8-K 1 v07191_8k.txt ================================================================================ UNITED STATES 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): September 24, 2004 Commission File Number 000-31090 SYSTEMS EVOLUTION INC. -------------------------- (Exact name of registrant) IDAHO 82-0291029 ------------------------ ------------------------------------ (State of incorporation) (I.R.S. Employer Identification No.) 10707 Corporate Drive, Suite 156, Stafford, Texas 77477 ---------------------------------------------------------- (Address of principal executive offices and zip code) (281) 265-7075 (Registrant's telephone number) ================================================================================ Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c)) -------------------------------------------------------------------------------- Item 2.01. Completion of Acquisition or Disposition of Assets. On September 24, 2004, Systems Evolution Inc. ("we" or the "Company") completed the acquisition of Duration Software, Inc. of Austin, Texas ("Duration"). Duration's primary focus is on custom applications and integration solutions for government and healthcare. Its core service offerings include: Application Design and Development; Application Integration; Database Design, Development and Integration; Project and Contract Management; and Knowledge Transfer. Since inception in mid-1997, Duration has grown from a small startup into one of the most respected professional services firms in Texas, due largely to its commitment to create a company focused on exceptional client service and excellence in a clearly defined market niche. In connection with the acquisition of Duration from its five stockholders, we paid the selling stockholders $450,000 in cash, and issued them $300,000 aggregate principal amount of our non-interest bearing notes due February 1, 2007, and 15,000,000 shares of our common stock. Item 2.03. Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of Registrant. In connection with the acquisition of Duration, we issued to the five stockholders of Duration $300,000 aggregate principal amount of our non-interest bearing notes ("Notes"), due in three equal annual installments of principal, payable on February 1, 2005, February 1, 2006 and February 1, 2007 (maturity). Any such stockholder that voluntarily leaves the employ of the Company forfeits all future payments required under the terms of the Note held by that stockholder. The note payable due to David R. McCormick would decrease as follows should any selling stockholder voluntarily leave the employ of the Company: by 28.057% for Mr. Montgomery; by 19.714% for Mr. Steinle; by 17.714% for Mr. Prevatt; and by 12.458% for Mr. Friesen, as to amounts have not been paid to that point in time. The Notes provide that if default be made in the payment when due of any part or installment of the Notes, then the whole sum of the principal will become immediately due and payable at the option of the holder thereof, without notice. Further, if the Company should at any time fail in business or become insolvent, or commit an act of bankruptcy, or if any writ of execution, garnishment, attachment, or other legal process is issued against any deposit account of or other property of the Company, or if any assessment for taxes against the Company, other than taxes on real property, is made by the federal or state government, or any department of the federal or state government, or if the Company fails to notify the holder of any Note of any material change in its financial condition, then and in such case all of the obligations of the Company will, at the option of the holder, become due and payable immediately without demand or notice. -2- Item 3.02. Unregistered Sales of Equity Securities.

~~CURRENT~~---------------- ~~REPORT~~--------------------------------------- ~~FOR~~----------------- ~~ISSUERS~~---------------- ~~SUBJECT~~------------------------- TODate ~~THE~~Title and Amount* Purchaser Underwriter Total Offering Price/ Underwriting Discounts ---------------- --------------------------------------- ----------------- ---------------- ------------------------- September 24, Warrants to purchase an aggregate of Financial NA NA/NA 2004 200,000 shares of common stock Consultant ---------------- --------------------------------------- ----------------- ---------------- ------------------------- September 24, Warrants to purchase an aggregate of Financial NA NA/NA 2004 100,000 shares of common stock consultant ---------------- --------------------------------------- ----------------- ---------------- ------------------------- September 22, 100,000 shares of common stock for Equipment vendor NA $0.38 per share/NA 2004 the purchase of equipment ---------------- --------------------------------------- ----------------- ---------------- ------------------------- September 24, 15,000,000 shares of common stock Stockholders of NA $0.15 per share/NA 2004 issued to the five stockholders of Duration Duration Software Inc. in connection Software, Inc. with its acquisition by the Company ---------------- --------------------------------------- ----------------- ---------------- ------------------------- September 24, $300,000 principal amount of Stockholders of NA $300,000/NA 2004 promissory notes due February 1, Duration 2007, issued to the five stockholders Software, Inc. of Duration Software Inc. in connection with its acquisition by the Company ---------------- --------------------------------------- ----------------- ---------------- -------------------------

