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: February 11, 2003
VisiJet, Inc.
(Exact name of the Company as specified in its charter)
Delaware 0--256111 33-0838660
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
188 Technology Drive, Suite D
Irvine, California 92618
(Address of principal executive offices)
The Company's telephone number, including area code:
949-453-9652
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired.
Attached are audited financial statements of VisiJet, Inc., a
California corporation, predecessor of the Registrant, for the year
ended December 31, 2002 and for the period February 2, 1996
(inception)to December 31, 2002.
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.
VisiJet, Inc., a Delaware
corporation
By: /s/ Laurence Schreiber
-----------------------------
Laurence Schreiber, Secretary
Date: April 28, 2003
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS AND AUDITORS' REPORT
FOR THE YEAR ENDED DECEMBER 31, 2002
AND FOR THE PERIOD FEBRUARY 2, 1996 (INCEPTION)
TO DECEMBER 31, 2002
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT................................................1
FINANCIAL STATEMENTS
BALANCE SHEET......................................................2
STATEMENTS OF OPERATIONS...........................................3
STATEMENTS OF SHAREHOLDERS' EQUITY.................................4
STATEMENTS OF CASH FLOWS...........................................5
NOTES TO FINANCIAL STATEMENTS...................................6-17
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors
VISIJET, INC.
(A Development Stage Company)
Irvine, California
We have audited the accompanying balance sheet of VisiJet, Inc. (a development
stage company) as of December 31, 2002, and the related statements of
operations, shareholders' deficit and cash flows for the year then ended and for
the period from February 2, 1996 (inception) to December 31, 2002. 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. The financial statements for the period from February 2, 1996
(inception) to December 31, 2001, before the restatement described in Note 10,
were audited by other auditors whose report dated October 25, 2002, except Note
10, which is November 12, 2002, expressed an unqualified opinion .
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 VisiJet, Inc. (a development
stage company) as of December 31, 2002, and the results of its operations and
its cash flows for the year then ended and for the period from February 2, 1996
(inception) to December 31, 2002 in conformity with accounting principles
generally accepted in the United States of America.
We also audited the adjustments described in Note 10 that were applied to
restate the financial statements for the period from February 2, 1996
(inception) to December 31, 2001. In our opinion, such adjustments are
appropriate and have been properly applied.
As discussed in Note 1 to the financial statements, VisiJet, Inc. (a development
stage company) has reported accumulated losses during the development stage
aggregating $5,817,067 and without additional financing, lacks sufficient
working capital to fund operations beyond May 2003, which raises substantial
doubt about its ability to continue as a going concern. Management's plans as to
these matters are described in Note 1. The financial statements do not include
any adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from the outcome of this uncertainty.
/s/ PETERSON & CO.
April 22, 2003
San Diego, California
F-1
VisiJet, Inc.
(A Development Stage Company)
Balance Sheet
December 31, 2002
ASSETS
Current assets:
Cash $ 960
------------
Total current assets 960
Property and equipment, net of accumulated depreciation 47,443
------------
Total assets $ 48,403
============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 196,985
Accrued liabilities 130,469
Accrued interest payable 160,837
Royalties payable 60,000
Compensation settlement agreement - current portion 595,833
Notes payable - related parties 1,543,843
------------
Total current liabilities 2,687,967
------------
Compensation settlement agreement, net of current portion 104,167
------------
Shareholders' deficit
Common stock, no par value; 10,000,000 shares authorized;
7,997,735 shares issued and outstanding as of December 31, 2002 615,248
Preferred stock, no par; 5,000,000 shares authorized;
140,306 Series A shares authorized, issued and outstanding as of December 31, 2002 550,000
636,364 Series B shares authorized; 363,946 shares issued and outstanding
as of December 31, 2002 1,908,088
Deficit accumulated during development stage (5,817,067)
------------
Shareholders' deficit (2,743,731)
------------
Total liabilities and shareholders' deficit $ 48,403
============
The accompanying notes are an integral part of these financial statements.
F-2
VisiJet, Inc.
