UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO 1 TO
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 12, 2002
Immediatek, Inc.
--------------------------------------------------
(Exact name of Registrant as specified in charter)
Nevada 0-26073 86-0881193
---------------------------- ----------- -----------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification)
2435 N. Central Expressway Suite 1200, Richardson, TX 75080
----------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 712-7336
--------------
ModernGroove Entertainment, Inc.
1801 E. Tropicana, Suite 9, Las Vegas, NV 89119
--------------------------------------------------------------
(Former name or former address, if changed, since last report)
1
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS FOR PURPOSES OF
THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995.
Certain statements in this report, including statements in the following
discussion which are not statements of historical fact, are what are known
as "forward looking statements," which are basically statements about the
future, and which for that reason, involve risk and uncertainty, since no
one can accurately predict the future. Words such as "plans," "intends,"
"will," "hopes," "seeks," "anticipates," "expects," "goal" and "objective"
often identify such forward looking statements, but are not the only
indication that a statement is a forward looking statement. Such forward
looking statements include statements of the Company's plans and objectives
with respect to the present and future operations of the Company, and
statements which express or imply that such present and future operations will
or may produce revenues, income or profits. Numerous factors and future
events could cause the Company to change such plans and objectives, or fail
to successfully implement such plans or achieve such objectives, or cause
such present and future operations to fail to produce revenues, income or
profits. Therefore, the reader is advised that the following discussion
should be considered in light of the discussion of risks and other factors
contained in this Form 8K and in the Company's other filings with the
Securities and Exchange Commission, and that no statements contained in
the following discussion or in this Form 8-K should be construed as a
guarantee or assurance of future performance or future results.
2
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
ModernGroove Entertainment, Inc. (the "Company") entered into a Merger
Agreement with Immediatek, Inc., a private company duly incorporated
in accordance with the laws of the State of Texas.
Pursuant to the terms of the Merger Agreement, ModernGroove Entertainment, Inc.
shall issue to Immediatek the sum of four million (4,000,000) Preferred Class
A Shares in full payment for the ESP business of Immediatek. The ModernGroove
Entertainment, Inc. Preferred Class A Shares shall have a conversion rate of
one (1) preferred share equals one hundred (100) ModernGroove Entertainment,
Inc. common shares. Upon conversion to common shares, these shares will be
issued to the two Immediatek shareholders, i.e., Zach Bair, and Tim DeWitt
under the securities transaction exemption afforded by Section 4(2) of the
Securities Act of 1933. These shares are restricted securities. These shares
will not be available for public resale without registration under applicable
securities laws or exemptions from those registration requirements. Prior to
the Merger Agreement, there were 30,650,700 Common Shares and no Preferred
Shares of ModernGroove Entertainment stock issued and outstanding. As approved
by a Board Resolution, the Company shall execute the conversion of the
4,000,000 preferred shares, which then convert to 400,000,000 common shares.
All of the shares issued following this combination will be issued as follows:
Preferred
Class A Number of Shares
Number of following conversion Percent
Name(1) Position Shares to Common Stock Ownership(2)
----------------------------------------------------------------------------
Zach Bair Chairman/CEO/ 2,200,000 220,000,000 51.1%
Secretary
Tim DeWitt Shareholder 1,800,000 180,000,000 41.8%
-----------------------------------------------
All Executive Officers and
Directors as a Group
(1 person) 4,000,000 400,000,000 92.9%
1) Business Address: 2435 N. Central Expressway Suite 1200, Richardson,
Texas 75080.
2) Percentages are based on 430,650,700 shares. This number is based on
the current issued and outstanding common shares of 30,650,700 plus the
conversion common shares of 400,000,000.
Since ModernGroove Entertainment virtually has no assets, the issuance of
these shares would have a negligible dollar dilution affect on the common
shares. The dilution affect will occur if the Company can generate revenues
and profits.
3
Pursuant to Nevada Corporate law, NRS 78.335(5), the Board of Directors
filled a Board vacancies with the nomination and acceptance of Mr. Zach Bair
effective immediately. At the same time, the previous Board members
resigned their positions from the Company. The new board member will hold
office for the unexpired term of their predecessors and/or until their
successor(s) are elected and qualified. Further, the Board of Directors
appointed Mr. Zach Bair as Chairman of the Board, Chief Executive Officer,
Secretary and Treasurer of the Company, effective immediately.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
The consideration exchanged pursuant to the Share Exchange Agreement was
negotiated between ModernGroove Entertainment, Inc. and Immediatek, Inc.
