8-K/A 1 csin_8ka50805r.txt AMENDED CURRENT REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported): June 22, 2005 ------------- Capital Solutions I, Inc. -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) Delaware 0-9879 13-2648442 -------------------------------------------------------------------------------- (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File number) Identification No.) 6915 Red Road, Suite 222, Coral Gables, Florida 33143 -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (305) 666-6565 ---------------- -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) 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)) SECTION 2 - FINANCIAL INFORMATION Item 2.01. Completion of Acquisition or Disposition of Assets Short Form Merger In a short-form merger consummated on June 22, 2005, Bedrock Holdings, Inc. ("Bedrock"), a wholly owned subsidiary of Capital Solutions I, Inc. (the "Company"), was merged with and into the Company This report on Form 8-K/A amends the Company's Report on Form 8-K dated June 22, 2005, which was filed on June 23, 2005 to include the financial statements and pro forma financial information required by Item 9.01 of Form 8-K. SECTION 9 - FINANCIAL STATEMENTS and EXHIBITS Item 9.01 Financial Statements and Exhibits (a) Financial Statements of Business Acquired Audited financial statements of Bedrock as of and for the year ended December 31, 2004 and unaudited financial statements of Bedrock as of and for the five months ended June 30, 2005 are filed herewith beginning on page F-1. (b) Pro Forma Financial Information The unaudited pro forma financial information required to be filed pursuant to Article 11 of Regulation S-X as of February 28, 2005 and for the nine months and year ended February 28, 2005 and May 31, 2004, respectively, is filed herewith beginning on page P-1. 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. Capital Solutions I, Inc. Date: August 5, 2005 By:/s/ CHRISTOPHER ASTROM ---------------------- Christopher Astrom, President 2 BEDROCK HOLDINGS CORPORATION FINANCIAL STATEMENTS DECEMBER 31, 2004 AND 2003 INDEX TO FINANCIAL STATEMENTS PAGE(S) AUDITED FINANCIAL STATEMENTS: Report of Independent Registered Public Accounting Firm F-2 - F3 Balance Sheets as of December 31, 2004 and 2003 F-4 Statements of Operations for the years ended December 31, 2004 ans 2003 F-5 Statements of Changes in Stockholders' Equity (Deficit) for the years ended December 31, 2004 and 2003 F-6 Statements of Cash Flow for the years ended December 31, 2004 and 2003 F-7 Notes to Financial Statements F-8 - F-14 F-1 BAGELL, JOSEPHS & COMPANY, L.L.C. Certified Public Accountants High Ridge Commons Suites 400-403 200 Haddonfield Berlin Road Gibbsboro, New Jersey 08026 (856) 346-2828 Fax (856) 346-2882 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------------------------------------- Board of Directors Bedrock Holdings Corporation Boca Raton, Florida We have audited the accompanying balance sheets of Bedrock Holdings Corporation (the "Company") as of December 31, 2004 and 2003 and the related statements of operations, changes in stockholders' equity (deficit), and cash flows for the years 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 audits. We have conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits 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. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 8 to the financial statements, the Company has incurred operating losses from continuing operations and had a deficit at December 31, 2004 and 2003. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in addressing these matters are more fully discussed in Note 8. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. MEMBER OF: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS SEC PRACTICE SECTION OF THE AICPA (SECPSI) NEW JERSEY SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS PENNSYLVANIA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS FLORIDA STATE BOARD OF ACCOUNTANCY F-2 In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bedrock Holdings Corporation as of December 31, 2004 and 2003 and the results of its operations, changes in stockholders' equity (deficit) and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. /s/BAGELL, JOSEPHS & COMPANY, L.L.C. BAGELL, JOSEPHS & COMPANY, L.L.C. Certified Public Accountants Gibbsboro, New Jersey July 25, 2005 F-3 BEDROCK HOLDINGS CORPORATION BALANCE SHEETS DECEMBER 31, 2004 AND 2003 ASSETS 2004 2003 --------- --------- CURRENT ASSETS Cash $ 739 $ 4,540 Investments - 9,000 --------- --------- TOTAL CURRENT ASSETS 739 13,540 Fixed assets, net