<PAGE>
U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1998
-------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------- -------------
Commission File No. 0-28002
VIS VIVA CORPORATION
--------------------
(Name of Small Business Issuer in its Charter)
NEVADA 87-0363656
------ ----------
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
124 South 600 East, Suite 100
Salt Lake City, Utah 84102
---------------------------
(Address of Principal Executive Offices)
Issuer's Telephone Number: (801) 359-0833
N/A
---
(Former Name or Former Address, if changed since last Report)
Securities Registered under Section 12(b) of the Exchange Act: None
Name of Each Exchange on Which Registered: None
Securities Registered under Section 12(g) of the Exchange Act: Common stock,
$0.01 par value
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 Company was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
--- --- --- ---
Check if disclosure of delinquent files in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of Company'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. [ ]
State Issuer's revenues for its most recent fiscal year: June 30, 1998 -
$65,523.
<PAGE>
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 prices of such stock, as of a specified date
within the past 60 days.
June 30, 1998 - $148,006.25. There are approximately 592,025 shares of
common voting stock of the Company held by non-affiliates. The Company has
valued these shares based on the average bid price of $.25 per share during
the quarterly period ended June 30, 1998.
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)
Not Applicable.
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of shares outstanding of each of the Issuer's
classes of common equity, as of the latest practicable date:
September 1, 1998
1,270,000
___________
DOCUMENTS INCORPORATED BY REFERENCE
A description of "Documents Incorporated by Reference" is contained
in Item 13 of this report.
Transitional Small Business Issuer Format Yes X No
--- ---
<PAGE>
PART I
Item 1. Description of Business.
------------------------
Business Development.
- ---------------------
The Company has not engaged in any material business development
activities in the fiscal year ended June 30, 1998. For a discussion of the
business development of the Company from inception to the end of the fiscal
year ended June 30, 1997, see its Registration Statement on Form 10-SB-A2,
filed with the Securities and Exchange Commission on June 21, 1996, and its
Annual Reports on Form 10-KSB for the fiscal years ended June 30, 1996, and
June 30, 1997. These Annual Reports were filed with the Securities and
Exchange Commission on September 23, 1996, and September 30, 1997,
respectively. Each of these documents is incorporated herein by this
reference. See Item 13 of this Report.
Business.
- ---------
Other than seeking and investigating potential assets, properties or
businesses to acquire, the Company has had no business operations since its
inception in September, 1980. To the extent that the Company intends to
continue to seek the acquisition of assets, property or business that may
benefit the Company and its stockholders, the Company is essentially a
"blank check" company. Management anticipates that any such acquisition would
require the Company to issue shares of its common stock as the sole
consideration for the acquisition. This may result in substantial dilution of
the shares of current stockholders. The Company's Board of Directors shall
make the final determination whether to complete any such acquisition; the
approval of stockholders will not be sought unless required by applicable
laws, rules and regulations, the Company's Articles of Incorporation or
Bylaws, or contract. Even if stockholder approval is sought, Jack R. Coombs
and John Michael Coombs beneficially own approximately 53 percent of the
outstanding shares of common stock of the Company, and could approve any
acquisition, reorganization or merger they deemed acceptable. The Company
makes no assurance that any future enterprise will be profitable or
successful.
The Company is not currently engaging in any substantive business
activity and has no plans to engage in any such activity in the foreseeable
future. In its present form, the Company may be deemed to be a vehicle to
acquire or merge with a business or company. The Company does not intend to
restrict its search to any particular business or industry, and the areas in
which it will seek out acquisitions, reorganizations or mergers may include,
but will not be limited to, the fields of high technology, manufacturing,
natural resources, service, research and development, communications,
transportation, insurance, brokerage, finance and all medically related
fields, among others. The Company recognizes that the number of suitable
potential business ventures that may be available to it may be extremely
limited, and may be restricted to entities who desire to avoid what these
entities may deem to be the adverse factors related to an initial public
offering ("IPO"). The most prevalent of these factors include substantial time
requirements, legal and accounting costs, the inability to obtain an
underwriter who is willing to publicly offer and sell shares, the lack of or
the inability to obtain the required financial statements for such an
undertaking, limitations on the amount of dilution to public investors in
comparison to the stockholders of any such entities, along with other
conditions or requirements imposed by various federal and state securities
laws, rules and regulations. Any of these types of entities, regardless of
their prospects, would require the Company to issue a substantial number of
shares of its common stock to complete any such acquisition, reorganization or
merger. For acquiring companies with little or no assets, this usually amounts
to between 80 and 95 percent of the outstanding shares of a company similar to
this Company following the completion of any such transaction; because this
Company currently has substantial assets, management expects that the amount
of common stock to be issued will more than likely be based upon the relative
assets of the Company and any prospective acquisition, reorganization or
merger candidate, but will still be enough to transfer control of the Company
to the former principals of the acquired entity. Accordingly, investments in
any such private entity, if available, may tend to be much more favorable than
any investment in the Company.
In the event that the Company engages in any transaction resulting in a
change of control of the Company and/or the acquisition of a business, the
Company will be required to file with the Securities and Exchange Commission a
Current Report on Form 8-K within 15 days of such transaction. A filing on
Form 8-K also requires the filing of audited financial statements of the
business acquired, as well as pro forma financial information consisting of a
pro forma condensed balance sheet, pro forma statements of income and
accompanying explanatory notes.
Management intends to consider a number of factors prior to making any
decision as to whether to participate in any specific business endeavor, none
of which may be determinative or provide any assurance of success. These may
include, but will not be limited to an analysis of the quality of the entity's
management personnel; the anticipated acceptability of any new products or
marketing concepts; the merit of technological changes; its present financial
condition, projected growth potential and available technical, financial and
managerial resources; its working capital, history of operations and future
prospects; the nature of its present and expected competition; the quality and
experience of its management services and the depth of its management; its
potential for further research, development or exploration; risk factors
specifically related to its business operations; its potential for growth,
expansion and profit; the perceived public recognition or acceptance of its
products, services, trademarks and name identification; and numerous other
factors which are difficult, if not impossible, to properly or accurately
analyze, let alone describe or identify, without referring to specific
objective criteria.
Regardless, the results of operations of any specific entity may not
necessarily be indicative of what may occur in the future, by reason of
changing market strategies, plant or product expansion, changes in product
emphasis, future management personnel and changes in innumerable other
factors. Further, in the case of a new business venture or one that is in a
research and development mode, the risks will be substantial, and there will
be no objective criteria to examine the effectiveness or the abilities of its
management or its business objectives. Also, a firm market for its products or
services may yet need to be established, and with no past track record, the
profitability of any such entity will be unproven and cannot be predicted with
any certainty.
