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 calendar year ended December 31, 1997
-----------------
[_] Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition period from ____________ to ______________
HIDENET SECURE ARCHITECTURES, INC.
(formerly known as Savin Electronics Inc.)
(Name of Small Business Issuer in Its Charter)
New Jersey 33-36670 22-3061278
(State or other (Commission File (IRS Employer
Jurisdiction of Number) Identification No.)
Incorporation)
103 Medinat Hayehudim Street, POB 837, Herzliya Israel 46733
(Address of Principal Executive Office)
011-972-9-957-9795
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
Title of Each Class Name of Each Exchange on Which
Registered
------------------- ------------------------------
None
Securities registered under Section 12(g) of the Exchange Act:
None
---------------
(Title of Class)
<PAGE>
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 past 90 days.
Yes ( ) No (X)
(1) This Form 10-KSB for calendar year ended December 31, 1997 being filed in
November 1999 should have been filed on or about April 15, 1998.
Check if there is no disclosure of delinquent filers 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 registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.
[X]
State issuer's revenues for its most recent calendar year - $-0-
The aggregate market value for the 591,714 shares of common stock, par
value $0.025 per share, held by non-affiliates* of Registrant as of November 1,
1999 is $1,183,428 based upon an average of $2.00 price for such stock on the
date heretofore indicated. See Item 5 (a) which indicates the limited, if any,
trading activity in the Registrant's securities for the periods indicated. By
virtue hereof, it is difficult if not impossible to accurately arrive at a
completely realistic "aggregate market value" of Registrant shares held by
non-affiliates as called for herein especially in view of the fact that the
existence of limited or sporadic quotations should not of itself be deemed to
constitute an "established public trading market". The above statements
regarding "aggregate market value" and "established public trading market"
should be taken into careful consideration when considering the information
contained herein regarding the indicated "aggregate market value" of shares of
voting stock held by non-affiliates.
* Affiliates for the purpose of this item refers to the Registrant's officers
and directors and/or any persons or firms (excluding those brokerage firms
and/or clearing houses and/or depository companies holding Registrant's
securities as record holders only for their respective clienteles'
beneficial interest) owning 5% or more of the Registrant's Common Stock,
both of record and beneficially - all as of November 1, 1999. See also Item
1 (a) and footnote 1 thereto.
ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes No
--- ___
<PAGE>
Not Applicable - See, however, Part I, Item 1 and Note 1(b) to the Company's
audited financial statements with respect to its wholly owned subsidiary being
placed in receivership in August 1997.
APPLICABLE ONLY TO CORPORATE REGISTRANTS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date. 4,059,600 shares as of
November 1, 1999.
Transitional Small Business Disclosure Format: Yes x No
--- ---
DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly describe
them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) any annual report to security-holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"). None
TABLE OF CONTENTS
Page
Number
------
PART I
Item 1. Description of Business............................................5
Item 2. Description of Property............................................6
Item 3. Legal Proceedings..................................................6
Item 4. Submission of Matters to a Vote of Security Holders................6
<PAGE>
PART II
Item 5. Market For Common Equity and Related Stockholder Matters...........7
Item 6. Management's Plan of Operation.....................................8
Item 7. Financial Statements...............................................10
F1 - F8
Item 8. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure.......................11
PART III
Item 9...Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act.........11
Item 10. Executive Compensation.............................................12
Item 11. Security Ownership of Certain Beneficial Owners and Management.....13
Item 12. Certain Relationships and Related Transactions.....................14
Item 13. Exhibits, List and Reports on Form 8-K.............................14
ITEM 1. DESCRIPTION OF BUSINESS
Savin Electronics Inc. (hereinafter "SVPS" or the "Company") is a company
incorporated in the State of New Jersey in August, 1990. The Company recently
decided to enter the field of network data security and it is currently
developing products in such area (see Item 6 "Management's Plan of Operation"
below). On June 29, 1999, the Company changed its name to "Hidenet Secure
Architectures, Inc." to reflect the Company's current business plans.
