<PAGE>
As filed with the Securities and Exchange Commission on November 20, 1997
- --------------------------------------------------------------------------
Registration No. 333-30583
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
Amendment No. 3 to
Form SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
____________________
NEW DIRECTIONS MANUFACTURING, INC.
(Name of small business issuer in its charter)
Nevada 2511 86-0671974
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification No.)
organization) Code Number)
2940 W. Willetta 2940 W. Willetta
Phoenix, AZ 85009 Phoenix, AZ 85009
(602) 352-1165 (602) 352-1165
(Address and telephone number of (Address of principal
principal executive office) place of business)
Paracorp, Incorporated
318 North Carson Street, Suite 208
Carson City, NV 89701
(888) 972-7273
(Name, address and telephone number of agent for service)
____________________________
COPIES TO:
Lawrence W. Horwitz, Esq.
Horwitz & Beam
Two Venture Plaza, Suite 350
Irvine, CA 92618
(714) 453-0300
___________________
Approximate Date of Proposed Sale to the Public.
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Securities to be Number of Shares Offering Price Per Aggregate Offering Registration
Registered to be Registered Share(1) Price(1) Fee
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.001 par value 1,000,000 $4.94 $4,940,000 $1,496.97
- -----------------------------------------------------------------------------------------------------------------------------
Common Stock, $0.001 par value, underlying
H&B options/(2)/ 50,00 $2.25 $ 112,500 $ 34.09
- -----------------------------------------------------------------------------------------------------------------------------
Total 1,050,000 $5,052,500 $1,531.06
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457 and based upon the average of the bid
and asked prices for the Common Stock on June 24, 1997, as reported by the
OTC Bulletin Board.
(2) Represents Common Stock issuable to Horwitz & Beam, Inc. upon exercise of
options granted to Horwitz & Beam, Inc. as counsel to the Company ("H&B
Options") in connection with this Offering. Pursuant to Rule 416
promulgated under the Securities Act, this Registration Statement also
covers any additional common shares which may become issuable by reason of
the anti-dilution provisions of the H&B Options. Registration fee
calculated pursuant to Rule 457(g)(2).
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC.
CROSS REFERENCE SHEET
Pursuant to Item 501(b) of Regulations S-B
Showing Location in the Prospectus
of Information Required by Items of Form SB-2
<TABLE>
<CAPTION>
Form SB-2 Item Number and Caption Prospectus
<S> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus.. Facing Page of Registration
Statement: Outside Front Cover
2. Inside Front and Outside Back Cover Page of Prospectus
Pages of prospectus..................... Available Information;
Incorporation of Certain Documents
by Reference; Table of Contents
3. Summary Information; Risk Factors....... Prospectus Summary; Risk Factors
4. Use of Proceeds......................... Prospectus Summary; Business of
the Company; Use of Proceeds
5. Determination of Offering Price......... Risk Factors; Plan of Distribution
6. Dilution................................ Dilution
7. Selling Security Holders................ Selling Shareholders
8. Plan of Distribution.................... Underwriting
9. Legal Proceedings....................... Not Applicable
10. Directors, Executive Officers, Promoters
and Control Persons..................... Management and Principal
Shareholders
11. Security Ownership of Certain Beneficial
Owners and Management................... Management and Principal
Shareholders
12. Description of Securities to be
Registered.............................. Description of Securities
13. Interests of Named Experts and Counsel.. Selling Shareholders
14. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................. Indemnification of Directors and
Officers
15. Organization Within Last Five Years..... Business of the Company
16. Description of Business................. Business of the Company
17. Management's Discussion and Analysis of
Plan of Operation....................... Management's Discussion and
Analysis of Financial Condition
and Results of Operations
18. Description of Property................. Business of the Company
(Properties)
19. Certain Relationships and Related
Transactions............................ Transactions with Affiliates
20. Market for Common Equity and Related
Stockholder Matters..................... Risk Factors; Market for Common
Stock and Related Shareholder
Matters
21. Executive Compensation.................. Executive Compensation
22. Consolidated Financial Statements....... Consolidated Financial Statements
23. Changes In and Disagreements With
Accountants on Accounting and Financial
Disclosure.............................. Not Applicable
</TABLE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
<PAGE>
SUBJECT TO COMPLETION, DATED NOVEMBER 20, 1997
PROSPECTUS
NEW DIRECTIONS MANUFACTURING, INC.
1,000,000 Shares
of
Common Stock
and
50,000 Shares of
Common Stock
Underlying Options to Counsel
($0.001 par value)
The shares of Common Stock of New Directions Manufacturing, Inc., a Nevada
corporation ("the Company") offered hereby (the "Shares") will be sold from time
to time by the shareholders described herein (the "Selling Shareholders") in
transactions in the national over-the-counter market or otherwise at prices
prevailing at the time of sale. The Company will not receive any of the proceeds
from the sale of the Shares. All expenses incurred in registering the Shares
(approximately $37,000) are being borne by the Company, but all selling and
other expenses incurred by the Selling Shareholders will be borne by the Selling
Shareholders. See "Selling Shareholders."