of depreciation 45 140 --------- --------- TOTAL ASSETS $ 784 $ 13,680 ========= ========= LIABILITIES AND STOCKHOLDERS' (DEFICIT) CURRENT LIABILITIES Lines of Credit $ 64,777 $ 582 Demand note - 25,000 Accounts payable 56 2,852 --------- --------- TOTAL CURRENT LIABILITIES 64,833 28,434 STOCKHOLDERS' (DEFICIT) Common stock, $1.00 par value; 500 shares authorized, issued and outstanding 500 500 Accumulated other comprehensive income - 8,000 Accumulated deficit (64,549) (23,254) --------- --------- (64,049) (14,754) --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ 784 $ 13,680 ========= ========= The accompanying notes are an integral part of these financial statements. F-4 BEDROCK HOLDINGS CORPORATION STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 2004 2003 --------- ---------- REVENUES $ - $ - --------- ---------- OPERATING EXPENSES Salaries and wages 9,183 35,700 Compensation of officers - 20,000 Professional fees 1,250 2,300 Marketing expenses 400 2,175 Other general and administrative expenses 31,859 31,507 Depreciation expense 94 736 Interest expense 2,793 38 --------- ---------- TOTAL OPERATING EXPENSES 45,579 92,456 --------- ---------- LOSS BEFORE OTHER INCOME (LOSS) (45,579) (92,456) --------- ---------- OTHER INCOME (LOSS) Realized gain (loss) from sale of securities 4,284 (62,038) --------- ---------- TOTAL OTHER INCOME (LOSS) 4,284 (62,038) --------- ---------- NET LOSS BEFORE PROVISION FOR INCOME TAXES (41,295) (154,494) PROVISION FOR INCOME TAXES - - --------- ---------- NET LOSS APPLICABLE TO COMMON SHARES $(41,295) $(154,494) ========= ========== BASIC AND DILUTED LOSS PER SHARE $ (82.59) $ (308.99) ========= ========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES 500 500 ========= ========== The accompanying notes are an integral part of these financial statements. F-5 BEDROCK HOLDINGS CORPORATION STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

The accompanying notes are an integral part of these financial statements. F-6

The accompanying notes are an integral part of these financial statements. F-7 BEDROCK HOLDINGS CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004 AND 2003 NOTE 1- ORGANIZATION ------------ The Company was incorporated in Florida on May 24, 1993 as an S Corporation. The Company was formed as a holding company that performs marketing services to various companies. In January 2004, the Company had its "S" status terminated due to the transfer of 42% of its common stock to a "C" Corporation. The "C" Corporation was a former publicly traded company named SERAC Holdings, Inc. ("SERAC). SERAC in 2004 was deregistered and is currently a private company. NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------------------------ USE OF ESTIMATES ---------------- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. CASH AND CASH EQUIVALENTS ------------------------- The Company considers all highly liquid debt instruments and other short- term investments with an initial maturity of three months or less to be cash or cash equivalents. At December 31, 2004 and 2003, the Company maintained cash and cash equivalent balances at one financial institution that is insured by the Federal Deposit Insurance Corporation, whose amounts did not exceed the insured limit of $100,000. F-8 BEDROCK HOLDINGS CORPORATION NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2004 AND 2003 NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ------------------------------------------------------ INCOME TAXES ------------ Deferred income taxes are reported using the liability method. Deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. (See Note 1) ADVERTISING COSTS ----------------- The Company will expense the costs associated with advertising as they are incurred. Advertising expense for the years ended December 31, 2004 and 2003 was $400 and $2,175, respectively. FIXED ASSETS ------------ Fixed assets are stated at cost less accumulated depreciation and amortization. The Company computes depreciation and amortization using an accelerated method over the estimated useful lives of the assets acquired as follows: Equipment and fixtures 5 - 7 years Leasehold improvements 15 years F-9 BEDROCK HOLDINGS CORPORATION NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2004 AND 2003 NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ------------------------------------------------------ FIXED ASSETS (CONTINUED) ------------------------ The carrying amount of all long-lived assets is evaluated periodically to determine whether adjustment to the useful life or to the unamortized balance is warranted. Such evaluation is