UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest reported) August 7, 2002
iRV INC.
(Exact name of registrant as specified in its chapter)
Nevada 0-19949 84-1153522
(State or other jurisdiction (Commission (IRS Employer
of incorporation File Number) Identification No.)
1000-885 Dunsmuir Street, Vancouver, British Columbia V6C 1N5
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (604) 689-8770
(Former name or former address, if changed since last report)
ITEM 4: CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANTS
-------------------------------------------------------
The Registrant hereby amends Item 4 of the 8-K filed on August 1, 2002 to read
as follows:
Effective July 19, 2002, the Company's Board of Directors approved a change in
the Company's independent accountant. The independent account who was dismissed
and had been previously engaged as the principal accountant to audit the
Company's financial statements was Gerald R. Hendricks & Co., P.C.
("Hendricks"). Hendricks' reports covered each of the years ended March 31,
2000, through to March 31, 2002. The financial statements of the Company for the
periods reported on by Hendricks did not contain any adverse opinion or
disclaimer of opinion, or were qualified or modified as to uncertainty, audit
scope, or accounting principles, except that the reports of Hendricks contained
a going concern emphasis paragraph. In connection with the audits of the
Company's financial statements for each of the fiscal years ended March 31,
2000, through to March 31, 2002, and in connection with the subsequent interim
period up to the date of dismissal there were no disagreements with Hendricks on
any matters of accounting principles or practices, financial statement
disclosure, or auditing scope and procedures which, if not resolved to the
satisfaction of Hendricks, would have caused Hendricks to make reference to the
matter in its report. Hendricks has not reported on financial statements for any
subsequent periods after March 31, 2002.
The Company has retained the accounting firm of Moore Stephens Ellis Foster
Ltd., Chartered Accountants ("Ellis Foster") to serve as the Company's
independent accountant to audit the Company's financial statements. Prior to its
engagement as the Company's independent accountant, Ellis Foster had not been
consulted by the Company either with respect to the application of accounting
principles to a specific transaction or the type of audit opinion that might be
rendered on the Company's financial statements or on any matter that was the
subject of any prior disagreement between the Company and its previous
certifying accountant. The engagement of Ellis Foster was effective on July 19,
2002.
In connection with the filing of this Form 8-K, Hendricks was provided with a
copy of this disclosure and was requested by the Company to furnish to the
Company a letter addressed to the SEC stating whether Hendricks agrees with the
above statements. A copy of Hendricks' letter to the SEC will be filed with the
SEC within two business days after its receipt by the Company.
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
------------------------------------------
The Registrant hereby amends Item 7 of the 8-K filed on August 1, 2002 to read
as follows:
(a) Audited Financial Statements
Pursuant to Item 7(a)(4), the Registrant files herewith the following audited
financial statements of the acquired business:
Report of Independent Certified Public Accountants
Scarab Systems, Inc. Consolidated Balance Sheet as of March 31, 2002
Scarab Systems, Inc. Consolidated Statement of Operations for the period October
8, 2001 (inception) to March 31, 2002
Scarab Systems, Inc. Consolidated Statement of Stockholders' Equity for the year
ended March 31, 2002
Scarab Systems, Inc. Consolidated Statement of Cash Flows for the period October
8, 2001 (inception) through March 31, 2002
Scarab Systems, Inc. Notes to Consolidated Financial Statements
(b) Pro Forma Financial Information
Pursuant to Item 7(b) and Item 7(a)(4), the Registrant files herewith the
following unaudited pro forma consolidated financial information:
Accountant's Compilation Report
iRV Inc. and Subsidiaries Pro-Forma Consolidated Balance Sheet as of March 31,
2002
iRV Inc. and Subsidiaries Pro-Forma Consolidated Statement of Stockholders'
Equity for the period from October 8, 2001 (inception) to March 31, 2002
Notes to Pro-Forma Consolidated Financial Statements
(c) Exhibits
Item Title
---- -----
Ex-2 Agreement and Plan of Reorganization by and between iRV Inc, Scarab
Systems, Inc. and certain shareholders of Scarab Systems Inc. dated
March 25, 2002.
Ex-16 Letter of Gerald R. Hendricks & Company, P.C. former accountants to the
Company.
SIGNATURE
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.
IRV, INC.