* The common stock, Notes and warrants listed in the table were issued to a limited number of investors and therefore the transactions were exempt from registration under Section 4(2) of the Securities Act, as transactions not involving any public offering. Item 9.01. Financial Statements and Exhibits. (c) Exhibits. Exhibit No. Description ----------- ----------- 4.8 Form of Promissory Note due February 1, 2007 issued by Systems Evolution Inc. to the stockholders of Duration Software, Inc. in connection with the acquisition of Duration Software Inc. 10.6 Acquisition Agreement, dated August 30, 2004, by and among the Company, Systems Evolution Inc., a Texas corporation, Duration Software, Inc. and the stockholders of Duration Software, Inc. -3- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SYSTEMS EVOLUTION, INC. Dated: September 30, 2004 By: /s/ Robert C. Rhodes --------------------------------- Robert C. Rhodes Chief Executive Officer -4-

1934 ACT REPORTING REQUIREMENTS

FORM 8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

CURRENT REPORT

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

August 20, 2004

Date of Report

(Date of Earliest Event Reported)

SYSTEMS EVOLUTION INC.

(Exact name of registrant as specified in its charter)

IDAHO	000-31090	82-0291029
(State or other jurisdiction Identification No.)	(Commission File Number)	(IRS Employer of incorporation)

10707 Corporate Drive, Suite 156

Stafford, Texas 77477

(Address of principal executive offices (zip code))

(281) 265-7075

(Registrant’s telephone number, including area code)

ITEM 4.01. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT

Malone & Bailey, PLLC (the "Former Accountant") was dismissed on August 20, 2004 as Systems Evolution Inc.’s independent auditors. Malone & Bailey’s audit reports as of May 31, 2003 and 2002 and for the two years then on the Systems Evolutions Inc.'s financial statements, did not contain an adverse opinion or disclaimer of opinion, or qualification or modification as to uncertainty, audit scope, or accounting principles, except that the report indicated that Systems Evolution Inc. has suffered recurring losses and its need to raise additional capital that raise substantial doubt about its ability to continue as a going concern.

During the two most recent fiscal years ended May 31, 2003 and 2002 and in the subsequent interim periods through the date of dismissal, there were no disagreements with Malone & Bailey, PLLC on any matters of accounting principles or practices, financial statement disclosure, or auditing scope and procedures which, if not resolved to the satisfaction of Malone & Bailey PLLC would have caused Malone & Bailey, PLLC to make reference to the matter in their report. Systems Evolution Inc. has requested Malone & Bailey, PLLC to furnish it a letter addressed to the Commission stating whether it agrees with the above statements. A copy of that letter, dated August 30, 2004 is filed as Exhibit 16 to this Form 8-K. Lopez, Blevins, Bork & Associates, L.L.P. was engaged on August 30, 2004 as Systems Evolution Inc.'s principal accountant to audit the financial statements of Systems Evolution Inc. The decision to change accountants was approved by the audit committee of the Board of Directors.

During the years ended May 31, 2004 and 2003 and subsequent to May 31, 2004 through the date hereof, neither Systems Evolution Inc. nor anyone on its behalf consulted with Lopez, Blevins, Bork & Associates, L.L.P. regarding either the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on Systems Evolution Inc.'s financial statements, nor has Lopez, Blevins, Bork & Associates, L.L.P. provided to Systems Evolution Inc. a written report or oral advice regarding such principles or audit opinion or any matter that was the subject of a disagreement or reportable events set forth in Item 304(a)(iv) and (v), respectively, of Regulation S-K with Systems Evolution Inc.'s former accountant.

Systems Evolution Inc. has requested Lopez, Blevins, Bork & Associates, L.L.P. review the disclosure in this report on Form 8-K and provided Lopez, Blevins, Bork & Associates, L.L.P. the opportunity to furnish Systems Evolution Inc. with a letter addressed to the Commission containing any new information, clarification of Systems Evolution Inc.'s expression of its views, or the respects in which Lopez, Blevins, Bork & Associates, L.L.P. does not agree with the statements made by Systems Evolution Inc. in this report. Lopez, Blevins, Bork & Associates, L.L.P. has advised Systems Evolution Inc. that no such letter need be issued.

ITEM 9.01. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS

(a) EXHIBITS

16.21 Letter from Malone & Bailey, PLLC regarding change in certifying accountant.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.

Systems Evolution Inc.

By: /s/ Robert C. Rhodes

Robert C. Rhodes

Chief Executive Office

Dated: August 30, 2004

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