SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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) January 28, 2003
----------------
BASIC ENERGY, INC.
(Exact name of registrant as specified in its charter)
Utah
(State or other jurisdiction of incorporation)
0-27849 00-1748413
(Commission File Number) (IRS Employer Identification No.)
24351 Pasto Road, Suite B, Dana Point, California 92629
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (949) 489-2400
Item 1. Change in Control of Registrant.
Item 2. Acquisition or Disposition of Assets.
On January 28, 2003, Basic Energy, Inc. (the "Registrant")
acquired Skyframes, Inc., a Texas corporation ("Skyframes") pursuant to an
Exchange Agreement (the "Agreement"), dated as of January 28, 2003.
The Registrant acquired all of the outstanding shares of Common
Stock of Skyframes, in exchange for 8,500,000 shares of the Registrant's Common
Stock. In addition, the Company issued 150,000 shares for cash received by
Skyframes at $.50 per share (all numbers give effect to a 1 for 100 reverse
stock split). As a result, there are approximately 8,734,641 shares outstanding.
Pursuant to the Agreement, the officers and directors of the
Registrant resigned and new individuals were elected to the Board of Directors,
as set forth below.
The names of the current directors and executive officers of the
Registrant and holders of more than 5% of the outstanding shares of common stock
and the number of shares held and the percentage of the total issued and
outstanding Common Stock (the only voting security) of the Registrant owned by
each of them are as follows.
Number Percentage
of Shares of Shares
Name Office Owned Owned
Chester A. Noblett, Jr.
Chairman (1) 2,500,000 28.6%
James France
President and Director 500,000 5.7%
JJ Fin
Chief Technical Officer1,200,000 13.7%
All officers
and directors
as a group
(3 persons) 4,200,000 48.1%
(1) Mr. Noblett beneficially owns these shares which are held in trust by
the law firm of Pierson & Behr, Arlington, Texas. A principal of such
firm, Gary Pierson, also owns 250,000 shares.
2
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a)(b) The required financial statements and pro forma
financial information is
attached hereto.
(c) Exhibits
2. Plan of acquisition, reorganization,
arrangement, liquidation or
succession.
2.1. Exchange Agreement dated January 28,
2003, between the
Registrant and Skyframes, Inc.
3
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 thereunto duly authorized.
Dated: February 3, 2003 BASIC ENERGY, INC.
By: /s/ Chester L. Noblett, Jr.
Chester L. Noblett, Jr.
Chairman
4
SKYFRAMES, INC.
(Formerly CyberVillage, Inc.)
[A Development Stage Company]
FINANCIAL STATEMENTS
AUGUST 31, 2002
5
SKYFRAMES, INC.
(Formerly CyberVillage, Inc.)
[A Development Stage Company]
CONTENTS
PAGE
-- Independent Auditors' Report 1
-- Balance Sheet, August 31, 2002 2
-- Statement of Operations, from inception
on May 24, 2002 through August 31, 2002 3
- Statement of Stockholders' Equity (Deficit),
from inception on May 24, 2002 through
August 31, 2002 4
-- Statement of Cash Flows, from inception
on May 24, 2002 through August 31, 2002 5
-- Notes to Financial Statements 6 - 10
6
INDEPENDENT AUDITORS' REPORT
Board of Directors SKYFRAMES, INC.
(Formerly CyberVillage, Inc.)
Dana Point, California
We have audited the accompanying balance sheet of SkyFrames, Inc. (formerly
CyberVillage, Inc.) [a development stage company] at August 31, 2002, and the
related statements of operations, stockholders' equity (deficit) and cash flows
for the period from inception on May 24, 2002 through August 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.
We conducted our audit in accordance with generally accepted auditing standards
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 audited by us present fairly, in all
material respects, the financial position of SkyFrames, Inc. (formerly
CyberVillage, Inc.) [a development stage company] as of August 31, 2002, and the
results of its operations and its cash flows for the period from inception on
May 24, 2002 through August 31, 2002, in conformity with generally accepted
accounting principles in the United States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 7 to the financial
statements, the Company was just recently formed, has current liabilities in
excess of current assets and has incurred losses since its inception. These
factors raise substantial doubt about its ability to continue as a going
concern. Management's plans in regards to these matters are also described in
Note 7. The financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
Pritchett, Siler & Hardy, P.C.
