U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1996
Commission File Number 33-98694-NY
BUTTERFLY TECHNOLOGY, INC.
(Name of Small Business Issuer as Specified in Its Charter)
Nevada 11-3276768
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
63 Wall Street, Suite 1801, New York, NY 10005
(Address of Principal Executive Offices)
(212) 344-1600
(Issuer's Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
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) has been subject to such filing
requirements for the past 90 days.
Yes x No
The number of shares outstanding of the issuer's common stock, as
of September 30, 1996 was: 16,500
<PAGE>
BUTTERFLY TECHNOLOGY, INC.
FORM 10-QSB
September 30, 1996
INDEX
PAGE
PART I - FINANCIAL INFORMATION 3
Item I - FINANCIAL STATEMENTS (UNAUDITED)
Balance Sheets -
September 30, 1996 and December 31, 1995 4
Statements of Operations
Three Months Ended September 30, 1996 5
Statements of Cash Flows
Three Months Ended September 30, 1996 6
Notes to Financial Statements 7
Item II - MANAGEMENT'S DISCUSSION AND ANALYSIS
AND PLAN OF OPERATION 15
<PAGE>
BUTTERFLY TECHNOLOGY, INC.
FORM 10-QSB
SEPTEMBER 30, 1996
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
<PAGE>
BUTTERFLY TECHNOLOGY, INC.
(a Development Stage Company)
UNAUDITED BALANCE SHEET
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996
THE YEAR ENDED DECEMBER 31, 1995
ASSETS
September 30, December 31,
1996 1995
Current Assets
Cash $ 5,457 $ 9,617
Accounts Receivable $ 2,125
Total Current Assets $ 5,457 $ 11,742
Other Assets
Deferred Offering
Costs $ 19,165 $ 19,030
Organization Costs $ 350 $ 350
$ 19,515 $ 19,380
Total Assets $ 24,972 $ 31,122
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable $ 2,972 $ 9,122
Total Liabilities $ 2,972 $ 9,122
Stockholders' Equity
Authorized 20,000,000
shares common stock at
$.001 par value;
issued and outstanding
16,500 shares at $1.33
per share $ 17 $ 17
Additional Paid-in
Capital $ 21,983 $ 21,983
Total Liabilities and
Stockholders' Equity $ 24,972 $ 31,122<PAGE>
BUTTERFLY TECHNOLOGY, INC.
(a Development Stage Company)
STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996
Income from
Operations $ -0-
Costs and Offering
Expenses $ -0-
Net Income $ -0-
Net Loss $ -0-
<PAGE>
BUTTERFLY TECHNOLOGY, INC.
(a Development Stage Company)
STATEMENT OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996
Cash Flows from Operations $ -0-
Cash Flows from Stock Offerings $ -0-
Changes in Assets and
Liabilities:
Deferred Offering Costs $ (45)
Accounts Payable $ (657)
Net Decrease in Cash $ (6,240)
Cash, Beginning of Period $ 4,094
Cash, End of Period $ 3,377<PAGE>
BUTTERFLY TECHNOLOGY, INC.
(A Development Stage Company)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
FOR THE PERIOD JANUARY 1, 1996 TO SEPTEMBER 30, 1996
1.ORGANIZATION OF THE COMPANY
The Company was incorporated in Nevada on June 13, 1995.
Subsequent to incorporation, it issued and sold 16,500 shares of
common stock on June 16, 1996. The Shares were sold for $1.33 per
share. The total amount of cash received by the Company from the
sale of those securities was $22,000. On February 5, 1996, the
Company's initial public offering was declared effective by the
Securities and Exchange Commission. Pursuant to this offering,
10,000 shares of common stock were offered at $5.00 per share on a
"best efforts, all or nothing basis." This offering closed on
August 5, 1996.
The Company's business is to seek potential business ventures which
in the opinion of management will provide a profit to the Company.
Such involvement can be in the terms of the acquisition of existing
businesses and/or the acquisition of assets to establish businesses
for the Company. Present management of the Company does not expect
to become involved as management in the aforementioned businesses
and will hire presently unknown and unidentified individuals as
management for the aforementioned businesses.
The Company's only activities to date have been the acquisition of
funds from the sale of its Common Stock to its officers, directors,
and other investors, and its initial public offering.