Date: August 7, 2002 By: /s/ Thomas E. Mills
-------------- --------------------
Thomas E. Mills,
President & CEO
SCARAB SYSTEMS, INC.
(A development stage enterprise)
Financial Statements
(EXPRESSED IN U.S. DOLLARS)
March 31, 2002
INDEX
-----
Report of Independent Accountants
Balance Sheet
Statement of Stockholders' Equity
Statement of Operations
Statement of Cash Flows
Notes to Financial Statements
MOORE STEPHENS ELLIS FOSTER LTD.
F-1
MOORE STEPHENS ELLIS FOSTER LTD.
CHARTERED ACCOUNTANTS
1650 West 1st Avenue
Vancouver, BC Canada V6J 1G1
Telephone: (604) 734-1112 Facsimile: (604) 714-5916
E-Mail: generaldelivery@ellisfoster.com
Website: www.ellisfoster.com
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
SCARAB SYSTEMS, INC.
(A development stage enterprise)
We have audited the balance sheet of Scarab Systems, Inc. ("the Company") (a
development stage enterprise) as at March 31, 2002, the related statement of
stockholders' equity for the period from October 8, 2001 (inception) to March
31, 2002 and the statement of operations and cash flows from October 8, 2001
(inception) to March 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 audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform 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 audits provide a reasonable basis
for our opinion.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at March 31, 2002 and the
results of its operations and cash flows for the period from October 8, 2001
(inception) to March 31, 2002 in conformity with generally accepted accounting
principles in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has not generated any revenue from operations
that raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Vancouver, Canada "MOORE STEPHENS ELLIS FOSTER LTD."
April 23, 2002 Chartered Accountants
F-2
--------------------------------------------------------------------------------
MS AN INDEPENDENTLY OWNED AND OPERATED MEMBER OF MOORE STEPHENS NORTH AMERICA,
INC. MEMBERS IN PRINCIPAL CITIES THROUGHOUT NORTH AMERICA.
MOORE STEPHENS NORTH AMERICA, INC. IS A MEMBER OF MOORE STEPHENS INTERNATIONAL
LIMITED, MEMBERS IN PRINCIPAL CITIES THROUGHOUT THE WORLD.
SCARAB SYSTEMS, INC.
(A development stage enterprise)
Balance Sheet
March 31, 2002
(EXPRESSED IN U.S. DOLLARS)
--------------------------------------------------------------------------------
2002
--------------------------------------------------------------------------------
ASSETS
CURRENT
Cash and cash equivalents $ 14,927
Prepaid expenses and deposits 8,515
--------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 23,442
SMART-E-CARD DISTRIBUTION RIGHTS (Note 3) 200
LOAN RECEIVABLE (Note 4) 62,684
FIXED ASSETS, net of accumulated depreciation of $329 1,865
--------------------------------------------------------------------------------
TOTAL ASSETS $ 88,191
================================================================================
CONTINUED OPERATIONS (Note 1)
STOCKHOLDERS' EQUITY
SHARE CAPITAL
Authorized:
50,000,000 common shares with a par value of
$0.001 per share
Issued and outstanding:
8,130,000 common shares $ 8,130
ADDITIONAL PAID IN CAPITAL 531,435
SUBSCRIPTIONS RECEIVABLE (Note 5) (338,940)
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE (112,434)
--------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY $ 88,191
================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
MOORE STEPHENS ELLIS FOSTER LTD.
F-3
SCARAB SYSTEMS, INC.
(A development stage enterprise)
Statement of Stockholders' Equity
For the period from October 8, 2001 (inception) to March 31, 2002
(EXPRESSED IN US DOLLARS)
------------------------------------------------------------------------------------------------------------------------------------
Deficit
accumulated Total
Common stock Additional during Stock-
---------------------- paid-in Subscription development holders'
Shares Amount capital receivable stage equity
------------------------------------------------------------------------------------------------------------------------------------
Stock issued for cash
at $0.001 per share in October, 2001 5,425,000 $ 5,425 $ -- $ -- $ -- $ 5,425
Stock issued for intangible asset acquisition at
$0.001 per share in October, 2001 (see Note 3) 200,000 200 -- -- -- 200
Issued 1,440,000 common stock
at $0.001 per share in October, 2001
(proceeds not received, see Note 5) 1,440,000 1,440 -- (1,440) -- --
Stock issued at $0.50 per share in
November, 2001 (proceeds not received,
see Note 5) 675,000 675 336,825 (337,500) -- --
Stock issued for cash at $0.50 per share
in January, 2002 390,000 390 194,610 -- -- 195,000
Net (loss) for the period -- -- -- -- (112,434) (112,434)
------------------------------------------------------------------------------------------------------------------------------------
BALANCE, March 31, 2002 8,130,000 $ 8,130 $ 531,435 $(338,940) $(112,434) $ 88,191
====================================================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
MOORE STEPHENS ELLIS FOSTER LTD.
