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Codestream Holdings Inc – ‘8-K/A’ for 6/8/00

On: Tuesday, 8/22/00, at 4:38pm ET · For: 6/8/00 · Accession #: 912057-0-38702 · File #: 33-25779

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 8/22/00  Codestream Holdings Inc           8-K/A:7     6/08/00    2:51K                                    Merrill Corp/FA

Amendment to Current Report — Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K/A       Amendment to Current Report                           28    112K 
 2: EX-27       Financial Data Schedule (Pre-XBRL)                     2      8K

8-K/A — Amendment to Current Report
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Financial Statements and Exhibits
1	1st Page - Filing Submission
2	Item 7. Financial Statements and Exhibits

8-K/A 1st Page of 28 TOC ↑Top Previous Next ↓Bottom Just 1st
 
UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 event reported)  
June 8, 2000  

       CODESTREAM HOLDINGS, INC.
        --------------------------
(Exact name of Company as specified in its charter)   

33-25779                                 84-1100609         
-------------------------------                   ----------                  
(Commission File Number)                    (I.R.S. Employer            
                                   Identification No.)

 1771 International Parkway, Suite 121
Richardson, Texas 75081 
 -----------------------------------------------
(Address of principal executive offices)
(Zip Code)

(972) 479-0534
----------------------------------------------------
(Company's telephone number, including area code)   

   Bud Financial Group, Inc.
----------------------------------------------------
Former name, if changed since last report)

*  *  *  *  *  *  

8-K/A 2nd Page of 28 TOC 1st Previous Next ↓Bottom Just 2nd
The Registrant has previously filed its Current Report on Form 8-K, dated       
June 23, 2000, without certain financial information required by Item 7 of      
such Form 8-K. The Registrant hereby amends the Current Report on Form 8-K to   
file such financial information. Item 7, subparagraph (a) of the Report dated   
June 23, 2000, is hereby amended to read as follows:                            

ITEM 7.       FINANCIAL STATEMENTS AND EXHIBITS.                                

(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED:    
           (1)  Audited Financial Statements for the periods ended
December 31, 1998 and 1999.       

(c) EXHIBIT                                         
(27) Financial Data Schedule                

8-K/A 3rd Page of 28 TOC 1st Previous Next ↓Bottom Just 3rd
             S I G N A T U R E S

Pursuant to the requirements of the Securities Exchange Act of 1934, the        
Company has duly caused this report to be signed on its behalf by the           
undersigned thereunto duly authorized.                                          

         CODESTREAM HOLDINGS, INC.
         (Company)

Date: August 22, 2000               /s/ D. Gordon Werner                        
         ---------------------------
            D. Gordon Werner
            President, Chief Executive Officer and
           Chief Financial Officer
           (Principal Financial Officer)

2 

8-K/A 4th Page of 28 TOC 1st Previous Next ↓Bottom Just 4th
 CODESTREAM TECHNOLOGIES CORPORATION
 (A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
 FOR THE YEARS ENDED
DECEMBER 31, 1999 AND 1998 AND
FOR THE PERIOD FROM JANUARY 17, 1996 (INCEPTION) TO 
 DECEMBER 31, 1999

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                                             CODESTREAM TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                                        CONTENTS
                                                               DECEMBER 31, 1999

--------------------------------------------------------------------------------

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                                                    Page  
                                                          
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS    1   

FINANCIAL STATEMENTS                                      

     Balance Sheet                                  2 - 3 

     Statements of Operations                         4   

     Statements of Shareholders' Equity (Deficit)   5 - 6 

     Statements of Cash Flows                       7 - 8 

     Notes to Financial Statements                  9 - 23


8-K/A 6th Page of 28 TOC 1st Previous Next ↓Bottom Just 6th
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS  

To the Board of Directors and Shareholders of                                   
CodeStream Technologies Corporation                                             
(a development stage company)                                                   

We have audited the accompanying balance sheet of CodeStream Technologies       
Corporation (a development stage company) as of December 31, 1999, and the      
related statements of operations, shareholders' equity (deficit), and cash      
flows for each of the two years in the period ended December 31, 1999, and for  
the period from January 17, 1996 (inception) to December 31, 1999. 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 generally accepted auditing          
standards. 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 audits provide a reasonable basis   
for our opinion.                                                                

In our opinion, the financial statements referred to above present fairly, in   
all material respects, the financial position of CodeStream Technologies        
Corporation as of December 31, 1999, and the results of its operations and its  
cash flows for each of the two years in the period ended December 31, 1999,     
and for the period from January 17, 1996 (inception) to December 31, 1999 in    
conformity with generally accepted accounting principles.                       

The accompanying financial statements have been prepared assuming that the      
Company will continue as a going concern. As discussed in Note 2 to the         
financial statements, the Company incurred a net loss of $5,274,250 during the  
year ended December 31, 1999, it had negative cash flows from operations of     
$4,113,711 and it has incurred net losses of $14,439,869 since inception.       
Further, the Company is in the development stage at December 31, 1999. These    
factors, among others, as discussed in Note 2 to the financial statements,      
raise substantial doubt about the Company's ability to continue as a going      
concern. Management's plans in regard to these matters are also described in    
Note 2. The financial statements do not include any adjustments that might      
result from the outcome of this uncertainty.                                    

SINGER LEWAK GREENBAUM & GOLDSTEIN LLP                                          

Los Angeles, California                                                         
August 17, 2000                                                                 

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                                             CODESTREAM TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                                   BALANCE SHEET
                                                               DECEMBER 31, 1999

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                                ASSETS                
                                                      
CURRENT ASSETS                                        
     Cash                               $      188,729
                                        --------------

         Total current assets                  188,729

PROPERTY AND EQUIPMENT, net                    650,522

OTHER ASSETS                                          
     Deposits                                   13,066
                                        --------------

                  TOTAL ASSETS          $      852,317
                                        ==============


      The accompanying notes are an integral part of these financial statements.
           2

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                                             CODESTREAM TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                                   BALANCE SHEET
                                                               DECEMBER 31, 1999

--------------------------------------------------------------------------------

                                                        [Enlarge/Download Table]

                                       LIABILITIES AND SHAREHOLDERS' DEFICIT                                
                                                                                                            
CURRENT LIABILITIES                                                                                         
     Current portion of capital lease obligations                                              $    133,088 
     Notes payable                                                                                1,091,121 
     Accounts payable                                                                               918,453 
     Accrued expenses                                                                                75,140 
                                                                                               ------------ 

         Total current liabilities                                                                2,217,802 