As a result of its limited resources, the Company will, in all
likelihood, have the ability to effect only a single Business
Combination. Accordingly, the Prospects for the Company's
success will be entirely dependent upon the future performance of
a single business.
The Company's directors and officers are or may become, in their
individual capacities officers, directors, controlling shareholders
in a variety of businesses including other "blank check" companies.
There exists potential conflicts of interest including, among other
things, time, effort and corporate opportunity involved in
participation with other business entities.
The Company's fiscal year-end is December 31st.<PAGE>
BUTTERFLY TECHNOLOGY, INC.
FORM 10-QSB
SEPTEMBER 30, 1996
2. SIGNIFICANT ACCOUNTING POLICIES
Organization costs
Organization costs will be amortized on a straight line basis over
a five year period from the Commencement of Operations.
Deferred Offering Costs
All costs incurred by the Company in connection with the initial
public offering were charged to additional paid-in-capital upon the
successful completion of the offering.
Interim Financial Statements
In the opinion of management, the unaudited interim financial
statements reflect all adjustments necessary, consisting of normal
recurring adjustments, to present fairly the Company's financial
position at September 30, 1996 and December 31, 1995, and the
results of operations and cash flows for three month period ending
September 30, 1996. Results for this periods are not necessarily
indicative of the results to be expected for the entire fiscal
year.
3. LEASES
The Company has no oral or written leases or freeholds of any kind
on any physical plant. The Company presently uses the offices of
Schonfeld & Weinstein, LLP, at 63 Wall Street, New York, New York
10005 the attorney for the Company and one of its shareholders at
no cost. Such arrangement is expected to continue after completion
of this offering.
<PAGE>
BUTTERFLY TECHNOLOGY, INC.
FORM 10-QSB
SEPTEMBER 30, 1996
4. TAXES
The Company is subject to New York State minimum franchise tax and
New York City minimum corporation taxes for the year ended December
31, 1996. A provision has been made in the accompanying financial
statements.
5. RULE 419 REQUIREMENTS
Rule 419 requires that offering proceeds after deduction for
underwriting commissions, underwriting expenses and dealer
allowances issued be deposited into an escrow or trust account (the
"Deposited Funds" and "Deposited Securities," respectively)
governed by an agreement which contains certain terms and
provisions specified by the Rule. Under Rule 419, the Deposited
Funds and Deposited Securities will be released to the Company and
to the investors, respectively, only after the Company has met the
following three basic conditions. First, the Company must execute
an agreement(s) for an acquisition(s) meeting certain prescribed
criteria. Second, the Company must file a post-effective amendment
to the registration statement which includes the terms of a
reconfirmation offer that must contain conditions prescribed by the
rules. The post-effective amendment must also contain information
regarding the acquisition candidate(s) and its business(es),
including audited financial statements. The agreement(s) must
include, as a condition precedent to their consummation, a
requirement that the number of investors representing 80% of the
maximum proceeds must elect to reconfirm their investments. Third,
the Company must conduct the reconfirmation offer and satisfy all
of the prescribed conditions, including the condition that
investors representing 80% of the Deposited Funds must elect to
remain investors. The post-effective amendment must also include
the terms of the reconfirmation offer mandated by Rule 419. The
reconfirmation offer must include certain prescribed conditions
which must be satisfied before the Deposited Funds and Deposited
Securities can be released from escrow. After the Company submits
a signed representation to the Escrow Agent that the requirements
of Rule 419 have been met and after the acquisition(s) is
consummated, the Escrow Agent can release the Deposited Funds and
Deposited Securities. Investors who do not reconfirm their
investments will receive the return of a pro-rata portion thereof;
and in the event investors representing less than 80% of the
Deposited Funds reconfirm their investments, the Deposited Funds
will be returned to the investors on a pro-rata basis.
<PAGE>
BUTTERFLY TECHNOLOGY, INC.
FORM 10-QSB
SEPTEMBER 30, 1996
Accordingly, the Company has entered into an escrow agreement with
Atlantic Liberty Savings (the "Escrow Agent") which provides that:
(1) The net proceeds are to be deposited into an
escrow account maintained by The Trust Company of New
York promptly upon receipt. The deposited proceeds and
interest or dividends thereon, if any, are to be held for
the sole benefit of the investors and can only be
invested in bank deposits, in money market mutual funds
or federal government securities or securities for which
the principal or interest is guaranteed by the federal
government.
