Clearlogic Inc – ‘8-K’ for 11/13/99

On:  Tuesday, 11/30/99   ·   For:  11/13/99   ·   Accession #:  1002334-99-239   ·   File #:  0-24376

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Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Acquisition of Clearlogic                             17     55K 
 2: EX-2        Agreement and Plan of Reorganization                  10     47K 
 3: EX-3.(I)    Certificate of Amendment                               2     10K 

8-K   —   Acquisition of Clearlogic
Document Table of Contents

8-K
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                  SECURITIES AND EXCHANGE COMMISSION

                                Washington, D.C. 20549

                                FORM 8-K

                                CURRENT REPORT

                                Pursuant to Section 13 or 15(d) of
                                 the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)  November 13, 1999             

                                CLEARLOGIC, INC.
                        (Exact name of registrant as specified in its charter)

                                 ST. JAMES GROUP, INC.
                                 (Former Name)

                                Delaware
                                (State or other jurisdiction of incorporation)

        0-24376                                                     33-0612125
(Commission File Number)                      (IRS Employer Identification No.) 

41 South Haddon Avenue, Haddonfield, New Jersey                           08033 
(Address of principal executive offices)                             (Zip Code) 

Registrant's telephone number, including area code:  (856) 547-7844             

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Item 1.       Change in Control of Registrant.                                  
Item 2.       Acquisition or Disposition of Assets.                             

              Pursuant to an Agreement and Plan of Reorganization dated November
13,  1999  (the  "Agreement")  a  wholly  owned  subsidiary  of the  Registrant,
ClearLogic,  Inc.  merged  into  ClearLogic,  Inc.,  a  New  Jersey  Corporation
("Clearlogic")  effective  November 23, 1999 and the Company  issued  11,114,458
shares  to  acquire  all of the  outstanding  shares of  Clearlogic.  Clearlogic
employee  stock options to purchase  905,000 shares were converted in the Merger
to options to purchase 1,635,542 Shares of the Registrant at a price of $.027666
per share. The Registrant  changed its name to Clear- logic, Inc. and Clearlogic
became a wholly owned  subsidiary of the  Registrant.  Officers and directors of
Clearlogic,  Inc.  were  elected  as  the  new  directors  and  officers  of the
Registrant.  Prior  to  the  Closing  the  Registrant  had no  affiliation  with
Clearlogic.  The Registrant  issued 137,900 shares on conversion of a promissory
note and then effected a four-for-one  forward stock split  immediately prior to
the Closing,  resulting in 2,250,000  shares  outstanding  and 15,000,000  total
shares  outstanding  after giving effect to the issuance of shares to ClearLogic
shareholders and the potential exercise of all 1,635,542 option.                

              The names of the current  directors and executive  officers of the
Registrant and holders of more than 5% of the outstanding shares of common stock
and the  number of  shares  held and the  percentage  of the  total  issued  and
outstanding  Common Stock (the only voting  security) of the Registrant owned by
each of them are as follows.  The table  includes  only those  options which are
exerciseable within 60 days.                                                    

                                                                [Download Table]

                                         Number      Percentage 
                                        of Shares     of Shares 
   Name                         Office    Owned         Owned   

                                                                
Sina Khelil, CEO and Director(1)          7,969,880        53.1%
Philip Burnham, COO and Director            361,446         2.4%
Najat Khelil(1)                           1,084,337         7.2%
Ronaldo Nascimento, Senior Vice                                 
  President R&D and Director                361,446         2.4%
Doug Schwarzwaelder, Director             1,626,506        10.8%
Jason Costomiris, CTO  361,446                 2.4%             

All officers and directors as                                   
  a group (4 persons)10,680,724               71.2%             

(1)           Najat Khelil is the mother of Sina Khelil.  Each disclaims        
 beneficial ownership of the shares held by the other.

                                 2

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Item 7.       Financial Statements, Pro Forma Financial Information             
and Exhibits.                                       

      (a)(b)     The required financial statements and pro forma
financial information are filed herewith.                                       

(c)        Exhibits                                 

                       2.      Plan of acquisition, reorganization, arrange-
                  ment, liquidation or succession.

                                2.1.     Agreement and Plan of Reorganization,
dated November 13, 1999, between the
 Registrant, Clearlogic and Clearlogic
 Acquisition Corp.

                 3.      Certificate of Incorporation and Bylaws

                            3.3      Amendment to Certificate of Incorporation
                                     changing name to Clearlogic, Inc.

