounted for in financial
statements upon their acquisition. This statement also addresses how
goodwill and other intangible assets should be accounted for after they
have been initially recognized in the financial statements. It is
effective for fiscal years beginning after December 15, 2001. Early
application is permitted for entities with fiscal years beginning after
March 15, 2001, provided that the first interim financial statements have
not been issued previously.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment at December 31, 2000 consisted of the following:
Machinery and equipment $ 793,669
Computer equipment 22,465
Capital lease equipment 211,312
Leasehold improvements 106,107
----------
1,133,553
Less accumulated depreciation and amortization 247,914
----------
Total $ 885,639
==========
For the years ended December 31, 2000 and 1999, depreciation and
amortization expense amounted to $129,500 and $42,570, respectively.
Included in accumulated depreciation is $63,369 for capital lease equipment
at December 31, 2000.
NEW CENTURY REMANUFACTURING, INC.
(A WHOLLY OWNED SUBSIDIARY OF
NEW CENTURY COMPANIES, INC.)
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
--------------------------------------------------------------------------------
NOTE 4 - LOANS TO SHAREHOLDERS
As of December 31, 2000, the Company had loans to its shareholders for
$358,324, which bear interest at 5% per annum. There is not a specified
maturity date, and it is the Company's and shareholders' intention not to
reduce the balance before December 31, 2001. For the years ended December
31, 2000 and 1999, total interest income for loans to shareholders was
$11,621 and $0, respectively, which is accrued and included in prepaid
expenses and other current assets on the accompanying balance sheet.
NOTE 5 - NOTES PAYABLE
Notes payable at December 31, 2000 consisted of the following:
Note payable - converted from line of credit, secured by all of the
Company's assets and personal guarantees of the shareholders.
Payable monthly at $8,500, plus interest at the Citibank, N.A.'s
base rate (9.5% at December 31, 2000), plus 1%. Debt matured
in February 2001, but was subsequently extended to February
2002. $ 264,124
Note payable - secured by all of the Company's assets and personal
guarantees of the shareholders. Payable monthly at $6,944, plus
interest at the Citibank, N.A.'s base rate, plus 1.25%. Debt
matures in December 2002. The Company must maintain certain
financial covenants of which the Company was not in
compliance at December 31, 2000. 159,723
----------
423,847
Less current portion 261,722
----------
Long-term portion $ 162,125
==========
Future minimum payments of notes payable at December 31, 2000 were as
follows:
Year Ending
December 31,
------------
2001 $ 261,722
2002 162,125
----------
Total $ 423,847
==========
NEW CENTURY REMANUFACTURING, INC.
(A WHOLLY OWNED SUBSIDIARY OF
NEW CENTURY COMPANIES, INC.)
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
--------------------------------------------------------------------------------
NOTE 6 - COMMITMENTS
The Company leases equipment under an operating lease requiring minimum
monthly payments of $273 per month through August 2005. For the year ended
December 31, 2000 and 1999, total equipment rent expense was $3,277 and
4,236, respectively.
The Company leases a truck under an operating lease requiring minimum
monthly payments of $538 per month through July 2005. For the years ended
December 31, 2000 and 1999, truck lease expense was $2,690 and $0,
respectively.
The Company leases office and factory space under an operating lease
requiring minimum monthly payments of $6,800 through August 2003. The
agreement calls for annual increases. For the years ended December 31,
2000 and 1999, rent expense was $79,200 and $75,279, respectively.
The Company also leases equipment under capital lease obligations that
expire through May 2004. Monthly payments of $4,429 are due, including
interest at rates ranging from 16% to 31%.
Future minimum lease payments under operating and capital lease agreements
at December 31, 2000 were as follows:
Year Ending Operating Capital
December 31, Leases Leases
------------ ----------- ---------
2001 $ 92,137 $ 53,144
2002 93,737 53,144
2003 65,737 25,544
2004 9,737 4,894
2005 4,596 -
----------- ---------
$ 265,944 136,726
===========
Less amount representing interest 38,118
98,608
Less current portion 30,580
---------
Long-term portion $ 68,028
=========
Interest expense related to capital lease obligations for the years ended
December 31, 2000 and 1999 was $19,062 and $3,617, respectively.