The Shares offered hereby have been acquired by the Selling Shareholders
from the Company in private transactions and are "restricted securities" under
the Securities Act of 1933, as amended (the "Act"), prior to their sale
hereunder. This Prospectus has been prepared for the purpose of registering the
Shares under the Act to allow for future resales by the Selling Shareholders to
the public without restriction. To the knowledge of the Company, the Selling
Shareholders have made no arrangement with any brokerage firm for the sale of
the Shares. The Selling Shareholders may be deemed to be "underwriters" within
the meaning of the Act. Any commissions received by a broker or dealer in
connection with resales of the Shares may be deemed to be underwriting
commissions or discounts under the Act. See "Plan of Distribution."
Brokers or dealers effecting transactions in the Shares should confirm the
registration of the Shares under the securities laws of the states in which such
transactions occur or the existence of an exemption from such registration, or
should cause such registration to occur in connection with any offer or sale of
the Shares.
Additionally, the Company is registering for sale hereunder, 50,000 Shares
underlying options issued to its legal counsel in exchange for services rendered
in connection with this Registration Statement. Twenty-five thousand options
were issued to counsel on June 9, 1997 and 25,000 options were issued to counsel
on September 15, 1997. All options are exercisable for five years at the option
exercise price of $2.25 per Share.
The Common Stock of the Company is traded in the over-the-counter market
and quoted on the National Association of Securities Dealers Electronic Bulletin
Board ("OTC Bulletin Board") under the symbol "NDMI." The closing bid and asked
prices for the Common Stock on September 24, 1997, as reported by the OTC
Bulletin Board were $3.50 and $4.00 per share, respectively. To date, the
volume of trading in the Common Stock has been limited and, therefore, the
market prices for the Common Stock may not accurately reflect the value of the
Company.
______________________
The Securities offered hereby involve a high degree of risk.
See "Risk Factors" commencing on page 5.
------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The Date of this Prospectus is November 20, 1997
<PAGE>
AVAILABLE INFORMATION
The Company is not presently subject to the reporting requirements of the
Securities Exchange Act of 1934 (the "Exchange Act"). The Company has filed
with the Securities and Exchange Commission (the "Commission") a Registration
Statement on Form SB-2 (together with all amendments and exhibits thereto, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Act") with respect to the securities offered hereby. This Prospectus, which
constitutes a part of the Registration Statement, omits certain information
contained in the Registration Statement on file with the Commission pursuant to
the Act and the rules and regulations of the Commission thereunder. The
Registration Statement, including the exhibits thereto, may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549. Copies of such material
may be obtained by mail at prescribed rates from the Public Reference Branch of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Statements
contained in this Prospectus as to the contents of any contract or other
document referred to are not necessarily complete and in each instance reference
is made to the copy of such contract or other document filed as an exhibit to
the Registration Statement, each such statement being qualified in all respects
by such reference. Such material may also be accessed electronically by means
of the Commission's home page on the Internet at http://www.sec.gov. The
Company's securities are currently listed on the NASD over-the-counter bulletin
board and trading under the symbol "NDMI."
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
PROSPECTUS SUMMARY............................................. 1
RISK FACTORS................................................... 5
MARKET FOR COMMON STOCK AND RELATED SHAREHOLDER MATTERS........ 8
DIVIDEND POLICY................................................ 8
SELECTED FINANCIAL DATA........................................ 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS............................ 11
BUSINESS OF THE COMPANY........................................ 14
MANAGEMENT..................................................... 18
PRINCIPAL SHAREHOLDERS......................................... 21
SELLING SHAREHOLDERS........................................... 22
PLAN OF DISTRIBUTION........................................... 22
DESCRIPTION OF SECURITIES...................................... 23
LEGAL MATTERS.................................................. 23
EXPERTS........................................................ 24
CONSOLIDATED FINANCIAL STATEMENTS.............................. F-1
</TABLE>
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and the
Financial Statements (including the notes thereto) appearing elsewhere in this
Prospectus. Unless otherwise specifically referenced, all references to dollar
amounts refer to United States dollars.
The Company
The Company was incorporated under the laws of the state of Nevada on January
9, 1997. In July 1996, Sean F. Lee acquired an option to purchase 100% of the
issued and outstanding common stock of New Directions-Manufacturers of
Contemporary Furniture, Inc., an Arizona corporation ("New Directions"), a
manufacturer and distributor of contemporary oak wood furniture in exchange for
$20,000. The Company acquired the option ("Option") to purchase the outstanding
capital stock of New Directions from Mr. Lee in exchange for the opportunity to
purchase 1,530,000 shares of the Company at par value, and the reimbursement of
Mr. Lee's costs associated with acquiring the option ($20,000). The Company
then paid the initial purchase price of the Option of $100,000. The Stock
Purchase Agreement and the companion agreements pertaining to the acquisition of
New Directions by the Company shall collectively be referred to herein as the
"Acquisition Agreement."