(A Development Stage Company)
Statements of Operations
For the period
For the year February 2, 1996
ended (inception) to
December 31, 2002 December 31,2002
---------------- ----------------
Operating expenses:
General and administrative expenses $ 751,717 $ 1,859,262
Research and development expenses 294,736 3,600,877
---------------- ----------------
Total operating expenses 1,046,453 5,460,139
---------------- ----------------
Loss from operations (1,046,453) (5,460,139)
---------------- ----------------
Other expense
Interest expense (131,319) (281,741)
Loss on judgment -- (21,483)
Loss on disposal of asset (48,104) (48,104)
---------------- ----------------
Total other expense (179,423) (351,328)
---------------- ----------------
Loss before provision for income taxes (1,225,876) (5,811,467)
Provision for income taxes 800 5,600
---------------- ----------------
Net loss $ (1,226,676) $ (5,817,067)
================ ================
The accompanying notes are an integral part of these financial statements.
F-3
VisiJet, Inc.
(A Development Stage Company)
Statements of Shareholders' Deficit
Deficit
Accumulated
Common Stock Preferred A Preferred B during the
----------------------- ------------------------- --------------------------- Development Shareholders'
Shares Amount Shares Amount Shares Amount Stage Deficit
------------ ---------- ---------- ------------ ------------ ------------ ------------ ------------
Inception,
February 2, 1996 -- $ -- -- $ -- -- $ -- $ -- $ --
Net loss
------------ ---------- ---------- ------------ ------------ ------------ ------------ ------------
Balance,
December 31, 1996 --
Net loss -- --
------------ ---------- ---------- ------------ ------------ ------------ ------------ ------------
Balance,
December 31, 1997 -- -- -- -- -- -- -- --
Issuance of stock
for cash 5,125,500 25,500 127,550 500,000 525,500
Net loss (580,192) (580,192)
------------ ---------- ---------- ------------ ------------ ------------ ------------ ------------
Balance,
December 31, 1998 5,125,500 25,500 127,550 500,000 (580,192) (54,692)
Cancelled stock (5,100,000) (25,500) (25,500)
Spin-off from
affiliated entity 4,133,195 --
Issuance of stock
for cash 26,834 107,334 12,756 50,000 57,911 318,500 475,834
Issuance of stock
for services 62,227 12,383 12,383
Exercise of stock
options 927,382 184,549 184,549
Net loss (1,198,506) (1,198,506)
------------ ---------- ---------- ------------ ------------ ------------ ------------ ------------
Balance,
December 31,1999 5,175,138 304,266 140,306 550,000 57,911 318,500 (1,778,698) (605,932)
Issuance of stock
for cash 55,252 221,008 147,315 756,000 977,008
Issuance of stock
for services 17,842 3,551 3,551
Net loss (1,336,520) (1,336,520)
------------ ---------- ---------- ------------ ------------ ------------ ------------ ------------
Balance,
December 31, 2000 5,248,232 528,825 140,306 550,000 205,226 1,074,500 (3,115,218) (961,893)
Issuance of stock
for cash 158,720 833,588 833,588
Issuance of stock
for assets and
services 2,425,169 79,936 79,936
Net loss (1,439,602) (1,439,602)
------------ ---------- ---------- ------------ ------------ ------------ ------------ ------------
Balance,
December 31, 2001 7,673,401 608,761 140,306 550,000 363,946 1,908,088 (4,554,820) (1,487,971)
Prior period
adjustment (35,571) (35,571)
------------ ---------- ---------- ------------ ------------ ------------ ------------ ------------
Adjusted balance,
December 31, 2001 7,673,401 608,761 140,306 550,000 363,946 1,908,088 (4,590,391) (1,523,542)
Issuance of stock
for services 324,334 6,487 6,487
Net loss (1,226,676) (1,226,676)
------------ ---------- ---------- ------------ ------------ ------------ ------------ ------------
Balance,
December 31, 2002 7,997,735 $ 615,248 140,306 $ 550,000 363,946 $ 1,908,088 $(5,817,067) $(2,743,731)
============ ========== ========== ============ ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
F-4
VisiJet, Inc.