<PAGE>
The Company filed a Self-Underwritten Registration Statement on Form S-18,
which Registration Statement was declared effective on November 1, 1991 and the
offering described therein closed in January of 1992. From conclusion of its
aforesaid public offering of securities through April of 1996 the Company had
been pursuing its stated business activities seeking to acquire business(es);
its public offering having been a "blind pool/blank check" offering. The Company
had basically been inactive since "going public" until the closing in April 1996
of its initial acquisition. Information with respect to such acquisition is
contained in Company filings under Form 8-K with date of report of March 21,
1996 and Amendment No. 1 thereto as filed April 4, 1996 and June 21, 1996
respectively. Further information regarding such acquisition may be found in
Item 6 of the Company's Form 10-KSB for its then fiscal year ended March 31,
1996. The company acquired as a result of such acquisition, Savin Electronics,
Ltd., an Israeli corporation ("Savin Israel"), which was engaged (as reported in
aforesaid Form 8-K) in the development, manufacture and marketing of electronic
power supply products for computers and other electronic systems. As indicated
in Note 1 to the Company's audited financial statements, Savin Israel incurred
losses in excess of $1,200,000 as at December 31, 1996. Additionally, as at
December 31, 1996 Savin Israel current liabilities exceeded its current assets
by approximately $2,100,000 and it had a shareholders' deficiency of
approximately $1,300,000. Savin Israel was placed in receivership in August 1997
and remains in the process of being liquidated for the benefit of creditors.
The Company has not had any revenues from operations from inception through
December 31, 1997.
The Company decided to enter the field of network data security, and in
connection therewith, issued 73.9% of its issued and outstanding capital stock
to three inventors in exchange for all their right, title and interest in
proprietary technology in such field. See Current Report on Form 8-K with date
of report June 11, 1999 for a more detailed description of the transaction.
Reference is herewith made to Item 6 hereof regarding Management's Plan of
Operations with respect to proposed future Company activities.
EMPLOYEES
As of calendar year ended December 31, 1997 the Company did not have any
employees. Currently, the Company's subsidiary, Hidenet Secure Architectures
Ltd., an Israeli company, employs two individuals.
ITEM 2. DESCRIPTION OF PROPERTY
As of December 31, 1997, the Company maintained an office, rent free, at
the offices of its counsel (Gary B. Wolff, P.C.) at 747 Third Avenue, New York,
New York 10017 for purposes of receipt of mail domestically and inquiries which
in turn are forwarded to Company personnel located in Israel. Its limited
business activities were conducted by its current management in the State of
Israel. Currently, the Company maintains a business address care of its
subsidiary at 103 Medinat Hayehudim Street, Herzliya, Israel 46733 and its
telephone number is 011-972-9-957-9795. Such offices are maintained pursuant to
a two-year lease at a cost of approximately $4,000 per month. The lease is
renewable at the option of the Company at a 10% annual increase above the
current rent.
ITEM 3. LEGAL PROCEEDINGS
The Company's wholly owned subsidiary, Savin Israel, was placed in
receivership in August of 1997. The Company is not presently a party to any
other material litigation nor, to the knowledge of management, is any material
litigation threatened.
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company did not hold an annual meeting of stockholders for calendar
year ended December 31, 1997. At the end of 1997, the stockholders holding a
majority of the issued and outstanding capital stock of the Company authorized
an amendment to the Company's certificate of incorporation increasing the
authorized share capital from 60,000 shares to 15,000,000 shares, par value
$0.025 per share. On June 29, 1999, said stockholders authorized a change in the
name of the Company to "Hidenet Secure Architectures, Inc."
(b) As reported in Form 8-K with date of report of March 17, 1997 under
Item 5 Other Events "On March 3, 1997, in accordance with Section 14A:5-6 of the
New Jersey Business Corporation Act (the "New Jersey Act"), the holders of
approximately 51.08% of the outstanding common stock, par value $.0001 per
share, of Savin Electronics Inc. (the "Company"), took action to remove the
existing Board of Directors of the Company, consisting of Meir Portnoy, Yechiel
Nussbaum, Gil Sarig and Avrum Savran, and elected Avrum Savran and Avi Pines to
serve as the sole members of the Company's Board of Directors (the "Corporation
Action")." Such Corporate Action became effective on March 17, 1997.
Aforesaid Item 5 to Form 8-K further indicates "At a meeting of the new
Board of Directors held on March 17, 1997, Meir Portnoy was removed as President
and Chairman of the Board of the Company and Avi Pines and Avrum Savran were
elected to serve as President and Chairman of the Board, respectively, of the
Company."
On October 28, 1998, the Board of Directors authorized a 1:250 reverse
stock split so that the number of issued and outstanding shares of Common Stock
of the Company was reduced from 8,150,000 to 32,600 shares. In December 1998,
the holders of a majority of the issued and outstanding share capital increased
the authorized share capital of the Company to 15,000,000 shares of common
stock, par value $0.025 per share.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
(a) Marketing Information. The following table sets forth, for the periods
indicated, the range of high and low bid prices on the dates indicated for the
Company's securities indicated below for each full quarterly period within the
two most recent years (if applicable) and any subsequent interim period for
which financial statements are included and/or required to be included.