The terms of the Acquisition Agreement include the following:
1. The Company held the option to purchase 100% of the issued and outstanding
common stock of New Directions for the stated purchase price of $2.08 million,
of which approximately $1.18 million was to be paid in cash on or before January
31, 1997, the purchase price of the option of $100,000 would be credited, and
$800,000 was to be financed by the Sellers under the terms of a four year
promissory note bearing interest at the rate of 8% annually with level principal
and interest payments due monthly. The amount of the cash payments to be made
at closing was dependent upon the amount of New Directions' accounts receivable
on the closing date.
2. The selling shareholders of New Directions, which included its current
officers and directors, have agreed to a five year non-compete covenant.
3. Except as noted in (4) below, the officers and directors of New Directions
would resign and be replaced with the nominees of the Company. (See
"Management.")
4. Jack Horner, Jr., a co-founder, shareholder and executive officer of New
Directions, would continue to serve as the Vice-President of the Company after
the Company's acquisition of New Directions.
5. Two key executive officers of the Company, Donald A. Metke and Jack
Horner, Jr., were each issued 510,000 shares of restricted common stock of the
Company in exchange for the payment of par value ($510 each) and to ensure their
long term commitment to the Company. Sean F. Lee was issued 1,530,000 shares
of restricted common stock of the Company.
On January 10, 1997, the Company entered into an Exchange Agreement with
Premier Ventures & Exploration, Inc., a Louisiana corporation ("Premier")
whereby the Company became a wholly-owned subsidiary of Premier.
On January 15, 1997, the Company exercised the Option with a cash payment of
$1,180,000. The Company paid the cash payment of $1,180,000 with funds raised
in its private offering commenced on January 9, 1997 as well as a short-term
loan from a private individual in the amount of $500,000. The loan was
completely paid off, including principal and interest, upon the completion of
the private offering on May 14, 1997. The remaining balance of the purchase
price of $800,000 was financed by the sellers according to a promissory note
under the terms set forth in (1) above. There remains due and owing $713,382
under the note, as of June 30, 1997.
1
<PAGE>
The Company entered into a Plan of Merger (the "Merger Agreement") with
Premier on February 25, 1997. The Company had no relationship with Premier prior
to the transactions related to the Merger. The purpose of the merger was to
change the corporate domicile of the Company from Louisiana to Nevada. Prior to
the execution of the Merger Agreement, Premier was a public company with dormant
operations and had 3,560,296 shares of common stock outstanding. Premier became
a "public company" pursuant to two Regulation D, Rule 504 offerings, one in 1996
and one in 1997. Premier's common stock was listed on the NASD's over-the-
counter market as of January 6, 1997 under the symbol "PVEI" and quoted pursuant
to SEC Rule 15c2-11. Premier's predecessor-in-interest was Omni Answers, Inc.
("Omni") which was incorporated on September 11, 1985 in the State of Louisiana.
Omni operated a consultation by mail business. Omni changed its name to Premier
on December 20, 1996. Pursuant to the terms of the Merger Agreement, the
Premier shareholders received one share of the Company for every share of
Premier common stock they held, all Premier stock was cancelled, and Premier was
merged with and into the Company, leaving the Company as the surviving entity.
The Merger was effective on April 16, 1997. New Directions changed its name to
New Directions Manufacturing, Inc., an Arizona corporation and the Company (New
Directions Manufacturing, Inc., a Nevada corporation) then became the 100% owner
of New Directions (the Arizona corporation) which conducts business as the
Company's wholly-owned operating subsidiary.
In summary, on January 9, 1997, New Directions Manufacturing, Inc. (the
"Company") was incorporated in Nevada. On January 10, 1997, Premier Ventures &
Exploration, Inc., a Louisiana corporation ("Premier") acquired all of the
issued and outstanding capital stock of the Company pursuant to an Exchange
Agreement. The Company became the wholly owned subsidiary of Premier. On March
14, 1997, the Plan of Merger (the "Merger Agreement") was adopted by director
and shareholder approval of both corporations. Articles of Merger were filed in
Louisiana and Nevada. Premier was merged with and into the Company, leaving the
Company as the surviving entity.
The Selling Shareholders hereunder are identified in the "Selling
Shareholders" section of this Prospectus.
The address of the Company's principal executive offices is 2940 W. Willetta,
Phoenix, AZ 85009. The Company's telephone number is (602) 352-1165. Unless
otherwise noted, the "Company" as used in this Prospectus, will refer to the
consolidated entities described above.
2
<PAGE>
The Offering
<TABLE>
<CAPTION>
<S> <C>
Common Stock Outstanding on
September 15, 1997 4,987,770
Common Stock Offered by Selling
Shareholders 1,000,000
Risk Factors The securities offered hereby involve a high
degree of risk and immediate substantial
dilution. See "Risk Factors."