NEW CENTURY REMANUFACTURING, INC.
(A WHOLLY OWNED SUBSIDIARY OF
NEW CENTURY COMPANIES, INC.)
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
--------------------------------------------------------------------------------
NOTE 7 - SUBSEQUENT EVENTS
Merger with InternetMercado.com, Inc.
-------------------------------------
On May 25, 2001, the Company entered into a merger agreement (the
"Agreement") in which the Company was merged with InternetMercado.com, Inc.
("InternetMercado"). In accordance with the terms of the Agreement, the
following conversions occurred:
. Each issued and outstanding share of common stock of the new entity's
newly formed, wholly owned subsidiary was converted into one share of
the Company's common stock.
. Each share of the Company's common stock was converted into shares of
InternetMercado's common stock, par value $0.10 per share (the
"InternetMercado Shares") at the rate of 833.3333 InternetMercado Share
for each of the Company's shares amounting to an aggregate 15,000,000
InternetMercado Shares.
Proposed Merger with Smith West, Inc.
-------------------------------------
On June 26, 2001, the Company and Smith West, Inc. ("Smith West") both
signed a Memorandum of Understanding (the "Memorandum") that the Company, a
public corporation, agreed to acquire the capital stock of Smith West, a
private corporation. The tentative purchase price would be $40,000,000 with
50% in cash and 50% in shares of the Company's stock, subject to a
valuation determination mutually agreed-upon during the parties respective
due diligence.
The Memorandum is effective for 120 days from June 26, 2001. The parties
agreed to cooperate in good faith to consummate a definitive merger
agreement and close the proposed transaction in the above time frame.
Name Change
-----------
In June 2001, the Company's name was changed from InternetMercado.com, Inc.
to New Century Companies, Inc.
NEW CENTURY COMPANIES, INC.
(formerly NUMEX CORPORATION)
AND SUBSIDIARIES
CONTENTS
December 31, 2000
================================================================================
Page
FINANCIAL STATEMENTS
Pro Forma Balance Sheet 20 - 21
Pro Forma Statement of Operations 22
Note to Pro Forma Financial Statements 23
NEW CENTURY COMPANIES, INC.
(formerly NUMEX CORPORATION)
AND SUBSIDIARIES
PRO FORMA BALANCE SHEET
December 31, 2000
================================================================================
ASSETS
New Century Internet-
Remanu- Mercado.com,
facturing, Inc. and
Inc. Subsidiaries Adjustments Total
----------- ------------ ----------- -----------
(unaudited) (unaudited)
Current assets
Cash $ 230,945 $ - $ - $ 230,945
Contracts receivable 259,000 - - 259,000
Inventory 689,839 - - 689,839
Costs and estimated earnings on
contracts in progress in excess
of billings 92,140 - - 92,140
Prepaid expenses and other current
assets 27,932 - - 27,932
---------- ------------ ----------- ----------
Total current assets 1,299,856 - - 1,299,856
Property and equipment, net 885,639 - - 885,639
Loans to stockholders 358,324 - - 358,324
Deposits 9,177 - - 9,177
---------- ------------ ----------- ----------
Total assets $2,552,996 $ - $ - $2,552,996
========== ============ =========== ==========
The accompanying notes is an integral part of these financial statements.
NEW CENTURY COMPANIES, INC.