<TABLE>
<CAPTION>
Fiscal Year Ended March 31, 1996 (A) Quarterly Common Stock
By Quarter Price Ranges
- ------------------------------------ ----------------------
Quarter Date High Low
<S> <C> <C> <C>
1st June 30, 1995 (1) (1)
2nd September 30, 1995 (1) (1)
3rd December 31, 1995 (1) (1)
4th March 31, 1996 (1) (1)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Calendar Year Ended December 31, 1996 By Quarterly Common Stock
Quarter Price Ranges (2)
- ----------------------------------------- ----------------------
Quarter Date High Low
<S> <C> <C> <C>
1st June 30, 1996 $3.75 $2.75
2nd September 30, 1996 $5.75 $2.125
3rd December 31, 1996 $4.25 $0.8125
</TABLE>
<TABLE>
<CAPTION>
Calendar Year Ended December 31, 1997 By Quarterly Common Stock
Quarter Price Ranges (2)
- ----------------------------------------- ----------------------
Quarter Date High Low
<S> <C> <C> <C>
1st March 31, 1997 $1.50 $0.2500
2nd June 30, 1997 $1.375 $0.3125
3rd September 30, 1997 $1.46875 $0.0625
4th December 31, 1997 $0.093 $0.062
</TABLE>
<TABLE>
<CAPTION>
Calendar Year Ended December 31, 1998 By Quarterly Common Stock
Quarter Price Ranges (2)
- ----------------------------------------- ----------------------
Quarter Date High Low
<S> <C> <C> <C>
1st March 31, 1998 $0.40 $0.10
2nd June 30, 1998 $0.10 $0.10
3rd September 30, 1998 $0.10 $0.10
4th December 31, 1998 $2.5 $2.50
</TABLE>
(A) At a Special Meeting of the Board of Directors held in September 1996 it
was resolved that commencing subsequent to the close of the Company's
fiscal year ended March 31, 1996 that its year end would be changed to
December 31. A Form 8-K with date of report of September 3, 1996 reporting
such change was filed with the SEC.
(1) Notwithstanding closing of the Company's public offering of securities
in November 1991 its securities did not commence trading until
subsequent to application for trading being submitted to the National
Association of Securities Dealers, Inc. ("NASD") in accordance with
Schedule H of such Association's by-laws and Rule 15c2-11 under the
Securities Exchange Act of 1934. On May 16, 1996 and acting in
reliance upon information filed, the NASD cleared the Company's common
stock for quotation on the Electronic Over-the-Counter Bulletin Board.
The opening prices of the Company's common stock on June 3, 1996 was
$2.75 bid and $3.50 asked.
<PAGE>
(2) The existence of limited or sporadic quotations should not of itself
be deemed to constitute an "established public trading market". To the
extent that limited trading in the Company's Common Stock has taken
place, such transactions have been limited to the over-the-counter
market. All prices indicated herein are as reported to the Company by
broker-dealer(s) making a market in its securities in the National
Quotation Data Service ("pink sheets") and/or in the Electronic
Over-the-Counter Bulletin Board (the latter under the symbol SVPS).
The aforesaid securities were not traded or quoted on any automated
quotation system (other than as may be indicated herein). The
over-the-counter market quotes indicated above reflect inter-dealer
prices, without retail mark-up, mark-down or commission, and may not
necessarily represent actual transactions.
(b) Holders. As of December 31, 1997 the approximate number of
stockholders of the Company's Common Stock (as indicated on its
transfer agent's December 31, 1997 certified list of
stockholders) amounted to 19 persons and/or firms (inclusive of
those brokerage firms and/or clearing houses and/or depository
companies holding the Company's securities for their respective
clientele - each such brokerage house, clearing house and/or
depository firm being considered as one record holder). The exact
number of beneficial owners of the Company's securities is not
known but would necessarily exceed the number of record owners
indicated above in that brokerage firms and/or clearing house
and/or depository companies are normally record owners for
presumably any number of unidentified beneficial owners.
(c) Dividends. The payment by the Company of dividends, if any, in
the future rests within the discretion of its Board of Directors
and will depend, among other things, upon the Company's earnings,
its capital requirements and its financial condition, as well as
other relevant factors. The Company has not paid or declared any
dividends upon its Common Stock since its inception and, by
reason of its present financial status and its contemplated
financial requirements, does not currently contemplate or
anticipate paying any dividends on its Common Stock in the
foreseeable future.