(2) All securities issued in connection with the
offering and any other securities issued with respect to
such securities, including securities issued with
respect to stock splits, stock dividends or similar
rights are to be deposited directly into the Escrow
Account promptly upon issuance (the "Deposited
Securities") and the identity of the investors are to be
included on the stock certificates or other documents
evidencing the Securities. The Deposited Securities held
in the escrow account are to remain as issued and are to
be held for the sole benefit of the investors' who retain
the voting rights, if any, with respect to the securities
held in their names. The Deposited Securities held in
the Escrow Account may not be transferred, disposed of
nor any interest created therein other than by will or
the laws of descent and distribution, or pursuant to a
qualified domestic relations order as defined by the
Internal Revenue Code of 1986 or Table 1 of the Employee
Retirement Income Security Act.
(3) Warrants, convertible securities or other
derivative securities relating to securities held in the
Escrow Account may be exercised or converted in
accordance with their terms; provided that, however, the
securities received upon exercise or conversion together
with any cash or other consideration paid in connection
with the exercise or conversion are to be promptly
deposited into the Escrow Account.
<PAGE>
BUTTERFLY TECHNOLOGY, INC.
FORM 10-QSB
SEPTEMBER 30, 1996
Prescribed Acquisition Criteria
Rule 419 requires that before the Deposited Funds and the
Deposited Securities can be released, the Company must first
execute an agreement to acquire an acquisition candidate(s) meeting
certain specified criteria. The agreement(s) must provide for the
acquisition(s) of a business(es) or assets for which the fair value
of the business represents at least 80% of the maximum offering
proceeds. For purposes of the offering, the fair value of the
business(es) or assets to be acquired must be at least $40,000.
Post-Effective Amendment
Once the agreement(s) governing the acquisition(s) of a
business(es) meeting the above criteria has been executed, Rule 419
requires the Company to update the registration statement with a
post-effective amendment. The post-effective amendment must
contain information about: the proposed acquisition candidate(s)
and its business(es), including audited financial statements; the
results of this offering; and, the use of the funds disbursed from
the Escrow Account. The post-effective amendment must also include
the terms of the reconfirmation offer mandated by Rule 419. The
reconfirmation offer must include certain prescribed conditions
which must be satisfied before the Deposited Funds and Deposited
Securities can be released from escrow.
<PAGE>
BUTTERFLY TECHNOLOGY, INC.
FORM 10-QSB
SEPTEMBER 30, 1996
Reconfirmation Offering
The reconfirmation offer must commence after the effective
date of the post-effective amendment. Pursuant to Rule 419, the
terms of the reconfirmation offer must include the following
conditions;
(1) The prospectus contained in the post-effective
amendment will be sent to each investor whose securities
are held in the Escrow Account within 5 business days
after the effective date of the post-effective amendment.
(2) Each investor will have no fewer than 20 and no
more than 45 business days from the effective date of the
post-effective amendment to notify the Company in writing
that the investor elects to remain an investor.
(3) If the Company does not receive written
notification from any investor within 45 business days
following the effective date, the pro rata portion of the
Deposited Funds (and any related interest or dividends)
held in the Escrow Account on such investor's behalf will
be returned to the investor within 5 business days by
first class mail or other equally prompt means.
(4) The acquisition(s) will be consummated only if
a minimum number of investors representing 80% of the
maximum offering proceeds ($40,000) elect to reconfirm
their investment.
(5) If a consummated acquisition (s) has not
occurred by August 5, 1997, the Deposited Funds held in
the Escrow Account shall be returned to all investors on
a pro rata basis within 5 business days by first class
mail or other equally prompt means.
<PAGE>
BUTTERFLY TECHNOLOGY, INC.
