8-K/A 1 bottom8ka2.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A-2 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) of the SECURITIES EXCHANGE ACT OF 1934 Date of Original Report: September 5, 2001 BOTTOMLINE HOME LOAN, INC. -------------------------- (Exact name of registrant as specified in its charter) NEVADA (State or other jurisdiction of incorporation or organization) 0-31413 88-0356064 ------- ---------- (Commission File Number) (IRS Employer Identification Number) c/o Buster Williams, Jr., CEO 200 South Los Robles Avenue, Suite 230 Pasadena, California 91101 -------------------------- (Address of principal executive offices) (800) 520-5626 -------------- (Registrant's telephone number, including area code) 1 This Amendment to the 8-K/A dated September 5, 2001 has the sole purpose of filing a revision to the Pro Forma Condensed Consolidated Statement of Operation (unaudited) to reflect that the transfer reported in the original 8-K will be accounted for as a reverse acquisition, none of the other information has been changed or modified. ITEM 7. Financial Statements and Exhibits The following exhibit(s) are included as part of this report and amendment to that filing of July 10, 2001: 2.2 Audited Financial Statements as of June 30, 2001, dated August 27, 2001 performed by Mantyla McReynolds the Registrant's independent auditors. 2.2(a) Pro forma financial statement reflecting the acquisition reported in the 8-K/A filed on July 8, 2001. 23.1 Consent of Independent Public Accounts - Mantyla McReynolds, Registrant's independent auditors Pursuant to the requirement of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Bottomline Home Mortgage, Inc. Signature Date By: /s/ Buster Williams February 4, 2003 -------------------------------------------------- Name: Buster Williams, Jr. Title: CEO 2 (Letterhead of Mantyla McReynolds) 5872 South 900 East Suite 250 Salt Lake City, Utah 84121 February 4, 2003 Bottomline Home Loan, Inc. 300 South Los Robles Avenue, Suite 230 Pasadena, California 91101 Ladies and Gentlemen: This letter shall serve as formal notice that we have received your 8-K/A-2, to be filed with the Securities and Exchange Commission. Upon review of the filing information as it relates to our audit of the financial statement of Bottomline Mortgage, Inc. as of June 30, 2001, under our report dated August 27, 2001, we consent to the incorporation of our report in such filing. Very truly yours, /s/ Mantyla McReynolds MANTYLA McREYNOLDS 3 BOTTOMLINE MORTGAGE, INC. FINANCIAL STATEMENTS June 30, 2001 [WITH INDEPENDENT AUDITORS' REPORT] 4 BOTTOMLINE MORTGAGE, INC. Table of Contents Page Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . 1 . Balance Sheet - June 30, 2001 . . . . . . . . . . . . . . . . . . . . . . 2-3 . Statements of Stockholders' Equity for the years ended June 30, 2001 and 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 . Statements of Operations for the years ended June 30, 2001 and 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 . Statements of Cash Flows for the years ended June 30, 2001 and 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 . Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . 7-14 5 INDEPENDENT AUDITORS' REPORT Board of Directors and Stockholders Bottomline Mortgage, Inc. Pasadena, California We have audited the accompanying balance sheet of Bottomline Mortgage, Inc. as of June 30, 2001, and the related statements of stockholders' equity, operations, and cash flows for the years ended June 30, 2001 and 2000. 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 Bottomline Mortgage, Inc. as of June 30, 2001, and the results of operations and cash flows for the years ended June 30, 2001 and 2000, in conformity with accounting principles generally accepted in the United States. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company's history of operating losses raises substantial doubt about its ability to continue as a going concern. Management's plans in those matters are described in note 10. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Mantyla McReynolds --------------------------------------- Mantyla McReynolds August 27, 2001 Salt Lake City, Utah 6 BOTTOMLINE MORTGAGE, INC. Balance Sheet June 30, 2001 June 30, 2001 ----------------- ASSETS Current Assets Cash $ 40,184 Marketable securities - trading - Notes 1 & 4 118,546 Mortgage loans held for sale, net 1,717,850 Note receivable - current portion - Note 5 210 Total Current Assets 1,876,790 Fixed Assets Furniture and equipment - Note 1 80,252 Accumulated depreciation (41,261) Net Fixed Assets 38,991 Other Assets Note receivable net of current portion - Note 5 19,923 Note receivable - related party - Note 2 86,017 Deposits 5,172 Total Other Assets 111,112 TOTAL ASSETS $ 2,026,893 ================= See accompanying notes to financial statements 2 BOTTOMLINE MORTGAGE, INC. Balance Sheet (continued) June 30, 2001 June 30, 2001 ----------------- LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Current Liabilities Accounts payable and accrued expenses $ 97,520 Warehouse line of credit - Note 5 1,651,944 Income tax payable - Notes 1 & 3 800 Notes payable - current portion - Note 6 22,877 Total Current Liabilities 1,773,141 Long-Term Liabilities Notes payable - net of current portion - Note 6 14,092 Total Long-Term Liabilities 14,092 ----------------- TOTAL LIABILITIES 1,787,233 STOCKHOLDERS' EQUITY Common stock - 50,000,000 shares authorized at $0.001 par; 5,373,000 shares issued and outstanding 5,373 Paid in capital 760,718 Retained earnings (deficit) (526,431) TOTAL STOCKHOLDERS' EQUITY 239,660 ----------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,026,893 ================= See accompanying notes to financial statements 3 BOTTOMLINE MORTGAGE, INC. Statements of Stockholders' Equity for the years ended June 30, 2001 and 2000