                                 3

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                                SIGNATURES

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

Dated:  November 23, 1999                              CLEARLOGIC, INC.         

                                                    By: /s/ Philip Burnham
                                                    Philip Burnham
                                         COO

                                 4

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Board of Directors and Stockholders                                             
ClearLogic, Inc.:                                                               

We have  audited  the  accompanying  balance  sheet of  ClearLogic,  Inc.  as of
December  31,  1998 and June 30,  1999,  and the related  statements  of income,
retained  earnings,  and cash flows (6/30/99 only) for the year and partial year
then ended.  These financial  statements are the responsibility of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.                                                  

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.          

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of ClearLogic, Inc. as of December
31, 1998 and June 30, 1999, and the results of its operations and its cash flows
for the year  then  ended  in  conformity  with  generally  accepted  accounting
principles.                                                                     

August 31, 1999                                                                 

                                   5

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                                  ClearLogic, Inc.

                                  Balance Sheets
                                   June 30, 1999 and December 31, 1998

                                                        [Enlarge/Download Table]


                                                           6/30/99         12/31/98   

Assets                                                                                
Current Assets                                                                        
                                                                                      
       Cash                                             $      124,892  $      (2,732)
       Accounts Receivable                                      63,886          12,693
       Prepaid Expenses                                         20,554           6,343

                                                               209,332          16,304

Property, Plant and Equipment, net                             182,672         118,900

Total Assets                                                   392,004         135,204

Liabilities and Stockholder's Equity                                                  

Current Liabilities                                                                   
       Accounts Payable                                         51,800          48,023
       Line of Credit                                           30,000          30,000
       Current Portion of Long Term Debt                         9,630           9,630
       Accrued Expenses                                          5,561                
       Current Portion of Capital                               61,587           9,388

              Lease Obligations                                                       
              Total Current Liabilities                        158,578          97,041

Shareholders' Loans                                            305,699         152,413
Notes Payable                                                  190,000                
Long Term Debt                                                  39,293          44,108
Long Term Portion of Capital Lease                              19,450          13,661

              Obligations                                                             
              Total Liabilities                                713,020         307,223

Stockholders' Equity:                                                                 
       Common Stock, no par value, 20,000,000 shares                                  
       authorized, 6,055,000 issued and outstanding**                                 
       Capital Stock                                           106,500         106,000
       Retained Earnings                                     (427,516)       (278,019)

              Total Stockholders' Equity                     (321,016)       (172,019)

              Total Liabilities & Stockholders' Equity         392,004         135,204

**Company also has 5,000,000 shares of preferred stock authorized.              

        See accompanying notes to financial statements and
accountants' audit report                                                       
                                   6

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                                  ClearLogic, Inc.

                                   Statement of Operations and Retained Earnings

                                  Partial Year Ended June 30, 1999 and
                                  Year Ended December 31, 1998

                                                                [Download Table]

                                       1/1/99-6/30/99        1998     

                                                                      
Sales                                 $        206,894   $     250,179
(net of allowance 6/30/99 of $3,000)                                  
Cost of Services                               148,064         198,079

Gross Profit                                    58,830          52,100

General & Administrative Expenses              194,793         265,392

Operating Profit (Loss)                      (135,963)       (213,292)

Other Income (Expense)                                                

Interest Expense                              (13,534)        (25,012)
Other Income                                          6,000           

                                              (13,534)        (19,012)

Income (loss) before income taxes     $      (149,497)   $   (232,304)

Retained Earnings:                                                    

       Balance at beginning of year          (278,019)        (45,715)

       Balance at 6/30/99             $      (427,516)   $   (278,019)

  See accompanying notes to financial statements and accountants' audit report

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                                  ClearLogic, Inc.

                                  Statements of Cash Flows

                                  Partial Year Ended 6/30/99

Cash flows from operating activities:                                           

                                                                [Download Table]

                                                       6/30/99   

                                                                 
Net Income                                          $   (149,497)
Adjustments to reconcile net income to net                       
cash provided by (used in) operating activities                  
       Depreciation                                        18,370
       (Increase) decrease in assets:                            
             Accounts receivable                         (51,193)
             Prepaid expenses                            (14,211)
       Increase (decrease) in liabilities:                       
             Accounts payable                               3,777
             Accrued expenses                               5,561
             Deferred income taxes                               

                Total adjustments                        (37,696)

                Net cash provided by                             
                (used in) operating activities      $   (187,192)

Cash flows used in investing activities:                         
       Capital expenditures                              (72,601)

             Net cash used in investing activities       (72,601)

Cash flows from financing activities:                            
       Net proceeds (payments) from borrowings            406,019
       Payments on capital lease obligations             (18,602)

             Net cash provided by (used in)                      
             financing activities                         387,417

       Net increase in cash                         $     127,624

Cash:                                                            
Beginning of year                                         (2,732)

End of year                                         $     124,892

  See accompanying notes to financial statements and accountants' audit report

                                   8

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                                  ClearLogic, Inc.