CAPITAL LEASE OBLIGATIONS, net of current portion                                                    25,380 
                                                                                               ------------ 

              Total liabilities                                                                   2,243,182 
                                                                                               ------------ 

COMMITMENTS                                                                                                 

SHAREHOLDERS' DEFICIT                                                                                       
     Preferred stock, Series A, $0.001 par value 23,156 shares authorized 23,156                            
         shares issued and outstanding $133.33 per share liquidation preference                             
         dividends of $238,333 in arrears                                                                23 
     Preferred stock, Series B, $0.001 par value                                                            
         11,536 shares authorized 11,536 shares issued and outstanding $294.74                              
         per share liquidation preference                                                                   
         dividends of $254,012 in arrears                                                                12 
     Preferred stock, Series C, $0.001 par value                                                            
         7,514 shares authorized 7,514 shares issued and outstanding $745.30 per                            
         share liquidation preference                                                                       
         dividends of $336,000 in arrears                                                                 8 
     Common stock, $0.001 par value                                                                         
         15,730,656 shares authorized                                                                       
         7,424,266 shares issued and outstanding                                                      7,424 
     Paid-in capital                                                                             13,041,537 
     Accumulated deficit                                                                        (14,439,869)
                                                                                               ------------ 

              Total shareholders' deficit                                                        (1,390,865)
                                                                                               ------------ 
                  TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT                                  $    852,317 
                                                                                               ============ 

                    The accompanying notes are an integral part of these financial statements.              

                                           3

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                                             CODESTREAM TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                        STATEMENTS OF OPERATIONS
                              FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 AND
           FOR THE PERIOD FROM JANUARY 17, 1996 (INCEPTION) TO DECEMBER 31, 1999

--------------------------------------------------------------------------------

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                                                                                                     For the   
                                                                                                   Period from 
                                                                                                   January 17, 
                                                                                                      1996     
                                                                      For the Years Ended       (Inception) to 
                                                                            December 31,          December 31, 
                                                                 ----------------------------                  
                                                                      1999           1998             1999     
                                                                 ------------    ------------   -------------- 
                                                                                                               
RESEARCH AND DEVELOPMENT EXPENSES                                $    676,588    $  2,627,448    $   3,413,136 

GENERAL AND ADMINISTRATIVE EXPENSES                                 4,591,580       3,277,978       11,279,570 
                                                                 ------------    ------------    ------------- 

LOSS FROM OPERATIONS                                               (5,268,168)     (5,905,426)     (14,692,706)
                                                                 ------------    ------------    ------------- 

OTHER INCOME (EXPENSE)                                                                                         
   Interest income                                                     48,094         128,679          334,036 
   Interest expense                                                   (54,176)        (26,360)         (81,199)
                                                                 ------------    ------------    ------------- 

     Total other income (expense)                                      (6,082)        102,319          252,837 
                                                                 ------------    ------------    ------------- 

NET LOSS                                                         $ (5,274,250)   $ (5,803,107)   $ (14,439,869)
                                                                 ============    ============    ============= 

BASIC AND DILUTED LOSS PER COMMON SHARE                          $      (1.09)   $      (1.15)   $       (3.87)
                                                                 ============    ============    ============= 

WEIGHTED-AVERAGE COMMON SHARES                                                                                 
   OUTSTANDING                                                      4,847,848       5,057,600        3,732,979 
                                                                 ============    ============    ============= 

                    The accompanying notes are an integral part of these financial statements.                 

                                           4

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                                                                                      CODESTREAM TECHNOLOGIES CORPORATION
                                                                                            (A DEVELOPMENT STAGE COMPANY)
                                                                             STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
                                                    For the Period from January 17, 1996 (Inception) to December 31, 1999
-------------------------------------------------------------------------------------------------------------------------
                                  Series A          Series B          Series C          Common Stock                     
                             ---------------------------------------------------------------------------     Paid-In     
                             Shares    Amount    Shares   Amount   Shares   Amount     Shares     Amount     Capital     
                             ------    ------    ------   ------   ------   ------    ---------   -------   ----------   
                                                                                                                         
BALANCE, JANUARY 17,                                                                                                     
   1996 (INCEPTION)               -   $     -         -   $    -        -  $     -            -   $     -   $        -   
INITIAL CAPITALIZATION                                                                2,194,532     2,194       (2,167)  
ISSUANCE OF SERIES A                                                                                                     
   PREFERRED STOCK FOR                                                                                                   
   CASH                      20,625        20                                                                2,749,980   
NET LOSS                                                                                                                 
                             ------    ------    ------   ------   ------   ------    ---------   -------   ----------   

BALANCE, DECEMBER 31,                                                                                                    
   1996                      20,625        20         -        -        -        -    2,194,532     2,194    2,747,813   
NET LOSS                                                                                                                 
                             ------    ------    ------   ------   ------   ------    ---------   -------   ----------   

BALANCE, DECEMBER 31,                                                                                                    
   1997                      20,625        20         -        -        -        -    2,194,532     2,194    2,747,813   
ISSUANCE OF SERIES A                                                                                                     
   PREFERRED STOCK                                                                                                       
     Upon conversion of                                                                                                  
       intercompany                                                                                                      
       payable                  656         1                                                                   87,499   
     Upon conversion of                                                                                                  
       note payable           1,875         2                                                                  249,998   
ISSUANCE OF SERIES B                                                                                                     
   PREFERRED STOCK FOR                                                                                                   
   CASH                                          11,536       12                                             3,400,146   
ISSUANCE OF SERIES C                                                                                                     
   PREFERRED STOCK FOR                                                                                                   
   CASH                                                                      7,514            8              5,599,992   
OFFERING COSTS                                                                                                (377,070)  
ISSUANCE OF COMMON                                                                                                       
   STOCK UPON                                                                                                            
   CONVERSION OF                                                                                                         
   INTERCOMPANY                                                                                                          
   PAYABLE                                                                            3,404,012     3,404      259,096   
NET LOSS                                                                                                                 
                             ------    ------    ------   ------   ------   ------    ---------   -------   ----------   

                               Accumulated                                                                               
                                 Deficit         Total                                                                   
                               -----------   -----------                                                                 
                                                                                                                         
BALANCE, JANUARY 17,                                                                                                     
   1996 (INCEPTION)            $         -   $         -                                                                 
INITIAL CAPITALIZATION                                27                                                                 
ISSUANCE OF SERIES A                                                                                                     
   PREFERRED STOCK FOR                                                                                                   
   CASH                                        2,750,000                                                                 
NET LOSS                           (54,929)      (54,929)                                                                
                               -----------   -----------                                                                 