F-4
SCARAB SYSTEMS, INC.
(A development stage enterprise)
Statement of Operations
(EXPRESSED IN U.S. DOLLARS)
-------------------------------------------------------------------------------
October 8
2001 (inception)
to
March 31
2002
-------------------------------------------------------------------------------
GENERAL AND ADMINISTRATIVE EXPENSES
Consulting $ 61,092
Legal and accounting 20,373
Office and Miscellaneous 9,366
Rent 13,898
Travel 7,705
-------------------------------------------------------------------------------
NET (LOSS) FOR THE PERIOD $ (112,434)
===============================================================================
(LOSS) PER SHARE, basic and diluted $ (0.02)
===============================================================================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 7,144,195
===============================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
MOORE STEPHENS ELLIS FOSTER LTD.
F-5
SCARAB SYSTEMS, INC.
(A development stage enterprise)
Statement of Cash Flows
(EXPRESSED IN U.S. DOLLARS)
--------------------------------------------------------------------------------
October 8
2001 (inception)
to
March 31
2002
--------------------------------------------------------------------------------
CASH FLOWS (USED IN) OPERATING ACTIVITIES
Net (loss) for the period $ (112,434
Adjustment to reconcile net loss to
net cash used in operating activities:
- amortization 330
Changes in non-cash working capital items:
- prepaid expenses and deposits (8,515)
--------------------------------------------------------------------------------
(120,619)
--------------------------------------------------------------------------------
CASH FLOWS USED IN INVESTING ACTIVITIES
Loan to Healthnet (Note 4) (62,684)
Acquisition of fixed assets (2,195)
--------------------------------------------------------------------------------
(64,879)
--------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 200,425
--------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, end of period $ 14,927
================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
MOORE STEPHENS ELLIS FOSTER LTD.
F-6
SCARAB SYSTEMS, INC.
(A development stage enterprise)
Notes to Financial Statements
March 31, 2002
(EXPRESSED IN U.S. DOLLARS)
--------------------------------------------------------------------------------
1. INCORPORATION AND CONTINUANCE OF OPERATIONS
The Company was formed on October 8, 2001 under the laws of the State
of Nevada. The Company, a development stage enterprise, is in the
business of providing a comprehensive range of services to the
e-commerce sector. The Company is presently engaged in the development
and distribution of card-based alternative payment systems.
These financial statements have been prepared in accordance with
generally accepted accounting principles applicable to a going concern,
which contemplates the realization of assets and the satisfaction of
liabilities and commitments in the normal course of business. The
Company has not generated any revenue and requires additional funds to
maintain its operations. Management's plans in this regard are to raise
equity financing as required.
These conditions raise substantial doubt about the Company's ability to
continue as a going concern. These financial statements do not include
any adjustments that might result from this uncertainty.
The Company has not generated any operating revenues to date.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Cash and Cash Equivalents
Cash equivalents comprise certain highly liquid instruments
with a maturity of three months or less when purchased. As at
March 31, 2002, cash and cash equivalents consist of cash
only.
(b) Accounting Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of 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 estimates and assumptions.
(c) Advertising Expenses
The Company expenses advertising costs as incurred. There were
no advertising expenses incurred by the Company for the
periods ended March 31, 2002.
MOORE STEPHENS ELLIS FOSTER LTD.
F-7
SCARAB SYSTEMS, INC.
(A development stage enterprise)
Notes to Financial Statements
March 31, 2002
(EXPRESSED IN U.S. DOLLARS)
--------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) Fixed Assets
Fixed assets are recorded at cost. Depreciation is based on
the estimated useful lives of the assets and is computed using
the double declining method as follows:
Furnitures and fixtures 30%
(e) Loss Per Share
Loss per share is computed using the weighted average number
of shares outstanding during the period. The Company adopted
SFAS No. 128, "EARNINGS PER SHARE".