(A Development Stage Company)
Statements of Cash Flows
For the period
For the year February 2, 1996
ended (inception) to
December 31, 2002 December 31,2002
------------------ ------------------
Cash flows from operating activities:
Net loss $ (1,226,676) $ (5,817,067)
Adjustment to reconcile net loss to net cash
used in operating activities:
Depreciation 13,627 205,321
Loss from disposition of fixed assets 48,104 48,104
Non cash compensation 6,487 102,357
Changes in assets and liabilities:
Accounts payable 37,767 196,985
Income taxes payable (132,234) 800
Accrued judgment -- 129,669
Accrued interest 42,389 160,837
Royalties payable 60,000 60,000
Compensation settlement agreement 291,651 700,000
------------------ ------------------
Net cash used in operating activities (858,885) (4,212,994)
------------------ ------------------
Cash flows from investing activities:
Acquisition of property and equipment (4,633) (320,840)
------------------ ------------------
Net cash used in investing activities (4,633) (320,840)
------------------ ------------------
Cash flows from financing activities:
Advance from shareholders and related parties 891,960 1,591,297
Repayment of advance from shareholders and related parties (27,482) (27,482)
Proceeds from issuance of common stock, net -- 512,891
Proceeds from issuance of preferred stock -- 2,458,088
------------------ ------------------
Net cash provided by financing activities 864,478 4,534,794
------------------ ------------------
Net increase (decrease) in cash 960 960
Cash, beginning of period -- --
------------------ ------------------
Cash, end of period $ 960 $ 960
================== ==================
The accompanying notes are an integral part of these financial statements.
F-5
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - NATURE OF OPERATIONS
-----------------------------
VisiJet, Inc. (the Company), a California corporation in the
development stage, was incorporated on February 2, 1996, to develop and
distribute medical products. The Company is developing a line of
surgical equipment for use in the field of ophthalmology based on
waterjet technology. Potential customers include physicians, surgical
centers and hospitals.
Prior to 1999, the Company was a wholly owned subsidiary of SurgiJet,
Inc. In May 1999, the Company spun its operations off from SurgiJet,
Inc. SurgiJet, Inc. distributed shares of VisiJet, Inc. common stock to
its stockholders. Upon the completion of this distribution, SurgiJet,
Inc. had no ownership interest in VisiJet, Inc. Certain operating
assets and liabilities were assumed by VisiJet, Inc. in connection with
this spin-off.
The Company is in the development stage and its efforts through
December 31, 2002, have been principally devoted to organizational
activities, raising capital and research and development efforts.
Management intends to continue developing and testing its waterjet
technologies. The Company received approval in October 2000 from the
Food and Drug Administration (FDA) for one of its products. To date,
the Company has not received any revenues from product sales.
GOING CONCERN
The Company has incurred net operating losses since inception, has
generated no revenue, and has working capital and stockholders'
deficits. The Company is likely to incur substantial and increasing
operating losses as it continues its research and development efforts
until such time, if ever, as product sales, royalties, license and
development and other fees can generate sufficient revenue to fund its
continuing operations. The Company's future capital requirements will
depend on many factors, including but not limited to the Company's
ability to successfully market its waterjet technology to third
parties, overall product development costs including the cost of
clinical trials and competing technological and market developments.
MERGER
On February 11, 2003, the Company completed its pending merger with
Ponte Nossa Acquisition Corp., (`PNAC"). As a result of this
transaction, the Company became a wholly owned subsidiary of PNAC.
Since this transaction resulted in the shareholders of the Company
acquiring control of PNAC, for financial reporting purposes the
business combination was accounted for as a recapitalization of PNAC (a
reverse acquisition with the Company as the accounting acquirer).
Subsequently, PNAC changed its name to VisiJet, Inc.
F-6
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------
RESEARCH AND DEVELOPMENT COSTS
Research and development costs are charged to expense as incurred.
Certain corporate overhead expenses, such as professional fees,
salaries, rent and travel are allocated to research and development
based on estimates made by management.
STOCK-BASED COMPENSATION
The Company accounts for equity instruments issued to employees for
services based on the fair value of the equity instruments issued and
accounts for equity instruments issued to other than employees based on
the fair value of the consideration received or the fair value of the
equity instruments, whichever is more reliably measurable. The Company
accounts for stock based compensation in accordance with SFAS 123,
"Accounting for Stock-Based Compensation." The provisions of SFAS 123
allow companies to either expense the estimated fair value of stock
options or to continue to follow the intrinsic value method set forth
in APB Opinion 25, "Accounting for Stock Issued to Employees" (APB 25)
but disclose the pro forma effects on net income (loss) had the fair
value of the options been expensed. The Company has elected to continue
to apply APB 25 in accounting for its stock option incentive plans.
DEPRECIATION
Depreciation of property and equipment is computed using the
straight-line method over estimated useful lives ranging from three to
five years.