BALANCE, DECEMBER 31,                                                                                                    
   1996                            (54,929)    2,695,098                                                                 
NET LOSS                        (3,307,583)   (3,307,583)                                                                
                               -----------   -----------                                                                 

BALANCE, DECEMBER 31,                                                                                                    
   1997                         (3,362,512)     (612,485)                                                                
ISSUANCE OF SERIES A                                                                                                     
   PREFERRED STOCK                                                                                                       
     Upon conversion of                                                                                                  
       intercompany                                                                                                      
       payable                                    87,500                                                                 
     Upon conversion of                                                                                                  
       note payable                              250,000                                                                 
ISSUANCE OF SERIES B                                                                                                     
   PREFERRED STOCK FOR                                                                                                   
   CASH                                        3,400,158                                                                 
ISSUANCE OF SERIES C                                                                                                     
   PREFERRED STOCK FOR                                                                                                   
   CASH                                        5,600,000                                                                 
OFFERING COSTS                                  (377,070)                                                                
ISSUANCE OF COMMON                                                                                                       
   STOCK UPON                                                                                                            
   CONVERSION OF                                                                                                         
   INTERCOMPANY                                                                                                          
   PAYABLE                                       262,500                                                                 
NET LOSS                        (5,803,107)   (5,803,107)                                                                
                               -----------   -----------                                                                 

The accompanying notes are an integral part of these financial statements.    

   5

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                                                                                      CODESTREAM TECHNOLOGIES CORPORATION
                                                                                            (A DEVELOPMENT STAGE COMPANY)
                                                                             STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
                                                    For the Period from January 17, 1996 (Inception) to December 31, 1999
-------------------------------------------------------------------------------------------------------------------------
                                  Series A          Series B          Series C          Common Stock                     
                             ---------------------------------------------------------------------------      Paid-In    
                             Shares    Amount    Shares   Amount   Shares   Amount     Shares     Amount      Capital    
                             ------    ------    ------   ------   ------   ------    ---------   -------   ------------ 
                                                                                                                         
BALANCE, DECEMBER 31,                                                                                                    
   1998                      23,156    $   23    11,536   $   12    7,514   $    8    5,598,544   $ 5,598   $11,967,474  
ISSUANCE OF COMMON                                                                                                       
   STOCK                                                                                                                 
     Upon conversion of                                                                                                  
       note payable                                                                     250,000       250        249,750 
     Acquisition of RDL                                                                                                  
       Photonic Integrated                                                                                               
       Chip Corporation                                                               1,575,722     1,576        679,471 
                             ------    ------    ------   ------   ------   ------    ---------   -------   ------------ 
RE-PRICING OF STOCK OPTIONS                                                                                              
NET LOSS                                                                                                                 
                             ------    ------    ------   ------   ------   ------    ---------   -------   ------------ 
BALANCE, DECEMBER 31,                                                                                                    
   1999                      23,156    $   23    11,536   $   12    7,514   $    8    7,424,266     7,424   $ 13,041,537 
                             ======    ======    ======   ======   ======   ======    =========   =======   ============ 

-----------------------------------------------------------------                                                        
                               Accumulated                                                                               
                                 Deficit         Total                                                                   
                               -----------   -----------                                                                 
                                                                                                                         
BALANCE, DECEMBER 31,                                                                                                    
   1998                      $ (9,165,619)   $ 2,807,496                                                                 
ISSUANCE OF COMMON                                                                                                       
   STOCK                                                                                                                 
     Upon conversion of                                                                                                  
       note payable                              250,000                                                                 
     Acquisition of RDL                                                                                                  
       Photonic Integrated                                                                                               
       Chip Corporation                                                                                                  
                             ------------    -----------                                                                 
RE-PRICING OF STOCK OPTIONS                      144,842                                                                 
NET LOSS                       (5,274,250)    (5,274,250)                                                                
                             ------------    -----------                                                                 

BALANCE, DECEMBER 31,                                                                                                    
   1999                      $(14,439,869)   $(1,390,865)                                                                
                             ============    ===========                                                                 

The accompanying notes are an integral part of these financial statements.    

   6

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                                             CODESTREAM TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                        STATEMENTS OF CASH FLOWS
                              FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 AND
           FOR THE PERIOD FROM JANUARY 17, 1996 (INCEPTION) TO DECEMBER 31, 1999

--------------------------------------------------------------------------------

                                                        [Enlarge/Download Table]


                                                                                                       For the      
                                                                                                     Period from    
                                                                                                     January 17,    
                                                                       For the Years Ended               1996       
                                                                           December 31,             (Inception) to  
                                                                ---------------------------------    December 31,   
                                                                      1999              1998             1999       
                                                                ----------------  ---------------  ---------------- 
                                                                                                                    
CASH FLOWS FROM OPERATING ACTIVITIES                                                                                
   Net loss                                                     $     (5,274,250) $    (5,803,107) $    (14,439,869)
   Adjustments to reconcile net loss to net cash                                                                    
     used in operating activities                                                                                   
       Depreciation and amortization of property                                                                    
         and equipment                                                   291,127          109,522           400,649 
       Compensation for re-pricing of stock options                      144,842                -           144,842 
   (Increase) decrease in                                                                                           
     Other receivables                                                    97,148          (97,148)                - 
   Increase (decrease) in                                                                                           
     Accounts payable                                                    650,179          239,781           918,453 
     Accrued expenses                                                    (22,757)         118,499            61,972 
                                                                ----------------  ---------------  ---------------- 

Net cash used in operating activities                                 (4,113,711)      (5,432,453)      (12,913,953)
                                                                ----------------  ---------------  ---------------- 

CASH FLOWS FROM INVESTING ACTIVITIES                                                                                
   Purchases of property and equipment                                  (135,932)        (579,868)         (715,800)
   Acquisition of RDL Photonic Integrated Chip                                                                      
     Corporation                                                         642,856                -           642,856 
   Other assets                                                             (975)         (12,091)          (13,066)
                                                                ----------------  ---------------  ---------------- 

Net cash provided by (used in) investing activities                      505,949         (591,959)          (86,010)
                                                                ----------------  ---------------  ---------------- 

CASH FLOWS FROM FINANCING ACTIVITIES                                                                                
   Proceeds from notes payable                                         1,307,351                -         4,191,121 
   Repayment of notes payable                                                  -       (2,600,000)       (2,600,000)
   Repayment of advances from affiliate                                        -         (192,144)         (192,144)
   Advances from affiliate                                                     -                -           542,144 
   Offering costs                                                              -         (377,070)         (377,070)
   Proceeds from preferred stock                                               -        9,000,158        11,750,158 
   Payments on capital leases                                           (112,546)         (12,998)         (125,544)
   Proceeds from common stock                                                  -                -                27 
                                                                ----------------  ---------------  ---------------- 