                                   Notes to Financial Statements

                                   June 30, 1999 and December 31, 1998

(1)    Summary of Significant Accounting Policies                               

Description of Business                                           

       ClearLogic,   Inc.  is  an  enterprise  solutions  developer.  They  have
       introduced  to the  marketplace  an Internet  based  electronic  proofing
       system.   Their  initial  focus  for  this  product  are  the  print  and
       advertising industries,  while additionally targeting any enterprise that
       engages  in  proofing/review  of  materials  on a  consistent  basis.  In
       addition,  ClearLogic, Inc. provides security, network administration and
       new  media.  The new media  department  has full range of  services  that
   include video/multimedia production and cutting edge web development.

Revenue and Cost Recognition                                      

       Software,  security,  network  administration  and new media revenues are
recognized on the accrual method for financial reporting purposes.

       Direct costs associated with software,  security,  network administration
       and new media revenues include all subcontractor, labor costs and product
       costs and those indirect costs related to product or service performance,
       such as travel expenses.  General and administrative costs are charged to
       expense  as  incurred.  Provision  for  estimated  losses on  uncompleted
  services are made in the period in which such losses are determined.

Allowance for Doubtful Accounts                                   

       The Company  provides an  allowance  for doubtful  accounts  equal to the
       estimated  losses that may be incurred in the collection of  receivables.
       The estimated  losses are based on a review of the current  status of the
existing receivables.                                             

Property and Equipment                                            

       Major  additions  and  improvements  of assets are  capitalized  at cost.
       Maintenance,  repairs, and minor improvements are expensed when incurred.
       The cost and accumulated depreciation of items sold or otherwise disposed
       of are  removed  from the  related  property,  plant  and  equipment  and
       accumulated  depreciation  accounts,  and the  resulting  gain or loss is
       recorded.  Depreciation  is provided on the declining  balance  method at
rates based on estimated service lives.                           

Use of Estimates                                                  

       The  preparation  of financial  statements in conformity  with  generally
       accepted accounting  principles requires management to make estimates and
       assumptions  that affect certain  reported amounts and disclosures in the
       financial statements. Accordingly, actual results could differ from those
estimates.                                                        

                                   9

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                                  ClearLogic, Inc.

                                   Notes to Financial Statements

(1)    Summary of Significant Accounting Policies, continued                    

Income Taxes                                                      

       For the period  ending  December  31,  1998,  the  Company  has elected S
       corporation  tax status whereby federal and state taxable income is taxed
       directly to the shareholder.  Accordingly,  no provision for income taxes
was made in the financial statements for December 31, 1998.       

       Income taxes for subsequent periods are accounted for using the asset and
       liability  method,  as  required by  Statement  of  Financial  Accounting
       Standards  No.  109.  Under  this  method,   deferred  income  taxes  are
       recognized for the estimated future tax effects attributable to temporary
       differences   and   carryforwards.   The   measurement  of  deferred  tax
       liabilities and assets is based on provisions of the enacted tax law; the
 effects of future changes in tax laws or rates are not anticipated.

(2)    Property, Plant and Equipment                                            

       Property,  Plant and  Equipment  at June 30, 1999 and  December  31, 1998
consisted of the following:                                                     

                                                                [Download Table]

                                  6/30/99         12/31/98   

                                                             
Furniture and Fixtures         $       10,612  $        5,354
Leasehold Improvements                  4,000                
Computer and Office Equipment         118,974          85,712
Software                               31,334          30,044
Video Equipment                        69,596          31,263

Less accumulated depreciation          51,844          33,473

                               $      182,672  $      118,900

       Depreciation  expense for the  partial  year ended June 30, 1999 and year
    ended December 31, 1998 amounted to $18,370 and $22,870, respectively.

