UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): August 17, 2001
RRUN VENTURES NETWORK INC.
(Exact name of Registrant as specified in its charter)
Nevada 000-27233 98-0204736
(State or Other (Commission File (IRS Employer
Jurisdiction of Number) Identification
Incorporation) Number)
4th Floor, 62 W. 8th Avenue, Vancouver, British Columbia, Canada V5Y 1M7
(Address of principal executive offices) (Zip Code)
(604) 682-6541
(Registrant's telephone number, including area code)
UNITED MANAGEMENT, INC.
Suite 104, 1456 St. Paul Street, Kelowna, British Columbia, Canada V1Y 2E6
(Former name or former address, if changed since last report)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
On December 18, 2000, a change in control of the Company occurred, in
conjunction with closing under an Agreement and Plan of Reorganization (the
"Merger Agreement"). Prior to closing under the Merger Agreement, the Company
had a total of 788,420 shares issued and outstanding.
The Company issued 305,439 shares of its common stock in exchange for
all of the issued and outstanding common stock of RRUN Ventures, Inc., a Nevada
corporation ("RRUN").
As a result of these transactions, the Company now has 1,093,859
issued and outstanding shares of common stock, of which 305,439 shares, or
approximately 27.9%, are owned by persons who were previously shareholders of
RRUN. Persons who were previously shareholders of the Company own a total of
788,420 shares or approximately 72.1% of the issued and outstanding common
stock.
Prior to closing, shareholders of the Company adopted Restated and
Amended Articles of Incorporation to be effective as of December 18, 2000. Among
the amendments was a change in the name of the Company to "RRUN Ventures Network
Inc." Shareholders for RRUN adopted the Merger Agreement by written consent.
In conjunction with the change in ownership of a controlling interest
in the stock of the registrant, the previous officers and directors of the
registrant resigned and appointed as new directors Ray Hawkins, Edwin Kwong and
Saya Kyvrikosaios. The new directors elected Ray Hawkins as the President and
Chief Executive Officer and Edwin Kwong as Chief Operating Officer of the
Company.
ITEM 2. Acquisition or Disposition of Assets
See Item 1. above.
Business of RRUN
RRUN was incorporated in Nevada on October 12, 2000. RRUN's core
business venture is RAHX, a software platform that uses Peer to Peer, or P2P
technologies to enable and enhance the distribution of digital media files over
the Internet. P2P technologies allow users to exchange digital media files
directly from their computers. RAHX focuses on providing both owners and
consumers of media-related content a suite of software products that address
their respective needs. To take advantage of the sudden growth in the file
exchange industry, RRUN expects to launch the RAHX venture before the end of
2001.
RAHX is used together with the product, RAHXWARE, the software which
consumers use to connect to RAHX.
2
Opportunities in the Digital Music Industry
There has been a recent media explosion around the controversial music
software company Napster. Napster has caused an uproar within the music
industry, as the company has led the way in pioneering a new process of
distributing music over the Internet. This process has been dubbed file exchange
or P2P. Consumers can now access music files directly with another consumer
without going through a website or centralized server.
However, companies like Napster are currently subject to a number of
highly publicized lawsuits because, among other things, they promote the use of
a software that violates the rights of music copyright owners including major
record labels Sony and Universal. An opportunity arises for a company to create
a feasible solution that not only generates revenue for the major record labels,
but also allows consumers to continue to download and exchange music easily for
a low cost.
RAHX Business Model
RRUN's core business venture is RAHX, a software platform that uses
P2P technologies to enable and enhance the distribution of digital media files
over the Internet. RAHX provides media users and content owners with an
end-to-end solution of distributing music over the Internet by performing the
following functions:
o Facilitating the transfer and exchanging of digital media files;
o Managing the income flow from consumers to content owners;
o Storing the income for the benefit of content owners;
o Tracking the content use;
o Distributing the income to content owners; and
o Protecting the consumers with Internet security and content owners
with digital rights management.