OTC Bulletin Board Symbol NDMI
</TABLE>
Summary Financial Information
The following table presents selected historical financial data for the Company
derived from the Company's Financial Statements. The historical financial data
are qualified in their entirety by reference to, and should be read in
conjunction with, the Financial Statements and notes thereto of the Company,
which are incorporated by reference into this Prospectus. The following data
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Financial Statements of
the Company and the notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
Period from
January 9, 1997
Three Months (date of incorporation)
Ended through
September 30, 1997 June 30, 1997
------------------ -----------------------
<S> <C> <C>
Statement of Operations Data:
Revenue $1,567,872 $3,215,985
Net income (loss) $ 24,841 $ (44,798)
Net income (loss) per share $ 0.01 $ (0.01)
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
September 30, 1997 June 30, 1997
------------------ -------------
<S> <C> <C>
Balance Sheet Data:
Working Capital $ 768,247 $ 796,761
Total assets $3,041,037 $3,045,171
Total liabilities $1,148,758 $1,177,733
Stockholder's equity $1,892,279 $1,867,438
</TABLE>
Summary Financial Information continued on next page
4
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended
December 31 Fiscal Year Ended
(unaudited) June 30
----------------------- -----------------------
1996 1995 1996 1995
----------------------- ----------------------
<S> <C> <C> <C> <C>
Statement of Operations Data:
Revenue $2,872,989 $2,789,447 $5,802,840 $4,607,085
Net income (loss) $ (213,734) $ (111,210) $ 50,078 $ (30,370)
Net income (loss) per share $ (214) $ (111) $ 50 $ (30)
</TABLE>
<TABLE>
<CAPTION>
December 31, 1996 June 30, 1996
----------------- -------------
<S> <C> <C>
Balance Sheet Data:
Working Capital $385,689 $576,812
Total assets $681,063 $890,070
Total liabilities $273,653 $268,925
Stockholder's equity $407,410 $621,145
</TABLE>
5
<PAGE>
RISK FACTORS
An investment in the Securities offered in this Prospectus involves a
high degree of risk and should only be made by persons who can afford the loss
of their entire investment. Accordingly, prospective investors should consider
carefully the following factors, in addition to the other information concerning
the Company and its business contained in this Prospectus, before purchasing the
Securities offered hereby.
Limited Operating History. Although the operating subsidiary of the
Company was in operation for several years prior to the Acquisition Agreement,
the current management team, with the exception of Jack F. Horner, Jr., is new
to the Company as well as to the furniture manufacturing business, and the
Company, after the Merger and acquisition of the operating company, has no
operating history and its financial health will be subject to all the risks
inherent in the establishment of a new business enterprise. Additionally, the
Company on a consolidated basis has operated at a loss for most of the periods
for which financial statements are presented herein. The likelihood of success
of the Company must be considered in the light of the problems, expenses,
difficulties, complications, and delays frequently encountered in connection
with the startup and growth of a new business, and the competitive environment
in which the Company will operate. The Company's success is dependent upon the
successful development and marketing of its products, as to which there is no
assurance. Unanticipated problems, expenses, and delays are frequently
encountered in establishing a new business and marketing and developing
products. These include, but are not limited to, competition, the need to
develop customer support capabilities and market expertise, setbacks in product
development, market acceptance, sales, and marketing. The failure of the
Company to meet any of these conditions would have a materially adverse effect
upon the Company and may force the Company to reduce or curtail operations. No
assurance can be given that the Company can or will ever operate profitably.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business of the Company--Marketing" and "--Competition."
Dependence Upon Key Personnel. The Company's success depends, to a
significant extent, upon a number of key employees. The loss of services of one
or more of these employees could have a material adverse effect on the business
of the Company. The Company believes that its future success will also depend
in part upon its ability to attract, retain, and motivate qualified personnel,
and consequently has entered into employment agreements with certain key
officers. Competition for such personnel is intense. There can be no assurance
that the Company will be successful in attracting and retaining such personnel.
The Company does not have "key person" life insurance on any of its key
employees. See "Management."
Competition. The Company will be competing with other established
businesses that market similar products. Many of these companies have greater
capital, marketing and other resources than the Company. There can be no
assurance that these or other entities will not develop new or enhanced products
that have greater market acceptance than any that may be marketed by the
Company. There can be no assurance that the Company will successfully
differentiate itself from its competitors or that the market will consider the
Company's products to be superior or to or more appealing than those of its
competitors. Market entry by any significant competitor may have an adverse
effect on the Company's sales and profitability. See "Business of the Company--
Competition."
Substantial Dilution. In many cases, the officers, directors, and
present shareholders of the Company have acquired their interest at a cost
substantially lower than that which investors will pay for the Common Stock
offered hereby. As a result, investors participating in this offering will
likely incur immediate, substantial dilution in the net tangible book value per
share. The net tangible book value of a share represents the amount of the
Company's tangible assets less the amount of its liabilities, divided by the
number of shares outstanding.
Lack of Dividends. The Company has never paid any cash dividends on
its Common Stock and does not anticipate paying any cash dividends in the
future. The Company currently intends to retain future earnings, if any, to
fund the development and growth of its business. See "Dividend Policy."