<PAGE>
ITEM 6. MANAGEMENT'S PLAN OF OPERATION
Certain statements contained in this report, including statements regarding
the anticipated development of the Company's business, the intent, belief or
current expectations of the Company, its directors or its officers, primarily
with respect to the performance of the Company and the products it expects to
offer and other statements contained herein regarding matters that are not
historical facts, are "forward-looking" statements within the meaning of the
Private Securities Litigation Reform Act (the "Reform Act"). Future filings with
the Securities and Exchange Commission, future press releases and future oral or
written statements made by or with the approval of the Company which are not
statements of historical fact, may contain forward-looking statements under the
Reform Act. Because such statements include risks and uncertainties, actual
results may differ materially from those expressed or implied by such
forward-looking statements. Factors that could cause actual results to differ
materially from those expressed or implied by such forward-looking statements
include, without limitation, the failure of the Company to obtain additional
financing, the failure of the Company to develop a product which is marketable,
rapid technological changes in the environment, frequent new product
introductions by others in the industry with greater resources than the Company,
competition in the marketplace in which the Company decided to operate and
evolving industry standards and customer preferences in that market which are
difficult to predict. Not only could the Company fail to produce a marketable
product, but the introduction of products embodying new technologies and the
emergence of new industry standards could render the Company's product, if it is
even developed, as well as any potential new products, obsolete and
unmarketable. Such constant technological changes also make accurate market
predictions difficult. The Company's results depend in part upon its ability to
attract, train, retain and motivate qualified management, technical,
manufacturing, sales and support personnel for its operations. The Company has
no patent protection for its product which it is in the process of developing.
All forward-looking statements speak only as of the date on which they are
made. The Company undertakes no obligation to update such statements to reflect
events that occur or circumstances that exist after the date on which they are
made.
The Company has never had any revenues since its inception.
On June 11, 1999, the Company executed and delivered an agreement with
Royce Investment Group ("RIG"), the Company's exclusive financial consultant,
and Uriel Ginzberg, Jonathan Levin and John Federman (collectively, the
"Inventors") whereby the Inventors assigned to the Company all their right,
title and interest in the proprietary technology in the field of network data
security (collectively, the "Intellectual Property"). In addition, RIG was
retained to offer and sell up to approximately $600,000 of shares of common
stock to be issued by the Company to RIG. See the Form 8-K with date of report
June 11, 1999 for a more detailed description of the agreement and the
transactions contemplated thereby. In connection with such transaction, the
Company changed its name to "Hidenet Secure Architectures, Inc." See the Form
8-K with the date of report June 29, 1999.
The Company currently intends to develop and market products in the field
of network data security. It established an Israeli subsidiary in July 1999,
Hidenet Secure Architectures Ltd., which hired two (2) employees. The Company
has no current operations, and even if the products it is developing in the
networks data security field are brought to market, there is no likelihood that
the sales of the Company's products will be sufficient to cover the costs and
expenses of the Company's operations. The Company estimates that sales of its
products will commence in the middle of 2000, but there is no assurance that its
products will be ready for market at such time. In the next year, RIG will
attempt to obtain equity financing for the Company. Failure to locate funding
for the Company raises doubts about its ability to continue as a going concern.
The Company remains subject to the reporting requirements under the
Securities Exchange Act of 1934. Notwithstanding such requirements, the last
report filed by the Company (exclusive of Forms 8-K) was a Form 10-QSB for its
quarter ended September 30, 1996. The Company, during the third quarter of 1999
embarked upon an effort to bring itself "current" with respect to its reporting
requirements and in that regard has prepared and filed (or is in the process of
filing) the following reports as indicated:
Form 8-K with date of report June 11, 1999
Form 8-K with date of report June 29, 1999
Form 10-KSB for calendar year ended December 31, 1998
<PAGE>
Form 10-QSB for the quarter ended March 31, 1999
Form 10-QSB for the quarter ended June 30, 1999
Each of the above referenced reports were basically prepared at or around
the same time and forwarded for filing purposes on or about the same date.
The Company currently has no significant business operations and (as
heretofore indicated) its wholly owned subsidiary Savin Israel is being
liquidated for the benefit of creditors.
Year 2000 Compliance
--------------------
The "Year 2000 problem" describes the world-wide concern that certain
computer applications, which use two digits rather than four to represent dates,
will interpret the year 2000 as the year 1900 and malfunction on January 1, 2000
or thereafter. Since the Company has no operations, the year 2000 problem does
not pertain to the Company. The Company will ensure that its products, and any
products of material significance to the Company, will function normally after
the year 2000.
ITEM 7. FINANCIAL STATEMENTS
The following financial statements have been prepared in accordance with
the requirements of Regulation S-B. Such information appears on pages F-1
through F-8 inclusive of this Form 10-KSB, which pages follow this page.
<PAGE>
SAVIN ELECTRONICS INC.