based principally on the expected utilization of the long-lived assets and the projected undiscounted cash flows of the operations in which the long-lived assets are used. EARNINGS (LOSS) PER SHARE OF COMMON STOCK ----------------------------------------- Historical net loss per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) includes additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. The following is a reconciliation of the computation for basic and diluted EPS for the years ended December 31, 2004 and 2003: 2004 2003 ---------- ---------- Net (loss) $ (49,294) $(154,494) ---------- ---------- Weighted-average common shares Outstanding (Basic) 500 500 Weighted-average common stock Equivalents Stock options - - Warrants - - ---------- ---------- Weighted-average common shares Outstanding (Diluted) 500 500 ========== ========== There were no options or warrants outstanding at December 31, 2004 and 2003. F-10 BEDROCK HOLDINGS CORPORATION NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2004 AND 2003 NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ------------------------------------------------------ REVENUE AND COST RECOGNITION ---------------------------- The Company records its transactions under the accrual method of accounting whereby income gets recognized when the services are rendered and collection is reasonably assured. INVESTMENTS ----------- In accordance with SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities", securities are classified into three categories: held-to-maturity, available-for-sale and trading. The Company's investments consist of equity securities classified as valuable-for-sale securities. Accordingly, they are carried at fair market value in accordance with SFAS No. 115. Further SFAS No. 115 unrealized gains and losses for available-for-sale securities are excluded from earnings, and reported net of deferred income taxes, as a separate component of stockholder's equity, unless the loss is classified as other than a temporary decline in market value. NOTE 3- FIXED ASSETS Fixed assets as of December 31, 2004 and 2003 were as follows: Equipment $ 17,624 $ 17,624 Leasehold improvements 10,302 10,302 ------- ------ 27,926 27,926 Less: accumulated depreciation (27,881) (27,786) -------- -------- Fixed assets, net $ 45 $ 140 ======== ======== Depreciation expense was $94 and $736 for the years ended December 31, 2004 and 2003, respectively. F-11 BEDROCK HOLDINGS CORPORATION NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2004 AND 2003 NOTE 4- INVESTMENTS ----------- The following is a summary of investments at December 2004 and 2003 at fair market value: 2004 2003 --------- --------- Portfolio of common stocks at fair market value $ - $ 9,000 ========= ========= The marketable securities appreciated $0 and $8,000 for the years ended 2004 and 2003, respectively. Additionally, no amounts were reclassified out of accumulated other comprehensive income/(loss) for the periods presented. NOTE 5- NOTE PAYABLE ------------ The Company owed $25,000 to SERAC Holdings, Inc. in 2003. The terms of the note were due on demand with no interest charged. Effective January 4, 2004, the Company's shareholders personally issued SERAC Holding, Inc. 42% of their stock in exchange for the cancellation of the $25,000 note. NOTE 6- LINES OF CREDIT --------------- The Company has two lines of credit with Union Planters Bank. The terms are as follows: Line of Credit #1 is a revolving line of credit renewed annually with interest at the prime rate plus 2.5%. The Company can borrow up to $40,000. As of December 31, 2004 and 2003, the amount outstanding on the line of credit was $39,777 and $582, respectively. Line of Credit #2 is a revolving line of credit with interest at the prime rate plus 3.00%. The line expires February 9, 2011. The Company can borrow up to $25,000. As of December 31, 2004 and 2003, the amount outstanding on the line of credit was $25,000 and $0, respectively. F-12 BEDROCK HOLDINGS CORPORATION NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2004 AND 2003 NOTE 7- PROVISION FOR INCOME TAXES -------------------------- Deferred income taxes will be determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company's assets and liabilities. Deferred income taxes will be measured based on the tax rates expected to be in effect when the temporary differences are included in the Company's consolidated tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases. At December 31, 2004, deferred tax assets consist of the following: Net deferred tax assets $ 6,194 Less: valuation allowance (6,194) -------- $ -0- ======== The