Future Capital Needs Could Result in Dilution to Investors; Additional
Financing Could be Unavailable or Have Unfavorable Terms. The Company's future
capital requirements will depend on many factors, including cash flow from
6
<PAGE>
operations, progress in its research and development, competing market
developments, and the Company's ability to market its proposed products
successfully. Although the Company currently has no specific plans or
arrangements for financing, to the extent that the Company's working capital is
insufficient to fund the Company's activities, it may be necessary to raise
additional funds through equity or debt financings. Any equity financings could
result in dilution to the Company's then-existing stockholders. Sources of debt
financing may result in higher interest expense. Any financing, if available,
may be on terms unfavorable to the Company. If adequate funds are not obtained,
the Company may be required to reduce or curtail operations. The Company
anticipates that its existing capital resources, together with the net proceeds
of this Offering, will be adequate to satisfy its operating expenses and capital
requirements for at least 12 months after the date of this Prospectus. However,
such estimates may prove to be inaccurate. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Business of the
Company" and Financial Statements.
Economic Conditions and Consumer Spending. As with other businesses,
the Company's results may be adversely affected by unfavorable local, regional
or national economic conditions affecting disposable consumer income. There can
be no assurance that consumer spending will not decline in response to economic
conditions, thereby adversely affecting the Company's growth, net sales, and
profitability.
Unpredictable Product Acceptance; Lack of Distribution Agreements.
There can be no assurance that the Company's marketing and/or sales strategies
will be effective and that consumers will buy the Company's products. The
failure of the Company to penetrate its markets would have a material adverse
effect upon the Company's operations and prospects. Market acceptance of the
Company's products will depend in part upon the ability of the Company to
demonstrate the advantages of its products over competing products. In
addition, the Company's sales strategy for its products contemplates sales to
markets yet to be established. Also, the Company currently has no distribution
agreements for any of its products in place. See "Business of the Company--
Marketing" and "--Competition."
Difficulty of Planned Expansion; Management of Growth. The Company
has expanded its operations rapidly, and it plans to continue to further expand
its level of operations in all areas following the Offering. The Company's
operating results will be adversely affected if net sales do not increase
sufficiently to compensate for the increase in operating expenses caused by this
expansion. In addition, the Company's planned expansion of operations may cause
significant strain on the Company's management, technical, financial, and other
resources. To manage its growth effectively, the Company must continue to
improve and expand its existing resources and management information systems and
must attract, train, and motivate qualified managers and employees. There can
be no assurance, however, that the Company will successfully be able to achieve
these goals. If the Company is unable to manage growth effectively, its
operating results will be adversely affected.
No Outside Directors. The Company's Board of Directors presently
consists of three (3) directors: Sean F. Lee, Chairman of the Board; Donald A.
Metke, President, Chief Operating Officer, Chief Financial Officer, Director;
and Jack Horner, Jr., Vice President, Secretary, Director. Therefore, the
Company's Board of Directors has no outside directors and insiders can presently
control certain policies, actions, and decisions of the Company. See
"Management--Directors and Executive Officers.
7
<PAGE>
Offering Price and Subsequent Trading Dependent Upon Market. The
securities to be offered hereby will be offered at the market price prevailing
at the time of the offer, which price may vary and may have a limited
relationship, or no relationship, to the Company's assets, book value, results
of operations, or other established criteria of value. The offering price also
many not be indicative of the prices that will prevail in the subsequent trading
market for the company's securities. The Company's securities will trade in the
subsequent trading market at prices that may vary and have a limited
relationship, or no relationship, to the Company's assets, book value, results
of operating, or other established criteria of value.
Shares Eligible for Future Sale. Of the 4,987,770 shares of Common
Stock issued and outstanding as of the date of this Prospectus, 3,557,283 shares
are "restricted securities" as that term is defined under Rule 144 promulgated
under the Act, and will become eligible for sale in the public market subject to
the provisions of Rule 144. In general, under Rule 144, a person (or persons
whose shares are aggregated) who has satisfied a one-year holding period may
sell restricted securities in ordinary brokerage transactions or in transactions
directly with a market maker within any three-month period limited to a number
of shares which does not exceed the greater of one percent of the Company's
then-outstanding Common Stock or the average weekly trading volume during the
four calendar weeks prior to such sale. Rule 144 also permits the sale (without
any quantity limitations) of "restricted securities" by a person who is not an
affiliate of the issuer and who has satisfied a two-year holding period. Future
sales of such shares could have an adverse effect on the market price of the
Common Stock. One million of the 3,557,283 "restricted securities" are being
registered herein and, upon effectiveness, will be eligible for sale in the
public market. See "Description of Securities."
Risks Relating to Low-Price Stocks. The Company's Common Stock is
quoted and traded on the Over-the-Counter Bulletin Board ("OTC Bulletin Board").
As a result, an investor could find it more difficult to dispose of, or to
obtain accurate quotations as to the market value of, the Company's securities.
