U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-KSB
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1998
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-26886
INTERNET HOLDINGS, INC.
(Exact name of Company as specified in its charter)
Utah 13-3758042
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
c/o Beckman, Millman & Sanders, LLP
116 John Street - Suite 1313
New York, New York 10038
(Address of principal executive offices) (Zip Code)
Company's telephone number, including area code: (212) 406-4700
Securities registered under Section 12(b) of the
Exchange Act: None
Securities registered under Section 12(g) of the
Exchange Act: None
Check whether the issuer (1) filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act
during the past 12 months (or for such shorter period
that the registrant was required to file such reports),
and (2) had been subject to such filing requirements
for the past 90 days. Yes [_] No [X]
Check if there is no disclosure of delinquent filers
in response to Item 405 of Regulation S-B contained in
this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part
III of this Form 10-KSB or any amendment to this Form
10-KSB [X]
State issuer's revenue for its most recent
fiscal year: $ 79
State the aggregate market value of the
voting stock held by non-affiliates
computed by reference to the price at
which the stock was sold, or the average
bid and asked price of such stock, as of
a specified date within the past 60
days: $4,503,873 as of
December 30, 1998
State the number of shares outstanding
of each of the Registrant's classes of
common equity as of the latest 2,119,470 shares as of
practicable date: December 31, 1998
-1-
<PAGE>
PART I
Item 1. Description of Business
Internet Holdings, Inc. (the "Company" or the "Registrant") had no
operations during this reporting period, following the divestiture of the
Company's only operating subsidiary Chiron Systems Ltd. ("CSL") with effect from
December 19, 1997; pursuant to the acquisition agreement dated May 22, 1997. The
structure of the divestiture was that the Company delivered to certain
shareholders of the Company who had previously owned CSL all the outstanding
shares in CSL. The CSL shareholders returned to the Company the shares held by
them pursuant to the acquisition agreement.
On July 28, 1998, CSL's creditors placed CSL into involuntary liquidation.
As a result of the collapse and insolvency of CSL, the Company was advised by
its lawyers that any rights it may have had under the acquisition agreement
against CSL were not worth pursuing because even if a judgment were obtained,
there was no prospect of any payment being made to the Company.
As a result of this divestiture and the failure of CSL, the Company was
unable to deliver products and technology as contracted under agreements with
its joint venture partners. This failure led to legal proceedings. The Company
countercharged that the assets purchased by it from its joint venture partners
had not been effectively transferred. During the period September 1997 to
October 1999 the Company was unable to raise funds to develop its business,
unable to settle the outstanding litigation relating to its joint ventures and
had its indebtedness been demanded the Company would have been unable to repay.
In November 1999, the Company finally settled these legal proceedings and
entered into a comprehensive settlement agreement. The adjudication of this
matter enabled the Company to move forward. By this agreement the Company agreed
not to pursue claims against certain assets purchased from the joint venture
partners, the joint venture partners agreed not to pursue claims against the
Company for alleged negligence and breach of contract and the Company was
released from debts totaling approximately $300,000. This resulted in a net
write off to the Company of $1.9 million.
Following the planned appointment of additional management and the
settlement of the legal proceedings the Company can now proceed to rebuild its
business.
Marketing
The Company had no sales during the year.
Employees
None
2
<PAGE>
Item 2. Description of Property
During the year, the Company did not maintain offices. A mailing address
and facility for meetings is maintained at the offices of the Company's legal
counsel Beckman, Millman & Sanders, LLP.
Item 3. Legal Proceedings
During the period of the Company's ownership of CSL, in addition to other
matters, the Company devoted considerable resources to expanding the market for
CSL's products in Asia and Africa. Both these regions possess rapidly growing
markets where there is substantial demand for new telephony technology.
The efforts in these new markets were extremely successful with joint
ventures being agreed in both Asia and Africa. However, the collapse of CSL and
the consequent inability of the Company to supply products or technology to
either joint venture left the Company exposed to allegations of breach of
contract.
The continuing defense against legal proceedings meant that the Company was
unable to raise funds to continue its business.