RAHX earns income for RRUN through a two-pronged business model:
Direct to Consumer Model and Licensing Model. In the Direct to Consumer Model,
RAHX provides a file exchange service or P2P media service directly to consumers
and uses its file exchange software to generate transaction fees by acting as an
agent to facilitate transactions between consumers and content owners. In the
Licensing Model, RAHX licenses its software to other P2P media services that
desire a method to generate revenue. RAHX bills these file exchange services
software license fees and transaction facilitation fees. Under this model, RAHX
earns a smaller transaction fee rate than in the direct to consumer model.
3
Management of RRUN
The officers and directors of RRUN are as follows:
Name Age Position
---- --- --------
Ray Hawkins 31 Director, President and CEO
Edwin Kwong 29 Director, COO
Saya Kyvrikosaios 32 Director, VP Product and
Technology Development
Ray Hawkins - Director, President & CEO. As the President & CEO, Mr.
Hawkins' duties include the forging of business development, securing of
partnerships, and overseeing product development, and marketing campaigns.
Mr. Hawkins is a serial entrepreneur with over a decade of experience
in the fields of media, entertainment, and marketing. From 1990-1995, Mr.
Hawkins operated his own music artist management firm, RAH Talent. During that
time Mr. Hawkins also acted as the CEO of Empire Communications, a record label
that produced a number of cutting edge music artists. From 1993-1997 Mr. Hawkins
acted as a music consultant, procuring cutting edge music for movie and
television production houses like Paramount Pictures and video game companies
like Electronic Arts. From 1996-1999 Mr. Hawkins was the founder, President, and
CEO of TAXI Communications Network Inc., a leading edge media and marketing firm
that produced a popular local culture magazine, TAXI Vancouver, and developed
urban based marketing campaigns for companies like Labatt Breweries, Universal
Music, Virgin Megastore and Molson Canada.
Edwin Kwong - Director, COO. Mr. Kwong uses his background in finance
and project management to oversee the day-to-day operations of RRUN.
Mr. Kwong has over 5 years of international management consulting
experience in Project Management and Finance in Canada and Asia. In 1993 Mr.
Kwong received a Bachelor of Commerce in Finance from the University of British
Columbia. In 1996 Mr. Kwong received a Graduate Diploma in Asian Pacific
Management. From 1994-1996 Mr. Kwong worked as Investment Advisor Assistant for
Great Pacific Management in Vancouver. From 1996 to 1997 Mr. Kwong acted as a
consultant in Hong Kong for Manulife International Ltd. and Ernst and Young
Management Consulting. From 1997-1998 Mr. Kwong was a Project Executive for
Hopewell Holdings in Hong Kong and Indonesia. In 1998 Mr. Kwong completed his
Level 1 examination in the Chartered Financial Analyst program. From 1999-2000
Mr. Kwong was the Senior Business Specialist for Intria Items Inc., a financial
technology solutions division of Canadian Imperial Bank of Commerce.
Saya Kyvrikosaios - Director, VP Product and Technology Development.
Mr. Kyvrikosaios is a well-diversified management and technology professional
and uses his skills and experience to lead the product and technology
development for RRUN.
4
From 1991-1995 Mr. Kyvrikosaios acted as the Branch Manager and
Implementation Consultant for Laurentian Bank. From 1995-1998 Mr. Kyvrikosaios
was the Project Manager and Technology Implementation Consultant for Credit
Union Enterprise Datawest Ltd. From 1998-2000 Mr. Kyvrikosaios acted as the
Project Leader of Western Canada for INTRIA Items Inc., a subsidiary of the
Canadian Imperial Bank of Commerce. In 1999 Mr. Kyvrikosaios received his
Bachelor's degree in Business Administration from Simon Fraser University.