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997
IN U.S. DOLLARS
INDEX
Page
Report of Independent Auditors 2
Balance Sheets 3
Statements of Operations 4
Statements of changes in Shareholders' Deficiency 5
Statements of Cash Flows 6
Notes to Financial Statements 7 - 9
<PAGE>
KOST FORER & GABBAY ERNST & YOUNG
[GRAPHIC OMITTED]
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders of
SAVIN ELECTRONICS INC.
We have audited the accompanying balance sheet of Savin Electronics Inc.
("the Company") as of December 31, 1997 and the related statements of
operations, changes in shareholders' deficiency and cash flows for the years
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards in the United States. 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 also 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 audit provides a
reasonable basis for out opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Savin Electronics Inc. as of
December 31, 1997 and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles in
the United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1c to the
financial statements, the Company has suffered recurring losses from operations,
has a working capital deficiency and shareholders deficiency. These conditions
raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are described in Note 1c and 4.
The accompanying financial statements do not include any adjustments to reflect
future effect on the classification of liabilities that might result from the
outcome of this uncertainty.
Tel-Aviv, Israel KOST FORER & GABBAY
August 15, 1999 A Member of Ernst & Young International
<PAGE>
SAVIN ELECTRONICS INC.
BALANCE SHEETS
- --------------------------------------------------------------------------------
In U.S. dollars
<TABLE>
<CAPTION>
December 31,
--------------------
1997 1996
-------- --------
<S> <C> <C>
ASSETS
INVESTMENT IN A SUBSIDIARY (Note 1) ......... 1 1
-------- --------
1 1
======== ========
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities .... 56,462 45,975
Loan payable - officer (Note 3) ............. 7,000 5,000
-------- --------
Total current liabilities ................... 63,462 50,975
-------- --------
SHAREHOLDERS' DEFICIENCY:
Common stock - $ 0.025 par value:
Authorized: 60,000 shares;
Issued and outstanding: 32,600 shares ... 815 815
Additional paid-in capital .................. 924,591 924,591
Accumulated deficit ......................... (988,867) (976,380)
-------- --------
Total shareholders' deficiency .............. (63,461) (50,974)
-------- --------
1 1
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
SAVIN ELECTRONICS INC.
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
In U.S. dollars
<TABLE>
<CAPTION>
Nine months
Year ended ended Year ended
December 31, December 31, March 31,
1997 1996 1996
<S> <C> <C> <C>
Costs and expenses:
General and administrative ..... 12,487 58,625 8,434
Write-down of investment
in a subsidiary (Note 1) ..... -- 859,478 --
----------- ----------- -----------
Net loss ........................... 12,487 918,103 8,434
=========== =========== ===========
Basic and diluted net loss per ..... 0.38 28.16 4.63
share =========== =========== ===========
Weighted average number of shares .. 32,600 32,600 1,820
outstanding =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
SAVIN ELECTRONICS INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIENCY
- --------------------------------------------------------------------------------
In U.S. dollars
<TABLE>
<CAPTION>
Additional Total
Common stock paid-in Accumulated shareholders'
Shares Amount capital deficit deficiency
<S> <C> <C> <C> <C> <C>
Balance as of April 1, 1995 ..... 1,820 1,820 41,857 (49,843) (6,166)
Value of services contributed
by officer ................ -- -- 9,000 -- 9,000
Net loss .................... -- -- -- (8,434) (8,434)
------------ ------------ ------------ ------------ ------------
Balance as of March 31, 1996 .... 1,820 1,820 50,857 (58,277) (5,600)
Adjustment from change of
par value to $ 0.025 per
share ..................... -- (1,775) 1,775 -- --
Shares issued to acquire
foreign subsidiary ........ 24,600 615 -- -- 615
Net proceeds from private
placement of shares ....... 6,180 155 871,959 -- 872,114
Net loss .................... -- -- -- (918,103) (918,103)
------------ ------------ ------------ ------------ ------------
Balance as of December 31, 1996 . 32,600 815 924,591 (976,380) (50,974)
Net loss .................... -- -- -- (12,487) (12,487)
------------ ------------ ------------ ------------ ------------
Balance as of December 31, 1997 . 32,600 815 924,591 (988,867) (63,461)
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
SAVIN ELECTRONICS INC.