Net cash provided by financing activities                              1,194,805        5,817,946        13,188,692 
                                                                ----------------  ---------------  ---------------- 

      The accompanying notes are an integral part of these financial statements.                                    
                                             7                                                                      

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                                             CODESTREAM TECHNOLOGIES CORPORATION                                    
                                                   (A DEVELOPMENT STAGE COMPANY)                                    
                                                        STATEMENTS OF CASH FLOWS                                    
                              FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 AND                                    
           FOR THE PERIOD FROM JANUARY 17, 1996 (INCEPTION) TO DECEMBER 31, 1999                                    

--------------------------------------------------------------------------------                                    

                                                                                                       For the      
                                                                                                     Period from    
                                                                                                     January 17,    
                                                                       For the Years Ended               1996       
                                                                           December 31,             (Inception) to  
                                                                ---------------------------------    December 31,   
                                                                      1999              1998             1999       
                                                                ----------------  ---------------  ---------------- 

Net increase (decrease) in cash                                 $     (2,412,957) $      (206,466) $        188,729 

CASH, BEGINNING OF PERIOD                                              2,601,686        2,808,152                 - 
                                                                ----------------  ---------------  ---------------- 

CASH, END OF PERIOD                                             $        188,729  $     2,601,686  $        188,729 
                                                                ================  ===============  ================ 


SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES            
During the year ended December 31, 1999, the Company entered into capital       
lease agreements for computer and lab equipment valued at $284,012.             

During the years ended December 31, 1999 and 1998, the Company issued 250,000   
shares of common stock and 1,875 shares of Series A convertible preferred       
stock valued at $250,000 and $250,000, respectively, as settlement of notes     
payable.                                                                        

During the year ended December 31, 1998, the Company issued 656 shares of       
Series A convertible preferred stock valued at $87,500 to reimburse the holder  
of the Company's Series A convertible preferred stock for the holder's payment  
of an intercompany payable for $87,500 to the Company's parent.                 

During the year ended  December 31, 1998, the Company  issued  3,404,012        
shares of common stock valued at $262,500 as settlement of an intercompany      
payable.                                                                        

      The accompanying notes are an integral part of these financial statements.
           8

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                                           CODESTREAM TECHNOLOGIES CORPORATION
                                                 (A DEVELOPMENT STAGE COMPANY)
                                                 NOTES TO FINANCIAL STATEMENTS
                                                             DECEMBER 31, 1999

------------------------------------------------------------------------------- 

NOTE 1 - SUMMARY OF BUSINESS                                                    

BUSINESS ACTIVITY                                             
    CodeStream Technologies Corporation (the "Company") (a development
     stage company) was incorporated on January 17, 1996 in the State of
     Delaware to develop certain technologies acquired from a government
        defense and aerospace contractor. The Company is developing technology
intended to increase the fiber optic network capacity of      
telecommunications traffic carriers.                          

NOTE 2 - GOING CONCERN MATTERS                                                  

        The accompanying financial statements have been prepared in conformity
 with generally accepted accounting principles which contemplate
      continuation of the Company as a going concern. However, the Company
      incurred a net loss of $5,274,250 during the year ended December 31,
       1999, it had negative cash flows from operations of $4,113,711 and it
      has incurred net losses of $14,439,869 since inception. Further, the
 Company is in the development stage at December 31, 1999. These
factors raise substantial doubt about the Company's ability to
continue as a going concern.                                  

       Recovery of the Company's assets is dependent upon future events, the
  outcome of which is indeterminable. Successful completion of the
       Company's development program and its transition to the attainment of
profitable operations is dependent upon the Company obtaining 
adequate debt and equity financing to fulfill its development 
   activities and achieving a level of sales adequate to support the
       Company's cost structure. In addition, realization of a major portion
       of the assets in the accompanying balance sheet is dependent upon the
      Company's ability to meet its financing requirements and the success
of its plans to develop and sell its products. The financial  
statements do not include any adjustments relating to the     
recoverability and classification of recorded asset amounts or
   amounts and classification of liabilities that might be necessary
should the Company be unable to continue in existence.        

  Management plans to raise additional equity capital, continue to
      develop its products, and look for merger or acquisition candidates.

NOTE 3 - ACQUISITION                                                            

      During August 1999, pursuant to an Agreement and Plan of Merger, the
      Company acquired the 975,000 issued and outstanding shares of common
stock of an affiliated company, RDL Photonic Integrated Chip  
     Corporation ("PIC"), a Delaware corporation. The Company is now the
     sole owner of PIC. The Company acquired the shares from its parent,
Research & Development Laboratories ("RDL").                  

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                                           CODESTREAM TECHNOLOGIES CORPORATION
                                                 (A DEVELOPMENT STAGE COMPANY)
                                                 NOTES TO FINANCIAL STATEMENTS
                                                             DECEMBER 31, 1999

------------------------------------------------------------------------------- 

NOTE 3 - ACQUISITION (CONTINUED)                                                

     The Company purchased the net assets of PIC through the issuance of
 975,000 shares of its common stock. In addition, as part of the
       Company's sale of its Series A, B, and C convertible preferred stock,
        PIC issued warrants to the purchasers of the Company's preferred stock
to purchase shares of preferred stock of PIC. As part of the  
   acquisition of PIC, the Company exchanged an aggregate of 600,722
  shares of its common stock for the warrants. The acquisition was
       accounted for in a manner similar to a pooling of interests since PIC
was acquired from a related party. The assets acquired and the
liabilities assumed were as follows:                          

             Cash                                                    $ 642,856
             Property and equipment, at net book value                  51,359
              Accrued expenses                                          (13,168)
                                                                      ----------

                 TOTAL NET ASSETS                                    $ 681,047
                                                                      ==========

       The information provided in the above table is based on PIC's audited
financial statements as of August 18, 1999.                   

NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                             

STOCK SPLIT                                                   
        On November 13, 1998, the Company effected a 80.59122334-for-one stock
   split of its common stock. All share and per share data have been
retroactively restated to reflect this stock split.           

ESTIMATES                                                     
     The preparation of the Company's financial statements in conformity
      with generally accepted accounting principles requires the Company's
      management to make estimates and assumptions that affect the amounts
       reported in these financial statements and accompanying notes. Actual
results could differ from those estimates.                    