FORM 10-QSB
SEPTEMBER 30, 1996
Release of Deposited Securities and Deposited Funds
The Deposited Funds and Deposited Securities may be released
to the Company and the investors, respectively, after:
(1) The Escrow Agent has received a signed representation from
the Company and any other evidence acceptable by the Escrow Agent
that:
(a) The Company has executed an agreement for the
acquisition (s) of a Business (es) for which the par value of the
business represents at least 80% of the maximum offering proceeds
and has filed the required post-effective amendment;
(b) The post-effective amendment has been declared
effective, that the mandated reconfirmation offer having the
conditions prescribed by Rule 419 has been completed and that the
Company has satisfied all of the prescribed conditions of the
reconfirmation offer.
(2) The acquisition(s) of the business(es) with the fair value
of at least 80% of the maximum proceeds is consummated.
<PAGE>
BUTTERFLY TECHNOLOGY, INC.
FORM 10-QSB
SEPTEMBER 30, 1996
6. ADDITIONAL INFORMATION
The Board of Directors passed a resolution in June 1995 authorizing
the Management of the Company to initiate steps to make a public
offering of the Company's securities, in order to raise additional
capital of $50,000.00. Management was granted authority to file an
SB-2 Registration Statement with the Securities and Exchange
Commission and to register the securities in any state
jurisdictions that Management felt was required and appropriate.
It was furthermore resolved that the public offering would consist
of 10,000 shares of common stock to be offered at $5.00 per share
on a "best efforts all or nothing basis." This offering was
completely sold, and closed on August 5, 1996.
<PAGE>
BUTTERFLY TECHNOLOGY, INC.
FORM 10-QSB
SEPTEMBER 30, 1996
Item 2. Management's Discussion and Analysis and Plan of Operation
The Company does not currently engage in any business
activities which provide any cash flow. The costs of identifying,
investigating, and analyzing Business Combinations will be paid
with money in the Company's treasury, and not with proceeds
received from the Company's initial public offering.
The Company may seek a Business Combination in the form of
firms which have recently commenced operations, are developing
companies in need of additional funds for expansion into new
products or markets, are seeking to develop a new product or
service, or are established businesses which may be experiencing
financial or operating difficulties and are in need of additional
capital. A Business Combination may involve the acquisition of,
or merger with, a Company which does not need substantial
additional capital but which desires to establish a public trading
market for its shares, while avoiding what it may deem to be
adverse consequences of undertaking a public offering itself, such
as time delays, significant expense, loss of voting control and
compliance with various Federal and State securities laws.
The Company will not acquire a Target Business unless the fair
value of the Target Business represents 80% of the maximum offering
proceeds (including funds to be received upon exercise of the
Warrants, the sale of the Secondary Securities and the exercise of
the Warrants contained therein) (the "Fair Market Value Test.") To
determine the fair market value of a Target Business, the Company's
management will examine the certified financial statements
(including balance sheets and statements of cash flow and
stockholders' equity) of any candidate and will participate in a
personal inspection of any potential Target Business. If the
Company determines that the financial statements of a proposed
Target Business does not clearly indicate that the Fair Market
Value Test has been satisfied, the Company will obtain an opinion
from an investment banking firm (which is a member of National
Association of Securities Dealers, Inc., (the "NASD") with respect
to the satisfaction of such criteria.
<PAGE>
BUTTERFLY TECHNOLOGY, INC.
FORM 10-QSB
SEPTEMBER 30, 1996
Based upon management's experience with and knowledge of blank
check companies, the probable desire on the part of the owners of
target businesses to assume voting control over the Company (to
avoid tax consequences or to have complete authority to manage the
business) will almost assure that the Company will combine with
just one target business. Management also anticipates that upon
consummation of a Business Combination, there will be a change in
control in the Company which will most likely result in the
resignation or removal of the Company's present officers and
directors.
None of the Company's officers or directors have had any
preliminary contact or discussions with any representative of any
other entity regarding a Business Combination. Accordingly, any
Target Business that is selected may be a financially unstable
Company or an entity in its early stage of development or growth
(including entities without established records of sales or
earnings), the Company will become subjected to numerous risks
inherent in the business and operations of financially unstable and
early stage or potential emerging growth companies. In addition,
the Company may affect a Business Combination with an entity in an
industry characterized by a high level of risk, and although
management will endeavor to evaluate the risks inherent in a
particular industry or Target Business, there can be no assurance
that the Company will properly ascertain or assess all significant
risks.