See accompanying notes to financial statements 4

See accompanying notes to financial statements 5 BOTTOMLINE MORTGAGE, INC. Statements of Cash Flows for the years ended June 30, 2001 and 2000

See accompanying notes to financial statements 6 BOTTOMLINE MORTGAGE, INC. Notes to Financial Statements June 30, 2001 NOTE 1 Summary of Significant Accounting Policies ------------------------------------------------------ Nature of Operations The Company incorporated under the laws of the State of California on August 29, 1989 as C&W Global Realty, Inc. The name of the company was changed to Bottomline Mortgage, Inc. on January 20, 1997. The Company assists individuals, brokers and others in obtaining long term trust deed (mortgage) financing. The Company processes loan applications, effects loan underwriting and receives purchase commitments from investor groups for mortgage backed loans prior to funding the loans, primarily at its corporate office in Pasadena California. Loan applications are also solicited and received at its office locations in Salt Lake City Utah, Phoenix Arizona, and San Marcos Texas. The Company is a non-supervised mortgagee, as defined by the U.S. Department of Housing and Urban Development (HUD), and is therefore required to conform to certain net worth, liquid assets and other conditions and requirements and to follow certain specific regulations issued from time to time by HUD. Accounting Method The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States, applicable to a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Statement of Cash Flows Cash is comprised of cash on hand or on deposit in banks. The Company had $40,184 and $22,492 at June 30, 2001 and 2000. The Company's non cash financing activities consisted of 250,000 and 3,400,000 common shares issued for services and debt valued at $83,333 and $59,900 during the years ended June 30, 2001 and 2000. At times during the year the company maintains more than $100,000 in one bank. Cash is only insured by the Federal Deposit Insurance Corporation (FDIC) up to $100,000. Funds in excess of $100,000 are not insured by the FDIC or any other Federal agency. As of the balance sheet date the Company had less than $100,000 in any one bank. Deferred Income Taxes The Company complies with Statement of Financial Accounting Standard (SFAS) No. 109, "Accounting For Income Taxes," which requires the asset and liability method of accounting for income taxes. The asset and liability method requires that the current or deferred tax consequences of all events recognized in the financial statements are measured by applying the provisions of enacted tax laws to determine the amount of taxes payable or refundable currently or in future years. See Note 3 below. 7 BOTTOMLINE MORTGAGE, INC. Notes to Financial Statements June 30, 2001 NOTE 1 Summary of Significant Accounting Policies (continued) ------------------------------------------------------------------ Net Income Per Common Share Net income per common share is based on the weighted average number of shares outstanding during the period. Depreciation The Company's furniture and equipment is depreciated using primarily the straight-line method over useful lives of five to seven years. Depreciation for financial reporting purposes amounted to $10,972 and $14,834 for the years ended June 30, 2001 and 2000. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Mortgage Loans Held for Sale Mortgage loans held for sale, net of any deferred loan origination fees or costs, are carried at the lower of cost or market value as determined by outstanding commitments from investors. In accordance with Statement of Financial Accounting Standards (SFAS) No. 140 "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities", gains resulting from sales of mortgage loans are recognized as of the date the loans are sold to permanent investors if the following conditions are met: (i) the mortgage loan is beyond the reach of the Company and its creditors, (ii) the investor (transferee) has been given the right to pledge or exchange the mortgage loan, and (iii) the Company maintains no effective control over the mortgage loan. Losses are recognized when the market value is determined to be lower than cost. Generally, the Company minimizes the provisions for recourse available on mortgage loans sold. Such recourse provisions generally consist of an early default provision (non-payment in first month) and fraud provision. The limited-recourse nature of the Company's loan sales does not, however, entirely eliminate the Company's default risk since the Company may be required to repurchase a loan from the investor or indemnify an investor if the borrow fails to make its first mortgage payment or if the loan goes into default and the Company is found to be negligent in uncovering fraud in connection with the loan origination process. The Company incurred loan repurchase expenses of $46,967 and $98,750 during the years ended June 30, 2001 and 2000. No provision has been included in the financial statements for future loan repurchases. 