Company established valuation allowances equal to the full amount of the deferred tax assets due to the uncertainty of the utilization of the operating losses in future periods. NOTE 8- GOING CONCERN ------------- The accompanying financial statements have been presented in accordance with accounting principles generally accepted in the United States of America, which assume the continuity of the Company as a going concern. The Company has incurred net losses for the years ended December 31, 2004 and 2003, and has an accumulated deficit. Additionally, the Company does not have the revenue stream necessary to operate or develop its business. This raises substantial doubt about its ability to continue as a going concern. F-13 BEDROCK HOLDINGS CORPORATION NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2004 AND 2003 NOTE 8- GOING CONCERN (CONTINUED) ------------------------- Management has formulated and is in the process of implementing its business plan intended to develop steady revenues and income in areas of operation. This plan includes the following, subject to obtaining the necessary financing: o Signing up new clients o Seeking out new companies for possible merge (See Note 9) Presently, the Company cannot ascertain the eventual success of management's plans with any degree of certainty. The accompanying consolidated financial statements do not include any adjustments that might result from the eventual outcome of the risks and uncertainties described above. NOTE 9- SUBSEQUENT EVENTS ----------------- On May 26, 2005, Capital Solutions I, Inc., ("The Company") consummated a Share Exchange Agreement with Bedrock Holdings, Inc., a privately held Company whereby, Capital Solutions I, Inc., agreed to acquire all the outstanding capital stock of Bedrock Holdings, Inc. The acquisition will be accounted for under the purchase method of accounting. Accordingly, Bedrock Holdings, Inc. will be treated as a wholly owned subsidiary of Capital Solutions I, Inc.. F-14 BEDROCK HOLDINGS CORPORATION REVIEWED FINANCIAL STATEMENTS MAY 31, 2005 AND 2004 INDEX TO REVIEWED FINANCIAL STATEMENTS PAGE(S) REVIEWED FINANCIAL STATEMENTS: Report of Independent Registered Public Accounting Firm F-16 Balance Sheets as of May 31, 2005 and 2004 F-17 Statements of Operations for the five months ended May 31, 2005 and 2004 F-18 Statements of Cash Flow for the five months ended May 31, 2005 and 2004 F-19 Reviewed Statement of Changes in Stockholders' (Deficit) for the five months ended May 31, 2005 and 2004 F-20 Notes to Reviewed Financial Statements F-21 - F26 F-15 BAGELL, JOSEPHS & COMPANY, L.L.C. Certified Public Accountants High Ridge Commons Suites 400-403 200 Haddonfield Berlin Road Gibbsboro, New Jersey 08026 (856) 346-2828 Fax (856) 346-2882 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------------------------------------- Board of Directors Bedrock Holdings Corporation Boca Raton, Florida We have reviewed the accompanying balance sheets of Bedrock Holdings Corporation (the "Company") as of May 31, 2005 and 2004 and the related statements of operations, changes in stockholders' (deficit), and cash flows for the five months then ended. These interim financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit in accordance with standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the financial statements referred to above in order for them to be in conformity with U.S. 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 6 to the financial statements, the Company has sustained operating losses and capital deficits that raise substantial doubt about its ability to continue as a going concern. Management's operating and financing plans in regard to these matters are also discussed in Note 6. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. /s/BAGELL, JOSEPHS & COMPANY, L.L.C. BAGELL, JOSEPHS & COMPANY, L.L.C. Certified Public Accountants Gibbsboro, New Jersey July 25, 2005 MEMBER OF: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS SEC PRACTICE SECTION OF THE AICPA (SECPSI) NEW JERSEY SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS PENNSYLVANIA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS FLORIDA STATE BOARD OF ACCOUNTANCY F-16 BEDROCK HOLDINGS CORPORATION REVIEWED BALANCE SHEETS MAY 31, 2005 AND 2004 ASSETS 2005 2004 --------- --------- CURRENT ASSETS Cash $ 133 $ 5,654 Other current assets - 6,360 --------- --------- TOTAL CURRENT ASSETS 133 12,014 Fixed assets, net of depreciation 26 100 --------- --------- TOTAL ASSETS $ 159 $ 12,114 ========= ========= LIABILITIES AND STOCKHOLDERS' (DEFICIT) CURRENT LIABILITIES Lines of Credit $ 64,777 $ 33,581 