Management anticipates that it may be able to effect only one
potential Business Combination, due primarily to the Company's
limited financing. As a result, the Company will not be able to
offset potential losses from one venture against gains from
another.
<PAGE>
BUTTERFLY TECHNOLOGY, INC.
FORM 10-QSB
SEPTEMBER 30, 1996
The Company anticipates that the selection of a Business
Combination will be complex and extremely risky. Because of
general economic conditions, rapid technological advances being
made in some industries, and shortages of available capital,
management believes that there are numerous firms seeking even the
limited additional capital which the Company will have and/or the
benefits of a publicly traded corporation. Such perceived benefits
of a publicly traded corporation may include facilitating or
improving the terms on which additional equity financing may be
sought, providing liquidity for the principals of a business,
creating a means for providing incentive stock options or similar
benefits to key employees, providing liquidity (subject to
restrictions of applicable statutes) for all shareholders, and
other factors. Potentially available Business Combinations may
occur in many different industries and at various stages of
development, all of which will make the task of comparative
investigation and analysis of such business opportunities extremely
difficult and complex.
The analysis of Business Combinations will be undertaken by
or under the supervision of the officers and directors of the
Company, none of whom is a professional business analyst.
Management intends to concentrate on identifying preliminary
prospective Business Combinations which may be brought to its
attention through present associations. In analyzing prospective
Business Combinations, management will consider such matters as the
available technical, financial, and managerial resources; working
capital and other financial requirements; history of operation, if
any; prospects for the future; nature of present and expected
competition; the quality and experience of management services
which may be available and the depth of that management; the
potential for further research, development, or exploration;
specific risk factors not now foreseeable but which then may be
anticipated to impact the proposed activities of the Company; the
potential for growth or expansion; the potential for profit; the
perceived public recognition or acceptance or products, services,
or trades; name identification; and other relevant factors.
Officers and directors of the Company will meet personally with
management and key personnel of the firm sponsoring the business
opportunity as part of their investigation. To the extent
possible, the Company intends to utilize written reports and
personal investigation to evaluate the above factors.<PAGE>
BUTTERFLY TECHNOLOGY, INC.
FORM 10-QSB
SEPTEMBER 30, 1996
Since the Company will be subject to Section 13 or 15 (d) of
the Securities Exchange Act of 1934, it will be required to furnish
certain information about significant acquisitions, including
audited financial statements for the Company(s) acquired, covering
one, two or three years depending upon the relative size of the
acquisition. Consequently, acquisition prospects that do not have
or are unable to obtain the required audited statements may not be
appropriate for acquisition so long as the reporting requirements
of the Exchange Act are applicable. In the event the Company's
obligation to file periodic reports is suspended under Section
15(d), the Company intends on voluntarily filing such reports.
It may be anticipated that any Business Combination will
present certain risks. Many of these risks cannot be adequately
identified prior to selection, and investors herein must,
therefore, depend on the ability of management to identify and
evaluate such risks. In the case of some of the potential
combinations available to the Company, it may be anticipated that
the promoters thereof have been unable to develop a going concern
or that such business is in its development stage in that it has
not generated significant revenues from its principal business
activity prior to the Company's merger or acquisition, and there is
a risk, even after the consummation of such Business Combinations
and the related expenditure of the Company's funds, that the
combined enterprises will still be unable to become a going concern
or advance beyond the development stage. Many of the Combinations
may involve new and untested products, processes, or market
strategies which may not succeed. Such risks will be assumed by
the Company and, therefore, its shareholders.
In implementing a structure for a particular business
acquisition, the Company may become a party to a merger,
consolidation, reorganization, joint venture, or licensing
agreement with another corporation or entity. It may also purchase
stock or assets of an existing business.
Investors should note that any merger or acquisition effected
by the Company can be expected to have a significant dilutive
effect on the percentage of shares held by the Company's
then-shareholders, including purchasers in this offering. On the
consummation of a Business Combination, the Target Business will
have significantly more assets than the Company; therefore,
management plans to offer a controlling interest in the Company to
the Target Business. While the actual terms of a transaction to
which the Company may be a party cannot be predicted, it may be
expected that the parties to the business transaction will find it
<PAGE>
BUTTERFLY TECHNOLOGY, INC.