In addition, trading in the Common Stock would be covered by Rules 15g-1 through
15g-100 promulgated under the Exchange Act for non-Nasdaq and non-exchange
listed securities. Under this rule, broker-dealers who recommend such
securities must satisfy burdensome sales practice requirements. The Securities
Enforcement and Penny Stock Reform Act of 1990 (the "Reform Act") also requires
additional disclosure in connection with any trades involving a stock defined as
a "penny stock" (generally, according to recent regulations adopted by the
Commission, any equity security that has a market price of less than $5.00 per
share, subject to certain exceptions), including the delivery, prior to any
penny stock transaction, of a disclosure schedule explaining the penny stock
market and the risks associated therewith. The regulations governing low-priced
or penny stocks could limit the ability of broker-dealers to sell the Company's
securities and thus the ability of the purchasers of this Offering to sell their
securities in the secondary market.
8
<PAGE>
MARKET FOR COMMON STOCK AND RELATED SHAREHOLDER MATTERS
The Common Stock of Premier Ventures & Exploration, Inc. (Premier")
began trading on the NASD's over-the-counter market as of January 6, 1997 under
the symbol "PVEI" and quoted pursuant to SEC Rule 15c2-11. On April 16, 1997,
Premier was merged with and into the Company. The stock symbol was changed from
"PVEI" to "NDMI" on April 25, 1997. Trading activity with respect to the
Company's Common Stock has been extremely limited and sporadic. From the time
of listing through June 24, 1997, the high bid price was $12.00 and the low bid
price was $3.00; quarter end high and low bids, as reported by the OTC Bulletin
Board, for the first two quarters of 1997 are set forth below, which quotations
reflect inter-dealer prices, without retail mark-up, mark-down, or commission,
and may not reflect actual transactions:
<TABLE>
<CAPTION>
High Low
- -------------------------------------
1997
- -------------------------------------
<S> <C> <C>
First Quarter $12.00 $1.875
- -------------------------------------
Second Quarter $ 9.50 $ 3.00
- -------------------------------------
</TABLE>
As of September 15, 1997, there were approximately 129 shareholders of
record of the Company's Common Stock. On September 24, 1997, the closing bid
price for the Company's Common Stock was $3.50.
DIVIDEND POLICY
The Company has never paid any cash dividends on its Common Stock and
does not anticipate paying any cash dividends in the future. The Company
currently intends to retain future earnings, if any, to fund the development and
growth of its business.
9
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data are qualified by reference to,
and should be read in conjunction with, the Financial Statements, related Notes
to Financial Statements and Report of Independent Public Accountants, and
Management's Discussion and Analysis of Financial Condition and Results of
Operations contained elsewhere herein. The following tables summarize certain
selected financial data of New Directions for the fiscal year ended June 30,
1995 (audited), the fiscal year ended June 30, 1996 (audited), the six months
ended December 31, 1995 (unaudited), the six months ended December 31, 1996
(unaudited), and the three months ended September 30, 1997 (unaudited). The
operations of the Company for the period from January 9, 1997 (date of
incorporation of the acquiring company) through June 30, 1997 (audited) are also
presented. The data has been derived from Financial Statements included
elsewhere in this Prospectus. No dividends have been paid for any of the
periods presented.
<TABLE>
<CAPTION>
Period from
January 9, 1997
Three Months (date of incorporation)
Ended through
September 30, 1997 June 30, 1997
------------------ ------------------------
<S> <C> <C>
Statement of Operations Data:
Revenue $1,567,872 $3,215,985
Net income (loss) $ 24,841 $ (44,798)
Net income (loss) per share $ 0.01 $ (0.01)
</TABLE>
<TABLE>
<CAPTION>
September 30, 1997 June 30, 1997
------------------ -------------
<S> <C> <C>
Balance Sheet Data:
Working Capital $ 768,247 $ 796,761
Total assets $3,041,037 $3,045,171
Total liabilities $1,148,758 $1,177,733
Stockholder's equity $1,892,279 $1,867,438
</TABLE>
Selected Financial Data continued on next page
10
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended
December 31 Fiscal Year Ended
(unaudited) June 30
1996 1995 1966 1995
------------------------ ----------------------
<S> <C> <C> <C> <C>
Statement of Operations
Data:
Revenue $2,872,989 $2,789,447 $5,802,840 $4,607,085
Net income (loss) $ (213,734) $ (111,210) $ 50,078 $ (30,370)
Net income (loss) per share $ (214) $ (111) $ 50 $ (30)
</TABLE>
<TABLE>
<CAPTION>
December 31, 1996 June 30, 1996
----------------- -------------
<S> <C> <C>
Balance Sheet Data:
Working Capital $385,689 $576,812
Total assets $681,063 $890,070
Total liabilities $273,653 $268,925
Stockholder's equity $407,410 $621,145
</TABLE>
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion regarding the financial statements of the Company
should be read in conjunction with the Financial statements of the Company
included herewith.