(f) Concentration of Credit Risk
The Company places its cash and cash equivalents with high
credit quality financial institutions. As of March 31, 2002
the Company had no balance in a bank beyond insured limits.
(g) Foreign Currency Transactions
The Company maintains its accounting records in U.S. Dollars,
as follows:
At the transaction date, each asset, liability, revenue and
expense is translated into U.S. dollars by the use of the
exchange rate in effect at that date. At the period end,
monetary assets and liabilities are remeasured by using the
exchange rate in effect at that date. The resulting foreign
exchange gains and losses are included in operations.
(h) Fair Value of Financial Instruments
The respective carrying value of cash approximated its fair
value due to its short-term nature. Management is of the
opinion that the Company is not exposed to significant
interest, credit or currency risks arising from these
financial instruments.
MOORE STEPHENS ELLIS FOSTER LTD.
F-8
SCARAB SYSTEMS, INC.
(A development stage enterprise)
Notes to Financial Statements
March 31, 2002
(EXPRESSED IN U.S. DOLLARS)
--------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(i) Income Taxes
The Company has adopted Statement of Financial Accounting
Standards (SFAS") No. 109, "ACCOUNTING FOR INCOME TAXES",
which requires the Company to recognize deferred tax
liabilities and assets for the expected future tax
consequences of events that have been recognized in the
Company's financial statements or tax returns using the
liability method. Under this method, deferred tax liabilities
and assets are determined based on the temporary differences
between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect in the years in
which the differences are expected to reverse.
(j) Comprehensive Income
The Company adopted SFAS No. 130, "REPORTING COMPREHENSIVE
INCOME", which requires inclusion of foreign currency
translation adjustments, reported separately in its Statement
of Stockholders' Equity, in other comprehensive income. The
Company had no other comprehensive income for the year ended
March 31, 2002.
(k) Stock-based Compensation
The Company adopted the disclosure-only provisions of
Statement of Financial Accounting Standards No. 123 (SFAS
123), "ACCOUNTING FOR STOCK-BASED COMPENSATION". SFAS 123
encourages, but does not require, companies to adopt a fair
value based method for determining expense related to
stock-based compensation. The Company will account for
stock-based compensation using the intrinsic value method as
prescribed under Accounting Principles Board Opinion (APB) No.
25, "ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES" and related
Interpretations.
The Company does not have a stock option plan nor granted any
stock options since inception.
MOORE STEPHENS ELLIS FOSTER LTD.
F-9
SCARAB SYSTEMS, INC.
(A development stage enterprise)
Notes to Financial Statements
March 31, 2002
(EXPRESSED IN U.S. DOLLARS)
--------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(l) New Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 141 (SFAS
141), BUSINESS COMBINATIONS. SFAS 141 applies to all business
combinations initiated after June 30, 2001. The SFAS 141
applies to all business combinations accounted for using the
purchase method for which the date of acquisition is July 1,
2001, or later. The adoption of SFAS 141 will not have an
impact on the Company's financial statements.
In June, 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 142 (SFAS
142), GOODWILL AND OTHER INTANGIBLE ASSETS. The provisions of
SFAS 142 are required to be applied starting with fiscal years
beginning after December 15, 2001 with earlier application
permitted for entities with fiscal years beginning after March
15, 2001 provided that the first interim financial statements
have not been previously issued. The Statement is required to
be applied at the beginning of the entity's fiscal year and to
be applied to all goodwill and other intangible assets
recognized in its financial statements to that date. The
adoption of SFAS 142 will not have an impact on the Company's
financial statements.
In August 2001, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 143
(SFAS 143), ASSET RETIREMENT OBLIGATIONS. SFAS 143 establishes
accounting standards for recognition and measurement of a
liability for the costs of assets retirement obligations.
Under SFAS 143, the costs of retiring an asset will be
recorded as a liability when the retirement obligation arises,
and will be amortized to expense over the life of the asset.
The adoption of SFAS 143 will not have an impact on the
Company's financial statements.