Item 4. Submission of matters to a Vote of Security Holders
None
3
<PAGE>
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
The Company's Common Stock has been traded on the Over-The-Counter Bulletin
Board (OTC - Bulletin Board) since July 22, 1977 and is currently traded under
the symbol "HTTP". The following are reported high and low quotations for the
Company's Common Stock for the periods indicated and do not include dealer mark
ups, mark downs or commissions nor do they represent actual sale prices:
Low High
First Quarter 1998 3/32 5/16
Second Quarter 1998 3/8 3/8
Third Quarter 1998 5/32 5/8
Fourth Quarter 1998 1/8 2 1/8
Item 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Sources of Capital
As of December 31, 1998, the Registrant had current assets of $271 as
compared to $35,600 as of December 31, 1997. On October 27, 1999 the Company
filed a Form 8-K setting out a contingent acquisition, which, if consummated,
would provide the Company with $2,160,000 in cash and liquid securities. This
agreement is conditional on the settlement of all outstanding litigation, the
filing of outstanding periodic and annual reports under the Securities Exchange
Act of 1934, as amended, and the maintenance of the Company's quotation on the
OTC - Bulletin Board.
Results of Operations
The Company had no operations during the period.
Item 7. Financial Statements
Attached.
Item 8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure.
Not applicable.
4
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons in
Compliance With Section 16(a) of the Exchange Act
Christopher J. Wilkes, aged 33, became a Director of the Company on
September 30, 1996. Mr. Wilkes also holds the offices of Chairman and President
of the Company. He holds these offices and positions until the next annual
meeting of the Company. Mr. Wilkes is the Senior Partner of Levenworth
Management, a management consulting company based in the United Kingdom, which
he founded in 1992. He has advised on the restructuring and operations of
companies in a number of different industries and has an international
clientele.
Lewis M. Klee, aged 44, served as a Director of the Company beginning on
September 30, 1996. Although Mr. Klee no longer holds this position, he still
serves as Secretary of the Company. On August 1, 1996 Mr. Klee became the
Managing Partner of the Law Office of Lewis M. Klee Esq., prior to this he was
of counsel to the Law Office of Steven A. Sanders P.C.
Item 10. Executive Compensation
Mr. Wilkes was paid $12,178 in consultancy fees during the period.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information with respect to beneficial
ownership of Common Stock by (i) each person known by the Company to own
beneficially more than five percent (5%) of the outstanding Common Stock of the
Company, (ii) each director of the Company, and (iii) all directors and officers
of the Company as a group. Except as other wise indicated the named person has
sole voting and investment power with respect to such person's shares.
Number of Common shares
Name Beneficially owned Percent
Christopher J. Wilkes 253,304 11.9%
President & Director
22 Parrotts Field
Hoddesdon
Heretfordshire EN11 OQU
United Kingdom
Lewis M. Klee 25,000 1.2%
Secretary
The Law Office of Lewis M. Klee,
40 Exchange Place, 8th Floor
New York, NY 10005
All executive officers and directors
As a group: 278,304 13.1%
5
<PAGE>
Item 12. Certain Relationships and Related Transactions
None
Item 13. Exhibits and Reports on Form 8-K
None filed this quarter.
6
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Internet Holdings, Inc.
Date: December 13, 1999 By: /s/ Christopher J. Wilkes
-------------------------
Christopher J. Wilkes
President
7
<PAGE>
INTERNET HOLDINGS, INC.
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998 and 1997
TOGETHER WITH AUDITORS' REPORT
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Internet Holdings, Inc.:
We have audited the accompanying balance sheet of Internet Holdings, Inc.
(the "Company"), as of December 31, 1998, and the related statements of
operations, stockholders' deficit and cash flows for the years ended December
31, 1998 and 1997. 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.
Except as discussed in the following paragraph, we conducted our audits in
accordance with generally accepted auditing standards. 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.
In our opinion, with respect to the 1998 financial statements, the
financial statements referred to above present fairly, in all material respects,
the financial position of Internet Holdings, Inc. as of December 31, 1998, and
the results of its operations and cash flows for the year then ended in
conformity with generally accepted accounting principles. We were unable to
audit the financial statements of Chiron Systems Ltd. (a former wholly-owned
subsidiary of the Company in England, the "Subsidiary") for the period from May
22, 1997 to December 19, 1997. Furthermore, we were unable to audit certain
joint venture transactions in Asia and Africa during the year ended December 31,
1997. The activities of the Subsidiary and joint ventures comprised
substantially all of the Company's operations during the year ended December 31,
1997. Because of the significance of the operations of the Company's Subsidiary
and joint ventures which we were unable to audit, the scope of our work was not
sufficient to enable us to express, and we do not express, an opinion on the
1997 financial statements.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company presently has no revenue producing operations
or activities and has suffered recurring losses from operations. These factors
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ CALLAGHAN NAWROCKI LLP
--------------------------
CALLAGHAN NAWROCKI LLP
Melville, New York
December 13, 1999
F-1
<PAGE>
INTERNET HOLDINGS, INC.