Management will attempt to meet personally with management and key
personnel of the entity sponsoring any business opportunity afforded to the
Company, visit and inspect material facilities, obtain independent analysis or
verification of information provided and gathered, check references of
management and key personnel and conduct other reasonably prudent measures
calculated to ensure a reasonably thorough review of any particular business
opportunity; however, due to time constraints of management, these activities
may be limited.
The Company is unable to predict the time as to when and if it may
actually participate in any specific business endeavor. The Company
anticipates that proposed business ventures will be made available to it
through personal contacts of directors, executive officers and principal
stockholders, professional advisors, broker dealers in securities, venture
capital personnel, members of the financial community and others who may
present unsolicited proposals. In certain cases, the Company may agree to pay
a finder's or agent's fee or to otherwise compensate the persons who submit a
potential business endeavor in which the Company eventually participates. Such
persons may include the Company's directors, executive officers, beneficial
owners or their affiliates. In this event, such fees may become a factor in
negotiations regarding a potential acquisition and, accordingly, may present a
conflict of interest for such individuals.
Although the Company has not identified any potential acquisition target,
the possibility exists that the Company may acquire or merge with a business
or company in which the Company's executive officers, directors, beneficial
owners or their affiliates may have an ownership interest. Current Company
policy does not prohibit such transactions. Because no such transaction is
currently contemplated, it is impossible to estimate the potential pecuniary
benefits to these persons.
Management will undertake to review and investigate any proposed business
venture, and may seek the aid and assistance of Jack R. Coombs, a financial
consultant who is also the beneficial owner of approximately 48 percent of the
Company's outstanding shares. With regard to the consulting services of Mr.
Coombs, no amount of business experience can guarantee or assure the success
of any venture or entity in which the Company becomes involved.
Further, substantial fees are often paid in connection with the
completion of these types of acquisitions, reorganizations or mergers, ranging
from a small amount to as much as $250,000. These fees are usually divided
among promoters, finders or founders, after deduction of legal, accounting and
other related expenses, and it is not unusual for a portion of these fees to
be paid to members of management or to principal stockholders as consideration
for their agreement to retire a portion of the shares of common stock owned by
them. It is not expected that such fees will be paid to management of the
Company in connection with any such transaction. However, in the event that
such fees are paid, they may become a factor in negotiations regarding any
potential acquisition by the Company and, accordingly, may present a
conflict of interest for such individuals.
Principal Products and Services.
- --------------------------------
The limited business operations of the Company, as now contemplated,
involve those of a "blank check" company. The only activities to be conducted
by the Company are to manage its current assets and to seek out and
investigate the acquisition of any viable business opportunity by purchase and
exchange for securities of the Company or pursuant to a reorganization or
merger through which securities of the Company will be issued or exchanged.
Distribution Methods of the Products or Services.
- -------------------------------------------------
Management will seek out and investigate business opportunities through
every reasonably available fashion, including personal contacts,
professionals, securities broker-dealers, venture capital personnel, members
of the financial community and others who may present unsolicited proposals;
the Company may also advertise its availability as a vehicle to bring a
company to the public market through a "reverse" reorganization or merger.
Status of any Publicly Announced New Product or Service.
- --------------------------------------------------------
None; not applicable.
Competitive Business Conditions.
- --------------------------------
Management believes that there are literally thousands of "blank check"
companies engaged in endeavors similar to those engaged in by the Company;
many of these companies may have substantial current assets and cash reserves.
Competitors also include thousands of other publicly-held companies whose
business operations have proven unsuccessful, and whose only viable
business opportunity is that of providing a publicly-held vehicle through
which a private entity may have access to the public capital markets. There is
no reasonable way to predict the competitive position of the Company or any
other entity in the strata of these endeavors; however, the Company, having
virtually no operating history, will likely be at a competitive disadvantage
in competing with entities which have recently completed IPO's and have
operating histories when compared with the extremely limited operating history
of the Company.
Sources and Availability of Raw Materials and Names of Principal
Suppliers.
- ----------
None; not applicable.
Dependence on One or a Few Major Customers.
- -------------------------------------------
None; not applicable.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty
Agreements or Labor Contracts.
- ------------------------------
None; not applicable.
Need for any Governmental Approval of Principal Products or
Services.
- ---------
On the effectiveness of the Company's Registration Statement on Form
10-SB, the Company became subject to Regulation 14A regarding proxy
solicitations, which was promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended (the "1934 Act").
Section 14(a) of the 1934 Act requires all companies with securities
registered pursuant to Section 12(g) thereof to comply with the rules and
regulations of the Securities and Exchange Commission regarding proxy
solicitations outlined in Regulation 14A. Matters submitted to stockholders of
the Company at a special or annual meeting thereof or pursuant to a written
consent shall require the Company to provide its stockholders with the
information outlined in Schedules 14A or 14C of Regulation 14; preliminary
copies of this information must be submitted to the Securities and Exchange
Commission at least 10 days prior to the date that definitive copies of this
information are forwarded to stockholders.
Management intends to conduct a full evaluation of the worthiness of any
business proposal presented to it; nonetheless, it believes this process may
provide additional time within which to evaluate such a proposal, and may
eliminate proposals from entities not willing to undergo the public and agency
scrutiny involved in providing and filing information required under
Regulation 14. Management recognizes that this filing process may deter other
potential business venturers by reason of their inability to predict the
timeliness of their potential acquisition, reorganization or merger due to the
uncertainty related to the time involved in reviewing Regulation 14A filings
by the Securities and Exchange Commission; however, acquisitions or
reorganizations not requiring stockholder approval may be completed by
management, in its sole discretion, with the submission by management of an
Information Statement pursuant to Regulation 14C outlining any additional
proposals attendant to any such acquisition or reorganization. Such additional
or post-transaction proposals commonly include changing the name of the
acquiring company or increasing or decreasing the number of authorized or
outstanding shares of the acquiring company's common stock.
The Company is also subject to the provisions of Section 13 of the 1934
Act. Under applicable rules and regulations promulgated by the Securities and
Exchange Commission pursuant to this Section, the Company is required to file
(i) an annual report on Form 10-KSB with the Securities and Exchange
Commission within 90 days of the close of each fiscal year (Reg. Sections
240.13a-1 and 249.310b); (ii) a quarterly report on Form 10-QSB within 45 days
of the end of each of the first three quarters of its fiscal year (Reg.