STATEMENTS OF CASH FLOWS
- ------------------------------------------------------------------------------------------------------------------------------
In U.S. dollars
Nine months
Year ended ended Year ended
December 31, December 31 March 31,
1997 1996 1996
<S> <C> <C> <C>
Cash flows from operating activities:
------------
Net loss ......................................... (12,487) (918,103) (8,434)
Adjustments to reconcile net loss to net cash
used in operating activities:
Write-down of investments in a subsidiary .... -- 859,478 --
Contribution of services by officer .......... -- -- 9,000
Increase (decrease) in accounts payable and
accrued liabilities ....................... 10,487 45,375 (5,784)
------------ ------------ ------------
Net cash used in operating activities ............ (2,000) (13,250) (5,218)
------------ ------------ ------------
Cash flows from investing activities:
------------
Advances to foreign subsidiary ................... -- (858,864) --
------------ ------------ ------------
Net cash used in investing activities ............ -- (858,864) --
------------ ------------ ------------
Cash flows from financing activities:
------------
Net proceeds from private placement of shares .... -- 872,114 --
Loan received from officer ....................... 2,000 -- 5,000
------------ ------------ ------------
Net cash provided by financing activities ........ 2,000 872,114 5,000
------------ ------------ ------------
Decrease in cash and cash equivalents ............ -- -- (218)
Cash and cash equivalents at the beginning
of the period ................................ -- -- 218
------------ ------------ ------------
Cash and cash equivalents at the end of the period -- -- --
------------ ------------ ------------
Common shares issued for acquired foreign
subsidiary ................................... -- 615 --
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
SAVIN ELECTRONICS INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
In U.S. dollars
NOTE 1:- GENERAL
a. Savin Electronics Inc. ("the Company"), formerly known as
American Acquisition Corporation.
b. In April 1996, the Company acquired all of the issued and
outstanding shares of Savin Electronics Ltd., an Israeli
corporation ("the subsidiary"), in exchange for 24,600
shares of the Company's Common stock. The subsidiary was
engaged in the development, manufacture and marketing of
electronic power supply products for sensitive computers and
other electronic systems. The Company issued 6,180 shares of
Common stock, in a private placement, and received net
proceeds of $ 872,114, which were advanced to the subsidiary
to be used as operating capital.
As of December 31, 1996, the subsidiary incurred a
twelve-month operating loss which approximated of $ 1.2
million. Current liabilities exceeded current assets by $
2.1 million, and shareholders' deficiency approximated $ 1.3
million.
The subsidiary has been unable to raise additional capital
from external sources or from internally generated profits,
and, accordingly, was forced into receivership in August
1997. It is currently in the process of liquidation, for the
benefit of its creditors. Accordingly, the Company has
recorded a loss for the total amount of the investment in
and advances to the subsidiary which, at December 31, 1997,
was $ 859,478.
c. Since its incorporation, the Company has incurred losses
amounting to $ 988,867 as of December 31, 1997.
As of December 31, 1997, the Company has a working capital
deficiency of $ 63,462 and a shareholders' deficiency of $
63,461. The Company's ability to continue as a going concern
is subject to the Company's ability to raise cash through an
offering, or by financial support from its shareholders.
Accordingly, there is a substantial doubt whether the
Company is able to continue as a going concern.
In June 1999, the Company entered into an investment
agreement, as described in Note 4.
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern.
<PAGE>
SAVIN ELECTRONICS INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
In U.S. dollars
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared in accordance with
generally accepted accounting principles.
a. Use of estimates:
The preparation of the financial statements, in conformity
with generally accepted accounting principles, requires
management to make estimates and assumptions that affect the
amounts reported in the financial statements and
accompanying notes. Actual results could differ from those
estimates.
b. Fair value of financial instruments:
SFAS No. 107, "Disclosure About Fair Value of Financial
Instruments", requires disclosures about the fair value of
financial instruments. The following disclosures of the
estimated fair value of financial instruments have been
determined by the Company using available market information
and valuation methodologies described below. However,
considerable judgment is required in interpreting market
data to develop the estimates of fair value. Accordingly,
the estimates presented herein may not be indicative of the
amounts that the company could realize in a current market
exchange. The use of different market assumptions or
valuation methodologies may have a material effect on the
estimated fair value amounts.
The financial instruments of the Company are mainly accounts
payable and accruals, and loan payable - officer. In view of
their nature, the carrying amounts of these financial
instruments reasonably approximate their fair values.
c. Basic and diluted earnings (loss) per share:
Basic earnings (loss) per share is computed based on the
weighted average number of common shares outstanding during
each year. Diluted earnings per share is computed based on
the weighted average number of common shares outstanding
during each year, plus the dilutive potential common shares
considered outstanding during the year, in accordance with
FASB Statement No. 128, "Earnings Per Share".
d. Fiscal year:
During 1996, the Company changed its fiscal year-end from
March 31 to December 31.
NOTE 3:- LOAN PAYABLE - OFFICER
The loan does not bear interest and is payable on demand.