BALANCE SHEET
DECEMBER 31, 1998
ASSETS
CURRENT ASSETS:
Cash $ 271
-----------
Total current assets 271
-----------
$ 271
===========
LIABILITIES AND
STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 13,520
-----------
Total current liabilities 13,520
-----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT:
Common stock, $.001 par value, 50,000,000 shares
authorized, 2,119,470 shares issued and outstanding 2,119
Additional paid-in capital 5,723,560
Accumulated deficit (5,738,928)
-----------
Total stockholders' deficit (13,249)
-----------
$ 271
===========
The accompanying notes to financial statements are an
integral part of this statement.
F-2
<PAGE>
INTERNET HOLDINGS, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
1998 1997
----------- -----------
REVENUES $ 79 $ 3,813
EXPENSES 28,548 130,974
----------- -----------
Loss from continuing operations (28,469) (127,161)
LOSS FROM DISCONTINUED OPERATIONS -- (2,359,612)
----------- -----------
Net loss $ (28,469) $(2,486,773)
=========== ===========
PER SHARE DATA:
Loss from continuing operations $ (0.01) $ (0.07)
=========== ===========
Loss from discontinued operations $ -- $ (1.30)
=========== ===========
Net loss $ (0.01) $ (1.37)
=========== ===========
Weighted average number of common
shares outstanding 2,119,470 1,813,706
=========== ===========
The accompanying notes to financial statements are an
integral part of these statements.
F-3
<PAGE>
INTERNET HOLDINGS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
Common Stock Additional Total
--------------------------- Paid-In Accumulated Stockholders'
Shares Amount Capital Deficit Equity (Deficit)
----------- ----------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1997 1,697,858 $ 1,698 $ 3,151,481 $(3,223,686) $ (70,507)
8 to 1 reverse stock split (1,484,603) (1,485) 1,485 -- --
Shares issued pursuant to acquisition 2,640,313 2,640 657,360 -- 660,000
Shares issued in satisfaction of obligations 150,000 150 37,350 -- 37,500
2 to 1 reverse stock split (1,501,180) (1,501) 1,501 -- --
Shares issued in private placement 1,483,935 1,484 2,373,516 -- 2,375,000
Shares issued pursuant to conversion
of loan note 250,000 250 124,750 -- 125,000
Shares cancelled pursuant to divestiture (1,320,157) (1,320) (658,680) -- (660,000)
Shares issued in satisfaction of obligations 203,304 203 34,797 -- 35,000
Net loss for the year -- -- -- (2,486,773) (2,486,773)
----------- ----------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 1997 2,119,470 2,119 5,723,560 (5,710,459) 15,220
Net loss for the year -- -- -- (28,469) (28,469)
----------- ----------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 1998 2,119,470 $ 2,119 $ 5,723,560 $(5,738,928) $ (13,249)
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes to financial statements are an
integral part of these statements.
F-4
<PAGE>
INTERNET HOLDINGS, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (28,469) $(2,486,773)
Adjustments to reconcile net loss to net cash
used by operating activities:
Loss from discontinued operations -- 2,359,612
(Increase) decrease in other receivable 34,000 (34,000)
Decrease in accounts payable
and accrued expenses (6,860) (87,239)
----------- -----------
Net cash used by operating activities (1,329) (248,400)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Shares issued in private placement -- 2,375,000
Proceeds from convertible loan note -- 125,000
----------- -----------
Net cash provided by financing activities -- 2,500,000
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in joint venture -- (2,250,000)
----------- -----------
Net cash used by investing activities -- (2,250,000)
----------- -----------
NET INCREASE (DECREASE) IN CASH (1,329) 1,600
CASH, BEGINNING OF YEAR 1,600 --
----------- -----------
CASH, END OF YEAR $ 271 $ 1,600
=========== ===========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Corporation acquired by issuance of common shares $ -- $ 660,000
Corporation divested by cancellation of common shares -- (660,000)
Shares issued in satisfaction of other obligations -- 72,500
Shares issued pursuant to conversion of
loan note -- 125,000
</TABLE>
The accompanying notes to financial statements are an
integral part of these statements.