USE OF ESTIMATES
The preparation of the 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 amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company reviews long-lived assets and certain identifiable
intangibles for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to the future net cash
flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is measured
by the amount by which the carrying
F-7
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
---------------------------------------------------------------
amount of the assets exceeds the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying amount or fair
value less costs to sell.
INCOME TAXES
The Company utilizes the asset and liability method of accounting for
income taxes. Under this method, deferred tax assets and liabilities
are recognized for the estimated future tax consequences attributable
to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax basis and
operating loss and tax credit carryforwards. 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. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities". SFAS No. 146 requires
companies to recognize costs associated with exit or disposal
activities when they are incurred rather than at the date of a
commitment to an exit or disposal plan. Examples of costs covered by
the standard include lease termination costs and certain employee
severance costs that are associated with a restructuring, discontinued
operation, plant closing, or other exit or disposal activities. SFAS
No. 146 is effective prospectively for exit or disposal activities
initiated after December 31, 2002, with earlier adoption encouraged.
The Company elected not to adopt the provisions of SFAS No. 146 until
the adoption date and since there are no planned exit or disposal
activities for the periods after the adoption date, management does not
believe that the adoption of SFAS No. 146 will have a material impact
on the financial statements.
The Emerging Issues Task Force "EITF" recently reached a consensus on
its tentative conclusions for EITF 00-21, "Revenue Arrangements with
Multiple Deliverables." EITF 00-21 provides accounting guidance for
customer solutions where delivery or performance of products, services
and/or performance may occur at different points in time or over
different periods of time. Companies are required to adopt this
consensus for fiscal periods beginning after June 15, 2003. The Company
believes the adoption of EITF 00-21 will not have a material impact on
the Company's financial position, results of operations, or liquidity.
In November 2002, FASB issued FASB Interpretation No. 45 "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of
F-8
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
---------------------------------------------------------------
Indebtedness of Others" ("FIN 45"). FIN 45 elaborates on the
disclosures to be made by a guarantor in its interim and annual
financial statements about its obligations under certain guarantees
that it has issued. FIN 45 also clarifies that a guarantor is required
to recognize a liability for the fair value, or market value, of the
obligation undertaken in issuing a guarantee at the inception of the
guarantee. The provisions of FIN 45 relating to liability recognition
do not apply to certain obligations such as product warranties and
guarantees accounted for as derivatives. The initial recognition and
measurement provisions apply on a prospective basis to guarantees
issued or modified subsequent to December 31, 2002. The disclosure
requirements of FIN 45 are effective for interim or annual financial
statement periods ending after December 15, 2002. The Company does not
expect the adoption of the recognition and measurement provisions of
FIN 45 will have a significant impact on its financial position or
results of operations.
In December 2002, FASB issued SFAS No. 148 "Accounting for Stock-Based
Compensation, Transition and Disclosure" ("SFAS 148"). SFAS 148 amends
the disclosure requirements of SFAS No. 123 "Accounting for Stock-Based
Compensation" ("SFAS 123") to require prominent disclosures in both
interim and annual financial statements about the method of accounting
for stock-based employee compensation and the effect of the method used
on reported results. SFAS 148 also amends SFAS 123 to provide
alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation.
The Company will commence quarterly footnote disclosure of the fair
value based method of accounting for stock-based employee compensation
beginning in the first quarter ending March 31, 2003. As the Company
has decided not to voluntarily adopt the SFAS 123 fair value method of
accounting for stock-based employee compensation, the new transition
alternatives of SFAS 148 will not have a material impact on its
financial position or results of operations.
On January 17, 2003, the FASB issued FASB Financial Interpretation No.
46, "Consolidation of Variable Interest Entities" which requires
extensive disclosures (including disclosures that are applicable to
December 31, 2002 financial statements) and will require companies to
evaluate variable interest entities created after January 31, 2003 and
existing entities to determine whether to apply the Interpretation's
consolidation approach to them. Companies must apply the Interpretation
to entities with which they are involved if the entity's equity has
specified characteristics. If it is reasonably possible that a company
will have a significant variable interest in a variable interest entity
at the date the Interpretation's consolidation requirements become
effective, the company must disclose the nature, purpose, size and
activities of the variable interest entity and the consolidated
enterprise's maximum exposure to loss resulting from its involvement
with the variable interest entity in all financial statements issued
after January 31, 2003 (as well as December 31, 2002 financial
statements) regardless of when the variable interest
F-9
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
---------------------------------------------------------------
entity was created. Since the Company has no interest in any variable
interest entity, the Company believes that the adoption of this
interpretation will not have a material impact on its financial
position or results of operations.