Loans from shareholders (net) 6,352 9,231 Accrued payroll taxes - 56 --------- --------- TOTAL CURRENT LIABILITIES 71,129 42,868 --------- --------- STOCKHOLDERS' (DEFICIT) Common stock, $1.00 par value; 500 shares authorized, issued and outstanding 500 500 Accumulated other comprehensive - 5,960 Accumulated deficit (71,470) (37,214) --------- --------- Total stockholders' (deficit) (70,970) (30,754) --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ 159 $ 12,114 ========= ========= F-17 BEDROCK HOLDINGS CORPORATION REVIEWED STATEMENTS OF OPERATIONS FOR THE FIVE MONTHS ENDED MAY 31, 2005 AND 2004 2005 2004 --------- --------- REVENUE $ - $ - --------- --------- OPERATING EXPENSES Salaries and wages - 9,183 Other general and administrative expenses 5,433 4,820 Depreciation expense 20 40 Interest expense 2,192 692 --------- --------- TOTAL OPERATING EXPENSES 7,645 14,735 --------- --------- LOSS BEFORE OTHER INCOME (7,645) (14,735) --------- --------- OTHER INCOME Other 724 - Gain from sale of securities - 775 --------- --------- TOTAL OTHER INCOME 724 775 --------- --------- NET LOSS BEFORE PROVISION FOR INCOME TAXES (6,921) (13,960) PROVISION FOR INCOME TAXES - - --------- --------- NET LOSS APPLICABLE TO COMMON SHARES $ (6,921) $(13,960) ========= ========= NET LOSS PER BASIC AND DILUTED SHARE $ (13.84) $ (27.92) ========= ========= WEIGHTED AVERAGE NUMBER OF COMMON SHARES 500 500 ========= ========= F-18 BEDROCK HOLDINGS CORPORATION REVIEWED STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT) FOR THE FIVE MONTHS ENDED MAY 31, 2005 AND 2004

F-19 BEDROCK HOLDINGS CORPORATION REVIEWED STATEMENTS OF CASH FLOWS FOR THE FIVE MONTHS ENDED MAY 31, 2005 AND 2004 2005 2004 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (6,921) $(13,960) ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH (USED IN) OPERATING ACTIVITIES: Depreciation expense 20 40 CHANGES IN ASSETS AND LIABILITIES Decrease in accrued payroll taxes (56) (2,796) --------- --------- NET CASH (USED IN) OPERATING ACTIVITIES (6,957) (16,716) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Securities purchased, securities sold - net - 600 --------- --------- NET CASH PROVIDED BY INVESTING ACTIVITIES - 600 --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds form Officer loans 6,351 9,231 Repayment of note payable - (25,000) Proceeds from line of credit - 33,000 --------- --------- NET CASH PROVIDED BY FINANCING ACTIVITIY 6,351 17,231 --------- --------- NET CHANGE IN CASH AND CASH EQUIVALENTS (606) 1,115 CASH AND CASH EQUIVALENTS -BEGINNING OF PERIOD 739 4,540 --------- --------- CASH AND CASH EQUIVALENTS - END OF PERIOD $ 133 $ 5,654 ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: DURING THE PERIOD CASH WAS PAID FOR THE FOLLOWING: Interest $ 2,192 $ 692 ========= ========= SUPPLEMENTAL DISCLOSURE OF NON CASH ACTIVITY: Unrealized net gain on securities $ - $ 5,960 ========= ========= F-20 BEDROCK HOLDINGS CORPORATION NOTES TO REVIEWED FINANCIAL STATEMENTS MAY 31, 2005 AND 2004 NOTE 1- ORGANIZATION ------------ The Company was incorporated in Florida on May 24, 1993 as an S Corporation. The Company was formed as a holding company that performs marketing services to various companies. In January 2004, the Company had its "S" status terminated due to the transfer of 42% of its common stock to a C Corporation. The C Corporation was a former publicly traded company named SERAC Holdings, Inc. ("SERAC"). SERAC in 2004 was deregistered and is currently a private company. NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------------------------ USE OF ESTIMATES ---------------- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. CASH AND CASH EQUIVALENTS ------------------------- The Company considers all highly liquid debt instruments and other short- term investments with an initial maturity of three months or less to be cash or cash equivalents. At May 31, 2005 and 2004, the Company maintained cash and cash equivalent balances at one financial institution that is insured by the Federal Deposit Insurance Corporation, whose amounts did not exceed the insured limit of $100,000. F-21 BEDROCK HOLDINGS CORPORATION NOTES TO REVIEWED FINANCIAL STATEMENTS (CONTINUED) MAY 31, 2005 AND 2004 NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ------------------------------------------------------ INCOME TAXES ------------ Deferred income taxes are reported using the liability method. Deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. (See Note 1) ADVERTISING COSTS ----------------- The Company will expense the costs associated with advertising as they are incurred. Advertising expense