Sections 240.13a-13 and 249.308b); and (iii) a current report on Form 8-K
within 15 days of the occurrence of certain material events (e.g., changes in
accountants, acquisitions or dispositions of a substantial amount of assets
not in the ordinary course of business) (Reg. Sections 240.13a-11 and
249.308). In addition, annual reports on Form 10-KSB must be accompanied by
audited financial statements as of the end of the issuer's most recent fiscal
year. These reporting requirements may deter potential reorganization
candidates that are not willing to undergo the public and agency scrutiny
resulting therefrom.
Effect of Existing or Probable Governmental Regulations on
Business.
- ---------
The integrated disclosure system for small business issuers adopted by
the Securities and Exchange Commission in Release No. 34-30968 and effective
as of August 13, 1992, substantially modified the information and financial
requirements of a "Small Business Issuer," defined to be an issuer that has
revenues of less than $25 million; is a U.S. or Canadian issuer; is not an
investment company; and if a majority-owned subsidiary, the parent is also a
small business issuer; provided, however, an entity is not a small business
issuer if it has a public float (the aggregate market value of the issuer's
outstanding securities held by non-affiliates) of $25 million or more.
The Securities and Exchange Commission, state securities commissions and
the North American Securities Administrators Association, Inc. ("NASAA") have
expressed an interest in adopting policies that will streamline the
registration process and make it easier for a small business issuer to have
access to the public capital markets. The present laws, rules and regulations
designed to promote availability to the small business issuer of these capital
markets and similar laws, rules and regulations that may be adopted in the
future, will substantially limit the demand for "blank check" companies like
the Company, and may make the use of these companies obsolete.
Research and Development.
- -------------------------
None; not applicable.
Cost and Effects of Compliance with Environmental Laws.
- -------------------------------------------------------
None; not applicable. However, environmental laws, rules and regulations
may have an adverse effect on any business venture viewed by the Company as an
attractive acquisition, reorganization or merger candidate, and these factors
may further limit the number of potential candidates available to the Company
for acquisition, reorganization or merger.
Number of Employees.
- --------------------
None.
Item 2. Description of Property.
------------------------
Other than cash and its holdings of corporate stocks and bonds, the
Company has virtually no assets, property or business; its principal executive
office address and telephone number are the business office address and
telephone number of its President, John Michael Coombs, and have been provided
at $1,819 and $1,185 for the years ended June 30, 1998, and June 30, 1997,
respectively. Because the Company has no business, its activities will be
limited to keeping itself in good standing in the State of Nevada and to
preparing and filing the appropriate reports with the Securities and Exchange
Commission and investigating potential merger or other acquisition candidates.
These activities have consumed an insubstantial amount of management's time.
Item 3. Legal Proceedings.
------------------
The Company is not a party to any pending legal proceeding. To the
knowledge of management, no federal, state or local governmental agency is
presently contemplating any proceeding against the Company. No director,
executive officer or affiliate of the Company or owner of record or
beneficially of more than five percent of the Company's common stock is a
party adverse to the Company or has a material interest adverse to the Company
in any proceeding.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
No matter was submitted to a vote of the Company's security holders
during the fourth quarter of the fiscal year covered by this Report.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
---------------------------------------------------------
Market Information
- ------------------
The Company's common stock is quoted on the OTC Bulletin Board of the
NASD under the symbol "VISV"; however, the market for shares of the Company's
common stock is extremely limited. No assurance can be given that the present
limited market for the Company's common stock will continue or will be
maintained, and the sale of the Company's common stock pursuant to Rule 144 of
the Securities and Exchange Commission by Jack R. Coombs or his wife, Margaret
V. Coombs may have a substantial adverse impact on any such public market. See
Item 11 of this Report.
The high and low closing bid prices for shares of common stock of the
Company for each quarter within the last two fiscal years are as follows:
<TABLE>
<CAPTION>
Bid
Quarter ending: High Low
- --------------- ---- ---
<S> <C> <C>
September 30, 1996 1/4 1/4
December 31, 1996 1/4 1/4
March 31, 1997 1/4 1/4
June 30, 1997 1/4 1/4
September 30, 1997 1/4 1/4
December 31, 1997 1/4 1/4
March 31, 1998 1/4 1/4
June 30, 1998 1/4 1/4
</TABLE>
These bid prices were obtained from the National Quotation Bureau, LLC
("NQB") and do not necessarily reflect actual transactions, retail markups,
mark downs or commissions.
No assurance can be given that any "established public market" will
develop in the common stock of the Company, regardless of whether the Company
is successful in completing any acquisition, reorganization or merger deemed
by management to be beneficial for the Company, or if any such market does
develop, that it will continue or be sustained for any period of time.
Holders
- -------
The number of record holders of the Company's common stock as of the date
of this Report is approximately 169.
Dividends
- ---------
The Company has not declared any cash dividends with respect to its
common stock and does not intend to declare dividends in the foreseeable
future. The future dividend policy of the Company cannot be ascertained with
any certainty, and until the Company completes any acquisition, reorganization
or merger, as to which no assurance may be given, no such policy will be
formulated. There are no material restrictions limiting, or that are likely
to limit, the Company's ability to pay dividends on its common stock.
Item 6. Management's Discussion and Analysis or Plan of Operation.
----------------------------------------------------------
Plan of Operation.
- ------------------
The Company has not engaged in any material operations or had any
revenues from operations since its inception or during the last two fiscal
years. The Company's plan of operation for the next 12 months is to continue
to seek the acquisition of assets, properties or businesses that may benefit
the Company and its stockholders. Management anticipates that to achieve any
such acquisition, the Company will issue shares of its common stock as
the sole consideration for such acquisition.
During the next 12 months, the Company's only foreseeable cash
requirements will relate to maintaining the Company in good standing and
preparing and filing its reports under Section 13 of the 1934 Act or the
payment of expenses associated with reviewing or investigating any potential
business venture, which the Company expects to pay from its cash resources. As
of June 30, 1998 it had cash or cash equivalents or $90,738.
Results of Operations.
- ----------------------
Other than maintaining its good corporate standing in the State of Utah
and (following its change of domicile in the fiscal year ended June 30, 1995)
in the State of Nevada and seeking the acquisition of assets, properties or
businesses that may benefit the Company and its stockholders, the Company has
had no material business operations in the two most recent fiscal years.
During the fiscal year ended June 30, 1998, the Company examined certain
potential acquisition transactions, but management determined that such
transactions were not in the best interests of the Company or its
stockholders.