8 BOTTOMLINE MORTGAGE, INC. Notes to Financial Statements June 30, 2001 NOTE 1 Summary of Significant Accounting Policies (continued) ------------------------------------------------------------------ Commitment Fees Commitment fees are received, which arise from agreements with borrowers that obligate the Company to make a loan or to satisfy an obligation under a specified condition, are initially deferred and recognized as income as loans are delivered to investors, or when it is evident that the commitment will not be utilized. Mortgage Fee Income The Company recognizes revenue from the sale of mortgage loans, the sale of servicing rights of such loans, commitment fees and loan origination fees. In accordance with Statement of Financial Accounting Standards (SFAS) No. 140 "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities," gains resulting from sales of mortgage loans are recognized as of the date the loans are sold to permanent investors if the following conditions are met: (i) the mortgage loan is beyond the reach of the Company and its creditors, (ii) the investor (transferee) has been given the right to pledge or exchange the mortgage loan, and (iii) the company maintains no effective control over the mortgage loan. The Company does not carry any mortgage loans for investment purposes. A firm commitment is obtained from the investor on a loan-by-loan basis before closing a loan. Immediately after closing, the loan documents are sent to the investor endorsed in blank, thus meaning title and effective control have transferred to the investor. At such time, revenue, calculated as the amount due from the investor in excess of the loan funded by the Company, is recorded. In connection with the sale of mortgage loans, the Company also sells the servicing rights to such loans. The Company recognizes revenue from the sale of such servicing rights when an agreement with the purchaser of such servicing rights exists, ownership to such servicing rights has been transferred to the purchaser, the selling price of such servicing rights is fixed or determinable, and collectibility is reasonably assured. The Company's contracts with investors or servicers that purchase these rights require certain warrants and representations by the Company which guarantee the mortgages will be service for a minimum of 3-12 months after they are purchased. Should for any reason the loan be paid off or prepaid during the first year, the servicer may request the return of all or a pro-rated portion of the service release premium paid to the Company. The Company's accounting policy is to provide a reserve for the amount of fees that are estimated to be refunded to the servicers, however to date such estimates are minor. During the years ended June 30, 2001 and 2000, the Company did not refund any service release premiums to a servicer. NOTE 1 Summary of Significant Accounting Policies (continued) ------------------------------------------------------------------ 9 BOTTOMLINE MORTGAGE, INC. Notes to Financial Statements June 30, 2001 Mortgage Fee Income (continued) Commitment fees received, are non-refundable fees that arise from agreements with borrowers that obligate the Company to make a loan or satisfy an obligation under a specified condition, are initially deferred and recognized as revenue as loans are delivered to investors, or when it is evident that the commitment will not be utilized. Loan Origination Fees Loan origination fees received and direct costs of originating loans are deferred and recognized as income or expense when the loans are sold to investors. Accounting for Impaired Loans The Company accounts for impaired loans in accordance with Statement of Financial Accounting Standards (SFAS) No. 114 "Accounting by Creditors for Impairment of a Loan" as amended by SFAS 118. These standards require that all creditors value loans at the loan's fair market value if it is probable that the creditor will be unable to collect all amounts due according to the terms of the loan agreement. Because the Company does not service any loans at this time and has purchase commitments from investors prior to the closing of all loans, the Company believes that no impairment exists on the mortgage loans held for sale as of June 30, 2001. Marketable Securities The Company has classified its marketable securities as "trading" securities in accordance with Statement of Financial Accounting Standards (SFAS) No. 115. Trading securities are stated at fair value, with unrealized gains and losses reported as a separate portion of other income (expense) in the statements of operations. Marketable securities - trading at June 30, 2001 were valued at $118,546. Valuation of other security investments is based on acquisition costs. Markdowns are made to reflect significant and permanent impairment in value. Gains and losses on sales of securities are determined using the average cost method. Fiscal Year The Company recently adopted June 30 as its fiscal year end. Previous financial statements of the Company have been issued based on a July 31 fiscal year end. These statements have been prepared assuming June 30 as the fiscal year end for current and previous periods. 