Principal Shareholders of the Company
The following table provides certain information as to the officers
and directors individually and as a group, and the holders of more than 5% of
the Common Stock of the Company, as of July 31, 2001:
Shares Beneficially Shares to be
Directors, Officers and 5% Owned Beneficially Owned
Stockholders Prior to Acquisition After Acquisition
-------------------------- ------------------------- -----------------------
Number Percent Number Percent
------ ------- ------ -------
550605 B.C. Ltd.(5) 0 0 140,700(1) 6.3%
4th Floor, 62 W. 8th Avenue
Vancouver, B.C. V5Y 1M7
Ray A. Hawkins(5) 0 0 162,489(2) 7.3%
71-1075 Granville Street
Vancouver, B.C. V6Z 1L4
Pavel Bains(5)9351 Granville 0 0 131,500(2) 5.9%
Street
Richmond, B.C. V6Y 1P9
Edwin Kwong(5) 0 0 119,000(2) 5.4%
986 W. 37th Avenue
Vancouver, B.C. V5Z 2L5
Saya Kyvrikosaios(5) 0 0 119,000(2) 5.4%
#306 - 1139 West Broadway
Vancouver, B.C. V6H 1G1
Pickwick Company(6) 0 0 200,000(3) 9.0%
#267 - 1755 Robson Street
Vancouver, B.C. V6G 3B7
Gurpal Johal(5) 0 0 200,000(3) 9.0%
18536 58 B Street
Surry, B.C. V3S 5X9
EMH, LLC(7) 0 0 80,000(3) 3.6%
25 Flint Hill Road
West Tisbury, MA 02575
USA
5
Carl Jennings(5) 0 0 103,000(3) 4.6%
7413 Oskaloosa Drive
Derwood, MD 20855-2651
USA
Christine Cerisse 30.4% 152,000 6.8%
Suite 104, 1456 St. Paul St.
Kelowna, British Columbia
Canada V1Y 2E6
Bob Hemmerling 30.4% 152,000 6.8%
Suite 104, 1456 St. Paul St.
Kelowna, British Columbia
Canada VIY 2E6
All United Management directors 60.8% N/A N/A
and officers as a group
(2 persons)
All RRUN directors and 1,775,689(4) 79.3%
officers as a group (3 persons)
(1) Ray A. Hawkins owns 74% of 550605 B.C. Ltd.
(2) Includes 100,000 shares issuable upon the exercise of options.
(3) Issuable upon the exercise of options.
(4) Includes 300,000 shares issuable upon the exercise of options.
(5) These RRUN shareholders will receive the shares indicated upon consummation
of the merger. None of the investors in the offering are currently or will be
holders of 5% or more of our securities immediately after the merger.
(6) Pickwick Company is 100% owned by Lawrence Austin, 520-177 Telegraph Rd.,
Bellingham, WA 98226.
(7) EMH, LLC is 100% owned by Norman B. Hall, 25 Flint Hill Rd, West Tisbury, MA
02575.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not Applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
In connection with the change of control described above, in April
2001, the Company plans to engage Morgan & Company, Chartered Accountants,
Vancouver, Canada, to audit its financial statements for the fiscal year ended
December 31, 2000. Morgan & Company audited the financial statements for RRUN
Ventures, Inc.
6
ITEM 5. OTHER EVENTS
Not applicable.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS
See Item 1.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired: Filed with this
report.
(b) Pro forma financial information: Filed with this report.
(c) Exhibits:
Regulation S-K
Number Document
2.1 Agreement and Plan of Reorganization
2.1.1 Amendment to Merger Agreement
3.1 Restated and Amended Articles of Incorporation
16 Letter from Cordovano & Harvey
ITEM 8. CHANGE IN FISCAL YEAR
As a result of the acquisition of RRUN Ventures, Inc., which shall be
known as RRUN Ventures Network, Inc. the Company's fiscal year end will be
changed to December 31.
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.
7
RRUN VENTURES NETWORK INC.
DATED: August 17, 2001 By: /s/ Ray Hawkins
--------------------------------,
President
8
RRUN VENTURES INC.
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000
(Stated in U.S. Dollars)
AUDITORS' REPORT
To the Directors
RRUN Ventures Inc.
We have audited the consolidated balance sheet of RRUN Ventures Inc. (A
Development Stage Company) as at December 31, 2000 and the consolidated
statements of operations and deficit, cash flows, and stockholders' deficiency
for the period then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with United States and Canadian generally
accepted auditing standards. Those standards require that we plan and perform an
audit to obtain reasonable assurance 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, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at December 31, 2000
and the results of its operations and cash flows for the period then ended in
accordance with United States generally accepted accounting principles.