The Company's assets consist primarily of holdings of corporate bonds,
which had market values at June 30, 1998, and 1997, of $334,661 and $514,024,
respectively. In addition, at June 30, 1998, the Company held corporate stocks
valued at $20,748, as compared to $45,563 at June 30, 1997. Total assets on
these dates were $506,881 and $591,991, respectively. See Item 7 of this
Report.
Net income to the Company, after provision for income taxes, decreased to
$25,303 from $46,885 in the fiscal years ended June 30, 1998, and 1997,
respectively, due primarily to decreased gains from the sales of investments
in the fiscal year ended June 30, 1998, as compared to the previous fiscal
year. See Item 7 of this Report.
Liquidity and Capital Resources.
- --------------------------------
During the fiscal year ended June 30, 1998, the Company's cash and cash
equivalents increased from $0 to $90,738, due principally to increased
sales of securities during the period. At June 30, 1998, the Company's
investments in securities were valued at $355,409, as compared to $559,587 at
June 30, 1997. Total stockholders' equity decreased to $506,881 at June 30,
1998, from $530,947 at June 30, 1997.
Item 7. Financial Statements.
---------------------
Financial Statements for the years ended
June 30, 1998 and 1997, and for the
cumulative period from September 11, 1980
(date of inception) through June 30, 1998
Report of Independent Certified Public
Accountants
Balance Sheets - June 30, 1998 and 1997
Statements of income for the years ended
June 30, 1998 and 1997, and cumulative
for the period September 11, 1980 (date
of inception) through June 30, 1998
Statements of Stockholders' Equity for
the period from September 11, 1980 (date
of inception) through June 30, 1996 and
for the years ended June 30, 1997 and 1998
Statements of Cash Flows for the years ended
June 30, 1998 and 1997, and cumulative for
the period September 11, 1980 (date of
inception) through June 30, 1998
Notes to the Financial Statements
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
- ---------------------
The Company's principal independent accountant has not resigned,
declined to stand for re-election or been dismissed during the Company's two
most recent fiscal years or any later interim period.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
- --------------------------------------------------
Identification of Directors and Executive Officers
- --------------------------------------------------
The following table sets forth the names of all current directors and
executive officers of the Company. These persons will serve until the next
annual meeting of the stockholders (to be held within 180 days after the end
of each fiscal year) or until their successors are elected or appointed and
qualified, or their prior resignation or termination.
<TABLE>
<CAPTION>
Date of Date of
Positions Election or Termination
Name Held Designation or Resignation
- ---- ---- ----------- --------------
<S> <C> <C> <C>
John Michael Coombs President 5/95 *
Director 5/95 *
Terry S. Pantelakis Vice President 5/95 *
Director 5/95 *
Sandra E. Hansen Secretary/
Treasurer 4/94 *
Director 4/94 *
</TABLE>
* These persons presently serve in the capacities indicated.
Business Experience.
- --------------------
John Michael Coombs. Director and President. Mr. Coombs is 43 years of
age. He was graduated from Gonzaga University with a B.A. degree in
English/Philosophy/Drama in 1977, and received a J.D. degree in 1981 from
Loyola Law School in Los Angeles. Mr. Coombs was admitted to the Utah State
Bar in 1982 and has been engaged in the private practice of law, specializing
in business litigation, since that time. Mr. Coombs has been a member of the
Screen Actor's Guild for nearly 20 years. He has an honorable discharge from
the United States Marine Corps.
Terry S. Pantelakis. Director and Vice President. Mr. Pantelakis, age 57,
has been a principal of AAA Jewelers & Loans, a Salt Lake City, Utah, jewelry
store and pawn shop, since 1963. Mr. Pantelakis graduated from the Gemological
Institute of America in 1959 and is a certified gemologist.
Sandra E. Hansen, Director and Secretary/Treasurer. Ms. Hansen is 38
years of age. She graduated from Valencia High School in Placentia, California
in 1977. For the past 19 years, Ms. Hansen has served in corporate secretarial
positions. She was a public relations secretary for Children's Hospital of
Orange County, California from 1983 to 1987, and was an administrative
assistant for Therapeutic Associates in Van Nuys, California from 1988 to
1991. She was a homemaker from 1991 to January, 1994. Ms. Hansen has been
employed as legal secretary to John Michael Coombs since that time.
Significant Employees.
- ----------------------
The Company has no employees who are not executive officers, but who are
expected to make a significant contribution to the Company's business.
Family Relationships.
- ---------------------
There are no family relationships between any directors or executive
officers of the Company, either by blood or by marriage. John Michael Coombs
is the son of Jack R. Coombs, who is the Company's principal stockholder and a
former director and executive officer, and Margaret V. Coombs, who is a former
director and executive officer of the Company.
Involvement in Certain Legal Proceedings.
- -----------------------------------------
Except as stated below, during the past five years, no director, person
nominated to become a director, executive officer, promoter or control person
of the Company:
(1) was a general partner or executive officer of any business against
which any bankruptcy petition was filed, either at the time of the bankruptcy
or two years prior to that time;
(2) was convicted in a criminal proceeding or named subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses);
(3) was subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting his involvement in any type of business, securities or banking
activities; or
(4) was found by a court of competent jurisdiction (in a civil action),
the Securities and Exchange Commission or the Commodity Futures Trading
Commission to have violated a federal or state securities or commodities law,
and the judgment has not been reversed, suspended or vacated.
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
To the knowledge of management there were no statements that were
required to be filed with the Securities and Exchange Commission during the
year ended June 30, 1998.
Item 10. Executive Compensation.
-----------------------
The following table sets forth the aggregate compensation
paid by the Company for services rendered during the periods
indicated:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Secur-
ities All
Name and Year or Other Rest- Under- LTIP Other
Principal Period Salary Bonus Annual rictedlying Pay- Comp-
Position Ended ($) ($) Compen-Stock Optionsouts ensat'n
- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John Michael
Coombs, 6/30/96 0 0 0 0 (3) 0 $10,407(1)
President, 6/30/97 0 $500(2)0 0 0 0 $10,297.23(1)
Director 6/30/98 0 $500(2)0 0 0 0 $ 4,500(1)
Terry S.
Pantelakis, 6/30/96 0 0 0 0 (3) 0 0
Vice Pres., 6/30/97 0 $500(2)0 0 0 0 0
Director 6/30/98 0 $500(2)0 0 0 0 0
Sandra E.