PROPERTY AND EQUIPMENT                                        
Property and equipment are stated at cost, less accumulated   
  depreciation and amortization. For financial reporting purposes,
    depreciation and amortization are provided using the straight-line
method over the estimated useful lives as follows:            

             Machinery and equipment                                   3 years
             Furniture and office equipment                            3 years
             Computer software                                         3 years
             Leasehold improvements             life of the asset or the lease
                                                    term, whichever is shorter

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                                           CODESTREAM TECHNOLOGIES CORPORATION
                                                 (A DEVELOPMENT STAGE COMPANY)
                                                 NOTES TO FINANCIAL STATEMENTS
                                                             DECEMBER 31, 1999

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NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                 

PROPERTY AND EQUIPMENT (Continued)                            
       Betterments, renewals, and extraordinary repairs that extend the life
     of the asset are capitalized; other repairs and maintenance charges
are expensed as incurred. The cost and related accumulated    
depreciation applicable to assets retired are removed from the
    accounts, and the gain or loss on disposition is recognized in the
statement of operations.                                      

LOSS PER SHARE                                                
  The Company utilizes Statement of Financial Accounting Standards
 ("SFAS") No. 128, "Earnings per Share." Basic loss per share is
       computed by dividing the loss available to common shareholders by the
    weighted-average number of common shares outstanding. Diluted loss
       per share is computed similar to basic loss per share except that the
     denominator is increased to include the number of additional common
 shares that would have been outstanding if the potential common
 shares had been issued and if the additional common shares were
  dilutive. Because the Company has incurred net losses, basic and
diluted loss per share are the same.                          

INCOME TAXES                                                  
   The Company uses the asset and liability method of accounting for
    income taxes. The asset and liability method accounts for deferred
income taxes by applying enacted statutory rates in effect for
    periods in which the difference between the book value and the tax
bases of assets and liabilities are scheduled to reverse. The 
  resulting deferred tax asset or liability is adjusted to reflect
changes in tax laws or rates. Because the Company is in the   
       development stage and has incurred a loss from operations, no benefit
       is realized for the tax effect of the net operating loss carryforward
due to the uncertainty of its realization.                    

IMPAIRMENT OF LONG LIVED ASSETS                               
   The Company reviews its long-lived assets for impairment whenever
      events or changes in circumstances indicate that the carrying amount
    of an asset may not be recoverable. Recoverability of assets to be
     held and used is measured by a comparison of the carrying amount of
     the assets to future net cash flows expected to be generated by the
     assets. If the assets are considered to be impaired, the impairment
  to be recognized is measured by the amount by which the carrying
amount exceeds the fair value of the assets. To date, no such 
impairment has occurred.                                      

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                                           CODESTREAM TECHNOLOGIES CORPORATION
                                                 (A DEVELOPMENT STAGE COMPANY)
                                                 NOTES TO FINANCIAL STATEMENTS
                                                             DECEMBER 31, 1999

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NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                 

FAIR VALUE OF FINANCIAL INSTRUMENTS                           
The Company measures its financial assets and liabilities in  
       accordance with generally accepted accounting principles. For certain
  of the Company's financial instruments, including cash, accounts
      payable, and accrued expenses, the carrying amounts approximate fair
    value due to their short maturities. The amounts shown for capital
      leases and notes payable also approximate fair value because current
    interest rates offered to the Company for capital leases and notes
 payable of similar maturities are substantially the same or the
difference is immaterial.                                     

STOCK OPTIONS                                                 
       During 1995, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 123, "Accounting for Stock-Based Compensation," which
 defines a fair value based method of accounting for stock-based
     compensation. However, SFAS No. 123 allows an entity to continue to
     measure compensation cost related to stock and stock options issued
     to employees using the intrinsic method of accounting prescribed by
    Accounting Principles Board Opinion No. 25 ("APB 25"), "Accounting
      for Stock Issued to Employees." Entities electing to remain with the
    accounting method of APB 25 must make pro forma disclosures of net
income and earnings per share as if the fair value method of  
      accounting defined in SFAS No. 123 had been applied. The Company has
  elected to account for its stock-based compensation to employees
under APB 25.                                                 

COMPREHENSIVE INCOME                                          
      The Company utilizes SFAS No. 130, "Reporting Comprehensive Income."
  This statement establishes standards for reporting comprehensive
   income and its components in a financial statement. Comprehensive
      income as defined includes all changes in equity (net assets) during
      a period from non-owner sources. Examples of items to be included in
   comprehensive income, which are excluded from net income, include
   foreign currency translation adjustments and unrealized gains and
      losses on available-for-sale securities. Comprehensive income is not
   presented in the Company's financial statements since the Company
     did not have any of the items of comprehensive income in any period
presented.                                                    

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS                     
      In June 1999, the FASB issued SFAS No. 136, "Transfer of Assets to a
      Not-for-Profit Organization or Charitable Trust that Raises or Holds
    Contributions for Others." This statement is not applicable to the
Company.                                                      

        In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
  Instruments and Hedging Activities." The Company does not expect
    adoption of SFAS No. 137 to have a material impact, if any, on its
financial position or results of operations.                  

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                                           CODESTREAM TECHNOLOGIES CORPORATION
                                                 (A DEVELOPMENT STAGE COMPANY)
                                                 NOTES TO FINANCIAL STATEMENTS
                                                             DECEMBER 31, 1999

------------------------------------------------------------------------------- 

NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                 

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Continued)         
     In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain
    Instruments and Certain Hedging Activities." This statement is not
applicable to the Company.                                    

     In June 2000,  the FASB  issued SFAS No. 139,  "Rescission  of FASB
     Statement No. 53 and Amendments to Statements No. 63, 89, and 121."
This statement is not applicable to the Company.              

NOTE 5 - CASH                                                                   

     The Company maintains its cash balances in several banks located in
      Southern California. The balances are insured by the Federal Deposit
    Insurance Corporation up to $100,000. As of December 31, 1999, the
      uninsured portions of those balances held at the banks aggregated to
$195,828.                                                     

NOTE 6 - PROPERTY AND EQUIPMENT                                                 

Property and equipment at December 31, 1999 consisted of the  
following:                                                    

             Machinery and equipment                                $  838,397
             Furniture and office equipment                            144,452
             Computer software                                          26,633
             Leasehold improvements                                     41,689
                                                                    ----------

                                                                     1,051,171
             Less accumulated depreciation and amortization            400,649
                                                                    ----------

                 TOTAL                                              $  650,522
                                                                    ==========

        Depreciation and amortization expense for the years ended December 31,
1999 and 1998 was $291,127 and $109,522, respectively.        