October 18, 2002
Salt Lake City, Utah
1
SKYFRAMES, INC.
(Formerly CyberVillage, Inc.)
[A Development Stage Company]
BALANCE SHEET
ASSETS
August 31,
2002
CURRENT ASSETS:
Cash $ -
Total Current Assets -
PROPERTY AND EQUIPMENT, net 67
67
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 190
Advances from a related party 3,912
Accrued payroll and payroll taxes - related party 55,526
Total Current Liabilities 59,628
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, no par value,
100,000 shares authorized,
85,000 shares issued and outstanding 51,063
Deficit accumulated during the
development stage (110,624)
Total Stockholders' Equity (Deficit) (59,561)
$ 67
The accompanying notes are an integral part of this
financial statement.
2
SKYFRAMES, INC.
(Formerly CyberVillage, Inc.)
[A Development Stage Company]
STATEMENT OF OPERATIONS
From Inception
on May 24, 2002
Through
August 31, 2002
REVENUE $ -
OPERATING EXPENSES:
General and administrative 110,624
LOSS BEFORE INCOME TAXES (110,624)
CURRENT TAX EXPENSE -
DEFERRED TAX EXPENSE -
NET LOSS $ (110,624)
LOSS PER COMMON SHARE $ (2.64)
The accompanying notes are an integral part of this
financial statement.
3
SKYFRAMES, INC.
(Formerly CyberVillage, Inc.)
[A Development Stage Company]
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM THE DATE OF INCEPTION ON MAY 24, 2002
THROUGH AUGUST 31, 2002
Deficit
Accumulated
Common Stock During the
Development
Shares Amount Stage
BALANCE, May 24, 2002 - $ - $ -
Issued 25,000 shares of common stock for payment of
organization costs of $5,000, or $.20 per share, May 2002 25,000 5,000 -
Issued 60,000 shares of common stock for computers and related equipment of $0
and for payment of related party
advances of $46,063, or $.767714 per share, August 2002 60,000 46,063 -
Net loss for the period ended August 31, 2002 - - (110,624)
BALANCE, August 31, 2002 85,000 $ 51,063 $ (110,624)
The accompanying notes are an integral part of this
financial statement.
4
SKYFRAMES, INC.
(Formerly CyberVillage, Inc.)
[A Development Stage Company]
STATEMENT OF CASH FLOWS
From Inception
on May 24, 2002
Through
August 31, 2002
Cash Flows From Operating Activities:
Net loss $ (110,624)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation 63
Non-cash expenses paid by issuing common stock 5,000
Changes in assets and liabilities:
Increase in accounts payable 190
Increase in accrued payroll and payroll taxes - related party 55,526
Net Cash (Used) by Operating Activities (49,845)
Cash Flows From Investing Activities:
Payments for property and equipment (130)
Net Cash (Used) by Investing Activities (130)
Cash Flows From Financing Activities:
Advances from a related party 49,975
Net Cash Provided by Financing Activities 49,975
Net Increase (Decrease) in Cash -
Cash at Beginning of the Year -
Cash at End of the Year $ -
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ -
Income taxes $ -
Supplemental Schedule of Noncash Investing and Financing Activities:
From inception on May 24, 2002 through August 31, 2002:
On August 3, 2002, the Company issued 60,000 shares of common stock
for computers and related equipment with a carryover basis of $0
and for payment of related party advances of $46,063.
On May 24, 2002, the Company issued 25,000 shares of common stock
for payment of organization costs of $5,000.
The accompanying notes are an integral part of this financial
statement.
5
SKYFRAMES, INC.
(Formerly CyberVillage, Inc.)
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - SkyFrames, Inc. ("the Company") was organized under the
laws of the State of Texas on May 24, 2002 as CyberVillage, Inc. On
July 25, 2002, the Company changed its name from CyberVillage, Inc. to
SkyFrames, Inc.. The Company has not yet generated any revenues from
its planned principal operations and is considered a development stage
company as defined in Statement of Financial Accounting Standards No.