Vancouver, B.C. "Morgan & Company"
February 14, 2001 Chartered Accountants
COMMENTS BY INDEPENDENT AUDITORS FOR U.S. READERS
ON CANADA-U.S. REPORTING CONFLICT
In the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the opinion paragraph) when the financial
statements are affected by significant uncertainties such as those described in
Note 1(b) of the financial statements. Our report to the shareholders, dated
February 14, 2001, is expressed in accordance with Canadian reporting standards,
which do not permit a reference to such an uncertainty in the Auditors' Report
when the uncertainty is adequately disclosed in the financial statements.
Vancouver, B.C. "Morgan & Company"
February 14, 2001 Chartered Accountants
RRUN VENTURES INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2000
(Stated in U.S. Dollars)
-------------------------------------------------------------------------------
ASSETS
Current
Cash $ 10,794
Prepaid expense 500
------------
11,294
Investment (Note 4) 6,750
------------
$ 18,044
=============================================================================
LIABILITIES
Current
Accounts payable $ 32,114
Loans and advances payable (Note 6(b)) 66,803
------------
98,917
------------
STOCKHOLDERS' DEFICIENCY
Share Capital
Authorized:
25,000,000 common shares, par value $0.001 per share
Issued and Outstanding:
6,108,780 common shares 6,109
Additional paid in capital 4,622
Deficit (91,604)
------------
(80,873)
------------
$ 18,044
=============================================================================
Approved by the Board of Directors:
------------------------------- -------------------------------------
RRUN VENTURES INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT
FROM INCEPTION ON OCTOBER 12, 2000 TO DECEMBER 31, 2000
(Stated in U.S. Dollars)
-------------------------------------------------------------------------------
Expenses
Administrative services $ 30,164
Consulting 12,609
Office and sundry 9,970
Professional fees 21,781
Travel 4,944
------------
79,468
Minority interest in loss of subsidiary (219)
------------
Net Loss For The Period 79,249
Deficit, Beginning Of Period -
------------
79,249
Net Asset Deficiency Of Legal Parent At Date Of Reverse Take-Over
Transaction
12,355
------------
Deficit, End Of Period $ 91,604
================================================================================
Net Loss Per Share $ 0.02
================================================================================
Weighted Average Number Of Common Shares Outstanding 5,943,780
================================================================================
RRUN VENTURES INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
FROM INCEPTION ON OCTOBER 12, 2000 TO DECEMBER 15, 2000
(Stated in U.S. Dollars)
--------------------------------------------------------------------------------
Cash Flows From Operating Activities
Net loss for the period $ (79,249)
Adjustments To Reconcile Net Loss To Net Cash Used By Operating
Activities
Shares issued for other than cash 4,200
Minority interest in loss of subsidiary (219)
Prepaid expense (500)
Accounts payable 32,114
Loans and advances payable 66,803
----------
23,149
----------
Cash Flows From Investing Activity
Net asset deficiency of legal parent at date of reverse take-over
transaction (12,355)
----------
Increase In Cash 10,794
Cash, Beginning Of Period -
----------
Cash, End Of Period $ 10,794
================================================================================
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES
During the period, the Company issued 4,200,000 common shares at a value of
$4,200 for consulting services.
During the period, the Company acquired 67% of the issued and outstanding shares
of RAHX Inc. by issuing 2,814, 000 common shares at a value of $Nil.
During the period, the Company acquired 15% of the issued and outstanding shares
of Kaph Data Engineering Inc. by issuing 400,000 common shares at a value of
$6,750.
RRUN VENTURES INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
DECEMBER 31, 2000
(Stated in U.S. Dollars)
ADDITIONAL
PAID-IN
SHARES AMOUNT CAPITAL DEFICIT TOTAL
----------------------------------------------------------------------------
Shares Issued For Cash And
Services 4,200,000 $ 4,200 $ - $ - $ 4,200
Adjustment To Number Of Shares
Issued And Outstanding As A
Result Of The Acquisition Of
RAHX, Inc.