(3)    Long-Term Debt                                                           

       Long-term  debt at June 30, 1999 and December  31, 1998  consisted of the
following:                                                                      

                                                        [Enlarge/Download Table]

                                                                                  6/30/99         12/31/98   

Note  Payable,  Columbia  Savings  Bank,  secured  by  accounts  receivable  and                             
property,  plant and  equipment.  Payable  in  monthly  principal  and  interest                             
payments of $1,221.72 to April 1, 2004, with interest,                                                       
                                                                                                             
current interest rate at 10.25%                                                $       48,923  $       53,738

                                                                               $       48,923  $       53,738
       Less current maturates                                                           9,630           9,630

                                                                               $       39,293  $       44,108

                                  10

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                                  ClearLogic, Inc.

                                   Notes to Financial Statements

(3)    Long-Term Debt, continued                                                

Maturates of long-term debt as of June 30, 1999 are as follows:   

                                                                [Download Table]

                      
1999 (balance)   4,815
2000             9,630
2001             9,630
2002             9,630
2003             9,630
2004             5,589

                48,923

       In addition, the Company has available a $30,000 line of credit; interest
       payable at a rate which  varies  depending  on the  lender's  prime rate;
       secured by accounts  receivable and property,  plant, and equipment.  The
       line of credit is a demand  obligation  and has  outstanding  advances of
$30,000 and $30,000 at June 30, 1999 and December 31, 1998.       

(4)    Leases                                                                   

       The Company  leases  office space and  equipment  under  long-term  lease
       agreements.  The leases of computer  equipment are  classified as capital
       leases.  The leases  for the office  space are  classified  as  operating
leases.                                                           

       The following is a schedule of future  minimum lease payments for capital
leases and operating leases as of 6/30/99:                        

Year ending December 31:                                          

                                                                [Download Table]

                           Capital         Operating  
                           Leases           Leases    

                                                      
1999                    $       42,963  $       49,000
2000                            54,179          65,250
2001                             5,491          74,250
2002                                            32,500

                        $      102,632  $      221,000

Less interest amount            17,457                

Present value of                                      
minimum lease payments  $       85,175                

       Rent expense  under the operating  lease totaled  $20,500 and $29,000 for
       the  partial  year  June 30,  1999  and  full  year  December  31,  1998,
       respectively.  The  Company  relocated  its  offices  on May 1,  1999  to
Haddonfield, NJ.                                                  

(5)    Major Customers                                                          

       Four  of the  Company's  customers  accounted  for  approximately  59% of
       revenue  as  of  6/30/99.   For  1998,   two   customers   accounted  for
approximately 47% of revenue.                                     

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                                  ClearLogic, Inc.

                                   Notes to Financial Statements

(6)    Concentration of Credit Risk                                             

       As  of  June  30,  1999,  the  two  largest  client  receivable  balances
       represented  approximately  77% of the total accounts  receivable.  As of
       December 31, 1998, the two largest client receivable  balances  represent
approximately 80% of the total accounts receivable.               

(7)    Supplemental Cash Flow Information                                       

       Cash paid during the partial  year ended  6/30/99 and yea ended  December
31, 1998 for interest follows:                                                  

                                                                [Download Table]

                   6/30/99          12/31/98

                                            
Interest $  7,242           $14,894         

(8)    Commitments and Contingencies                                            

       The Company is subject to lawsuits  and claims  arising out of its normal
       course of business.  The Company has referred all such suits or claims to
       legal counsel, and if appropriate, its insurance carriers. In the opinion
       of legal  counsel  and  management,  there are no lawsuits or claims that
       will have a  material  adverse  effect  upon the  business  or  financial
position of the Company.                                          

       The  Company is in the  process of  raising  funds to fund their  planned
       extensive  marketing efforts and to meet their working capital needs. The
       notes that are being issued for the funds have a conversion  option.  The
       payee has the right to, prior to the notes maturity,  convert the note to
       capital stock.  The total raised as of the 6/30/99  financial  statements
       was $447,200. The notes issued in 1998 totaled $116,200. All notes issued
       in 1998 have a 36 month maturity date, with 8% interest. The notes issued
       in 1999, as of 6/30/99, totaled $331,000. Of that $331,000, $141,000 have
       an 18 month maturity date and $190,000 have a 24 month maturity date, all
with 8% interest.                                                 

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       The accompanying pro forma financial statements give effect to the merger
(the "Merger") of ClearLogic Acquisition Corp., a wholly-owned subsidiary of the
Company  into  ClearLogic,  Inc. a New  Jersey  corporation  ("ClearLogic")  for
12,750,000  shares of Company Common Stock, or 85% of the outstanding  shares of
Company  Common  Stock.  As a result,  ClearLogic  is  described  for  financial
reporting  purposes to have  acquired  the Company by the  issuance of 2,250,000
shares  for its net  assets  valued at $0.  The  proforma  balance  sheets as of
December 31, 1999 and June 30, 1999 assume the Merger was effected at the end of
the  periods  presented.  The  proforma  income  statements  for the year  ended
December  31, 1998 and the six months  ended June 30, 1999 assume the Merger was
effected as of the end of the periods presented.                                