(See Exhibit 2 "Merger Agreement.")
BUSINESS
---------
Except for historical information the matters set forth herein, which
are forward-looking statements, involve certain risks and uncertainties, and
other factors which may cause the actual results, performance, or achievement
expressed or implied by such forward-looking statements to differ. There are
risks and uncertainties that the company will be unable to generate a market
for the Company's products and thus will not provide the benefits to the
Company's stockholders as anticipated. Other potential risks and
uncertainties include, but are not limited to, the market acceptance and
amount of revenues anticipated to be created, the Company's ability to raise
sufficient capital for operations.
COMPANY OVERVIEW - IMMEDIATEK, INC.
-----------------------------------
Immediatek, Inc., is an "Efficient Solutions Provider," or "ESP" company,
located in the Richardson, TX Telecom Corridor. Additionally, Immediatek
has a parallel software development effort.
Immedatek offers IT outsourcing solutions with available 24x7 TekNet OnCall
technicians, and a guaranteed minimum 2-4 hour response time. Immediatek
offers a reduced hourly rate as compared to its competition, based on the
Company's unique processes and low overhead built into the TekNet OnCall
product. Immediatek philosophy is to offer top-quality service at prices
that do not deter any customer from picking up the phone and calling.
Additionally, management takes pride in their fast turnaround and next-day
customer follow-up are customer-oriented services that make Immediatek
stand out.
4
Immediatek is opportunistic in nature, and has expanded its product offering
to include the process automation and re-engineering expertise of Zach Bair,
who founded $12.4 million venture-backed PowerUp Networks in the year 2000, as
well as a small library of widely appealing software products. Immediatek
also uses internal processes and algorithms, which Bair developed to
streamline its own operations and increase profitability while reducing cost.
Immediatek uses these techniques in its TekNet OnCall IT support products,
as well as custom solutions.
Since Mr. Bair left PowerUp in 2001, he has been developing ideas surrounding
the TekNet OnCall services, and has focused on building a team and priming
"long term" clients. Immediatek has a two-fold growth plan for 2002/3:
a) create a new market opportunity with the unique TekNetOnCall services,
which are ideal for executive suite companies and hotel chains, among
others; and,
b) grow existing professional services client base based on channel
partners, industry contacts, reputation, and aggressive sales.
Eventually, Immediatek plans to offer software solutions for sale as a result
of internal development and based on its processes.
Market Opportunity
------------------
The home PC service market is currently over $400 billion in size, according
to sources including the Gartner Group. The TekNet OnCall service is a
totally new concept in providing IT support, and is ideal for small to
medium sized companies who can't afford to have a full-time support staff,
as well as individual users To date, there are many companies that offer
outsourcing of these types of services, however, there are no other companies
which management has identified that utilizes the unique pricing models,
offered by the Company.
Therefore, TekNet OnCall is perfect for companies such as executive office
suites, hotels, hi-rise apartment buildings, and other real estate where
there is basically a "captive audience" and an opportunity not only to sell
to the owners/managers of the property, but also on an exclusive basis to
their clients within. Immediatek will offer a single point of contact for
all IT needs including software, hardware, and support, and the owner/
property manager can then simply place the Company's fee into their standard
billing cycle to their clients, and provide themselves with a recommended
markup for their environment. As small companies grow, Immediatek can grow
with them.
Business Strategy
-----------------
The principal goal of the Company's market strategy is to rapidly enter the
market generating sales as soon as possible in order to achieve the revenue
target and to maximize company valuation and demonstrate a leadership
position in IT outsourcing and IT related professional services.
NOTE: Immediatek is already producing revenue.
5
Other goals of the go-to-market strategy include:
o Fully utilize management's background in process automation and IT
support to enhance brand image and provide a direct source
of ideas for product development;
o Protect the integrity of Immediatek's customer value proposition
thereby increasing the number of reference sites, unpaid referrals
and follow on business;
o Increase sales using business partners in order to allow Immediatek
to extend its sales footprint without the requirement for a large
investment in a direct sales force;
o Allow Immediatek to focus on its core competence as a solutions
company focused on being the leader in IT outsourcing through the
creation of a new paradigm in performance around time, productivity
and profitability;
The strategy must also acknowledge a number of key issues which include:
o The existence of a market sweet spot-the existence of the need
for services provided with the Company's pricing model, which includes
a flat-fee hourly rate coupled with a "no trip charge" policy.
o Key account customers offer multiple sales opportunities- within
enterprise, there exists various market segments. For example,
opportunities exist to extend beyond the present business
relationship with an internal IT Department, a cost center, to
revenue generating parts of these organizations such as their own
Outsourcing and Software Solutions business.