(formerly NUMEX CORPORATION)
AND SUBSIDIARIES
PRO FORMA BALANCE SHEET
December 31, 2000
================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
New Century Internet-
Remanu- Mercado.com,
facturing, Inc. and
Inc. Subsidiaries Adjustments Total
----------- ------------ ------------------ ------------
(unaudited) (unaudited)
Current liabilities
Current portion of notes payable $ 185,333 $ - $ $ 185,333
Current portion of capitalized lease
obligations 30,580 - - 30,580
Accounts payable 877,719 - - 877,719
Accrued expenses 84,512 - - 84,512
Billings in excess of costs and
estimates earnings on contracts
in progress 849,805 - - 849,805
----------- ------------ ------------------ ------------
Total current liabilities 2,027,949 - - 2,027,949
Notes payable, net of current portion 238,514 - - 238,514
Capitalized lease obligations, net of
current portion 68,028 - - 68,028
----------- ------------ ------------------ ------------
Total liabilities 2,334,491 - - 2,334,491
----------- ------------ ------------------ ------------
Stockholders' equity
Preferred stock - 100,900 - 100,900
Common stock 90,000 11,368,173 /a/ (11,373,823)
/b/ 1,000,000 1,084,350
Shares issuable under
compensation agreements - 317,329 /a/ (317,329) -
Treasury stock, at cost - (7,750) - (7,750)
Stock subscription receivable - (87,500) /b/ (1,000,000) (1,087,500)
Retained earnings 128,505 (11,691,152) /a/ 11,691,152 128,505
----------- ------------ ------------------ ------------
Total stockholders' equity 218,505 - - 218,505
----------- ------------ ------------------ ------------
Total liabilities and
stockholders' equity $ 2,552,996 $ - $ - $ 2,552,996
=========== ============ ================== ============
The accompanying note is an integral part of these finanicial statements.
NEW CENTURY COMPANIES, INC.
(formerly NUMEX CORPORATION)
AND SUBSIDIARIES
PRO FORMA STATEMENT OF OPERATIONS
For the Year Ended December 31, 2000
================================================================================
New Century Internet-
Remanu- Mercado.com,
facturing, Inc. and
Inc. Subsidiaries Adjustments Total
------------ ------------ ----------- ------------
(unaudited) (unaudited)
Net sales $7,432,400 - $ - $ 7,432,400
Cost of sales 6,951,107 $ - - 6,951,107
---------- ------------ ----------- -----------
Gross profit 481,293 - - 481,293
Operating expenses 819,350 - - 819,350
---------- ------------ ----------- -----------
Loss from operations (338,057) - - (338,057)
---------- ------------ ----------- -----------
Other income (expense)
Interest expense (67,839) - - (67,839)
Interest income 11,621 - - 11,621
---------- ------------ ----------- -----------
Total other income (expense) (56,218) - - (56,218)
---------- ----------- -----------
Loss before provision for income
taxes (394,275) - - (394,275)
Provision for income taxes 800 - - 800
---------- ------------ ----------- -----------
Net loss $ (395,075) $ - $ - $ (395,075)
========== ============ =========== ===========
Basic and diluted loss per share $ (21.95) $ (0.01)
========== ===========
Weighted-average share
outstanding 18,000 46,959,418
========== ===========
The accompaning note is an integral part of these financial statements.
NEW CENTURY COMPANIES, INC.
(formerly NUMEX CORPORATION)
AND SUBSIDIARIES
NOTE TO PRO FORMA FINANCIAL STATEMENTS
December 31, 2001
================================================================================
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited pro forma balance sheet presents the accounts of
New Century Remanufacturing ("Remanufacturing") and InternetMercado.com,
Inc. ("InternetMercado") as if the acquisition occurred on January 1, 2000,
and the pro forma statement of operations presents the accounts of New
Century and InternetMercado as if the acquisition took place on January 1,
2000.
On May 25, 2001, Remanufacturing effected a merger, whereby Remanufacturing
was acquired by InternetMercado. The merger is accounted for as a reverse
merger, whereby Remanufacturing became the remaining active operating
entity. Generally accepted accounting principles require that
Remanufacturing, whose stockholders retain the majority interest in a
combined business, be treated as the acquirer for accounting purposes.
Therefore, the results of operations are retroactively restated to reflect
those of Remanufacturing, and the equity section of Remanufacturing is
restated to reflect the capital structure of New Century Companies, Inc.
In June 2001, InternetMercado.com, Inc.'s name was changed to New Century
Companies, Inc.
The following is a summary of the entries recorded as if the transaction
had happened at the year end January 1, 2000, and its related effects on
the financial statements of New Century Companies, Inc.:
a. Recording of recapitalization of Remanufacturing and the acquisition
of InternetMercado.com in accordance with accounting required for
reverse merger transactions.
b. Issuance of subscription receivable for 4,000,000 shares of common
stock in the amount of $1,000,000 in connection with the acquisition.
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.
NEW CENTURY COMPANIES, INC.
Date: August 22, 2001 By /s/ David Duquette
----------------------- ---------------------------
Name: David Duquette
Title: Chairman, President and Director