7. The Company plans to provide high-speed information access using
satellites. The Company has, at the present time, not paid any
dividends and any dividends that may be paid in the future will depend
upon the financial requirements of the Company and other relevant
factors.
On August 31, 2002, the Company was acquired by Helsinki Capital
Partners, Inc. ("HCP") pursuant to an Exchange Agreement signed August
3, 2002. The agreement called for HCP to issue 8,500,000 post-split
shares of common stock to the shareholders of the Company for all
85,000 outstanding shares of the Company's common stock wherein the
Company became a wholly-owned subsidiary of HCP.
Fiscal Year - The Company's fiscal year-end is March 31st.
Cash and Cash Equivalents - The Company considers all highly liquid
debt investments purchased with a maturity of three months or less to
be cash equivalents.
Property and Equipment - Property and equipment are stated at cost or
at the shareholder's carryover basis. Expenditures for repairs and
maintenance are charged to operating expense as incurred. Expenditures
for additions and betterments that extend the useful lives of property
and equipment are capitalized, upon being placed in service. When
assets are sold or otherwise disposed of, the cost and related
accumulated depreciation or amortization is removed from the accounts
and any resulting gain or loss is included in operations. Depreciation
is computed using the straight-line method over the estimated useful
lives of the assets of three months to three years.
Website Costs - The Company has adopted the provisions of Emerging
Issues Task Force 00-2, "Accounting for Web Site Development Costs."
Costs incurred in the planning stage of a website are expensed as
research and development while costs incurred in the development stage
are capitalized and amortized over the life of the asset, estimated to
be three months. As of August 31, 2002, the Company has capitalized a
total of $130 of website costs. The Company did not incur any planning
costs and did not record any research and development costs for the
period from inception on May 24, 2002 through August 31, 2002.
Organization Costs - Organization costs, which reflect amounts expended
to organize the Company, were expensed as incurred.
Loss Per Share - The computation of loss per share is based on the
weighted average number of shares outstanding during the period
presented in accordance with Statement of Financial Accounting
Standards No. 128 [See Note 8].
6
SKYFRAMES, INC.
(Formerly CyberVillage, Inc.)
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles in the United
States of America requires management to make estimates and assumptions
that effect the reported amounts of assets and liabilities, the
disclosures of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimated by management.
Recently Enacted Accounting Standards - Statement of Financial
Accounting Standards ("SFAS") No.
141, "Business Combinations", SFAS No. 142, "Goodwill and Other
Intangible Assets", SFAS No. 143,
"Accounting for Asset Retirement Obligations", SFAS No. 144,
"Accounting for the Impairment or Disposal
of Long-Lived Assets", SFAS No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment
of FASB Statement No. 13, and Technical Corrections", SFAS No. 146,
"Accounting for Costs Associated
with Exit or Disposal Activities", and SFAS No. 147, "Acquisitions
of Certain Financial Institutions - an
Amendment of FASB Statements No. 72 and 144 and FASB Interpretation
No. 9", were recently issued.
SFAS No. 141, 142, 143, 144, 145, 146 and 147 have no current
applicability to the Company or their effect
on the financial statements would not have been significant.
NOTE 2 - EXCHANGE AGREEMENT
On August 31, 2002, the Company was acquired by Helsinki Capital
Partners, Inc. ("HCP") pursuant to an Exchange Agreement signed August
3, 2002. The agreement called for HCP to issue 8,500,000 post-split
shares of common stock to the shareholders of the Company for all
85,000 outstanding shares of the Company's common stock. The agreement
also called for HCP to effect a 1.5-for-1 forward stock split. On
August 31, 2002, as part of the agreement, HCP converted its two
convertible notes payable into 1,733,250 post-split shares of common
stock and $351 that HCP owed on the two convertible notes payable was
forgiven. No transactions have been recorded in the accompanying
financial statements as a result of the Exchange Agreement, thus, the
accompanying financial statements reflect the condition of the Company
just prior to acquisition.