Hansen, 6/30/96 0 0 0 0 (3) 0 0
Sec./Treas.,6/30/97 0 $500(2)0 0 0 0 0
Director 6/30/98 0 $500(2)0 0 0 0 0
Jack R.
Coombs, 6/30/96 0 0 0 0 0 0 0
Former Pres-6/30/97 0 0 0 0 0 0 0
ident, 6/30/98 0 0 0 0 0 0 0
Director
Margaret V.
Coombs, 6/30/96 0 0 0 0 0 0 0
Former Vice 6/30/97 0 0 0 0 0 0 0
President, 6/30/98 0 0 0 0 0 0 0
Director
</TABLE>
(1) John Michael Coombs, has acted as the Company's
legal counsel since 1992. Each of these figures
reflects the amount of legal fees that the Company
has paid to Mr. Coombs for the periods indicated.
(2) During the years ended June 30, 1998 and 1997, $500 was paid
to each director and officer of the Company for
services rendered during the year. Because the
Company has no firm policy with respect to such
compensation, it has been characterized as a bonus.
(3) On July 8, 1996, the Board of Directors of the
Company unanimously resolved to grant options to
the following directors and executive officers to
purchase "unregistered" and "restricted" shares
of the Company's common stock at a price of $0.25
per share: John Michael Coombs (50,000 shares);
Terry S. Pantelakis (50,000 shares); and Sandra
E. Hansen (5,000 shares). These options, which
are exercisable at any time in the future, were
granted in consideration of services rendered by
each of these persons during the fiscal year
ended June 30, 1996. Each director abstained
from voting on the granting of the option to
himself or herself. As of the date of this
Report, none of these options has been exercised.
For a discussion of the valuation of these options,
see Note 8 of the accompanying financial statements.
See Item 7 of this Report.
Compensation of Directors.
- --------------------------
There are no standard arrangements pursuant to which the Company's
directors are compensated for any services provided as director. No additional
amounts are payable to the Company's directors for committee participation or
special assignments.
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements.
- -------------
There are no employment contracts, compensatory plans or arrangements,
including payments to be received from the Company, with respect to any
director or executive officer of the Company which would in any way result in
payments to any such person because of his or her resignation, retirement or
other termination of employment with the Company or any subsidiary, any
change in control of the Company, or a change in the person's responsibilities
following a change in control of the Company.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
---------------------------------------------------------------
Security Ownership of Certain Beneficial Owners.
- ------------------------------------------------
The following table sets forth the shareholdings of those persons who own
more than five percent of the Company's common stock as of the date of this
Report, with the computations being based upon 1,375,000 shares of common
stock being outstanding. This figure takes into account the 1,270,000
presently outstanding shares of common stock and the 105,000 shares subject to
existing options held by John Michael Coombs, Terry S. Pantelakis and Sandra
E. Hansen (see Item 10 of this Report):
<TABLE>
<CAPTION>
Number of Shares Percentage
Name and Address Beneficially Owned of Class
- ---------------- ------------------ --------
<S> <C> <C>
Jack R. Coombs 609,975 (1) 44.3%
2581 East 1300 South
Salt Lake City, Utah
84108
John Michael Coombs 118,000 (2)(3) 8.5%
2435 South Scenic Drive
Salt Lake City, Utah
84109 ------- ----
727,975 52.8%
</TABLE>
(1) Of this amount, 70,000 shares are held in the name
of Margaret V. Coombs, Mr. Coombs' wife, and 15,000
shares are held in the name of the Rebecca Ann
Coleman Trust, of which Margaret V. Coombs is the
trustee.
(2) Of this amount, a total of 9,000 shares are held
in the name of John Michael Coombs for his three
minor children pursuant to the Uniform Gifts to
Minors Act.
(3) Includes an option to acquire 50,000 shares of
"unregistered" and "restricted" common stock of
the Company at a price of $0.25 per share, which
was granted to Mr. Coombs on July 8, 1996. See
Item 10 of this Report.
Security Ownership of Management.
- ---------------------------------
The following table sets forth the shareholdings of the Company's
directors and executive officers as of the date of this Report:
<TABLE>
<CAPTION>
Number of Percentage of
Name and Address Shares Beneficially Owned of Class
- ---------------- ------------------------- --------
<S> <C> <C>
John Michael Coombs (1) 118,000(2) 8.5%
2435 South Scenic Drive
Salt Lake City, Utah
84109
Terry S. Pantelakis (1) 50,000 3.6%
350 South State Street
Salt Lake City, Utah
84111
Sandra E. Hansen (1) 5,000 0.4%
124 South 600 East, Suite 100
Salt Lake City, Utah
84102 ----- ----
All directors and executive
officers as a group 173,000 12.5%
as a group (3 persons)
</TABLE>
(1) On July 8, 1996, the Company's Board of Directors
resolved to grant to each director and executive
officer an option to purchase stock of the Company for
$0.25 per share, in consideration of services rendered
to the Company, in the following amounts: John Michael
Coombs (50,000 shares); Terry S. Pantelakis (50,000
shares); and Sandra E. Hansen (5,000 shares). As of
the date of this Report, no such option has been
exercised. See Item 10 of this Report.
(2) Of this amount, a total of 9,000 shares are held in
the name of John Michael Coombs for his three minor
children pursuant to the Uniform Gifts to Minors
Act.
See Item 9 of this Report for information concerning the offices or other
capacities in which the foregoing persons serve with the Company.
Changes in Control.
- -------------------
There are no present arrangements or pledges of the Company's securities
which may result in a change in control of the Company.
Item 12. Certain Relationships and Related Transactions.
-----------------------------------------------
Transactions with Management and Others.
- ----------------------------------------
There have been no material transactions, series of similar transactions,
currently proposed transactions, or series of similar transactions, to which
the Company or any of its subsidiaries was or is to be a party, in which the
amount involved exceeded $60,000 and in which any director or executive
officer, or any security holder who is known to the Company to own of record
or beneficially more than five percent of the Company's common stock, or any
member of the immediate family of any of the foregoing persons, had a material
interest. However, see Item 1 of this Report.
Certain Business Relationships.
- -------------------------------
There have been no material transactions, series of similar transactions,
currently proposed transactions, or series of similar transactions, to which
the Company or any of its subsidiaries was or is to be a party, in which the
amount involved exceeded $60,000 and in which any director or executive
officer, or any security holder who is known to the Company to own of record
or beneficially more than five percent of the Company's common stock, or any
member of the immediate family of any of the foregoing persons, had a material
interest. However, see Item 1 of this Report.