Overview
The Company is engaged in the business of manufacturing and supplying oak
wood furniture.
Results of Operations
Three Months Ended September 30, 1997
There were no significant changes in the operations of the Company in its
first fiscal quarter. Revenues for the three months ended September 30, 1997
were $1,567,872. Net income for this period was $24,841, resulting in earnings
per share of $0.01. These amounts represent a slight increase over the prior
year's period.
Current assets for the three months ended September 30, 1997 were $1,302,919
and total assets were $3,041,037. Current liabilities for this period were
$534,672 and total liabilities were $1,148,758. Stockholders' equity for this
period was $1,892,279.
Period from January 9, 1997 (date of incorporation) through June 30, 1997
The period ended June 30, 1997 was the first period reflecting the
consolidated operations of the Company and its wholly-owned subsidiary New
Directions Manufacturing, Inc., an Arizona corporation (formerly New Directions-
Manufacturers of Contemporary Furniture, Inc.) During this period, the Company
started to pursue its goals of increasing sales. As a result, sales increased
to $3,215,985 for the six months ended June 30, 1997 as compared to $2,872,989
for the six months ended December 31, 1996 and $3,029,670 for the six months
ended June 30, 1996. During the past year, the Company has been able to hold
its material costs in line but has had increases in the cost of labor as the
result of increases in the minimum wage.
The net loss for the period was largely attributable to non-cash expenses
during the period. The Company reflected depreciation and amortization of
$106,578 for the covenant not to compete, goodwill, and the increased cost of
property and equipment.
The Company incurred interest expense of $35,029 for the first six months of
1997, primarily from the $800,000 carryback by the sellers of New Directions.
The most significant changes in the balance sheet of the Company at June 30,
1997 as compared to New Directions at June 30, 1996 are:
. Increased cash and equity resulting from the private placement
. Acquiring the covenant not to compete for $800,000 and the related
liability to the shareholders for it
. Increasing the cost of property and equipment to fair market value as
the result of the acquisition
. Recording goodwill for the excess of the purchase price over the fair
market value of the assets acquired from sellers.
12
<PAGE>
Fiscal Year Ended June 30, 1996 as Compared to Fiscal Year Ended June 30, 1995
Sales increased from $4,607,085 in fiscal 1995 to $5,802,480 in fiscal
1996, which represents an increase of approximately 26%. Costs and expenses,
other than officer compensation, as a percentage of sales remained relatively
constant during both years. Because New Directions was privately held,
management's policy was to take any increase in earnings as compensation to
officers. The combined total of new income (loss) and officer compensation
increased from $479,744 ($510,144-$30,370) in fiscal 1995 to $610,200 ($560,122
+ $50,078) in fiscal 1996. This resulted in an increase of approximately 27%,
which compared favorably with the increase in sales of 26%.
In comparison to similar companies, New Directions' fiscal management was
extremely conservative. New Directions did not rely upon any outside debt to
finance its business and had no long term obligations except a capital lease.
With credit terms that allow no exceptions from full payment within 30 days, the
average age of New Directions' accounts receivable was only 45 days.
As a result of its conservative management, New Directions' growth was
limited significantly. New Directions limited itself by its credit limits
and/or terms. In addition, New Directions' limited investment in production
equipment restricted New Directions' ability to capitalize on modern automation
technologies which could enable New Directions to improve manufacturing
efficiencies and reduce costs.
Six Months Ended December 31, 1996 as Compared to the Six Months Ended December
31, 1995
Sales for the six months ended December 31,1996 increased to $2,872,989
from $2,789,447 for the same period in 1995. The net loss before income taxes
for the same period increased from $111,210 in 1995 to $246,734 in 1996. The
most significant difference in the net loss is attributable to increases in
officer compensation from $266,382 in 1995 to $427,701 in 1996. New Directions'
policy was to declare bonuses prior to December 31, based upon the earnings of
the Corporation for the previous twelve month period. As a result of the
bonuses, the cash position of New Directions at December 31 of each year was
substantially less than its cash position at June 30.
As of December 31, 1996, New Directions had no cash reserves and total
current assets of $634,955 as compared to the six months ended December 31, 1995
when New Directions had cash reserves of $55,238 and total current assets of
$698,031.
Liquidity and Capital Resources
Initial start-up funding of $2,550 was raised through the sale of 2,550,000
shares of the Company's Common Stock to its founders and other principals for
$0.001 per share.
On January 9, 1997, the Company commenced a private placement of 1,000,000
shares of its Common Stock at $2.25 per Share (the "Private Placement"). The
Private Placement was exempt from the registration provisions of the Securities
Act of 1933 (the "Act") by virtue of Section 4(2) of the Act, as transactions by
an issuer not involving any public offering. The securities issued pursuant to
the Private Placement were restricted securities as defined in Rule 144. The
shares of Common Stock issued in the Private Placement are being registered
herein for resale only. The offering generated net proceeds of approximately
$1,909,686, net of offering costs and expenses and commissions of $340,314.