FORM 10-QSB
SEPTEMBER 30, 1996
desirable to avoid the creation of a taxable event and thereby
structure the acquisition in a so-called "tax-free" reorganization
under Sections 368(a)(1) or 351 of the Internal Revenue Code of
1954, as amended (the "Code"). In order to obtain tax-free
treatment under the Code, it may be necessary for the owners of the
acquired business to own 80% or more of the voting stock of the
surviving entity. In such event, the shareholders of the Company,
including investors in this offering, would retain less than 3% of
the issued and outstanding shares of the surviving entity, which
would be likely to result in significant dilution in the equity of
such shareholders. Management of the Company may choose to avail
the Company of these provisions. In addition, a majority of all of
the Company's directors and officers may, as part of the terms of
the acquisition transaction, resign as directors and officers.
Management will not actively negotiate or otherwise consent
to the purchase of any portion of their Common Stock as a condition
to or in connection with a proposed Business Combination unless
such a purchase is requested by a Target Company as a condition to
a merger or acquisition. The officers and directors of the Company
who own Common Stock have agreed to comply with this provision
which is based on a written agreement among management. Management
is unaware of any circumstances under which such policy through
their own initiative may be changed.
It is anticipated that any securities issued in any such
reorganization would be issued in reliance on exemptions from
registration under applicable federal and state securities laws.
In some circumstances, however, as a negotiated element of this
transaction, the Company may agree to register such securities
either at the time the transaction is consummated, under certain
conditions, or at specified times thereafter. The issuance of
substantial additional securities and their potential sale into any
trading market which may develop in the Company's Common Stock may
have a depressive effect on such market.
As a part of the Company's investigation, officers and
directors of the Company will meet personally with management and
key personnel, visit and inspect material facilities, obtain
independent analysis or verification of certain information
provided, check references of management and key personnel, and
take other reasonable investigative measures, to the extent of the
Company's limited financial resources and management expertise.
<PAGE>
BUTTERFLY TECHNOLOGY, INC.
FORM 10-QSB
SEPTEMBER 30, 1996
The manner of the Business Combination will depend on the
nature of the Target Business, the respective needs and desires of
the Company and other parties, the management of the Target
Business opportunity, and the relative negotiating strength of the
Company and such other management.
The Company has no present policy as to whether the Company
may acquire or merge with a business in which the Company's
management, promoters, their affiliates or associates have a direct
or indirect ownership interest. The Company also lacks a policy
with regard to related party transactions in general. The
Company's officers and directors have not approached and have not
been approached by any person or entity with regard to any proposed
business ventures with respect to the Company. The Company will
evaluate all possible Business Combinations brought to it. If at
any time a Business Combination is brought to the Company by any of
the Company's promoters, management, or their affiliates or
associates, disclosure as to this fact will be included in the
post-effective amendment, thereby allowing the public investors the
opportunity to fully evaluate the Business Combination.
The Company has adopted a policy that it will not pay a
finder's fee to any member of management for locating a merger or
acquisition candidate. No member of management intends to or may
seek and negotiate for the payment of finder's fees. In the event
there is a finder's fee, it will be paid at the direction of the
successor management after a change in management control resulting
from a Business Combination. The Company's policy regarding
finder's fees is based on a written agreement among management.
Management is unaware of any circumstances under which such policy
through their own initiative may be changed.
The Company does not intend to advertise or promote the
Company. Instead, the Company's management will actively search
for potential Target Businesses. In the event management decides
to advertise (in the form of an ad in a legal publication) to
attract a Target Business, the cost of such advertising will be
assumed by management.
The Company is a blank check company. It has no business of
its own, but instead is attempting to engage in a business
combination through the acquisition of a target company. The
Company has no current cash requirements, save for the printing and
filing of reports with the Securities and Exchange Commission. The
Company does not intend to raise any additional monies within the
next twelve months.<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act
of 1934, the registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BUTTERFLY TECHNOLOGY, INC.
By: Oleg Lagutenko
Oleg Lagutenko, President
Dated: January 23, 1997
Oleg Lagutenko
Oleg Lagutenko, President, Director
Dated: January 23, 1997
Melvyn S. Aronoff
Melvyn S. Aronoff, Secretary, Director