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                                           CODESTREAM TECHNOLOGIES CORPORATION
                                                 (A DEVELOPMENT STAGE COMPANY)
                                                 NOTES TO FINANCIAL STATEMENTS
                                                             DECEMBER 31, 1999

------------------------------------------------------------------------------- 

NOTE 7 - NOTES PAYABLE                                                          

 Notes payable consisted of 10 notes payable to various lenders,
       including the holders of the Series A, B, and C convertible preferred
stock and certain holders of the Company's common stock,      
     collateralized by all of the Company's assets, with interest at 12%
      compounded quarterly. The notes mature on March 31, 2000. Subsequent
   to December 31, 1999, the maturity dates were extended to June 9,
 2000. The notes were converted into common stock as part of the
reorganization discussed in Note 13.                          

NOTE 8 - COMMITMENTS                                                            

LEASES                                                        
      The Company leases its office and laboratory space. The Company also
      leases equipment under terms of various operating and capital leases
 which have been personally guaranteed by the Company's majority
      shareholders. Future minimum lease payments relating to these leases
were estimated to be as follows:                              

                                                        [Enlarge/Download Table]

         Year Ending                                                     Operating     Capital  
         December 31,                                                      Leases      Leases   
         -----------                                                   ------------  -----------
                                                                                                

            2000                                                       $    93,654   $  147,528 
            2001                                                       $    46,827       26,000 
                                                                       ------------  -----------

                                                                       $   140,481      173,528 
                                                                       ============             
            Less amount representing interest                                            15,060 
                                                                                     -----------
                                                                                        158,468 
            Less current portion                                                        133,088 
                                                                                     -----------
                  LONG-TERM PORTION                                                  $   25,380 
                                                                                     ===========

Rent expense was $163,706 and $104,502 for the years ended December 31,                         
1999 and 1998, respectively.                                                                    

Leased capital assets included in property and equipment at December                            
31, 1999 were estimated to be as follows:                                                       

         Furniture and office equipment                                              $    6,484 
         Lab equipment                                                                  277,528 
         Less accumulated amortization                                                   81,311 
                                                                                     -----------

                 TOTAL                                                               $  202,701 
                                                                                     ===========


                                          14

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                                             CODESTREAM TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                               DECEMBER 31, 1999
--------------------------------------------------------------------------------

NOTE 8 - COMMITMENTS (CONTINUED)                                                

LITIGATION                                                    
        During May 1999, RDL was served with a subpoena duces tecum to produce
     documents and to testify before the Grand Jury of the United States
       District Court, Central District of California. The subpoena appeared
  to relate to allegations of inappropriately charging or improper
       billing with respect to federal government contracts and was directed
       to RDL and, among others, all of its then present and former officers
         and directors, together with its then affiliates, including the Company
(then named RDL Commercial Technologies Corporation).         

    At a meeting with the Assistant United States Attorney ("AUSA") in
     charge of the investigation during July 1999, the attorneys for the
Company were advised that the Company was a subject of the    
        investigation. Subsequent to this meeting, the Company produced to the
         AUSA all documents requested by the subpoena and provided the AUSA with
         a copy of an analysis of cash receipts and disbursements of the Company
         since its inception prepared by PriceWaterhouseCoopers LLP showing that
        the Company has never received funds from the federal government under
 any government contracts. The Company also offered to cooperate
        completely with the Grand Jury investigation and on November 30, 1999,
   the CFO of the Company met with the AUSA and agents of the FBI to
answer their questions concerning RDL and the Company. At the 
      conclusion of this meeting, the AUSA indicated that she believed the
         CFO's commentary to be truthful and also indicated that, based upon the
         government's investigation to date, the Company was no longer a subject
         of the investigation. The AUSA indicated that if indictments were to be
       forthcoming as a result of the investigation, they would name persons
     and entities other than the Company. To the Company's knowledge, no
         such indictments have yet been issued. It should be noted that the AUSA
    has absolute discretion as to who, if anyone, will be indicted and
    until this matter is completely resolved, the Company remains as a
possible target of the investigation.                         

                                          15

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                                             CODESTREAM TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                               DECEMBER 31, 1999

--------------------------------------------------------------------------------

NOTE 9 - SHAREHOLDERS' DEFICIT                                                  

PREFERRED STOCK, SERIES A                                             
In August 1996, the Company issued 20,625 shares of Series A          
convertible preferred stock for cash proceeds of $2,750,000. In       
February 1998, the Company issued 1,875 and 656 additional shares of  
Series A convertible preferred stock upon the conversion of a note    
payable for $250,000 and for cash proceeds of $87,500, respectively.  
This stock has a cumulative cash dividend of 4% per annum, payable    
quarterly. The holders of this stock have voting rights equal to the  
holders of common stock. Each share of preferred stock is convertible 
at any time at the option of the holder into shares of the Company's  
common stock at a conversion price of $1.6544. The shares are subject 
to automatic conversion upon the effective date of an underwritten    
public offering of the Company's common stock with net proceeds of not
less than $20,000,000. At December 31, 1999, the Company had dividends
in arrears of $238,333.                                               

The purchaser was also issued 10,000 warrants to purchase shares of   
Series A preferred stock of PIC. The warrants have an exercise price  
of $1,300 and expire the earlier of 10 years from the date of grant   
or upon the effective date of an underwritten public offering of the  
Company's common stock with net proceeds of not less than $20,000,000.

PREFERRED STOCK, SERIES B                                             
In February and July 1998, the Company issued 10,179 and 1,357 shares 
of Series B convertible preferred stock for cash proceeds of          
$3,000,158 and $400,000, respectively. This stock has a cumulative    
cash dividend of 4% per annum, payable quarterly. The holders of this 
stock have voting rights equal to the holders of common stock. Each   
share of preferred stock is convertible at any time at the option of  
the holder into shares of the Company's common stock at a conversion  
price of $1.6544. The shares are subject to automatic conversion upon 
the effective date of an underwritten public offering of the          
Company's common stock with net proceeds of not less than             
$20,000,000. At December 31, 1999, the Company had dividends in       
arrears of $254,012. The purchasers were also issued 4,286 and 571    
warrants, respectively, to purchase shares of Series A preferred      
stock of PIC. The warrants have an exercise price of $1,300 and       
expire the earlier of 10 years from the date of grant or upon the     
effective date of an underwritten public offering of the Company's    
common stock with net proceeds of not less than $20,000,000.          