RAHX, Inc. (4,200,000) (4,200) - - (4,200)
RRUN Ventures Inc. 5,708,780 5,709 (1,509) 4,200
Adjustment To Stated Value Of
Stockholders' Equity To Reflect
Minority Interest In The Net
Assets Of RAHX, Inc. At The
Acquisition Date - - (219) - (219)
Net Asset Deficiency Of Legal
Parent At Date Of Reverse Take-
Over Transaction
- - - (12,355) (12,355)
Shares Issued To Acquire
Investment In Kaph Data
Engineering Inc. 400,000 400 6,350 - 6,750
Loss For The Period - - - (79,249) (79,249)
----------------------------------------------------------------------------
Balance, December 31, 2000 6,108,780 $ 6,109 $ 4,622 $ (91,604) $ (80,873)
============================================================================
RRUN VENTURES INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000
(Stated in U.S. Dollars)
1. NATURE OF OPERATIONS
a) Organization
The Company was incorporated in the State of Nevada, U.S.A. on October
12, 2000.
b) Development Stage Activities
The Company was organized to develop innovative technology based
ventures with a current emphasis on building new technologies for the
entertainment and content industry. The Company's initial venture is
RAHX, a business concept focused on the growing Peer-To-Peer (P2P)
file exchange industry. The first branded RAHX product is Rahxware, a
platform that uses P2P technologies to enable and enhance the
distribution of digital media over the internet.
The Company is in the development stage, therefore, recovery of assets
is dependent upon future events, the outcome of which is
indeterminable. In addition, successful completion of the Company's
development program and its transition, ultimately to the attainment
of profitable operations, is dependent upon obtaining adequate
financing to fulfil its development activities and achieve a level of
sales to support its cost structure.
Management is of the opinion that sufficient short term funding will
be obtained and that current negotiations with potential users of its
products will be successful.
2. SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in the United
States. Because a precise determination of many assets and liabilities is
dependent upon future events, the preparation of consolidated financial
statements for a period necessarily involves the use of estimates which
have been made using careful judgement.
The consolidated financial statements have, in management's opinion, been
properly prepared within reasonable limits of materiality and within the
framework of the significant accounting policies summarized below:
a) Consolidation
These consolidated financial statements include the accounts of the
Company and its 67% owned subsidiary, RAHX, Inc.
RRUN VENTURES INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000
(Stated in U.S. Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
b) Development Stage Company
The Company is a development stage company as defined in the Statements
of Financial Accounting Standards No. 7. The Company is devoting
substantially all of its present efforts to establish a new business
and none of its planned principal operations have commenced. All losses
accumulated since inception have been considered as part of the
Company's development stage activities.
c) Investments
Investments in companies owned less than 20% are recorded at the lower
of cost or fair market value.
d) Software Development Costs
The costs to develop new software products and enhancements to existing
software products will be expensed as incurred until technological
feasibility has been established. Once technological feasibility has
been established, any additional costs will be capitalized.
e) Income Taxes
The Company has adopted Statement of Financial Accounting Standards No.
109 - "Accounting for Income Taxes" (SFAS 109). This standard requires
the use of an asset and liability approach for financial accounting and
reporting on income taxes. If it is more likely than not that some
portion or all if a deferred tax asset will not be realized, a
valuation allowance is recognized.
f) Financial Instruments
The Company's financial instruments consist of cash and accounts
payable.
Unless otherwise noted, it is management's opinion that this Company is
not exposed to significant interest or credit risks arising from these
financial instruments. The fair value of these financial instruments
approximate their carrying values, unless otherwise noted.
RRUN VENTURES INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000
(Stated in U.S. Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
g) Net Loss Per Share
Net loss per share is calculated using the weighted average number of
common shares outstanding during the period. Fully diluted loss per
share is not presented as the impact of the exercise of options is
anti-dilutive.
