UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission file number 33-36670
HIDENET SECURE ARCHITECTURES, INC.
(Exact name of registrant as specified in its charter)
New Jersey 22-3061278
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
103 Medinat Hayehudim Street, POB 837, Herzliya Israel 46733
(Address of principal executive offices) (Zip Code)
011-972-9-957-9795
(Registrant's telephone number, including area code)
Savin Electronics Inc., c/o Gary Wolff, P.C. 747 Third Ave., NY, NY 10017
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [_] Yes [X] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.025 par value, 4,059,600 shares outstanding as of November
1, 1999.
Traditional Small Business Disclosure Format (check one): [X] Yes [ ] No
<PAGE>
HIDENET SECURE ARCHITECTURES, INC.
(formerly known as Savin Electronics Inc.)
INDEX
Page
Part I. Financial Information
Item 1. Balance Sheets
Statements of Operations
Statements of Cash Flows
Notes to Financial Statements
Item 2. Management's Discussion and Analysis or Plan
of Operation
Part II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of
Security-Holders
Item 5. Other information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
SAVIN ELECTRONICS INC.
INTERIM FINANCIAL STATEMENTS
AS OF MARCH 31, 1999
IN U.S. DOLLARS
UNAUDITED
INDEX
Page
Balance Sheets 2
Statements of Operations 3
Statements of Cash Flows 4
Notes to Financial Statements 5 - 6
<PAGE>
SAVIN ELECTRONICS
BALANCE SHEETS
- --------------------------------------------------------------------------------
In U.S. dollars
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
<S> <C> <C>
ASSETS
INVESTMENT IN A SUBSIDIARY .............. 1 1
---------- ----------
1 1
---------- ----------
LIABILITIES AND SHAREHOLDERS'
DEFICIENCY
CURRENT LIABILITIES:
Accounts payable and accrued ............ 58,877 58,877
liabilities
Loan payable - officer .................. 7,835 7,835
---------- ----------
Total current liabilities ............... 66,712 66,712
---------- ----------
SHAREHOLDERS' DEFICIENCY:
Common stock - $ 0.025 par value:
Authorized: 15,000,000 shares;
Issued and outstanding: 59,600 shares 1,490 1,490
Additional paid-in capital .............. 943,916 943,916
Accumulated deficit ..................... (1,012,117) (1,012,117)
---------- ----------
Total shareholders' deficiency .......... (66,711) (66,711)
---------- ----------
1 1
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
SAVIN ELECTRONICS
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
In U.S. dollars
<TABLE>
<CAPTION>
Three months ended
March 31,
<S> <C> <C>
1999 1998
Cost and expenses:
General and administrative ..... -- 2,415
======= ------
Net loss ........................... -- 2,415
======= ======
Basic and diluted net loss per share -- 0.07
======= ======
Weighted average number of shares .. 59,600 32,600
outstanding ........................ ======= ======
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
SAVIN ELECTRONICS
STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
In U.S. dollars
<TABLE>
<CAPTION>
Three months ended
March 31,
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Loss for the period .............................. -- (2,415)
Adjustments to reconcile loss to net cash used
in operating activities:
Increase in accounts payable and accrued -- 2,415
liabilities
------ ------
Net cash used in operating activities ............ -- --
------ ------
Change in cash and cash equivalents .............. -- --
Cash and cash equivalents at the beginning of .... -- --
the period ....................................... -- --
Cash and cash equivalents at the end of the period -- --
====== ======
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOTE 1:- GENERAL
Basis of Presentation
The accompanying unaudited financial statements have been prepared by Savin
Electronic Inc. in accordance with the rules and regulations of the
Securities and Exchange Commission. These financial statements reflect all
adjustments which, in the opinion of management, are necessary for a fair
presentation of the financial position and the results of operations for
the interim periods presented. All such adjustments are of a normal and
recurring nature. The results of operations for the interim periods
presented are not necessarily indicative of the results of future
operations.
The accompanying unaudited financial statements have been prepared by Savin
Electronic Inc. in accordance with the rules and regulation of the
Securities and Exchange Commission. These Certain financial information,
which is normally included in financial statements prepared in accordance
with generally accepted accounting principles, is not required for interim
reporting purposes and, has accordingly, been condensed or omitted. The
accompanying financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's report
filed on Form 10-KSB for the year ended December 31, 1998.
NOTE 2:- SUBSEQUENT EVENT
a. In June 1999, the Company changed its name to Hidenet Secure
Architectures Inc.
b. 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>
Item 2. Management's Discussion and Analysis or Plan of Operation:
Cautionary Statement for Forward-Looking Information
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 quarter, 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, 1997
Form 10-KSB for calendar year ended December 31, 1998
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.
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 8,150000 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.
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.
<PAGE>
Part II - Other Information
Item 1. Legal Proceedings.
The Company's wholly owned subsidiary, Savin Israel, was
placed in receivership in August of 1997. See Form 10-KSB
for the year ended December 31, 1998 for a further
description of such proceedings. The Company is not
presently a party to any other material litigation nor, to
the knowledge of management, is any material litigation
threatened.
Item 2. Changes in Securities.
None.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security-Holders.
None.
Item 5. Other information.
None.
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
The Company did not file any Current Reports on Form 8-K with
the Securities and Exchange Commission during the quarter
ending March 31, 1999.
<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 Dated: November 4, 1999
- ---------------- a Director
Ron Fussman
/s/Avrum Savran Chairman of the Board of Dated: November 4, 1999
- ----------------- Directors and Treasurer
Avrum Savran
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