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                                             CODESTREAM TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                               DECEMBER 31, 1999

--------------------------------------------------------------------------------

NOTE 9 - SHAREHOLDERS' DEFICIT (CONTINUED)                                      

PREFERRED STOCK, SERIES C                                             
In July 1998, the Company issued 6,709 and 805 shares of Series C     
convertible preferred stock for cash proceeds of $5,000,000 and       
 $600,000, respectively. This stock has a cumulative cash dividend of 4%
per annum, payable quarterly. The holders of this stock have voting   
rights equal to the holders of common stock. Each share of preferred  
stock is convertible at any time at the option of the holder into     
shares of the Company's common stock at a conversion price of $1.6544.
The shares are subject to automatic conversion upon the effective date
of an underwritten public offering of the Company's common stock with 
net proceeds of not less than $20,000,000. At December 31, 1999, the  
Company had dividends in arrears of $336,000. The purchasers were also
issued 2,825 and 339 warrants, respectively, to purchase shares of    
 Series A preferred stock of PIC. The warrants have an exercise price of
$1,300 and expire the earlier of 10 years from the date of grant or   
upon the effective date of an underwritten public offering of the     
Company's common stock with net proceeds of not less than $20,000,000.

STOCK OPTIONS                                                         
 The Company adopted the 1998 Stock Option Plan (the "1998 Plan") during
February 1998, which was amended during November 1998. Under the terms
of the 1998 Plan, the aggregate number of shares that may be issued   
pursuant to the exercise of options granted initially will not exceed 
1,500,000. Options are not considered to be granted until an option   
agreement is executed. Incentive stock options must be granted at a   
price not less than 100% of the fair market value of the common stock 
 on the grant date. Non-qualified options must be granted at a price not
 less than 85% of the fair market value of the common stock on the grant
date.                                                                 

Incentive and non-qualified stock options granted to individuals who  
 own stock representing more than 10% of the voting power of the Company
must have an exercise price of more than 110% of the fair market value
of the common stock on the grant date. Incentive and non-qualified    
stock options vest over various periods as determined by the Company  
for each grant, ranging from zero to five years, and expire up to 10  
years from the grant date. The 1998 Plan has a term of 10 years from  
the date of its adoption by the Board of Directors.                   

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                                             CODESTREAM TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                               DECEMBER 31, 1999

--------------------------------------------------------------------------------

NOTE 9 - SHAREHOLDERS' DEFICIT (CONTINUED)                                      

STOCK OPTIONS (Continued)                                     
The following summarizes the stock option transactions under the stock
option plans:                                                                   

                                                                [Download Table]


                                                              Weighted-    
                                                               Average     
                                          Stock Options        Exercise    
                                           Outstanding           Price     
                                         ---------------   ----------------
                                                                           
Outstanding, December 31, 1997                         -   $              -
    Granted                                      236,398   $           1.65
    Forfeited                                    (12,089)  $           1.65
                                         ---------------                   

Outstanding, December 31, 1998                   224,309   $           1.65
    Granted                                      393,666   $           1.64
    Forfeited                                   (208,804)  $           1.75
                                         ---------------                   

         OUTSTANDING, DECEMBER 31, 1999          409,171   $           1.59
                                         ===============                   

         EXERCISABLE, DECEMBER 31, 1999           18,559   $           1.00
                                         ===============                   


 The weighted-average life of the options outstanding and exercisable at
  December 31, 1999 is 5 years. There were 1,090,829 options available for
future grant at December 31, 1999. The exercise prices for the options
 outstanding at December 31, 1999 ranged from $1.00 to $1.65, and have a
weighted average contractual life of 8.5 years.                       

                                            18

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                                             CODESTREAM TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                               DECEMBER 31, 1999

--------------------------------------------------------------------------------

NOTE 9 - SHAREHOLDERS' DEFICIT (CONTINUED)                                      

STOCK OPTIONS (Continued)                                             
 The Company has adopted the disclosure-only provisions of SFAS No. 123,
 "Accounting for Stock-Based Compensation." Accordingly, no compensation
 cost other than that required to be recognized by Accounting Principles
Bulletin ("APB") Opinion No. 25, "Accounting for Stock Issued to      
Employees," for the difference between the fair value of the Company's
common stock at the grant date and the exercise price of the options  
has been recognized. Had compensation cost for the Company's stock    
option plan been determined based on the fair value at the grant date 
for awards consistent with the provisions of SFAS No. 123, the        
Company's net loss and loss per share for the years ended December 31,
1999 and 1998 would have been increased to the pro forma amounts      
indicated below:                                                      

                                                                [Download Table]


                                        1999              1998       
                                  ---------------   ---------------- 
                                                                     
Net loss as reported              $    (5,274,250)  $     (5,803,107)
Net loss, pro forma               $    (5,334,324)  $     (5,831,365)
Basic loss per share as reported  $         (1.09)  $          (1.15)
Basic loss per share, pro forma   $         (1.10)  $          (1.15)


The fair value of these options was estimated at the date of grant    
using the minimum value method with the following weighted-average    
assumptions for the years ended December 31, 1999 and 1998: dividend  
yields of 0% and 0%, respectively; risk-free interest rates of 4.7%   
and 6.4%, respectively; and expected lives of 5 and 5 years,          
respectively. The weighted-average exercise price was $1.59 and $1.00 
at December 31, 1999 and 1998, respectively.                          

No compensation expense was recognized as a result of the issuance of 
stock options for the years ended December 31, 1999 and 1998.         

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                                             CODESTREAM TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                               DECEMBER 31, 1999

--------------------------------------------------------------------------------

NOTE 9 - SHAREHOLDERS' DEFICIT (CONTINUED)                                      

STOCK OPTIONS (Continued)                                             

STOCK OPTION RE-PRICING                                               
During the year ended December 31, 1999, the Company re-priced an     
aggregate of 49,223 options issued to six employees under the 1998    
 Plan. In relation to this re-pricing, the Company recorded compensation
expense totaling $144,842 for the year ended December 31, 1999. In    
accordance with generally accepted accounting principles, the employee
stock option awards that were re-priced will be accounted for as      
 variable awards from the date of the re-pricing to the date the options
are exercised, forfeited, or they expire.                             

NOTE 10 - INCOME TAXES                                                          

As of December 31, 1999, the Company had approximately $14,290,000 in 
net operating loss carryforwards that may be offset against future    
taxable income. No provision for income taxes for the years ended     
 December 31, 1999 and 1998 is required, except for minimum state taxes,
since the Company incurred losses during such periods. The deferred   
income tax benefit of the loss carryforward is the only significant   
deferred income tax asset or liability of the Company and has been    
offset by a valuation allowance of the same amount since management   
does not believe the recoverability of this deferred tax asset during 
the next fiscal year is more likely than not. Accordingly, no deferred
income tax benefit has been recognized in these financial statements. 