3. ACQUISITION OF SUBSIDIARY
Effective November 13, 2000, RRUN Ventures Inc. acquired 67% of the issued
and outstanding shares of RAHX, Inc. by issuing 2,814,000 common shares.
Since the transaction resulted in the former shareholders of RAHX, Inc.
owning the majority of the issued shares of RRUN Ventures Inc., the
transaction, which is referred to as a "reverse take-over", has been
treated for accounting purposes as an acquisition by RAHX, Inc. of the net
assets and liabilities of RRUN Ventures Inc. Under this purchase method of
accounting, the results of operations of RRUN Ventures Inc. are included in
these consolidated financial statements from November 13, 2000.
RRUN Ventures Inc. had a net asset deficiency at the acquisition date,
therefore, the 2,814,000 common shares issued on acquisition were issued at
an ascribed value of $Nil with the net asset deficiency of $12,355 charged
to deficit. RAHX, Inc. is deemed to be the purchaser for accounting
purposes. Accordingly, its net assets are included in the consolidated
balance sheet at their previously recorded amounts.
The acquisition is summarized as follows:
Current Assets $ 11,357
Current Liabilities 23,712
------------
Net Asset Deficiency $ (12,355)
============
4. INVESTMENT
Kaph Data Engineering Inc. - 159 common shares representing
15% of the Company's issued and outstanding common share
capital $ 6,750
===========
RRUN VENTURES INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000
(Stated in U.S. Dollars)
5. STOCK OPTION PLAN
The Company has granted stock options for the purchase of up to 600,000
common shares at $0.10 per share, and up to 518,000 common shares at $0.25
per share. All expiring on December 1, 2003.
6. RELATED PARTY TRANSACTIONS
a) During the period, the Company issued 4,200,000 at a value of $4,200 to
founding shareholders, and to a company controlled by certain founding
shareholders for consulting services.
b) Loans and advances payable are due to related parties, are interest
free, and have no specific terms of repayment.
UNITED MANAGEMENT INC.
(A Development Stage Company)
INTRODUCTION TO PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS
AS AT MARCH 31, 2001, AND FOR THE YEAR ENDED JUNE 30, 2000
AND FOR THE PERIOD FROM JULY 1, 2000 TO MARCH 31, 2001
(Stated in U.S. Dollars)
The following unaudited pro-forma consolidated balance sheet, pro-forma
consolidated statements of operations and explanatory notes give effect to the
acquisition of RRUN Ventures Inc. by United Management Inc. Since the
transaction resulted in the former shareholders of RRUN Ventures Inc. owning the
majority of the issued shares of United Management Inc., the transaction, which
is referred to as a "reverse take-over", has been treated for accounting
purposes as an acquisition by RRUN Ventures Inc. of the net assets and
liabilities of United Management Inc.
The pro-forma consolidated balance sheet, pro-forma consolidated statements of
operations and explanatory notes are based on the estimates and assumptions set
forth in the explanatory notes. This pro-forma consolidated balance sheet and
the pro-forma consolidated statements of operations have been prepared utilizing
the historical financial statements of United Management Inc. and RRUN Ventures
Inc. and should be read in conjunction with the historical financial statements
and notes thereto included elsewhere in this filing.
The pro-forma consolidated statements of operations have been prepared as if the
acquisition had been consummated on July 1, 1999 under the purchase method of
accounting and carried through to March 31, 2001. The pro-forma consolidated
balance sheet has been prepared as if the acquisition was consummated on March
31, 2001.
This pro-forma consolidated financial data is provided for comparative purposes
only, and does not purport to be indicative of the actual financial position or
results of operations had the acquisition occurred at the beginning of the
fiscal period presented, nor are they necessarily indicative of the results of
future operations.
UNITED MANAGEMENT INC.