Indebtedness of Management.
- ---------------------------
There have been no material transactions, series of similar transactions,
currently proposed transactions, or series of similar transactions, to which
the Company or any of its subsidiaries was or is to be a party, in which the
amount involved exceeded $60,000 and in which any director or executive
officer, or any security holder who is known to the Company to own of record
or beneficially more than five percent of the Company's common stock, or any
member of the immediate family of any of the foregoing persons, had a material
interest. However, see Item 1 of this Report.
Parents of the Issuer.
- ----------------------
The Company has no parents.
Transactions with Promoters.
- ----------------------------
There have been no material transactions, series of similar transactions,
currently proposed transactions, or series of similar transactions, to which
the Company or any of its subsidiaries was or is to be a party, in which the
amount involved exceeded $60,000 and in which any promoter or founder, or any
member of the immediate family of any of the foregoing persons, had a material
interest. However, see Item 1 of this Report.
Item 13. Exhibits and Reports on Form 8-K.
---------------------------------
Reports on Form 8-K
None.
Exhibits*
(i)
Where Incorporated
in this Report
--------------
Registration Statement on Form 10-SB-A2, Part I
filed June 21, 1996**
Annual Report on Form 10-KSB, filed Part I
September 23, 1996
Annual Report on Form 10-KSB, filed Part I
September 30, 1997
(ii)
Exhibit
Number Description
- ------ -----------
27 Financial Data Schedule
* Summaries of all exhibits contained within this
Report are modified in their entirety by reference
to these Exhibits.
** These documents and related exhibits have been
previously filed with the Securities and Exchange
Commission and are incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this Report
to be signed on its behalf by the undersigned, thereunto duly authorized.
VIS VIVA CORPORATION
Date: 9/8/98 By/s/John Michael Coombs
------ ------------------------------------
John Michael Coombs
Director and President
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, this Report has been signed below by the following persons on
behalf of the Company and in the capacities and on the dates indicated:
VIS VIVA CORPORATION
Date: 9/8/98 By/s/John Michael Coombs
------- ------------------------------------
John Michael Coombs
Director and President
Date: 9/9/98 By/s/Terry S. Pantelakis
------- ------------------------------------
Terry S. Pantelakis
Director and Vice President
Date: 9/8/98 By/s/Sandra E. Hansen
------- ------------------------------------
Sandra E. Hansen
Director and Secretary/Treasurer
<PAGE>
VIS VIVA CORPORATION
(A Development Stage Company)
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
AND
FINANCIAL STATEMENTS
As of June 30, 1998 and 1997, for the Years
Then Ended, and for the Cumulative
Period from September 11, 1980 (Date of Inception)
Through June 30, 1998
<PAGE>
HANSEN, BARNETT & MAXWELL [Letterhead]
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders
Vis Viva Corporation
We have audited the accompanying balance sheets of Vis Viva Corporation (a
development stage company) as of June 30, 1998 and 1997, and the related
statements of operations, stockholders' equity, and cash flows for the years
ended June 30, 1998 and 1997, and cumulative for the period September 11,
1980 (date of inception) through June 30, 1998. 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. The
financial statements of Vis Viva Corporation from inception through June 30,
1994 (not presented herein), were audited by other auditors whose report,
dated September 26, 1994, expressed an unqualified opinion on those
statements. Our opinion, in so far as it relates to the cumulative amounts
for the period from inception through June 30, 1994, is based solely on the
report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits and the report of the
other auditors provides a reasonable basis for our opinion.
In our opinion, based on our audits and the report of the other auditors, the
financial statements referred to above present fairly, in all material
respects, the financial position of Vis Viva Corporation as of June 30, 1998
and 1997, and the results of its operations and its cash flows for the
years ended June 30, 1998 and 1997, and cumulative for the period September
11, 1980 (date of inception) through June 30, 1998, in conformity with
generally accepted accounting principles.
HANSEN, BARNETT & MAXWELL
Salt Lake City, Utah
August 25, 1998<PAGE>
<TABLE>
VIS VIVA CORPORATION
(A Development Stage Company)
BALANCE SHEETS
<CAPTION>
June 30,
1998 1997
ASSETS
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 90,738 $ -
Investment in securities, net of
valuation allowance 355,409 559,587
Accrued interest receivable 23,029 16,444
Prepaid expenses - 13,000
Prepaid income taxes 5,577 2,173
Deferred tax asset 32,128 787
Total Current Assets 506,881 591,991
Total Assets $ 506,881 $ 591,991
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Brokerage margin account payable $ - $ 61,044
Total Current Liabilities - 61,044
Stockholders' Equity
Common Stock - $0.01 par value; 15,000,000
shares authorized; 1,270,000 shares issued
and outstanding 12,700 12,700
Additional paid-in capital 148,129 148,129
Unrealized loss on investment in securities -
net of taxes (59,478) (10,109)
Earnings accumulated during the development
stage 405,530 380,227
Total Stockholders' Equity 506,881 530,947
Total Liabilities and Stockholders' Equity $ 506,881 $591,991
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
VIS VIVA CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<CAPTION>
Cumulative
For the Period
September 11,
For the Years Ended 1980 (Inception)
June 30, Through
1998 1997 June 30, 1998
<S> <C> <C> <C>
Income
Interest income $ 64,426 $ 69,999 $ 533,555
Gain from sale of investments 897 13,064 162,624
Other income 200 270 10,356
Total Income 65,523 83,333 706,535
Operating Expenses
Abandoned acquisition expenses - - 14,000
Bad debt - - 8,839
Travel and entertainment 1,678 3,856 17,180
Legal fees 17,019 4,768 53,375
Directors fees 1,500 1,500 26,275
Accounting 4,700 4,525 25,180
Consulting 535 - 2,582
Filing fees and transfer costs 85 317 2,838
Office expenses 424 336 4,043
Rent 1,819 1,185 5,204
Amortization - - 875
Designing costs - - 850
Miscellaneous 472 589 7,622
Total Operating Expenses 28,232 17,076 168,863
Interest Expense 10,372 9,335 34,676
Income Before Income Taxes 26,919 56,922 502,996
Provision for Income Taxes 1,616 10,037 97,466
Net Income $ 25,303 $ 46,885 $ 405,430