NOTE 3 - PROPERTY AND EQUIPMENT
-------------------------------
At December 31, 2002, property and equipment consist of:
Computer and test equipment $ 21,833
Furniture and fixtures 16,067
Trade show equipment 47,002
------------
84,902
Less: Accumulated depreciation (37,459)
------------
$ 47,443
============
Depreciation expense for the year ended December 31, 2002 amounted to
$13,627. Depreciation expense for the period from February 2, 1996
(inception) to December 31, 2002 was $205,321.
NOTE 4 - NOTES PAYABLE - RELATED PARTIES
----------------------------------------
PONTE NOSSA ACQUISITION CORPORATION
During 2002, the Company entered into various loan agreements with
Ponte Nossa Acquisition Corporation ("PNAC") to provide funding to
facilitate transactions contemplated by the pending merger with PNAC.
Principal and accrued interest on the notes are due on the earlier of
i) the date on which the closing of the transactions of the merger
agreement by and between the Company and PNAC, ii) termination of the
merger agreement, iii) sale of the Company or iv) the maturity date.
The notes are collateralized by a security interest in certain assets
and common stock of the Company.
At December 31, 2002, notes payable to PNAC consist of the following:
Note payable - PNAC
Senior secured promissory notes,
interest at 3% per annum, due May 2003 $ 236,000
Note payable - PNAC
Working capital note, interest at 10% per annum,
due August 2003 309,752
Note payable - PNAC
F-10
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - NOTES PAYABLE - RELATED PARTIES (Continued)
----------------------------------------------------
Milestone note payable,
interest at 10% per annum, due August 2003 97,606
------------
$ 643,358
============
At December 31, 2002, accrued interest payable on the above notes is
$12,354. As a result of the merger (see Note 11), these notes payable
eliminate during the consolidation with PNAC.
SURGIJET, INC.
On October 23, 1998, in connection with a Trademark, Technology and
Patent License Agreements entered into with SurgiJet, Inc., a company
related through common shareholders, the Company issued a demand
promissory note in the amount of $400,000 in favor of SurgiJet, Inc.,
in connection with the reimbursement of expenses incurred by SurgiJet
in the development of the related technology. The terms of the note
were amended on February 3, 2003 to establish payment requirements and
to increase the interest rate to 10% per annum. Under the amended note,
the first payment, in the amount of $30,000, is payable on February 11,
2003, the date of merger with PNAC. Thereafter, the note is payable in
equal monthly installments of $15,000, including interest on the first
of each month until paid in full.
Until the note is paid in full, interest on this note accrues on the
unpaid principal at a variable interest rate based on the prime rate.
At December 31, 2002, accrued interest on the note was $137,149.
Pursuant the merger agreement, the loan is due and payable upon
successful completion of an independent audit of the Company's 2002
financial statements. At April 24, 2003, the balances are under
negotiation with the involved parties.
DENTAJET, INC.
During 2002, the Company entered into a promissory note for a principal
sum of $91,000, plus interest at the rate of 10% per annum with
DentaJet Inc., a Nevada corporation ("DentaJet"), related through
common shareholders.
DentaJet continued to provide funding in 2002 totaling an aggregate
loan amount of $161,000. Loan payments were made against this note in
2002 totaling $27,482 leaving an outstanding principal balance at
December 31, 2002 of $133,518. Accrued interest of $9,567 was incurred
during the year bringing the outstanding balance to $143,086. Pursuant
to the merger agreement, the loan is due and payable upon successful
completion of an independent audit of the Company's 2002 financial
statements. At April 24, 2003, the balances are under negotiation with
the involved parties.
F-11
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - NOTES PAYABLE - RELATED PARTIES (Continued)
----------------------------------------------------
SHAREHOLDERS
During 2002, the Company entered into a promissory note with Lance
Doherty, a shareholder of the Company, for a principal sum of $19,000
plus interest to accrue at a rate of 10% per annum. Total accrued
interest on the note is $1,767 at December 31, 2002. In addition, the
Company recorded as a liability certain expenses paid by Rex Doherty,
the principal stockholder of the Company, in the amount of $2,967 due
and payable as of December 31, 2002.