NOTE 11 - YEAR 2000 ISSUE                                                       

The Company has completed a comprehensive review of its computer      
systems to identify the systems that could be affected by ongoing Year
2000 problems. Upgrades to systems judged critical to business        
operations have been successfully installed. To date, no significant  
costs have been incurred in the Company's systems related to the Year 
2000.                                                                 

20  

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                                             CODESTREAM TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                               DECEMBER 31, 1999

--------------------------------------------------------------------------------

NOTE 11 - YEAR 2000 ISSUE (CONTINUED)                                           

Based on the review of the computer systems, management believes all  
action necessary to prevent significant additional problems has been  
taken. While the Company has taken steps to communicate with outside  
suppliers, it cannot guarantee that the suppliers have all taken the  
 necessary steps to prevent any service interruption that may affect the
Company.                                                              

NOTE 12 - RELATED PARTY TRANSACTIONS                                            

During the year ended December 31, 1999, the Company paid $98,370 to a
former officer/director for consulting services rendered pursuant to a
consulting agreement. Under the terms of the consulting agreement, the
Company is committed to pay this former officer/director $163,950     
during the year ended December 31, 2000.                              

 During the year ended December 31, 1998, certain employees and officers
of RDL provided administrative services to the Company. The Company   
paid RDL $112,900 for these services. At the direction of RDL, the    
Company paid $75,000 of the $112,900 directly to the controlling      
shareholder of RDL.                                                   

During the years ended December 31, 1999 and 1998, the Company paid   
$105,468 and $720,338, respectively, to an affiliated company to      
reimburse the affiliate for the salaries of certain employees of the  
affiliate used by the Company. The Company also reimbursed the        
affiliate for expenses incurred on behalf of the Company by the       
affiliate for $42,262 and $187,713 during the years ended December 31,
1999 and 1998, respectively.                                          

During the years ended December 31, 1999 and 1998, the Company paid   
rent of $30,000 and $157,500, respectively, to an affiliated company  
for using office space in the affiliated company's building.          

During the years ended December 31, 1999 and 1998, the Company paid   
$274,815 and $339,314, respectively, in legal fees to a law firm in   
which one of the Company's directors is a partner.                    

At December 31, 1997, the Company had an account payable to RDL for   
$542,144. During February 1998, the Company repaid $192,144 of the    
amount outstanding and issued 3,404,012 shares of its common stock    
valued at $262,500 as an additional payment. The remaining amount due 
 of $87,500 was repaid by one of the holders of the Series A convertible
preferred stock. The Company reimbursed this shareholder during March 
 1998 by issuing 656 shares of its Series A convertible preferred stock.

21  

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                                             CODESTREAM TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                               DECEMBER 31, 1999

--------------------------------------------------------------------------------

NOTE 13 - SUBSEQUENT EVENTS                                                     

BORROWINGS                                                            
In February 2000, the Company borrowed $500,000 from a third party to 
provide additional interim working capital for the operations of its  
business.                                                             

In March 2000, under an addendum to a loan agreement with its existing
lenders, the Company borrowed $500,000 to provide additional interim  
working capital for the operations of its business.                   

In April 2000, under an addendum to a loan agreement with its existing
lenders, the Company borrowed $200,000 to provide additional interim  
working capital for the operations of its business.                   

In May 2000, under an addendum to a loan agreement with its existing  
lenders, the Company borrowed $200,000 to provide additional interim  
working capital for the operations of its business.                   

STOCK OPTIONS                                                         
Subsequent to December 31, 1999, the Board of Directors of the Company
approved the repricing of all the granted stock options so that the   
exercise price is $1.                                                 

Subsequent to December 31, 1999, the Company granted 683,500 stock    
options to certain employees at an exercise price of $1.              

SEVERANCE AGREEMENT                                                   
Subsequent to December 31, 1999, the Company entered into a severance 
agreement with an employee under which it may be liable for $82,500.  

CAPITAL LEASES                                                        
 Subsequent to December 31, 1999, the Company entered into capital lease
agreements for computer and lab equipment valued at $31,500.          

22  

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                                             CODESTREAM TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                               DECEMBER 31, 1999

--------------------------------------------------------------------------------

NOTE 13 - SUBSEQUENT EVENTS (CONTINUED)                                         

REORGANIZATION                                                        
On June 8, 2000, the Company entered into an Agreement and Plan of    
Reorganization, whereby all of the Company's outstanding shares of    
common stock were acquired by Bud Financial Group, Inc. ("Bud"), a    
Nevada corporation, in exchange for an aggregate of 10,000,000 shares 
of newly issued common stock of Bud. For accounting purposes, the     
 transaction has been treated as a recapitalization of the Company, with
the Company as the accounting acquirer (reverse acquisition), and has 
been accounted for in a manner similar to a pooling of interests. To  
effect this transaction, the Company converted all of its outstanding 
Series A, B, and C convertible preferred stock into 14,612,779 shares 
of common stock and converted notes payable totaling $2,491,121 into  
9,444,447 shares of common stock. The Company then reverse split the  
 aggregate 31,481,492 shares common stock on a one-for-3.148149 basis so
that 10,000,000 shares of common stock were issued and outstanding    
prior to the reverse merger.                                          

23

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘8-K/A’ Filing	Date	First	Last	Other Filings

	12/31/00	26
Filed on:	8/22/00	3
	8/17/00	6
	6/23/00	2		8-K
	6/9/00	19
For Period End:	6/8/00	1	28
	3/31/00	19		10QSB
	12/31/99	2	28	10KSB
	11/30/99	20
	8/18/99	15
	12/31/98	2	26	10KSB
	11/13/98	15
	12/31/97	10	26
	12/31/96	10		10KSB, 10KSB/A
	1/17/96	4	14
				List all Filings

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Filing Submission 0000912057-00-038702 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Codestream Holdings Inc – ‘8-K/A’ for 6/8/00

On: Tuesday, 8/22/00, at 4:38pm ET · For: 6/8/00 · Accession #: 912057-0-38702 · File #: 33-25779

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Amendment to Current Report — Form 8-KFiling Table of Contents

8-K/A — Amendment to Current ReportDocument Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Amendment to Current Report — Form 8-K
Filing Table of Contents

8-K/A — Amendment to Current Report
Document Table of Contents