                                 Pro Forma Balance Sheet
                                 December 31, 1998

                                ASSETS

                                                        [Enlarge/Download Table]

                                     ClearLogic, Inc.       St. James                        Pro Forma  
                                        Historical         Historical        Pro Forma        Balance   
                                       Dec. 31, 1998      Dec. 31, 1998     Adjustments       Sheets    
Current Assets                                                                                          
                                                                                                        
    Cash                             $      (2,732)      $                $               $      (2,732)
    Prepaid Expenses                          6,343                                                6,343
    Accounts Receivables                     12,693                                               12,693
       Total Current Assets          $       16,304      $                $               $       16,304

Property, Plant and Equipment, Net   $      118,900      $                $               $      118,900

       Total Assets                  $      135,204      $                $               $      135,204

                                    LIABILITIES AND STOCKHOLDERS' EQUITY                                
Current Liabilities                                                                                     
    Accounts Payable                 $       48,023      $        1,941   $   (1,941)(A)  $       48,023
    Line of Credit                           30,000                                               30,000
    Current Portion of Long                                                                             
       Term Debt                              9,630                                                9,630
    Current Portion of Capital                                                                          
       Lease Obligations                      9,388                                                9,388
       Total Current Liabilities     $       97,041      $        1,941   $   (1,941)(A)  $       97,041

Shareholders' Loans                  $      152,413      $                $               $      152,413
Notes Payable                                    --                                                   --
Long Term Debt                               44,108                                               44,108
Long Term Potion of Capital Lease                                                                       
    Obligations                              13,661                                               13,661
       Total Liabilities             $      307,223      $                $               $      307,223

Stockholders' Equity                                                                                    
Common Stock                         $      106,000      $          425   $  (93,089)(B)  $       13,336
Paid-in Capital                                   0                 821        91,843(B)          92,664
Accumulated Deficit                       (278,019)             (3,187)         3,187(B)       (278,019)
    Total Stockholders' Equity       $    (172,019)      $      (1,941)   $     1,941(B)  $    (172,019)

    Total Liabilities and                                                                               
      Stockholders' Equity           $      135,204      $                $               $      135,204

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                                Pro Forma Income Statement
                                Year Ended December 31, 1998

                                                        [Enlarge/Download Table]

                                                                                   Pro Forma  
                                                                   Pro Forma        Balance   
                                   ClearLogic      St. James      Adjustments       Sheets    

                                                                                              
Sales                           $      250,179  $           --  $           --  $      250,179
Cost of Services                     (198,079)                                       (198,079)

Gross Profit                            52,100                                          52,100

Expenses                                                                                      
    General and Administrative         265,392             110        (110)(C)         265,392

       Total Expenses           $      265,392  $          110  $        (110)  $      265,392

Net Operating Income            $    (213,292)  $        (110)  $       110(C)  $    (213,292)

Other Income                                                                                  
    Interest Expense                  (25,012)                                        (25,012)
    Other Income                         6,000                                           6,000
    Forgiveness of Debt                                                                       
       Total Other Income             (19,012)                                        (19,017)

Net Income (Loss)               $    (232,304)  $               $               $    (232,304)

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                                 Pro Forma Balance Sheet
                                 June 30, 1999

                                ASSETS

                                                        [Enlarge/Download Table]

                                     ClearLogic, Inc.       St. James                        Pro Forma  
                                        Historical         Historical        Pro Forma        Balance   
                                       June 30, 1999      June 30, 1999     Adjustments       Sheets    
Current Assets                                                                                          
                                                                                                        
    Cash                             $      124,892      $                $               $      124,892
    Prepaid Expenses                         20,554                                               20,554
    Accounts Receivables                     63,886                                               63,886
       Total Current Assets          $      209,332      $                $               $      209,332

Property, Plant and Equipment, Net   $      182,672      $                $               $      182,672

       Total Assets                  $      392,004      $                $               $      392,004