(A Development Stage Company)
PRO-FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 2001
(Stated in U.S. Dollars)
------------------------------------------------------------------------------------------------------------
UNITED RRUN
MANAGEMENT VENTURES
INC. INC. ADJUSTMENTS PRO-FORMA
------------------------------------------------------------------------------------------------------------
ASSETS
Current
Cash $ 116,438 $ 3,685 $ - $ 120,123
Computer Equipment - 5,796 - 5,796
Investment - 6,750 - 6,750
-------------------------------------------------------------------------
$ 116,438 $ 16,231 $ - $ 132,669
============================================================================================================
LIABILITIES
Current
Accounts payable $ 58,690 $ 250,846 $ - $ 309,536
Loans payable 13,106 183,942 - 197,048
-------------------------------------------------------------------------
71,796 434,788 - 506,584
Common Shares Subject To
Reconfirmation 115,368 - - 115,368
-------------------------------------------------------------------------
187,164 434,788 - 621,952
-------------------------------------------------------------------------
SHAREHOLDERS'
DEFICIENCY
Share Capital 50 6,109 (b) (50) 6,109
Additional Paid In Capital 15,670 4,622 (b) (15,670) 4,622
Deficit (86,446) (429,288)(b) 18,955 (500,014)
(b) (3,235)
-------------------------------------------------------------------------
(70,726) (418,557) - (489,283)
-------------------------------------------------------------------------
$ 116,438 $ 16,231 $ - $ 132,669
============================================================================================================
F-53
UNITED MANAGEMENT INC.
(A Development Stage Company)
PRO-FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 2000
(Stated in U.S. Dollars)
------------------------------------------------------------------------------------------------------------
UNITED RRUN
MANAGEMENT VENTURES
INC. INC. ADJUSTMENTS PRO-FORMA
------------------------------------------------------------------------------------------------------------
Revenue $ - $ - $ - $ -
Expenses 16,932 - - 16,932
-------------------------------------------------------------------------
Net Loss $ 16,932 $ - $ - $ 16,932
============================================================================================================
Net Loss Per Share $ 0.03
============================================================================================================
Weighted Average Number Of
Common Shares Outstanding 593,859
============================================================================================================
F-54
UNITED MANAGEMENT INC.
(A Development Stage Company)
PRO-FORMA CONSOLIDATED STATEMENT OF OPERATIONS
PERIOD ENDED JULY 1, 2000 TO MARCH 31, 2001
(Stated in U.S. Dollars)
------------------------------------------------------------------------------------------------------------
UNITED RRUN
MANAGEMENT VENTURES
INC. INC. ADJUSTMENTS PRO-FORMA
------------------------------------------------------------------------------------------------------------
Revenue $ - $ - $ - $ -
Expenses 67,491 416,933 - 484,424
-------------------------------------------------------------------------
Net Loss $ 67,491 $ 416,933 $ - $ 484,424
============================================================================================================
Net Loss Per Share $ 0.82
============================================================================================================
Weighted Average Number Of
Common Shares Outstanding 593,859
============================================================================================================
F-55
UNITED MANAGEMENT INC.
(A Development Stage Company)
NOTES AND ASSUMPTIONS TO THE UNAUDITED CONSOLIDATED PRO-FORMA
BALANCE SHEET AND PRO-FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2000
AND FOR THE PERIOD FROM JULY 1, 2000 T0 MARCH 31, 2001
(Stated in U.S. Dollars)
1. ORGANIZATION AND BASIS OF PRESENTATION
The unaudited pro-forma consolidated balance sheet and consolidated
statements of operations have been prepared based on historical financial
information, using U.S. generally accepted accounting principles of United
Management Inc. for the year ended June 30, 2000, and for the nine months
ended March 31, 2001, and of RRUN Ventures Inc. for the period from
inception on October 12, 2000 to March 31, 2001 considering the effects of
the reverse take-over transaction as if the transaction was completed
effective July 1, 1999 in the case of the pro-forma consolidated statements
of operations, and effective March 31, 2001 in the case of the pro-forma
consolidated balance sheet.
2. ASSUMPTION
The number of common shares used in the calculation of the pro-forma net
loss per share data is based on the weighted average number of common
shares outstanding during the period adjusted to give effect to shares
assumed to be issued, had the transaction referred to above been
consummated July 1, 1999.
3. PRO-FORMA ADJUSTMENT
Record the reverse take-over transaction
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