for the five months ended May 31, 2005 and 2004 was $-0- and $-0-, respectively. FIXED ASSETS ------------ Fixed assets are stated at cost less accumulated depreciation and amortization. The Company computes depreciation and amortization using an accelerated method over the estimated useful lives of the assets acquired as follows: Equipment and fixtures 5 - 7 years Leasehold improvements 15 years The carrying amount of all long-lived assets is evaluated periodically to determine whether adjustment to the useful life or to the unamortized balance is warranted. Such evaluation is based principally on the expected utilization of the long-lived assets and the projected undiscounted cash flows of the operations in which the long-lived assets are used. F-22 BEDROCK HOLDINGS CORPORATION NOTES TO REVIEWED FINANCIAL STATEMENTS (CONTINUED) MAY 31, 2005 AND 2004 NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ------------------------------------------------------ EARNINGS (LOSS) PER SHARE OF COMMON STOCK ----------------------------------------- Historical net loss per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) includes additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. The following is a reconciliation of the computation for basic and diluted EPS for the five months ended May 31, 2005 and 2004: 2005 2004 -------- -------- Net (loss) (6,921) (13,960) -------- -------- Weighted-average common shares outstanding (Basic) 500 500 Weighted-average common stock equivalents Stock Options - - Warrants - - -------- -------- Weighted-average common shares outstanding Diluted 500 500 ======== ======== There were no options and warrants outstanding as of May 31, 2005 and 2004. F-23 BEDROCK HOLDINGS CORPORATION NOTES TO REVIEWED FINANCIAL STATEMENTS (CONTINUED) MAY 31, 2005 AND 2004 NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ------------------ REVENUE AND COST RECOGNITION ---------------------------- The Company records its transactions under the accrual method of accounting whereby income gets recognized when the services are rendered and collection is reasonably assured. INVESTMENTS ----------- In accordance with SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities", securities are classified into three categories: held-to-maturity, available-for-sale and trading. The Company's investments consist of equity securities classified as valuable-for-sale securities. Accordingly, they are carried at fair market value in accordance with SFAS No. 115. Further SFAS No. 115 unrealized gains and losses for available-for-sale securities are excluded from earnings, and reported net of deferred income taxes, as a separate component of stockholder's equity, unless the loss is classified as other than a temporary decline in market value. NOTE 3- FIXED ASSETS ------------ Fixed assets as of May 31, 2005 and 2004 were as follows: 2005 2004 ---------- ---------- Equipment $ 17,624 $ 17,624 Leasehold improvements 10,302 10,302 ---------- ---------- 27,926 27,926 Less: accumulated depreciation 27,900 27,826 ---------- ---------- Fixed assets, net $ 26 $ 100 ========== ========== Depreciation expense was $20 and $40 for the five months ended May 31, 2005 and 2004, respectively. F-24 BEDROCK HOLDINGS CORPORATION NOTES TO REVIEWED FINANCIAL STATEMENTS (CONTINUED) MAY 31, 2005 AND 2004 NOTE 4- LINES OF CREDIT The Company has two lines of credit with Union Planters Bank. The terms are as follows: Line of Credit #1 is a revolving line of credit reviewed annually with interest at the prime rate plus 2.5%. The Company can borrow up to $40,000. As of May 31, 2005 and 2004, the amount outstanding on the line of credit was $39,777 and $8,581, respectively. Line of Credit #2 is a revolving line of credit with interest at the prime rate plus 3.00%. The line expires February 9, 2011. The Company can borrow up to $25,000. As of May 31, 2005 and 2004, the amount outstanding on the line of credit was $25,000. NOTE 5- PROVISION FOR INCOME TAXES Deferred income taxes will be determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company's assets and liabilities. Deferred income taxes will be measured based on the tax rates expected to be in effect when the temporary differences are included in the Company's consolidated tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases. At May 31, 2005, deferred tax assets consist of the following: Net deferred tax assets $ 7,500 Less: valuation allowance (7,500) ----------- $ -0- =========== The Company established valuation allowances equal to the full amount of the deferred tax assets due to the uncertainty of the utilization of the operating