Basic and Diluted Earnings Per Share $ 0.02 $ 0.04 $ 0.32
Weighted Average Shares Outstanding 1,270,000 1,270,000 1,289,468
Net Income $ 25,303 $ 46,885 $ 405,430
Other Comprehensive Income (Loss)
Unrealized losses on investment
in securities, net of tax (49,369) (32,096) (59,478)
Comprehensive Income (Loss) $ (24,066)$ 14,789 $ 345,925
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
VIS VIVA CORPORATION
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
Earnings
Unrealized Accumulated Total
Additional Gain (Loss)on During the Stock
Common Stock Paid-In Investment Development holders
Shares Amount Capital In Securities Stage Equity
------ ------ ------- ------------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Balance -
September 11, 1980
(Date of Inception) - $ $ $ $ $
Shares issued to
incorporators for
cash, September 11,
1980,$0.05 per share 420,000 4,200 16,800 - - 21,000
Proceeds from public
offering, May 1981,
for cash, net of
offering costs
of $30,171, $0.17
per share 1,000,000 10,000 159,829 - - 169,829
Redemption and
retirement of stock
for cash, December
1988, $0.20 per
share (150,000) (1,500)(28,500) - - (30,000)
Net income for the
period from
September 11, 1980
(date of inception)
through June 30, 1994 - - - - 221,415 221,415
---- ---- ---- ---- ------- -------
Balance -
June 30, 1994 1,270,000 12,700 148,129 - 221,415 382,244
Change in
unrealized gain
(loss) on
investment in
securities - - - 24,198 - 24,198
Net income for
the year ended
June 30,1995 - - - - 27,300 27,300
---- ---- ---- ---- ------ ------
Balance -
June 30, 1995 1,270,000 12,700 148,129 24,198 248,715 433,742
Change in
unrealized gain
(loss) on
investment in
securities - - - (2,211) - (2,211)
Net income for
the year ended
June 30, 1996 - - - - 84,627 84,627
---- ---- ---- ---- ------ ------
Balance -
June 30, 1996 1,270,000 12,700 148,129 21,987 333,342 516,158
Change in
unrealized gain
(loss) on
investment in
securities - - - (32,096) - (32,096)
Net income for
the year ended
June 30, 1997 - - - - 46,885 46,885
---- ---- ---- ---- ------ ------
Balance -
June 30, 1997 1,270,000 $12,700 $148,129$(10,109) $380,227 $530,947
Change in
unrealized loss
on investment in
securities - - - (49,369) - (49,369)
Net income for
the year ended
June 30, 1998 - - - - 25,303 25,303
Balance -
June 30, 1998 1,270,000 $12,700 $148,129$(59,478) $ 405,530$ 506,881
--------- ------ ------- -------- ------- -------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
VIS VIVA CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<CAPTION>
Cumulative
For the Period
September 11,
For the Years Ended 1980 (Inception)
June 30, Through
1998 1997 June 30, 1998
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net income $ 25,303 $ 46,885 $ 405,530
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Amortization - - 875
Gain from sale of
investments (895) (13,064) (162,622)
Prepaid expenses 9,596 (8,673) (5,577)
Deferred tax provision (4,420) 2,210 -
Increase in accrued
interest receivable (6,585) (1,026) (23,029)
Change in income taxes
payable - (12,486) -
Net Cash Provided By
Operating Activities 22,999 13,846 215,177
Cash Flows From Investing Activities
Organization costs paid - - (875)
Purchase of securities (510,150) (847,647) (3,662,439)
Proceeds from sale of
securities 638,933 769,501 3,378,046
Net Cash Used in
Investing Activities 128,783 (78,146) (285,268)
Cash Flows From Financing Activities
Proceeds from brokerage
margin account borrowings (61,044) 61,044 -
Net proceeds from issuance
of common stock - - 190,829
Acquisition and retirement
of common stock - - (30,000)
Net Cash Provided by
Financing Activities (61,044) 61,044 160,829
Net Increase (Decrease) In Cash 90,738 (3,256) 90,738
Cash and Cash Equivalents at
Beginning of Period - 3,256 -
Cash and Cash Equivalents at
End of Period $ 90,738 $ - $ 90,738
Supplemental Cash Flow Information - Note 5.
</TABLE>
The accompanying notes are an integral part of these financial statements.
VIS VIVA CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1998 AND 1997
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization. Vis Viva Corporation (the Company) was incorporated under
the laws of the State of Utah on September 11, 1980. Effective June 30, 1995,
the Company changed its domicile to the State of Nevada. Vis Viva Corporation
is a development stage company. It is primarily engaged in the process of
investigating business opportunities which appear to have profitable potential
for the Company.
Cash Equivalents. The Company considers all highly liquid debt
instruments purchased with an original maturity of three months or less to be
cash equivalents.
Investment in Securities. Investments in equity and debt securities are
stated at fair value, based on quoted market prices, and are classified as
available-for-sale. Unrealized gains and losses are reported in stockholders'
equity, net of related deferred income taxes. Gains and losses on disposition
are based on the net proceeds less the cost basis of the security sold, using
the specific identification method.
Basic and Diluted Earnings Per Share. In February 1997, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
No. 128, Earnings Per Share. Statement No. 128 specifies the computation,
presentation, and disclosure requirements for earnings per share and was
adopted as of June 30, 1998. Earnings per share for the year ended June 30,
1997 and for the cumulative period from inception through June 30, 1998 were
restated; however, the effect of the change to earnings per share for those
periods was not material. Basic earnings per common share is computed by
dividing net income by the number of common shares outstanding during the
period. Diluted earnings per common share is computed by taking the income
available to common stockholders, adding the effect of assumed stock option
conversions, and dividing that number by the total of the weighted-average
shares outstanding and the dilutive potential common shares.
Comprehensive Income. In June 1997, the Financial Accounting Standards
Board issued SFAS No. 130, Reporting Comprehensive Income, and was adopted as
of June 30, 1998. This statement expands or modifies disclosures and had no
impact on the Company's financial position, results of operations or cash
flows.
Stock-Based Compensation. Compensation arising from stock options
granted to directors and officers is accounted for using the
intrinsic-value-based method.
Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect certain reported amounts and
disclosures. Actual results could differ from those estimates. An estimate
which is subject to change in the near future is the unrealized gain (loss) on
investment in securities.