In October, 2001, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 144
(SFAS 144), ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF
LONG-LIVED ASSETS. SFAS 144 supersedes SFAS 121, ACCOUNTING
FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS
TO BE DISPOSED OF, and APB Opinion 30, REPORTING THE RESULTS
OF OPERATIONS - REPORTING THE EFFECTS OF DISPOSAL OF A SEGMENT
OF A BUSINESS, AND EXTRAORDINARY, UNUSUAL AND INFREQUENTLY
OCCURRING EVENTS AND TRANSACTIONS, for segments of a business
to be disposed of. SFAS 144 is effective for fiscal years
beginning after December 15, 2001. The adoption of SFAS 144
will not have an impact on the Company's financial statements.
MOORE STEPHENS ELLIS FOSTER LTD.
F-10
SCARAB SYSTEMS, INC.
(A development stage enterprise)
Notes to Financial Statements
March 31, 2002
(EXPRESSED IN U.S. DOLLARS)
--------------------------------------------------------------------------------
3. SMART-E-CARD DISTRIBUTION RIGHTS
In October, 2001, the Company entered into an agreement with BentleyTel
USA Inc. ("Bentley"), pursuant to which the Company was granted a
perpetual worldwide exclusive agency to Bentley's Smart-e-Cards. The
Company issued 200,000 shares of its common stock at $0.001 each for
the distribution rights.
4. LOAN RECEIVABLE
The Company lent a sum of $62,684 (CAD$100,000) to Healthnet
International, Inc. ("Healthnet"). The loan bears interest at 15% per
annum and is convertible into stocks in Healthnet at $0.50 (CAD$0.80)
per share (125,000 shares).
5. SUBSCRIPTIONS RECEIVABLE
(a) During the period, 1,440,000 common stocks were subscribed at
$0.001 per share by certain investors. As at March 31, 2002,
the total proceeds of $1,440 had not been received.
(b) During the period, 675,000 common stocks were subscribed at
$0.50 per share. The subscriptions receivable, totalling
$337,500, are secured by an option agreement to acquire all of
the issued and outstanding shares of 485017 B.C. Ltd., a
Canadian company involved in marketing and advertising
services.
6. INCOME TAXES
As at March 31, 2002, the Company has estimated tax losses carryforward
for tax purposes of $112,000. This amount may be applied against future
federal taxable income. The Company evaluates its valuation allowance
requirements on an annual basis based on projected future operations.
When circumstances change and this causes a change in management's
judgement about the realizability of deferred tax assets, the impact of
the change on the valuation allowance is generally reflected in current
income.
The tax effects of temporary differences that give rise to the
Company's deferred tax asset (liability) are as follows:
------------------------------------------------------------------
2002
------------------------------------------------------------------
Loss carry forwards $ 17,000
Valuation allowance (17,000)
------------------------------------------------------------------
$ -
==================================================================
MOORE STEPHENS ELLIS FOSTER LTD.
F-11
SCARAB SYSTEMS, INC.
(A development stage enterprise)
Notes to Financial Statements
March 31, 2002
(EXPRESSED IN U.S. DOLLARS)
--------------------------------------------------------------------------------
7. RELATED PARTY TRANSACTIONS
During the year, the Company paid consulting fees of $11,330 to the
president and a director of the Company
8. NON-CASH FINANCING ACTIVITIES
See notes 3 and 5.
MOORE STEPHENS ELLIS FOSTER LTD.
F-12
iRV, INC.
(A development stage enterprise)
Pro-Forma Consolidated Financial Statements
(EXPRESSED IN U.S. DOLLARS)
March 31, 2002
INDEX
-----
Accountant's Compilation Report
Pro-Forma Consolidated Balance Sheet
Pro-Forma Consolidated Statement of Stockholders' Equity
Notes to Pro-Forma Consolidated Financial Statements
MOORE STEPHENS ELLIS FOSTER LTD.
F-1
MOORE STEPHENS ELLIS FOSTER LTD.
CHARTERED ACCOUNTANTS
1650 West 1st Avenue
Vancouver, BC Canada V6J 1G1
Telephone: (604) 734-1112 Facsimile: (604) 714-5916
E-Mail: generaldelivery@ellisfoster.com
Website: www.ellisfoster.com
--------------------------------------------------------------------------------
ACCOUNTANT'S COMPILATION REPORT
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
IRV, INC.