F-5
<PAGE>
INTERNET HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
(1) Business and organization
Internet Holdings, Inc. (the "Company") was originally incorporated in the
State of Utah on July 22, 1977, under the name of Western Corn Dog
Factories. The Company has had a series of mergers with other companies,
all accounted for as reverse acquisitions, with the Company in each case
changing its name to that of or similar to the reverse acquiror. In this
regard, the Company's previous names were: Resources West, Inc., Magma
Resources, Inc., Cellular Telecommunications & Technologies, Inc. and China
Biomedical Group, Inc. The name Internet Holdings, Inc. was adopted on July
12, 1996.
In 1993, the Company acquired Cellular Payphones, Inc., ("CPI"), (a
Delaware Corporation), whereby all of the issued and outstanding shares of
CPI were exchanged for approximately 90% of the issued and outstanding
stock of the Company. This transaction was accounted for as a reverse
acquisition purchase, in which CPI was the acquiring corporation, and the
Company was the acquired corporation. The Company accounted for this
transaction as a recapitalization of CPI, with the issuance of 2,625,000
shares of common stock for the net assets of the Company. Following the
1993 acquisition, the Company was engaged in the business of (i)
installation and servicing of cellular credit-card pay telephones in
taxicabs, radio-cabs, limousines, rental cars, trains, ferries, hotels, and
business conference centers, and (ii) the data processing and development
of streamline software specializing in credit card authorization processing
with real-time billing functions. The Company ceased such operations in
October 1994 due to substantial losses. Effective April 3, 1995, the
Company acquired C.B. Marketing and Investment Limited, a privately-held
English corporation engaged in the business of medical market research and
the manufacture of pharmaceuticals and contraceptives in the Peoples'
Republic of China. On April 22, 1996, the Company entered into a
divestiture agreement with respect to C.B. Marketing and Investment
Limited. During 1996, the Company was reorganized to invest in internet and
ISDN ("International Standard Digital Network") related technologies.
On May 22, 1997, the Company acquired Chiron Systems Ltd. ("CSL"), a
privately-held English Corporation engaged in the business of designing and
developing ISDN related products. During 1997, the Company, through CSL
provided hardware and software products and services for internet and ISDN
applications. CSL had expected to confirm several substantial orders from
the Far East during the last quarter of 1997 based upon a new range of
products. However, these orders never materialized due to alleged
specification failure, resulting in a need for additional funding. The
Company decided not to make any further investment in CSL and, effective
December 19, 1997, exercised its right to divest CSL under the terms of the
acquisition agreement. CSL was subsequently placed into liquidation by its
creditors. During its ownership of CSL, the Company invested in joint
ventures in Asia and West Africa in connection with the delivery of
products and services being developed by CSL. As a result of the failure of
CSL to develop the requisite products and technology, and the corresponding
divestiture of CSL, the Company became engaged in various legal proceedings
with its joint venture partners which was finally settled in October 1999.
F-6
<PAGE>
The Company presently has no revenue producing operations or activities and
has suffered recurring operating losses from operations. Management's plans
include seeking an acquisition candidate in the internet and related
technology fields. In connection with such a transaction, which, similar to
the Company's previous mergers will actually be a reverse acquisition, the
Company may seek to raise proceeds from the sale of its securities. On
October 27, 1999 the Company filed a Form 8-K setting out a contingent
acquisition which, if consummated, would provide the Company with
$2,160,000 in cash and liquid securities. This agreement is conditional on
the settlement of all outstanding litigation, the filing of outstanding
reports and the maintenance of the Company's quotation on the OTC -
Bulletin Board.
(2) Summary of significant accounting policies:
Foreign currency translation -
Gains and losses from foreign currency transactions are reflected in
current operating results.
Revenue and cost recognition -
Revenues are generally recognized as earned and expenses are recognized
when incurred under the accrual basis of accounting.
Net loss per share -
Net loss per share was computed by dividing net loss by the weighted
average number of common shares issued and outstanding during the period.
Income taxes -
The Company has adopted Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes", to account for deferred income taxes.
Deferred taxes are computed based on the tax liability or benefit in future
years of the reversal of temporary differences in the recognition of income
or deduction of expenses between financial and tax reporting purposes. The
net difference, if any, between the provision for taxes and taxes currently
payable is reflected in the balance sheet as deferred taxes. Deferred tax
assets and/or liabilities, if any, are classified as current and noncurrent
based on the classification of the related asset or liability for financial
reporting purposes, or based on the expected reversal date for deferred
taxes that are not related to an asset or liability.