losses in future periods. F-25 BEDROCK HOLDINGS CORPORATION NOTES TO REVIEWED FINANCIAL STATEMENTS (CONTINUED) MAY 31, 2005 AND 2004 NOTE 6- GOING CONCERN ------------- The accompanying financial statements have been presented in accordance with accounting principles generally accepted in the United States of America, which assume the continuity of the Company as a going concern. The Company has incurred net losses for the five months ended May 31, 2005 and 2004, and has an accumulated deficit. Additionally, the Company does not have the revenue stream necessary to operate or develop its business. This raises substantial doubt about its ability to continue as a going concern. Management has formulated and is in the process of implementing its business plan intended to develop steady revenues and income in areas of operation. This plan includes the following, subject to obtaining the necessary financing: o Signing up new clients o Seeking out new companies for possible merge (See Note 7) Presently, the Company cannot ascertain the eventual success of management's plans with any degree of certainty. The accompanying consolidated financial statements do not include any adjustments that might result from the eventual outcome of the risks and uncertainties described above. NOTE 7- ACQUISITION ----------- On May 26, 2005, Capital Solutions I, Inc., ("The Company") consummated a Share Exchange Agreement with Bedrock Holdings, Inc., a privately held Company whereby, Capital Solutions I, Inc., agreed to acquire all the outstanding capital stock of Bedrock Holdings, Inc. The acquisition will be accounted for under the purchase method of accounting. Accordingly, Bedrock Holdings, Inc. will be treated as a wholly owned subsidiary of Capital Solutions I, Inc. F-26 CAPITAL SOLUTIONS I, INC., AND SUBSIDIARY UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FEBRUARY 28, 2005 INDEX TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS PAGE(S) Introduction to Unaudited Pro Forma Condensed Consolidated Financial Statements P-2 Balance Sheet - February 28, 2005 P-3 Statement of Operations for the nine months ended February 28, 2005 P-4 Statement of Operations for the Year ended May 31, 2004 P-5 Notes to Financial Statements P-6 P-1 CAPITAL SOLUTIONS I, INC., AND SUBSIDIARY INTRODUCTION TO UNAUDITIED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS On May 26, 2005, Capital Solutions I, Inc., ("The Company") consummated a Share Exchange Agreement with Bedrock Holdings, Inc., a privately held Company whereby, Capital Solutions I, Inc., agreed to acquire all the outstanding capital stock of Bedrock Holdings, Inc. The acquisition will be accounted for under the purchase method of accounting. Accordingly, Bedrock Holdings, Inc. will be treated as a wholly owned subsidiary of Capital Solutions I, Inc. The accompanying unaudited pro forma condensed consolidated balance sheet as of February 28, 2005 has been presented with a consolidated subsidiary at February 28, 2005. The unaudited pro forma condensed consolidated statements of operations for the nine months ended February 28, 2005 purport what the acquisition would look like. The year ended May 31, 2004 have been presented as if the acquisition had occurred June 1, 2003 combined. The unaudited pro forma condensed consolidated statements do not necessarily represent the actual results that would have been achieved had the companies been combined at the beginning of the year, nor may they be indicative of future operations. These unaudited pro forma condensed financial statements should be read in conjunction with the companies' respective historical financial statements and notes included thereto. P-2 CAPITAL SOLUTIONS I, INC. AND SUBSIDIARY UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET FEBRUARY 28, 2005

P-3 CAPITAL SOLUTIONS I, INC. AND SUBSIDIARY UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED FEBRUARY 28, 2005

P-4 CAPITAL SOLUTIONS I, INC. AND SUBSIDIARY UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED MAY 31, 2004

P-5 CAPITAL SOLUTIONS I, INC., AND SUBSIDIARY NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following unaudited pro forma adjustments are included in the accompanying unaudited pro forma condensed consolidated balance sheet as of February 28, 2005 and the unaudited pro forma condensed consolidated statements of operations for the nine months ended February 28, 2005 and for the year ended May 31, 2004, to reflect the combination of Capital Solutions I, Inc and Bedrock Holdings, Inc. A. To record the issuance of stock and purchase of the Company. P-6

CAPITAL SOLUTIONS I, INC. 8-K/A