In conclusion, Immediatek will pursue the following Go-to-Market strategy
which directly addresses its goals, the key issues and embraces the Company's
business philosophy "to think big, start small and scale rapidly".
Market Strategy
---------------
Immediatek will pursue a hybrid channel strategy comprised of the following
channels to market to reach its chosen target markets, namely:
o Signature and Channel Accounts.
o IT Departments in the Enterprise market and companies that
possess professional services arms
o The "small business" users and home users which generally cannot
afford to have an IT person on-staff on a full-time basis, and which
comprise a large portion of the market and are generally passed over
by other IT consulting companies in favor of the large accounts
6
Three channels to market will be created and include the following channel
segments:
o Signature Accounts- Immediatek will directly target and pursue
a handful of large Enterprise customers. These types of customers offer
multiple revenue opportunities and serve to build brand image, drive
referrals and help direct the product evolution path.
o Professional Services and Value Added Resellers-Immediatek will
pursue the IT Department and professional services markets indirectly by
securing reseller agreements with key players in the PC hardware and
software retailers industry. Notably, deals with nationwide superstores
such as Microcenter offers enormous promise.
o Consultancies- Immediatek will also pursue the IT Department
and professional services markets via the consulting community.
This channel will be further segmented into "tier 1" consultancies
including the Big 5 and "tier 2" consultancies. It is further
anticipated that some of these Consultancies will become customers
also as they will likely wish to use the Immediatek's processes and
methodologies.
Sales and Marketing Strategy - Top 3 Priorities
-----------------------------------------------
1. Primary focus will be to support sales team on lead adopter sign up and
building 2001 order funnel
o Create excitement within channels and support sales team with
business case to win End-Users
o Position Immediatek as the Industry and price leader in IT
outsourcing through the use of advanced processes, methodologies and
technology.
o Leverage high profile reference accounts (testimonials, video's,
CD's, Customer events) to appeal to and break into mass market
customer base.
o Maximize opportunities generated from company launch/Comdex 2003
2. Focus marketing dollars on winning market share and mind share in the
high growth IT outsourcing and associated customer bases.
3. Drive double edged marketing campaign:
o Deploy push Marketing Program to key channels, OEM Manufacturers,
Retail Outlets, Consultancies and Outsourcing Agents and respective
client lists
o Pull through (viral based) Marketing Program to consumers, user
groups, B2B exchange users and Telco Hotel users.
7
Opportunities: Old Method - IT Outsourcing
-------------------------------------------
In the current IT outsourcing climate, there are some basic understandings
that go along with obtaining an outsourcing solution: 1) it will be costly,
and 2) sometimes you do not know what you pay for. Multiple organizations
within a business are involved, which can cause the entire process to become
mysterious and convoluted. For instance, based on experience with at least
one Fortune 500 company, they were spending over $1.1 million per year on IT
outsourcing solutions, but they could not identify explicitly how the budget
was being spent.
Additionally, a typical PC tech, for instance, can cost anywhere from $75 to
$150 per hour, and most of the time will include a "trip charge" that can be
as much as $65 just for them to show up at the door. Moreover, an end user
will balk at spending this type of money, and rather than call for help,
they will end up spending hours of their own time trying to solve the
problem themselves. Ultimately, they would have ended up spending more
because of their own valuable time.
Large companies, on the other hand, spend this kind of money because this is
simply what they are used to paying. Many consulting companies take
advantage of this because they know that the big companies will pay it.
Companies also feel that since they pay for more then they will get more in
return. Unfortunately, this is a huge myth in the industry and must be
overcome to drive prices down and to stir growth in the overall market.
Immediatek TekNet OnCall
------------------------
The Immediatek TekNet OnCall product can reduce the cost of IT outsourcing
solutions by as much as 30-80% in some cases. By utilizing revolutionary
pricing models and groundbreaking methodologies, TekNet OnCall blows away
the myth of expensive IT support. On the surface, the simplest TekNet
OnCall package is just a low-priced model which is translated from
Immediatek's low overhead. The end-user is charged a flat, market-driven
rate which is substantially lower than the competition, in combination with
no extraneous expenses such as trip charges. The result is that the consumer
(or business partner) is more likely to pick up the phone and less likely to
balk at the pricing.