NOTE 3 - PROPERTY AND EQUIPMENT
The following is a summary of property and equipment at cost or
carryover basis, less accumulated depreciation as of:
August 31,
2002
Computers and related equipment $ -
Website 130
Less: accumulated depreciation (63)
$ 67
Depreciation expense for the period from inception on May 24, 2002
through August 31, 2002 amounted to $63.
7
SKYFRAMES, INC.
(Formerly CyberVillage, Inc.)
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - CAPITAL STOCK
Common Stock - The Company has authorized 100,000 shares of common
stock with no par value. The Company's Articles of Incorporation
require the prior written consent of the Company's Board of Directors
before a shareholder can sell or transfer shares of stock that would
result in an increase to the total number of shareholders. The
Company's Articles of Incorporation require at least 10 days notice to
the Company's Board of Directors before a shareholder may sell,
transfer, pledge, mortgage, hypothecate or otherwise encumber shares of
stock.
In May 2002, in connection with its organization, the Company issued
25,000 shares of its previously authorized but unissued common stock.
The shares were issued for payment of organization costs of $5,000 (or
$.20 per share).
In August 2002, the Company issued 60,000 shares of its previously
authorized but unissued common stock. The shares were issued for
computers and related equipment recorded at the carryover basis of $0
and for payment of related party advances of $46,063 (or $.767714 per
share). This issuance resulted in a change in control of the Company.
NOTE 5 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes".
SFAS No. 109 requires the Company to provide a net deferred tax
asset/liability equal to the expected future tax benefit/expense of
temporary reporting differences between book and tax accounting methods
and any available operating loss or tax credit carryforwards. At August
31, 2002, the Company has available unused operating loss carryforwards
of approximately $46,300, which may be applied against future taxable
income and which expire in various years through 2023.
The amount of and ultimate realization of the benefits from the
operating loss carryforwards for income tax purposes is dependent, in
part, upon the tax laws in effect, the future earnings of the Company
and other future events, the effects of which cannot be determined.
Because of the uncertainty surrounding the realization of the loss
carryforwards, the Company has established a valuation allowance equal
to the tax effect of the loss carryforwards and, therefore, no deferred
tax asset has been recognized for the loss carryforwards. The net
deferred tax assets are approximately $6,900 as of August 31, 2002 with
an offsetting valuation allowance of the same amount resulting in a
change in the valuation allowance of approximately $6,900 during the
period from inception on May 24, 2002 through August 31, 2002.
NOTE 6 - RELATED PARTY TRANSACTIONS
Advances - As of August 31, 2002, officers/shareholders of the Company
were owed $3,912 for expenses they paid on behalf of the Company. The
advances are due on demand and bear no interest.
8
SKYFRAMES, INC.
(Formerly CyberVillage, Inc.)
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - RELATED PARTY TRANSACTIONS [Continued]
Management Compensation - During the period from inception on May 24,
2002 through August 31, 2002, the Company paid $48,970 in compensation
to the Company's Chief Technical and Operations Officer who is a
shareholder of the Company. The Company also accrued $3,780 of
additional compensation for the officer/shareholder.
During the period from inception on May 24, 2002 through August 31,
2002, the Company accrued $48,000 of compensation for an
officer/director/shareholder of the Company.
Office Space - The Company has not had a need to rent office space. An
officer/shareholder of the Company is allowing the Company to use his
home as a mailing address, as needed, at no expense to the Company.
NOTE 7 - GOING CONCERN
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles in the United States of
America, which contemplate continuation of the Company as a going
concern. However, the Company was just recently formed, has current
liabilities in excess of current assets and has incurred losses since
its inception. These factors raise substantial doubt about the ability
of the Company to continue as a going concern. In this regard,
management is proposing to raise any necessary additional funds not
provided by operations through loans or through sales of its common
stock or through a possible business combination with another company.
There is no assurance that the Company will be successful in raising
this additional capital or in establishing profitable operations. The
financial statements do not include any adjustments that might result
from the outcome of these uncertainties.
NOTE 8 - LOSS PER SHARE
The following data shows the amounts used in computing loss per share:
From Inception
on May 24, 2002
Through
August 31, 2002
Loss available to common shareholders
(numerator) $ (110,624)
Weighted average number of common shares
outstanding used in loss per share during the
period (denominator) 41,970
Dilutive loss per share was not presented, as the Company had no common
equivalent shares for all periods presented that would effect the
computation of diluted loss per share.