10 BOTTOMLINE MORTGAGE, INC. Notes to Financial Statements June 30, 2001 NOTE 1 Summary of Significant Accounting Policies (continued) ------------------------------------------------------------------ Web Site Development Costs The Company accounts for web site development costs in accordance with Emerging Issues Task Force (EITF) No. 00-2. Accordingly, all costs incurred in the planning stage are expensed as incurred, costs incurred in the web site application and infrastructure development stage are accounted for in accordance with Statement of Position (SOP) 98-1 which requires the capitalization of certain costs that meet specific criteria, and costs incurred in the day to day operation of the web site are expensed as incurred. NOTE 2 Related Party Transactions In August 1999, the Company advanced $75,900 to an officer/director in exchange for a note secured by a third deed of trust on his personal residence. The note bears interest at 7% and requires no monthly payments. Principal and interest are due on July 4, 2009. Interest accrued on the note but not paid totals $5,313 and $4,804 for the years ended June 30, 2001 and 2000. During the year ended June 30, 2001 officers of the Company personally paid operating expenses of the Company for which they were not reimbursed. The officers have agreed not to seek reimbursement from the Company. $41,858 in expenses paid by the officers has been treated as additional paid in capital for the year. NOTE 3 Accounting for Income Taxes The Company has adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." The Company has net operating loss carryforwards of $520,000 and $190,000 at June 30, 2001 and 2000 that will begin to expire in 2019. No deferred tax benefit has been recorded because management has determined that it is not likely that the benefit of the carryforward will be realized. The tax benefit of the cumulative carryforwards has been offset by a valuation allowance in the same amount. The table below reflects changes in the valuation allowance for the year ended June 30, 2001. Income taxes payable of $800 at June 30, 2001 and 2000 represent minimum taxes payable to the State of California. Change in valuation allowance Valuation Allowance -------------------------------------------------- ---------------------- 6-30-2000 NOL $190,000 @ 34% $ 64,600 Operating loss of $330,000 for year @ 34% 112,200 6-30-2001 NOL $520,000 @ 34% $ 176,800 ====================== NOTE 4 Marketable Securities 11 BOTTOMLINE MORTGAGE, INC. Notes to Financial Statements June 30, 2001 Marketable securities are equity securities held in a single brokerage account and are shown at fair value at the balance sheet date. Net unrealized holding losses of $51,101 and $1,974 have been recorded for the years ended June 30, 2001 and 2000. NOTE 5 Warehouse Line of Credit The Company has a $2,000,000 line of credit that bears interest at 1% above the bank's reference rate. The line is used exclusively to fund pre-sold and pre-approved mortgage loans. The line is paid down when loans are sold to investor groups, and each funding must be repaid within 60 days. The line is secured by the Company's mortgage backed debt securities. At June 30, 2001 the warehouse line of credit amounted to $1,651,944 at a interest rate of 7.75%. NOTE 6 Debt The Company has the following long term debts: Bank loan in the amount of $29,465 bearing interest of 14.5%, monthly payments of $1,281 plus interest, maturity of May 2003, unsecured. Capital lease obligation in the amount of $7,504 with imputed interest of $21%, monthly payments of $1,135, maturity of February 2002, secured by furniture and equipment. Maturities of long term debt are as follows: Year ended June 30 Amount -------------------------------------------- --------------------------------- 2002 22,877 2003 14,092 2004 0 NOTE 7 Equity Transactions Prior to May 15, 2000 the Company had authorized 1,100,000 shares of a preferred class of stock with par value of $1.00 per share, paying non-cumulative dividends quarterly at 12% per annum. The preferred class of shares was non-voting, redeemable at par value and convertible to common at a rate of one for one. On May 15, 2000 the Company amended its Articles of Incorporation to authorize 50,000,000 shares of only one class of stock, that class being common stock with par value of $.001. NOTE 7 Equity Transactions (continued) ------------------------------- During the year ended June 30, 2000 the Company redeemed 75,000 preferred shares for $75,000 and issued another 25,000 preferred shares for $25,000. At May 30, 2000 the Company converted 12 BOTTOMLINE MORTGAGE, INC. Notes to Financial Statements June 30, 2001 the remaining 280,000 preferred shares to 840,000 common shares, a rate of 3 common shares for each preferred share. On May 15, 2000 the Company issued 3,400,000 common shares to officers and directors for debt and services valued at $59,900. During the year ended June 30, 2001 the Company issued 873,000 common shares for cash of $291,000 and 250,000 common shares for services valued at $83,333. In June 2001, individuals holding 76% of the common shares of the Company exchanged their shares for common shares of Bottomline Home Loan, Inc., a Nevada corporation (formerly known as CyberEnergy, Inc.). As a result of these transactions the Company became a subsidiary of Bottomline Home Loan, Inc. NOTE 8 Contingencies On May 1, 2001 a previous preferred shareholder filed suit against the Company alleging failure of the Company to repay a claimed loan of $180,000. Plaintiff seeks to recover general and special damages in an unspecified amount together with punitive damages and court costs. Discovery and trial preparation has not yet begun, no trial date has been set, nor has the Company filed an answer in the case. Management disputes the claims made and plans to vigorously contest the matter. Based solely on the allegations of the plaintiff, an adverse judgment could result in a loss in the range of $300,000. No opinion can reasonably be given as to the outcome of the suit and no loss or liability has been accrued in the financial statements. It is reasonably possible that this estimate could change within the next year, which change would have a material effect on the financial statements. Sales of Loans with Recourse The Company has agreements with investors that purchase mortgage notes from the Company. These agreements contain certain recourse provisions. The Company is required to repurchase loans in the event of the following circumstances: o Failure to deliver original documents specified by the investor o The existence of fraud in the origination of the loan o The borrower becomes delinquent during the first month after the loan is sold To date, losses from recourse have not been material. 13 NOTE 9 Going Concern The Company has suffered operating losses in recent years and its adjusted net worth has fallen below the $250,000 required to continue as a non-supervised mortgagee under HUD guidelines. These facts lend substantial doubt about the Company's ability to continue as a going concern. Managements plans include expanding its market area to increase revenues and obtaining additional equity financing. If management is unsuccessful in these plans the Company may have to significantly change the type of business it does or cease operations. The financial statements contain no adjustments that might result from the outcome of this uncertainty. NOTE 10 Concentrations The Company is involved in the real estate loan market. Fluctuations in interest rates or other market conditions within the real estate loan market may have a significant effect on the volume of business and profitability of the Company. 14 BOTTOMLINE HOME LOAN, INC. (formerly known as CYBERENERGY, INC.) and Subsidiary Pro Forma Condensed Consolidated Statement of Operations (Unaudited) On June 27, 2001, the Company acquired 76% of the issued and outstanding shares of common stock of Bottomline Mortgage, Inc. in exchange for 10,000,000 newly issued shares of the Company's common stock. The transaction will be accounted for as a reverse acquisition using the purchase method of accounting, the net effect of which is a recapitalization of the operating company. According to SFAS 141 paragraph 17, the acquiring entity for accounting purposes is the entity whose owners will have the majority of voting rights, authority to elect the governing board, or continuing senior management of the surviving entity. Subsequent to the acquisition the previous owners of Bottomline Mortgage, Inc. will have a majority of voting rights, authority to elect the governing board, and continuing senior management of Bottomline Home Loan, Inc. The accompanying condensed consolidated statement of operations illustrates the effect of the acquisition (pro forma) on the Company's results of operations. The statement is based on the historical statements of operations for the period. The statement assumes the acquisition took place on July 1, 2000. The pro forma condensed consolidated statement of operations may not be indicative of the actual results of the acquisition. The accompanying pro forma condensed consolidated statement of operations should be read in connection with the historical financial statements of the Company and Bottomline Mortgage, Inc. 15

16 BOTTOMLINE HOME LOAN, INC. (formerly known as CYBERENERGY, INC.) and Subsidiary Notes to Pro Forma Condensed Consolidated Statement of Operations (Unaudited) NOTE 1 There are no pro forma adjustments to the condensed consolidated statement of operations. Weighted number of shares outstanding was calculated assuming that the acquisition took place on July 1, 2000. 17

BOTTOMLINE HOME LOAN INC 8-K/A