The TekNet OnCall product is built upon a foundation of not charging the end
user and exorbitant rate and by instilling brand loyalty by outstanding
customer service and follow up. The main thrust of loyalty is driven by
these simple tactics:
o Flat, market-based hourly fee ($75 in Dallas, for instance)
o Guaranteed call-back from a technician within 1/2 hour
o Guaranteed on-site response within 2-4 hours
o Follow-up with the customer the following day to insure satisfaction.
8
These policies when delivered on a consistent basis will insure brand
loyalty and consistently grow the business through reputation and word of
mouth.
Additionally, Immediatek will outsource 24 x 7 telephone support to a
yet-to-be-identified entity, thereby allowing the company to focus on the
OnCall product suite.
MANAGEMENT
----------
The members of the Board of Directors of the Company serve until the
next annual meeting of stockholders, or until they have been elected by
the shareholders. The officers serve at the pleasure of the Board of
Directors. Information as to the directors and executive officers of the
Company is as follows:
Name Age Title
---------------------------------------------------------------------------
Zach Bair 40 Chairman/CEO/Treasurer/Secretary
Duties, Responsibilities and Experience:
Zach Bair, Chairman of the Board, CEO and Treasurer
---------------------------------------------------
Zach Bair, CEO and Chairman of Immediatek, Inc., is the 40 year old
innovator behind the term "Efficient Solutions Provider" and is a recognized
expert in business process engineering through the use of technology. Bair
has been a professional consultant in the IT industry since 1986, and in
recent years gained notoriety for founding Richardson, Texas software
company PowerUp Networks. Started in 2000 by Bair, PowerUp was based on
complex web-based software and processes he authored during full-time
employment with American Airlines and Sabre, Inc. Two of Bair's other
original web ventures were a Texas-based job website, and a sister website
of TexasComputerJobs.
Before and during his tenure at Sabre, Bair conceived and authored what is
now the flagship product of PowerUp Networks, "Rapid Network Deployment," or
RND. A venture-backed PowerUp Networks of Richardson, TX, was founded by
Bair in the year 2000.
9
After striking a deal with Sabre, who now employs the same product which
they know as "Warped," for "Wide Area Router Production Environment and
Design," Bair set out to find VC funding, and approached HO2 Partners, LLC,
after reading an article about their company in The Dallas Morning News.
Subsequently, Bair met with Charles Humphreyson and Dan Owen, of HO2, and
then with STARTech, the Richardson, Texas-based Startup Accelerator.
Together, along with independent investor Dennis Gorman, both companies
funded Bair in the seed round of financing, which was $600K. Bair then
brought on Alan Shannon, formerly of Read-Rite Corporation, EDS and TI, as
CEO, and Peter Donovan, formerly of Nortel, as Chief Marketing Officer.
Kevin Clark was then enlisted as VP for Development. In less than three
months, the core PowerUp management team, lead by Bair and Shannon, raised
over $12 million in a Series A funding event, the lead investor again being
HO2 partners.
Bair is a U.S. Air Force veteran, and attended Louisiana State University in
Shreveport, LA, and then Stephen F. Austin State University in Nacogdoches,
majoring in English.
Bair has over 17 years professional experience in business and Information
Technology. In 1986, while attending college, Bair sewed his
entrepreneurial seed and started a successful desktop publishing and
advertising firm, which also provided technical consulting, in Nacogdoches,
Texas. Bair relocated to Houston in 1990, after selling the ad agency,
first pursing a hybrid position at the Galveston Daily News as Art Director
& Columnist/Network Administrator, and then pursuing a purely technical
career. This involved primarily providing consulting services to such
Fortune 500 companies as Marathon Oil, Arco Oil & Gas, and MD Anderson
Cancer Center.
Bair moved to Dallas in 1995, and continued to provide consulting services
to companies including Nortel, Sprint, EDS, and Sabre, as well as
entertaining a short tenure as IT Manager for the Dallas City Attorney's
Office.
Bair has many interests outside of being an entrepreneur, such as flying his
own aircraft, and writing/recording rock & pop music. Concurrently with
employment and his computer-related businesses, Bair has successfully
provided management, lead vocals and guitar duties for his band No Control,
as well as producing and distributing three No Control CDs, all of which
have received airplay.