NOTE 2--INVESTMENT IN SECURITIES
Marketable equity and debt securities are classified as available-for-sale
and are stated at fair value, with unrealized gains and losses, net of
deferred income taxes, reported in stockholders' equity. On June 30, 1998 and
1997, available-for-sale securities consisted of the following:
<TABLE>
Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
June 30, 1998
Common stocks $ 33,761 $ - $ 13,013 $ 20,748
Corporate debt securities 413,255 7,307 85,901 334,661
Total $ 447,016 $ 7,307 $ 98,914 $355,409
June 30, 1997
Common Stocks $ 42,858 $ 3,380 $ 675 $ 45,563
Corporate debt securities 532,045 13,923 31,944 514,024
Total $ 574,903 $ 17,303 $ 32,619 $559,587
</TABLE>
The difference between cost and market of $91,607 and $15,316 (less
deferred tax benefit of $27,709 and $5,207) was charged to a separate
component of stockholders' equity called "unrealized loss on investment in
securities" for the years ended June 30, 1998 and 1997, respectively.
As of June 30, 1998, corporate debt securities have maturities ranging
from August 2001 to May 2004.
Gross realized gains from available-for-sale securities were $60,541 and
$83,690 for the years ended June 30, 1998 and 1997, respectively. Gross
realized losses from available-for-sale securities were $59,644 and $70,626
for the years ended June 30, 1998 and 1997, respectively.
NOTE 3 ABANDONED ACQUISITION AND BAD DEBT
The Company advanced $14,000 to Worldwide FiberComm, Inc. for a possible
merger which was terminated October 15, 1993. Upon termination, the advance
was charged to operations.
The Company paid expenses in connection with a possible merger with
Draycott Corporation, which was terminated. Management determined that the
amount paid was uncollectible as of June 30, 1988. During 1989, Draycott
Corporation began making payments on the receivable. Payments totaled $5,724
through 1993 which were offset against bad debt expense. No payments were
received subsequent to 1993.
NOTE 4--RETIREMENT OF STOCK
In December of 1988, the Company redeemed 150,000 shares of its common
stock for $30,000 and retired the shares.
NOTE 5--SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the years ended June 30, 1998 and 1997 and the period
from inception through June 30, 1998, for interest and income taxes were as
follows:
<TABLE>
Cumulative
for the Period
September 11,
For the Years Ended 1980 (Inception)
June 30, through
1998 1997 June 30, 1998
<S> <C> <C> <C>
Interest paid $ 10,371 $ 9,335 $ 34,676
Income taxes paid 6,036 22,814 102,177
</TABLE>
NOTE 6--RELATED PARTY TRANSACTIONS
An individual who acted as the Company's legal counsel since 1992,
became an officer and director of the Company in May 1995. Fees paid in legal
expenses to the officer and director were $37,932 for the period ended
September 11, 1980 (date of inception) through June 30, 1998 and $4,500 and
$10,297 for the years ended June 30, 1998 and 1997, respectively.
During the years ended June 30, 1998 and 1997, $1,500 and $11,500,
respectively, was paid for directors' fees to the directors and officers of
the Company.
NOTE 7--INCOME TAXES
Deferred income taxes are recognized for differences between the
bases of assets for financial statement and income tax purposes.
The components of the net deferred tax asset were as follows:
<TABLE>
June 30,
1998 1997
<S> <C> <C>
Deferred Tax Liabilities
Prepaid expenses deducted for tax reporting
purposes $ - $ (4,420)
Deferred Tax Assets
Unrealized loss on investments in securities 32,129 5,207
Net Deferred Tax Asset $ 32,129 $ 787
</TABLE>
The components of income tax expense were as follows:
<TABLE>
Cumulative
for the Period
September 11,
For the Years Ended 1980 (Inception)
June 30, through
1998 1997 June 30, 1998
<S> <C> <C> <C>
Current - Federal $ 6,036 $ 7,827 $ 82,137
- State - - 15,329
6,036 7,827 97,466
Deferred - Federal (4,420) 2,210 -
(4,420) 2,210 -
Provision for Income Taxes $ 1,616 $ 10,037 $ 97,466
</TABLE>
The Company has not been subject to state income tax subsequent to
June 30, 1995.
The following is a reconciliation of income tax expense to the amount
computed using the federal statutory rate:
<TABLE>
Cumulative
For the Period
September 11, 1980
(Inception)
For the Years Ended Through
June 30, June 30,
1998 1997 1998
<S> <C> <C> <C>
Tax at federal statutory rate (34%) $ 9,152 $ 19,353 $ 171,018
State income taxes, net of federal benefit - - 13,335
Non-deductible expenses 157 366 523
Effect of lower taxes (7,693) (9,682) (87,410)
Provision for Income Taxes $ 1,616 $ 10,037 $ 97,466
</TABLE>
NOTE 8--STOCK OPTIONS
In July 1996, the Company granted options to directors and officers
of the Company to purchase a total of 105,000 shares of common stock. The
exercise price is $0.25 per share. The market price at the date of grant was
also $0.25 per share. The options are exercisable at any time and will not
expire.
A summary of the Company's stock options as of June 30, 1998 and
1997, and changes during the year ended June 30, 1998 is as follows:
Weighted-Average
Shares Exercise Price
Outstanding June 30, 1996 - $ -
Granted 105,000 $ 0.25
Outstanding - June 30, 1997 105,000 $ 0.25
Granted - $ -
Outstanding - June 30, 1998 105,000 $ 0.25
Exercisable - June 30, 1998 105,000 $ 0.25
The Company computes compensation expense arising from stock options
using the intrinsic-value-based method prescribed by APB No. 25. Accordingly,
no compensation cost has been recognized in the financial statements for
options granted. Had compensation cost been determined on the basis of fair
value pursuant to FASB Statement No. 123, pro forma net income and earnings
per share would not have been materially different from actual amounts.
The fair value of these options was estimated at the date of grant
using the modified Black-Scholes American option-pricing model with the
following assumptions for June 30, 1998: expected volatility of 0.00%;
risk-free interest rate of 6.34 %; and expected life of 3 years. The fair
value of the options granted was $0.04 during the year ended June 30, 1997.
Option pricing models require the input of highly subjective
assumptions including the expected stock price volatility. Also, the Company's
director and officer stock options have characteristics significantly
different from those of traded options, and changes in the subjective input
assumptions can materially affect the fair value estimate. Management
believes the best input assumptions available were used to value the options
and the resulting values are reasonable.
NOTE 9 -- PAST DISPUTES
In December 1996, the Company was a party to a complaint filed
against two brokerage firms and a bank alleging fraud and insider trading with
regard to certain investments in debt securities held by the Company. In
exchange for legal representation in this matter by the Company's president,
all benefits and rights to damages under the action for the Company were
assigned to the president. Upon settlement of the action in September 1997,
it was determined that the Company was not damaged due to the appreciation in
the securities held by the Company.
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<NAME> VIS VIVA CORPORATION
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