<PAGE>
SAVIN ELECTRONICS INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
In U.S. dollars
NOTE 4:- SUBSEQUENT EVENTS
a. In June 1999, the Company changed its name to Hidenet Secure
Architectures Inc.
b. In October 1998, the Company effected a reverse stock split
of 1:250 on the nominal common stock of the existing
shareholders. All Common stock and per Common stock amount
have been retroactively adjusted to reflect this split.
c. In June 1999, the Company entered into an investment
agreement with several inventors ("Inventors") and a
placement agent ("the Agent"). Pursuant to the agreement,
the Inventors assigned to the Company all of their rights,
titles and interest in proprietary technology in the field
of network data security, in exchange for the allocation of
3,000,000 of the Company's shares. In addition, the Agent
will act as the exclusive financial consultant to raise
capital in the aggregate of $ 600,000, in two stages:
Stage A - The issuance of 1,000,000 representing 24.6 % of
the Company's outstanding shares, in return for an
investment of $ 100,000. (This stage took place in July
1999.)
Stage B - The issuance of 800,000 shares representing 16.5%
of the Company's outstanding shares, in return for an
investment of $ 500,000 within 180 days from the completion
date of Stage A. This stage can be executed in portions that
for each installment of $ 50,000 the Company will issue
80,000 shares of Common stock. As a consideration for the
raising of capital, the Agent will receive $ 75,000 per year
for one year, for consulting services $ 10,000 for expenses
and 10% of the gross amounts raised from Investors
introduced by the Agent.
In addition, the Agent will receive options to purchase
500,000 Common stock of the Company, at an exercise price of
$ 0.125 per share. The options are exercisable within three
years from the completion date of Stage A.
The agreement also states that the Company will establish a
subsidiary in Israel. The subsidiary will engage in research
and development. The Company will assign and transfer to the
subsidiary all of its intellectual property and all funds
raised by Stage A of investment, net of the cost of
registration of the shares. The subsidiary was established
in July 1999.
In connection with acting as a consultant to the subsidiary,
the Agent is entitled to 7% of the gross proceeds of any
investment made in the subsidiary, and Common stock of the
subsidiary, representing 7% of the gross proceeds of an
investment made in the subsidiary.
<PAGE>
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The Directors and Executive Officers of the Company, as of December 31, 1997
unless otherwise indicated, were as follows: (1)
Name and Address Position(s) Held Age
Ron Fussman President, Secretary and 36
52A Hanassi St Director
Herzllya Pituach 46448
Israel
Avrum Savran Chairman of the Board of 54
2 Habroshim Street Ramat Efal Tel Directors and Treasurer
Aviv 52960
Israel
Avi Pines(1) President and Director 44
Ramat Hasharaon
Israel
(1) Mr. Pines resigned from all his positions with the Company November, 1997.
Directors are elected to serve until the next annual meeting of
stockholders and until their successors have been elected and have qualified.
Officers are appointed to serve until the meeting of the Board of Directors
following the next annual meeting of stockholders and until their successors
have been elected and have qualified.
RON FUSSMAN served as President, Secretary-Treasurer and a Director of
the Company from March, 1996 until his resignation in April, 1996 and thereafter
served as an independent business consultant to the Company until assuming his
current positions with the Company in May of 1997. Mr. Fussman also serves as
President and control person of Universal Eagle Ltd., a firm founded by him in
1988 for purposes of providing business and financial consulting services.
AVRUM SAVRAN from 1987 to the present has managed Margolin Marketing
Ltd., a finance and economic consulting company as well as serving as manager
and owner of PBA Investment, a relatively large Israeli exporting firm and
during such same period of time helped support Israeli based industrial
companies through the raising of funds from governmental and private sources.
From 1981 to 1987 Mr. Savran served as a Financing Manager of Kibbutz Yizreel
and from 1982 to 1985 served as manager of Team USA of the United Kibbutz
Movement. Mr. Savran received a Bachelor of Arts degree in Business
Administration from Haifa University in 1973 and currently serves as Chairman of
the Board of Directors and as Treasurer of the Company.
See Item 11 hereof with respect to security ownership, if any, of
management.
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
Remuneration paid (and/or accrued, if applicable and so specifically
indicated) to officers and/or directors of the Company during calendar year
ended December 31, 1997 is indicated in the chart appearing directly
hereinafter.
<TABLE>
<CAPTION>
Securities Or
Salaries, Fees, Property, Insurance Aggregate of
Name of Individual Capacities In Which Directors' Fees, Benefits or Contingent Forms of
Served Commissions and Reimbursement, Remuneration
Bonuses Personal Benefits
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ron Fussman President, Secretary $ -0- $ -0- $ -0-
& a Director
Avrum Savran Chairman of the $ -0- $ -0- $ -0-
Board of Directors
and Treasurer
</TABLE>
There were no written employment agreements between the Company and any of
its officers and directors through calendar year ended December 31, 1997.