                                    LIABILITIES AND STOCKHOLDERS' EQUITY                                
Current Liabilities                                                                                     
    Accounts Payable                 $       51,800      $        2,021   $   (2,021)(A)  $       51,800
    Line of Credit                           30,000                                               30,000
    Current Portion of Long                                                                             
       Term Debt                              9,630                                                9,630
    Accrued Expenses                          5,561                                                5,561
    Current Portion of Capital                                                                          
       Lease Obligations                     61,587                                               61,587
       Total Current Liabilities     $      158,578      $        2,021   $   (2,021)(A)  $      158,578

Shareholders' Loans                  $      305,699      $                $               $      305,699
Notes Payable                               190,000                                              190,000
Long Term Debt                               39,293                                               39,293
Long Term Portion of Capital Lease                                                                      
    Obligations                              19,450                                               19,450
       Total Liabilities             $      713,020      $                $               $      713,020

Stockholders' Equity                                                                                    
Common Stock                         $      106,500      $          425   $  (93,089)(B)  $       13,336
Paid-in Capital                                   0                 821        91,843(B)          92,664
Accumulated Deficit                       (427,516)             (3,267)         3,267(B)       (427,516)
    Total Stockholders' Equity       $    (321,016)      $      (2,021)   $     2,021(B)  $    (321,016)

    Total Liabilities and                                                                               
      Stockholders' Equity           $      392,004      $                $               $      392,004

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                                Pro Forma Income Statement
                                Six Months Ended June 30, 1999

                                                        [Enlarge/Download Table]

                                                                                   Pro Forma  
                                                                   Pro Forma        Balance   
                                   ClearLogic      St. James      Adjustments       Sheets    

                                                                                              
Sales                           $      206,894  $           --  $           --  $      206,894
Cost of Services                     (148,064)                                       (148,064)

Gross Profit                            58,830                                          58,830

Expenses                                                                                      
    General and Administrative         194,793             110           (110)         194,793

       Total Expenses           $      194,793  $          110  $        (110)  $      194,793

Net Operating Income            $    (135,963)  $        (110)  $       110(C)  $    (135,963)

Other Income                                                                                  
    Interest Expense                  (13,534)                                        (13,534)
       Total Other Income             (13,534)                                        (13,534)

Net Income (Loss)               $    (149,497)  $               $               $    (149,497)

                                16

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                                Notes to Proforma Statements

(A)    Represents  $1,941 in accounts  payable to a former officer ($2,021 as of
       June 30, 1999), of which $1,379 was converted to 551,600 shares of Common
       Stock pursuant to the terms of a convertible promissory note and $562 was
       forgiven  ($642 as of June 30, 1999).  All share numbers give effect to a
       four-for-one  stock  split  effected  immediately  before  closing of the
Merger.                                                           
(B) Stockholders' equity is calculated as follows:                              

                                                        [Enlarge/Download Table]


                                                          Paid In     Accumulated              
                                  Shares      Amount      Capital       Deficit      Totals    

St. James                                                                                      
                                                                                               
  historical 12/31/98                424,600         425         821        (3,187)     (1,941)

Issuance of Shares                                                                             
  for debt of $1,379                 137,900         138       1,241                      1,379
    Balance                          562,500         563       2,062        (3,187)       (562)

Forgiveness of debt by                                                                         
  principal shareholder                                                                        
  by contribution to capital                                     562                        562
                                     562,500         563       2,624        (3,187)            

Forward stock split                1,687,500       1,687     (1,687)                           
    Balance                        2,250,000       2,250         937        (3,187)            

ClearLogic Amounts                 7,055,000     106,000          --      (278,019)   (172,019)

Net issuance of shares                                                                         
  in acquisition                                                                               
  (12,750,000 - 7,055,000)         5,695,000       5,695     (5,695)                           

Elimination of St. James Deficit                             (3,187)          3,187            

Transfer of excess capital                                                                     
  to paid-in-capital                            (99,970)      99,970                           
    Balance                       15,000,000      13,336      92,664      (278,017)   (172,019)

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘8-K’ Filing		Date		First		Last			Other Filings
		4/1/04		10
		12/31/99		13					10KSB,  NTN 10K
Filed on:		11/30/99
		11/23/99		2		4
For Period End:		11/13/99		1		3			8-K
		8/31/99		5
		6/30/99		5		17			10QSB
		5/1/99		11
		12/31/98		5		14			10QSB
									List all Filings