Comprehensive income -
Other than net income, the Company has no items of comprehensive income as
defined by generally accepted accounting principles.
F-7
<PAGE>
(3) Discontinued operations
On December 19, 1997, the Company's Board of Directors approved a
divestiture agreement whereby the Company delivered to certain shareholders
who had previously owned Chiron Systems Ltd., ("CSL") all the outstanding
shares in this corporation, which had been acquired by the Company on May
22, 1997. In return, the CSL shareholders transferred to the Company
1,320,157 shares (2,640,313 shares pre-reverse split) of the Company's
common stock. In connection therewith, the Company recognized $361,641 of
losses relating primarily to unrecoverable loans receivable from this
divested corporation.
In conjunction with its ownership of CSL, the Company entered into joint
ventures in Asia and West Africa for the delivery of products and services
being developed by CSL. During the year ended December 31, 1997, the
Company invested $2,250,000 in certain assets purchased from joint venture
partners. As a result of the failure of CSL to develop the requisite
products and technology, and the corresponding divestiture of CSL, the
Company became engaged in various legal proceedings with its joint venture
partners. In October 1999, a comprehensive settlement agreement was reached
by the Company with its joint venture partners. By this agreement, the
Company agreed not to pursue claims against certain assets purchased from
the joint venture partners, the joint venture partners agreed not to pursue
claims against the Company relating to negligence and breach of contract
and the Company was released from debts totaling $252,029. This resulted in
a net write-off to the Company of $1,997,971, which is reflected as a loss
from discontinued operations for the year ended December 31, 1997.
(4) Accounts payable and accrued liabilities
As of December 31, 1998, accounts payable and accrued liabilities consist
primarily of obligations for legal and professional fees.
(5) Stockholders' equity
On March 11, 1997, the Board of Directors approved a 1-for-8 reverse stock
split of the issued and outstanding shares of the Company's common stock.
On May 22, 1997, the Company acquired Chiron Systems Ltd., a privately-held
English Corporation in a stock-for-stock exchange. As a result of such
transaction, the Company issued 2,640,313 shares of its authorized but
unissued common stock to the shareholders of Chiron Systems Ltd. On
December 19, 1997 the Company exercised its right to divest Chiron Systems
Ltd., under the terms of the acquisition agreement. Accordingly, 1,320,157
(post 1-for-2 reverse stock split) shares were returned to the Company and
immediately cancelled.
On May 22, 1997, the Board of Directors approved the issuance of 150,000
shares of the Company's common stock in satisfaction of obligations in the
amount of $37,500.
On June 9, 1997, the Board of Directors approved a 1-for-2 reverse stock
split of the issued and outstanding shares of the Company's common stock.
F-8
<PAGE>
On June 20, 1997, the Company sold pursuant to a private placement under
Regulation S, 1,483,935 shares of common stock for proceeds of $2,375,000.
The proceeds are net of $147,689 of placement costs.
On August 12, 1997, 250,000 shares of the Company's common stock were
issued pursuant to the conversion of a loan note in the amount of $125,000.
On December 19, 1997, the Board of Directors approved the issuance of
203,304 shares of the Company's common stock in satisfaction of obligations
in the amount of $35,000.
(6) Income taxes
The income tax provision is summarized as follows for the years ended
December 31, 1998 and 1997:
Year Ended Year Ended
December 31, 1998 December 31, 1997
----------------- -----------------
Federal $-- $--
State and local -- --
---- ----
Total $-- $--
==== ====
Statutory rates of income tax 40% 43%
Income tax effect related to the
following items:
Net operating losses (40) (43)
---- ----
Total -- --
==== ====
Effective rate of income tax 0% 0%
==== ====
The Company has net operating loss carryforwards to offset future taxable
income of approximately $5 million expiring in the years 2009 through 2013.
As it is not more likely than not that the resulting deferred tax benefits
will be realized, a valuation allowance has been recognized for such
deferred tax assets.
(7) Commitments and contingencies
The Company has not filed federal nor state income tax returns for the past
several years, and is currently working with the Internal Revenue Service
and state taxing authorities to ensure filings of all requisite returns are
made as soon as possible. In management's opinion, there are no material
liabilities as a result of the delay in filing these returns.
(8) Legal proceedings and subsequent events
During the period subsequent to December 31, 1998, various legal
proceedings were settled. Reference is made to Note 3 for details as to
such resolution.
F-9