(A development stage enterprise)
We have compiled the accompanying pro-forma consolidated balance sheet of iRV,
Inc. as of March 31, 2002 and the pro-forma consolidated statement of
stockholders' equity for the period from October 8, 2001 (inception) to March
31, 2002 in accordance with statements on Standards for Accounting and Review
Services issued by the American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of pro-forma consolidated
financial statements information that is the representation of management. We
have not audited or reviewed the accompanying pro-forma consolidated financial
statements and accordingly, do not express an opinion or any other form of
assurance on them.
Management has elected to omit substantially all of the disclosure required by
generally accepted accounting principles. If the omitted disclosures were
included in the pro-forma consolidated financial statement, they might influence
the user's conclusions about the Company's pro-forma consolidated financial
position. Accordingly, these pro-forma consolidated financial statements are not
designed for those who are not informed about such matters.
Vancouver, Canada "MOORE STEPHENS ELLIS FOSTER LTD."
July 26, 2002 Chartered Accountants
F-2
--------------------------------------------------------------------------------
MS AN INDEPENDENTLY OWNED AND OPERATED MEMBER OF MOORE STEPHENS NORTH AMERICA,
INC. MEMBERS IN PRINCIPAL CITIES THROUGHOUT NORTH AMERICA. MOORE STEPHENS NORTH
AMERICA, INC. IS A MEMBER OF MOORE STEPHENS INTERNATIONAL LIMITED, MEMBERS IN
PRINCIPAL CITIES THROUGHOUT THE WORLD.
iRV, INC.
(A development stage enterprise)
Pro-Forma Consolidated Balance Sheet
March 31, 2002
(Unaudited - See Accountant's Compilation Report)
(EXPRESSED IN U.S. DOLLARS)
----------------------------------------------------------------------------------------------------------------------------
Scarab Prof-forma
Systems iRV adjustments Pro-forma
Inc. Inc. (Note 3) Consolidated
----------------------------------------------------------------------------------------------------------------------------
ASSETS
CURRENT
Cash and cash equivalents $ 14,927 $ - (a) $ 40,000 $ 54,927
Prepaid expenses and deposits 8,515 - - 8,515
----------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 23,442 - 63,442
SMART-E-CARD DISTRIBUTION RIGHTS 200 -
200
LOAN RECEIVABLE 62,684 - 62,684
FIXED ASSETS 1,865 - 1,865
----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 88,191 $ - $ 40,000 $ 128,191
============================================================================================================================
LIABILITIES
CURRENT
Accounts payable $ - $ 61,000 (b) $ (61,000) $ -
Accounts payable, related parties - 26,000 (b) (26,000) -
Bank overdraft - 3,000 (b) (3,000) -
----------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES - 90,000 (90,000) -
----------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
SHARE CAPITAL 8,130 14,000 (a) 130
(c) 74,340 96,600
ADDITIONAL PAID IN CAPITAL 531,435 3,784,000 (a) 39,870
(c) (74,340)
(d) (3,798,000) 482,965
SUBSCRIPTIONS RECEIVABLE (338,940) - (338,940)
ACCUMULATED DEFICIT (112,434) (3,888,000) (b) 90,000
(d) 3,798,000 (112,434)
----------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY $ 88,191 $ - $ 40,000 $ 128,191
============================================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
MOORE STEPHENS ELLIS FOSTER LTD.
F-3
iRV, INC.
(A development stage enterprise)
Pro-forma Consolidated Statement of Stockholders' Equity
For the period from October 8, 2001 (inception) to March 31, 2002
(Unaudited - See Accountant's Compilation Report)
(EXPRESSED IN US DOLLARS)
------------------------------------------------------------------------------------------------------------------------------------
Deficit
accumulated Total
Common stock Additional during Stock-
---------------------- paid-in Subscription development holders'
Shares Amount capital receivable stage equity
------------------------------------------------------------------------------------------------------------------------------------
Stock issued for cash
at $0.001 per share in October, 2001 5,425,000 $ 5,425 $ -- $ -- $ -- $ 5,425
Stock issued for intangible asset
acquisition at $0.001 per share in
October, 2001 200,000 200 -- -- -- 200
Issued 1,440,000 common stock
at $0.001 per share in October, 2001
(proceeds not received) 1,440,000 1,440 -- (1,440) -- --
Stock issued at $0.50 per share in
November, 2001 (proceeds not received) 675,000 675 336,825 (337,500) -- --
Stock issued for cash at $0.50 per share
in January, 2002 390,000 390 194,610 -- -- 195,000
Stock issued for cash at $0.50 per share
in April, 2002 (Note 3a) 130,000 130 39,870 -- -- 40,000
Initial capitalization to effect the
acquisition (Note 3c) 74,340,000 74,340 (74,340) -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Shares issued before recapitalization
(Note 3c) 82,600,000 82,600 496,965 (338,940) -- 240,625
Recapitalization (Note 3d) 14,147,903 14,000 (14,000) -- -- --
Net (loss) for the period -- -- -- -- (112,434) (112,434)
------------------------------------------------------------------------------------------------------------------------------------
BALANCE, March 31, 2002 96,747,903 $ 96,600 $ 482,965 $ (338,940) $ (112,434) $ 128,191
====================================================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
MOORE STEPHENS ELLIS FOSTER LTD.