No compensation of any nature was paid to any director or officer for
services rendered to the Company in such capacity excepting for repayment made,
if any, for accountable expenses incurred on the Company's behalf throughout
calendar year ended December 31, 1997.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners - The following persons
and/or firms are known to the Company to be the beneficial owners of more than
5% of the 4,059,600 shares of the Company's outstanding $0.025 par value Common
Stock as of November 1, 1999. To the best of the Company's knowledge each
individual and/or firm has beneficial ownership of the shares and each
individual and/or firm has sole voting power and sole investment power with
respect to the number of shares beneficially owned.
<PAGE>
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership Percent of Class
- -------------------------------------------- ----------------------------- ----------------------
<S> <C> <C>
Jonatan Levin 600,000 14.78%
c/o Hidenet Secure Architectures Ltd.
103 Medinat Hayehudim Street
P.O.B. 837
Herzliya, Israel 46733
Uriel Ginsberg 600,000 14.78%
c/o Hidenet Secure Architectures Ltd.
103 Medinat Hayehudim Street
P.O.B. 837
Herzliya, Israel 46733
John Federman 1,800,000 44.34%
c/o Hidenet Secure Architectures Ltd.
103 Medinat Hayehudim Street
P.O.B. 837
Herzliya, Israel 46733
Royce Investment Group (1) 967,886 23.84%
c/o Hidenet Secure Architectures Ltd.
103 Medinat Hayehudim Street
P.O.B. 837
Herzliya, Israel 46733
</TABLE>
(1) Includes warrants to purchase up to 500,000 shares of Common Stock at an
exercise price of $0.125 per share, which are currently exercisable and
expire July 2002. RIG was issued 1,000,000 shares of common stock as a
result of raising $100,000 for the Company and is currently the record
and beneficial owner of 440,886 of said shares. In addition to the shares
indicated above, RIG is entitled to an additional 800,000 additional
shares of common stock upon raising capital an additional $500,000 for
the Company. See Current Report of Form 8-K with date of report June 11,
1999 for a more detailed description of the transaction.
(b) Security Ownership of Management - The number and percentage of
shares of Common Stock of the Company owned of record and
beneficially, by each current officer and director of the Company
and by all current officers and directors of the Company as a
group, is as follows - as of November 1, 1999. To the best of the
Company's knowledge each individual has beneficial ownership of
the shares and each individual has sole voting power and sole
investment power with respect to the number of shares beneficially
owned.
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of
Name and Address of Beneficial Owner Beneficial Ownership Percent of Class
- -------------------------------------------- ----------------------------- ----------------------
<S> <C> <C>
Ron Fussman 1,100 (1) Less than 1%
52A Hanassl St.
Herzllya Pituach 46448
Israel
Avrum Savran -0- -0- %
2 Habroshim Street
Ramat Efal
Tel Aviv 52960
Israel
All officers and directors as a group (2 1,100 (1) Less than 1%
person)
</TABLE>
(1) The number of shares indicated above - 1,100 - are owned of record by
Universal Eagle Ltd., a firm under the control of Mr. Fussman by virtue of
the fact that he is President of such firm. Accordingly, Mr. Fussman may be
considered to be the beneficial owner of such securities.
The Company does not know of any arrangement or pledge of its securities by
persons now considered in control of the Company that might result in a change
of control.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For the calendar year ended December 31, 1997 there have not been any
material transactions between the Company and any director, executive officer,
security holder or any member of the immediate family of any of the
aforementioned which exceeded $60,000 other than as may be indicated in this
Form 10-KSB and the financial statements and footnotes thereto which are a part
hereof.
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K
Reference is herewith made to page F-1 through F-8 inclusive of this 10-KSB
with respect to the financial statements and notes thereto included therein.
No exhibits are being filed with this Form 10-KSB.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
HIDENET SECURE ARCHITECTURES, INC.
(formerly known as Savin Electronics Inc.)
By /s/Ron Fussman
----------------------
Ron Fussman, President
Date: November 4, 1999
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
/s/Ron Fussman President, Secretary and a Dated: November 4, 1999
- --------------- Director
Ron Fussman
/s/Avrum Savran Chairman of the Board of Directors Dated: November 4, 1999
- ---------------- and Treasurer
Avrum Savran
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001015979
<NAME> HIDENET SECURE ARCHITECHTURES
<MULTIPLIER> 1
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-10-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1
<CURRENT-LIABILITIES> 63462
<BONDS> 0
0
0
<COMMON> 815
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 12487
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> .38
<EPS-DILUTED> .38
</TABLE>