Bair currently resides in Plano, Texas and continues to serve as CEO and
Chairman of Immediatek, Inc.
10
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
Upon execution of the Merger Agreement, two Immediatek shareholders, who are
both officers and directors of the Company will receive 4,000,000 Class A
Preferred shares issued from ModernGroove Entertainment, Inc. These shares
have a conversion rate of one (1) preferred share which equals one hundred
(100) ModernGroove Entertainment, Inc. common shares. (See "Item 1. Changes
in Control of Registrant" above).
Prior the Merger Agreement, no Immediatek shareholders were shareholders of
ModernGroove Entertainment, and Likewise, not ModernGroove Entertainment
shareholders were shareholders of Immediatek.
ITEM 5. OTHER EVENTS
On October 28, 2002, by Board Resolution of the Company increased its
authorized common stock from 200,000,000 shares, par value $0.001 per share
to 500,000,000 shares, par value $0.001 per share. The Board Resolution was
passed with the consent of less than ten shareholders who own 80% of the
outstanding common shares. The vote for such amendment was 24,400,000 shares
or 80% and the number voted against such amendment was 0. This vote has been
reflect on the Certificate of Amendment filed with the Nevada Secretary of
State.
The capital change was made effective by filing a Certificate of Amendment
to the Company's Articles of Incorporation with the Nevada Secretary of State.
A copy of the filed Certificate is attached as an exhibit to this report.
(See "Exhibit 3.3 and 3.4 - Certificate of Amendment").
By recent Board Resolution, the Board approved the Company shall execute the
conversion of the 4,000,000 preferred shares, which then convert to 500,000,000
common shares, which were issued per the terms of the Merger Agreement (See
"Exhibit 2 - Merger Agreement").
The Corporation's mailing address and business address have been changed from
1801 E. Tropicana, Suite 9, Las Vegas, NV 89119 to 2435 N. Central Expressway
Suite 1200, Richardson, TX 75080, effective immediately.
By recent Board Resolution, the Board approved a change its corporate name
from ModernGroove Entertainment, Inc. to Immediatek, Inc. to better reflect
its new business focus. The Company filed a Certificate of Amendment
to its Articles of Incorporation, with the Nevada Secretary of State to
reflect this name change. (See ?Exhibit 3.4 ? Certificate of Amendment).
11
ITEM 7. FINANCIAL STATEMENTS
(a) Financial Statements of Immediatek are filed herewith.
(b) Pro Forma is filed herewith.
(c) Index to Exhibits.
Exhibit Number Description
2.0* Merger Agreement
3.3* Certificate of Amendment of
Articles of Incorporation
filed Secretary of State Nevada
3.4** Certificate of Amendment of
Articles of Incorporation
filed Secretary of State Nevada
* Previously filed as an exhibit to the Company's Current Report filed on
Form 8-K dated November 12, 2002.
** Previously filed as an exhibit to the Company's Current Report filed on
Form 8-K dated December 9, 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K to be signed on
its behalf by the undersigned hereunto duly authorized.
Immediatek, Inc.
By: /s/ Zach Bair
----------------------------------
Zach Bair
Chief Executive Officer
Date: January 21, 2003
12
Financial Statements
The audited financials will be filed with the audited consolidated financials
submitted on the December 31, 2002 Form 10KSB.
Pro Forma
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The Unaudited Pro Forma Financial Information reflects financial information,
which gives effect to the acquisition of all of the outstanding common shares
of Immediatek, Inc. ("Immediatek") (a Texas Corporation) in exchange for
400,000,000 shares of common stock of ModernGroove Entertainment, Inc.
("ModernGroove") (a Nevada Corporation).
The Pro Forma Statements included herein reflect the use of the purchase method
of accounting for the above transaction. The acquisition of Immediatek, which
closed on November 12, 2002 was accounted for as a reverse acquisition as the
former stockholders of Immediatek controlled the voting common shares of the
Company immediately after the acquisition. Such financial information has been
prepared from, and should be read in conjunction with, the historical unaudited
financial statements of Immediatek and ModernGroove included in this
memorandum.
The Pro Forma Balance Sheet gives effect to the transaction as if it had
occurred on December 31, 2001. The Pro Forma Statement of Operations gives
effect to the transaction as if it had occurred at the beginning of the
earliest period presented, combining the results of Immediatek and ModernGroove
for the nine-months ended September 30, 2002.
F-1
Immediatek, Inc.
(formerly ModernGroove Entertainment, Inc.)