9
SKYFRAMES, INC.
(Formerly CyberVillage, Inc.)
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 9 - SUBSEQUENT EVENTS
Office Lease - On September 30, 2002, the Company signed an office
lease to lease office space in San Juan Capistrano, California for one
year beginning October 1, 2002. The Company paid a $700 deposit and
will pay $600 per month. The lease is renewable for one additional
year.
Office Lease - On October 2, 2002, the Company signed an office lease
to lease office space in Oceanside, California for two years beginning
October 1, 2002. The Company paid a $1,114 deposit and will pay $1,142
per month during the first year and $1,189 during the second year plus
the Company's share (.99%) of the building's expenses. The lease is
guaranteed by the Company's Chief Technical and Operations Officer.
Satellite Service Agreement / Purchase Option - On October 10, 2002,
the Company signed a Satellite Service Agreement with Clear Channel
Satellite Services ("CCSS") to purchase preemptible satellite bandwidth
and power from CCSS on a month-to-month basis. The Company paid a
$6,000 deposit and will pay 75% of gross revenues derived from use of
the CCSS satellite with a minimum amount of $5,820 per month. The
agreement also grants CCSS the right to acquire the Company during the
18-24th months of the agreement at the greater of gross annual revenues
or fair market value. The agreement grants the Company first right of
refusal to convert to a non-preemptible status. The agreement also sets
minimum prices the Company can charge for its services and calls for a
3% increase in monthly fees at each anniversary of the agreement.
10
PRO FORMA FINANCIAL STATEMENTS
(unaudited)
BALANCE SHEET
Basic Energy Skyframes
Historical Historical Proforma
09/30/02 08/31/02 Adjustments Total
Assets
Cash $ 894 $ -- $ -- $ 894
Property and Equipment -- 67 -- 67
Total Assets $ 894 $ 67 $ -- $ 961
Liabilities
Accounts Payable $ 36,279 $ 190 $ (28,000) $ 8,469
Related Party Payables 14,688 59,438 (14,688) 59,438
Total Liabilities $ 59,967 $ 59,628 $ (42,688) $ 67,907
Stockholders Equity (Deficit)
Commmon Stock $ 813,122 $ 51,063 $ 9,279 $ 873,464
Paid in Capital 42,741 -- (872,527) (829,786)
Accumulated Deficit (905,936) (110,624) (905,936) (110,624)
Total $ (50,073) $ (59,561) $ 42,688 $ (66,946)
Total Liabilities and Stockholder's Equity $ 894 $ 67 $ 0 $ 961
11
PRO FORMA FINANCIAL STATEMENTS
(unaudited)
INCOME STATEMENT
Basic Energy Skyframes
Historical Historical Proforma
09/30/02 08/31/02 Adjustments Total
Revenue $ -- $-- $-- $ --
General and Administrative 31,381 110,624 (28,000) 114,005
Net Loss $ 31,381 $ 110,624 $ (28,000) $ 114,005
Net Loss Per Share $ (.00) $ (2.64) $ 2.63 $ (.01)
Weighted Average Oustanding Shares 8,131,226 85,000 518,415 8,734,641
12
NOTES TO PROFORMA FINANCIALS
1. The transaction has been accounted for as a reverse acquisition,
whereby Skyframes is deemed the accounting acquiror. The accumulated
deficit of Basic Energy is eliminated with the exception of the
approximately $88,279 in liabilities net assumed by the former control
shareholders of Basic Energy.
2. Stockholders equity adjustment. The following adjustments were made
in stockholder's equity.
- Common Stock -
Basic Energy reverse split $ (804,658)
Issuance of shares in acquisition, at par $.10 865,000
Less $51,063 par value of Skyframes (51,063)
Total Adjustment $ 9,279
- Paid in Capital -
Deemed issuance of 8,650,000 shares at less than par $ (865,000)
Deemed issuance for net liabilities assumed (7,327)
Total Adjustment $ (872,327)
13