FINANCIAL ENTREPRENEURS, INC. ("FEI")
Pursuant to an agreement entered into in connection with the merger
with PNAC, the Company entered into a note agreement with FEI, a
significant investor of PNAC. The note is due on demand and bears no
interest. The total amount due at December 31, 2002 is $345,000. As a
result of the merger, in February 2003, FEI converted the promissory
note held by it into 378,997 shares of the Company's common stock at a
conversion rate of $1.00 per share. There was no beneficial conversion
feature on this note.
NOTE 5 - COMMITMENTS
--------------------
OPERATING LEASES
The Company's primary facility is leased through a property management
group. Rent expense was $62,160 for the year ended December 31, 2002.
Rent expense for the period from February 2, 1996 (inception) to
December 31, 2002 was $293,848.
The minimum annual lease payments as of December 31, 2002 are as
fo1lows:
Year Ending December 31,
------------------------
2003 $ 94,188
2004 36,736
------------
$ 130,924
============
NOTE 6 - CONTINGENCY
--------------------
During 2001, judgments totaling $129,669 were entered against the
Company's former parent, SurgiJet, Inc. for failure to make scheduled
payments on equipment capital leases.
F-12
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - CONTINGENCY (Continued)
-------------------------------
These capital leases were transferred and assumed by the Company as of
January 1, 1999. The Company provided SurgiJet, Inc with monthly
payments of approximately $8,000, including interest ranging from 19%
to 30%. SurgiJet, Inc. defaulted on two of the leases due to the
Company's failure to make payments. The Company's management has
committed to pay the judgment on SurgiJet's behalf. At December 31,
2002, $129,669 is recorded as an accrued liability.
NOTE 7 - SHAREHOLDERS' DEFICIT
------------------------------
COMMON STOCK - RELATED PARTIES
During 2002, the Company issued 140,000 shares of common stock in
exchange for consulting services. The Company issued 100,000 shares to
Marilyn Doherty at a value of $2,000 and 40,000 shares to Lance Doherty
at a value of $800.
PREFERRED STOCK
During 1998, the Company raised $500,000 from the sale of 127,550
shares of Series A Preferred Stock priced at $3.92 per share to a small
group of private investors. In 1999, the Company raised an additional
$50,000 from the sale of 12,756 shares of Series A Preferred Stock.
During 1999, the Company raised $318,500 from the sale of 57,911 shares
of Series B Preferred Stock priced at $5.50 per share to a small group
of private investors.
During 2000, the Company issued 147,315 shares of Series B Preferred
Stock in exchange for services valued at $756,000.
During 2001, the Company raised $833,588 (net of issuance costs) from
the sale of 158,720 shares of Series B Preferred Stock priced at $5.50
per share to a small group of private investors.
Dividends, when declared are payable at a rate of $0.196 and $0.275 per
share per annum on each outstanding share of Series A and Series B
Preferred Stock, respectively, payable quarterly. Such dividends are
not cumulative.
Each share of Series A and B Preferred Stock shall be convertible into
Common Stock as determined by dividing $3.92 and $5.50 for each share
of Series A and B Preferred Stock, respectively, surrendered for
conversion. Each share of Preferred Stock will be automatically
converted at the conversion price upon the earlier of a) a public
offering
F-13
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 7 - STOCKHOLDERS' EQUITY (DEFICIT) (Continued)
---------------------------------------------------
which results in gross proceeds of at least $5,000,000, b) the consent
of a majority of Preferred Stockholders.
The Series A and B Preferred Stock have the right to one vote for each
share of common stock into which they can be converted. The Series A
and B Preferred Stock have certain liquidation and conversion price
adjustments for certain dilutive issuances, splits and combinations and
are not redeemable.
STOCK OPTIONS
In 1998, the Board of Directors approved the adoption of a stock option
plan ("1998 Plan") pursuant to which directors, officers, key
employees, consultants or associates are eligible to receive stock
options for common stock as defined in the 1998 Plan. The Company is
authorized to issue up to 500,000 shares of common stock under the 1998
Plan. All unexercised options terminate five years from the adoption
date of the 1998 Plan.