F-4
iRV, INC.
(A development stage enterprise)
Notes to Pro-Forma Financial Statements
March 31, 2002
(Unaudited - See Accountant's Compilation Report)
(EXPRESSED IN U.S. DOLLARS)
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1. BASIS OF PRESENTATION
(a) These pro-forma consolidated financial statements have been
prepared solely for submission to the Stock Exchange
Commission in connection with the acquisition of Scarab
Systems, Inc. ("Scarab"), a Nevada company, by iRV, Inc.
("iRV").
(b) This pro-forma information should be read in conjunction with
the financial statements and notes thereto of both Scarab and
iRV included in the Proxy Circular.
(c) These pro-forma consolidated financial statements have been
prepared in accordance with accounting principles generally
accepted in United States of America.
(d) The pro-forma consolidated financial statements have been
prepared from information derived from the audited financial
statements of Scarab and iRV as at March 31, 2002.
2. PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS ASSUMPTIONS
(a) Agreement and Plan of Reorganization
Pursuant to an Agreement and Plan of Reorganization dated
March 25, 2002, iRV agreed to issue 82,600,000 common stocks
in exchange for all of the issued and outstanding shares of
Scarab.
The proposed issuance of 82,600,000 common stocks is assumed
to have taken effect on March 31, 2002 for the purpose of
preparing the pro-forma information.
As part of the definitive agreement and plan of
reorganization, iRV will transfer all its assets and
liabilities to its subsidiaries and then spin off the
subsidiaries. As iRV will then become a non-operating shell
company without any assets or liabilities, the share exchange
transaction will result in the management of Scarab having
effective operating control of the combined company, with the
shareholders of iRV continuing only as passive investors.
Accounting principles applicable to reverse acquisition
recapitalization have been applied to record this transaction.
Under this basis of accounting, Scarab has been identified as
the acquirer. Since iRV will have no assets or liabilities
after the spin-off, the 14,147,903 shares of common stock
outstanding at the date of reorganization will be recorded at
$Nil. The reorganization plan is accounted for as a
reorganization of Scarab. It is deemed not to be the
acquisition of a business and, accordingly, no pro-forma
statement of operations is presented.
MOORE STEPHENS ELLIS FOSTER LTD.
F-5
iRV, INC.
(A development stage enterprise)
Notes to Pro-Forma Financial Statements
March 31, 2002
(Unaudited - See Accountant's Compilation Report)
(EXPRESSED IN U.S. DOLLARS)
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2. PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS ASSUMPTIONS (Continued)
(b) Stock Issuance
Subsequent to March 31, 2002, Scarab issued 20,000, 10,000 and
100,000 common stock (totaling 130,000 common stocks) for cash
at $0.50, $0.50 and $0.25 per share, respectively. The
issuance of 130,000 common stocks (totaling $40,000) is
assumed to have taken effect on March 31, 2002 for the purpose
of preparing the pro-forma information.
3. PRO-FORMA ADJUSTMENTS
(a) Issuance of 130,000 common stocks by Scarab for cash totaling
$40,000 (see Note 2b).
(b) Transfer of iRV's assets and liabilities to its subsidiaries
and spin off its subsidiaries.
(c) Initial capitalization to effect the reorganization by issuing
of 82,600,000 shares in exchange for all the issued and
outstanding common stocks of Scarab.
(d) Recapitalization of iRV's outstanding common stocks of
14,147,903 shares and elimination of iRV's accumulated deficit
to $Nil.
MOORE STEPHENS ELLIS FOSTER LTD.
F-6