(a Development Stage Company)
Unaudited Pro Forma Balance Sheet
December 31, 2001
Unaudited Pro Forma Balance Sheet
ModernGroove
Immediatek, Inc. Entertainment, Inc. Pro-forma
(Texas Corp.) (Nevada Corp.) Adjustments balance
---------------- ------------------- ----------- ---------
Assets
Current assets:
Cash & equivalents$ - $ - $ - $ -
Receivables - 3,992 (3,992)1 -
Prepaid consulting
fees - 291,499 (291,499)1 -
Prepaid expenses - 116,104 (116,104)1 -
---------------- ------------------- ----------- ---------
Total current
assets - 411,595 (411,595) -
---------------- ------------------- ----------- ---------
Property and
equipment, net - 233,640 (233,640)1 -
Software development
costs, net - 701,974 (701,974)1 -
---------------- ------------------- ----------- ---------
$ - $ 1,347,209 $(1,347,209) $ -
================ =================== =========== =========
Liabilities and Stockholders' Equity
Current liabilities:
Bank overdraft $ - $ 4,555 $ (4,555)1$ -
Line of credit - 186,477 (186,477)1 -
Loan payable -
related party - 451,995 (451,995)1 -
Accounts payable - 307,047 (307,047)1 -
Accrued
liabilities - 454,488 (454,488)1 -
---------------- ------------------- ----------- ---------
Total current
liabilities - 1,404,562 (1,404,562) -
---------------- ------------------- ----------- ---------
Stockholders' equity:
Common stock, $0.001 par
value, 500,000,000
shares authorized,
430,650,700 shares
issued and outstanding
as of 12/31/01 - 30,651 400,000 2 430,651
Additional paid-in
capital - 3,033,042 (520,000)2 -
(2,513,042)3
Stock subscriptions
receivable - (120,000) 120,000 2 -
(Deficit) accumulated
during development
stage - (2,997,617) 2,566,966 3(430,651)
Accumulated other
comprehensive income - (3,429) 3,429 3 -
---------------- ------------------- ----------- ---------
- (57,353) 57,353 -
---------------- ------------------- ----------- ---------
$ - $ 1,347,209 $(1,347,209) $ -
================ =================== =========== =========
The accompanying notes are an integral part of these financial statements.
F-2
Immediatek, Inc.
(formerly ModernGroove Entertainment, Inc.)
(a Development Stage Company)
Unaudited Pro Forma Statement of Operations
For the nine-months ended September 30, 2002
Unaudited Pro Forma Statement of Operations
ModernGroove
Immediatek, Inc. Entertainment, Inc. Pro-forma
(Texas Corp.) (Nevada Corp.) Adjustments balance
---------------- ------------------- ----------- ----------
Revenue $ 52,346 $ - $ - $ 52,346
Expenses:
Payroll expenses 81,896 - - 81,896
Rent 3,860 - - 3,860
General & administrative
expenses 9,935 - - 9,935
---------------- ------------------- ----------- -----------
Total expenses 95,691 - - 95,691
---------------- ------------------- ----------- -----------
Other (expense):
Interest (162) - - (162)
---------------- ------------------- ----------- -----------
Net (loss) $ (43,507) $ - $ - $ (43,507)
================ =================== =========== ===========
Weighted average number of
common shares
outstanding - 30,650,700 400,000,000 430,650,700
================ =================== =========== ===========
Net (loss) per share-
basic and diluted $ - $ - $ - $ (0.00)
================ =================== =========== ===========
The accompanying notes are an integral part of these financial statements.
F-3
Immediatek, Inc.
(Formerly ModernGroove Entertainment, Inc.)
(a Development Stage Company)
Notes
Note 1
On April 12, 2002, the Canadian Imperial Bank of Commerce, Vancouver, British
Columbia filed against ModernGroove Entertainment, Inc., a petition with the
Supreme Court of British Columbia to be adjudged bankrupt. The adjustments
reflect the disposition of assets and liabilities under the bankruptcy
proceedings.
Note 2
To adjust share capital on reverse acquisition and to reflect par value of
Immediatek's common stock.
Note 3
To reflect the recapitalization of Immediatek, Inc. with the book value of net
assets of ModernGroove Entertainment, Inc. at the acquisition date. Because
the acquisition was accounted for as a reverse acquisition, there was neither
goodwill recognized nor any adjustments to the book value of the net assets of
Immediatek that would affect the pro forma statement of operations.
F-4