In 1999, the Board of Directors approved the adoption of a stock option
plan ("1999 Plan") pursuant to which directors, officers, key
employees, consultants, and scientific advisors and other personnel
working directly with the Company are eligible to receive stock options
for common stock as defined in the 1999 Plan. The Company is authorized
to issue up to 796,132 shares of common stock under the 1999 Plan. All
unexercised options terminate five years from the adoption date of the
1999 Plan.
During 1999, the Company has granted 927,382 common stock options to
employees and consultants. Of these grants, 927,382 stock options have
been exercised at their exercise price of $0.20 per share as of
December 31, 1999. The weighted average fair value of options granted
during 1999 is $0.20. There were no stock options granted after 1999.
NOTE 8 - INCOME TAXES
---------------------
The provision for income taxes consist of the following for the year
ended December 31, 2002:
Current:
Federal $ --
State 800
------------
Total provision $ 800
============
F-14
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 8 - INCOME TAXES (Continued)
---------------------------------
The components of the net deferred income tax assets are as follows as
of December 31, 2002:
Deferred income tax assets:
Net operating loss carry forward $ 2,398,000
Other temporary timing adjustments 257,000
-------------
2,655,000
Deferred tax liability:
State taxes (191,000)
-------------
Deferred income tax asset, net before
Valuation allowance 2,464,000
Less: valuation allowance (2,464,000)
-------------
Deferred income tax asset, net $ --
=============
Since 1996, the company has generated a net operating loss (NOL) of
approximately $5,674,000. The total carry forward amounts are available
to offset future taxable income and expire in various years through
2022. The ability to use some or all of this carryforward is limited by
future events such as a failure to generate positive taxable income or
a change in ownership as stated under the rules of Internal Revenue
Code Section 382.
The net deferred tax asset is primarily associated with its net
operating loss carryforwards, state taxes and other timing adjustments.
The Company has recorded a valuation allowance for the entire amount
due to the uncertainty surrounding the likelihood of the Company
generating sufficient taxable income in the future.
NOTE 9 - SETTLEMENT AGREEMENTS AND LOAN PAYABLE
-----------------------------------------------
On November 4, 2002, the Company entered into settlement agreements
with two consultants for past due consulting services.
The total amount due related to these settlements at November 4, 2002
is $700,000 and will be payable as follows: $250,000 will be payable
over one to two years at a 3.5% annual interest rate, with the
remaining $450,000 convertible to shares of the merged company based
upon the closing price of the merged Company's stock on the day the
merger with Ponte Nossa Acquisition Corp. is completed (Note 11).
F-15
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 10 - PRIOR PERIOD ADJUSTMENT
---------------------------------
During 2002, it was discovered that there were errors in the prior
years' financial statements. The Company's prior management overstated
expenses in 2001 by recording $93,595 of personal expense of the
Company's prior management, as general and administrative expense. The
expense was recorded as accrued liabilities at December 31, 2001. The
financial statements for 2002 have been corrected for this error by
decreasing the liabilities associated with the expense and decreasing
the accumulated deficit at December 31, 2001 by $93,595.
In addition, it was discovered that certain general and administrative
expense and research and development expense were included in the 2002
financial statements, but were related to expenses for the year ended
December 31, 2001. The 2002 financial statements have been corrected
for this error by decreasing expense and increasing the accumulated
deficit at the beginning of 2002 by $129,166.
NOTE 11 - SUBSEQUENT EVENTS
---------------------------
MERGER
On December 20, 2002, the Company entered into a Second Amended and
Restated Agreement and Plan of Merger with Ponte Nossa Acquisition
Corp., ("PNAC") a Delaware corporation, for the merger of the two
companies into a single company. The merger was consummated as a
reverse merger on February 11, 2003.
Under the terms of the agreement and Plan of Merger, 12,128,491 shares
of PNAC common stock were issued to the shareholders of the Company. In
addition, warrants to purchase an additional 4,528,481 shares or common
stock were issued to certain investors for cash concurrently with the
consummation of the merger.
As a result of this transaction, the Company became a wholly owned
subsidiary of PNAC. The transaction resulted in the shareholders of the
Company acquiring control of PNAC. For financial reporting purposes,
the business combination was accounted for as a recapitalization of the
PNAC (a reverse acquisition with the Company as the accounting
acquirer), whereby PNAC changed its name to VisiJet, Inc.
LITIGATION
On February 5, 2003, a claim was filed against the Company by an
outside consultant stating that the consultant is entitled to a
commission arising out of the merger between PNAC and the Company. The
complaint alleges that the plaintiff is entitled to 105,000 shares of
the Company's common stock. The Company denies the material allegations
of the complaint and plans to vigorously contest the action.
F-16