At June 30, 1997, the Company had outstanding current liabilities of
$593,086. The Company anticipates satisfying its current liabilities in the
ordinary course of business from revenues.
The Company plans on expending approximately $50,000 over the next twelve
12 months upgrading and acquiring new equipment.
The Company does not believe that inflation has had a significant impact on
its operations since inception of the Company.
13
<PAGE>
Fluctuations in Operating Results; Seasonality.
Annual and quarterly fluctuations in the Company's results of operations
may be caused by the timing and composition of orders from the Company's
customers and distribution channels. The Company's future results also may be
affected by a number of factors, including its ability to offer products at
competitive prices and to anticipate customer demands. The Company's results
may also be affected by economic conditions in the geographical areas in which
the Company operates. Further, the furniture industry is affected by
seasonality, with the summer months tending to be the slowest part of the year.
All of the foregoing may result in substantial unanticipated quarterly earnings
shortfalls or losses. Due to all of the foregoing, the Company believes that
period-to-period comparisons of its results of operations are not necessarily
meaningful and should not be relied upon as indicative of future performance.
14
<PAGE>
BUSINESS OF THE COMPANY
History
The Company was incorporated under the laws of the state of Nevada on
January 9, 1997. In July 1996, Sean F. Lee acquired an option to purchase 100%
of the issued and outstanding common stock of New Directions-Manufacturers of
Contemporary Furniture, Inc., an Arizona corporation ("New Directions"), a
manufacturer and distributor of contemporary oak wood furniture in exchange for
$20,000. The Company acquired the option ("Option") to purchase the outstanding
capital stock of New Directions from Mr. Lee in exchange for the opportunity to
purchase 1,530,000 shares of the Company at par value, and reimbursement of Mr.
Lee's costs associated with acquiring the option ($20,000). The Company then
paid the initial purchase price of the Option of $100,000. The Stock Purchase
Agreement and the companion agreements pertaining to the acquisition of New
Directions by the Company shall collectively be referred to herein as the
"Acquisition Agreement."
The terms of the Acquisition Agreement include the following:
1. The Company held the option to purchase 100% of the issued and
outstanding common stock of New Directions for the stated purchase price of
$2.08 million, of which approximately $1.18 million was to be paid in cash on or
before January 31, 1997, the purchase price of the option of $100,000 would be
credited, and $800,000 was to be financed by the Sellers under the terms of a
four year promissory note bearing interest at the rate of 8% annually with level
principal and interest payments due monthly. The amount of the cash payments to
be made at closing was dependent upon the amount of New Directions' accounts
receivable on the closing date.
2. The selling shareholders of New Directions, which included its current
officers and directors, have agreed to a five year non-compete covenant.
3. Except as noted in (4) below, the officers and directors of New
Directions would resign and be replaced with the nominees of the Company. (See
"Management".)
4. Jack Horner, Jr., a co-founder, shareholder and executive officer of
New Directions, would continue to serve as the Vice-President of the Company
after the Company's acquisition of New Directions.
5. Two key executive officers of the Company, Donald A. Metke and Jack
Horner, Jr., were each issued 510,000 shares of restricted common stock of the
Company in exchange for the payment of par value ($510 each) and to ensure their
long term commitment to the Company. Sean F. Lee was issued 1,530,000 shares
of restricted common stock of the Company.
On January 10, 1997, the Company entered into an Exchange Agreement with
Premier Ventures & Exploration, Inc., a Louisiana corporation ("Premier")
whereby the Company became a wholly-owned subsidiary of Premier.
On January 15, 1997, the Company exercised the Option with a cash payment
of $1,180,000. The Company paid the cash payment of $1,180,000 with funds
raised in its private offering commenced on January 9, 1997 as well as a short-
term loan from a private individual in the amount of $500,000. The loan was
completely paid off, including principal and interest, upon the completion of
the private offering on May 14, 1997. The remaining balance of the purchase
price of $800,000 was financed by the sellers according to a promissory note
under the terms set forth in (1) above. There remains due and owing $713,382
under the note, as of June 30, 1997.
The Company entered into a Plan of Merger (the "Merger Agreement") with
Premier on February 25, 1997. The Company had no relationship with Premier prior
to the Merger. The purpose of the merger was to change the corporate domicile
of the Company from Louisiana to Nevada. Prior to the execution of the Merger
Agreement, Premier was a public company with dormant operations and had
3,560,296 shares of common stock outstanding. Premier
15
<PAGE>
became a "public company" pursuant to two Regulation D, Rule 504 offerings, one
in 1996 and one in 1997. Premier's common stock was listed on the NASD's over-
the-counter market as of January 6, 1997 under the symbol "PVEI" and quoted
pursuant to SEC Rule 15c2-11. Premier's predecessor-in-interest was Omni
Answers, Inc. ("Omni") which was incorporated on September 11, 1985 in the State
of Louisiana. Omni operated a consultation by mail business. Omni changed its
name to Premier on December 20, 1996. Pursuant to the terms of the Merger
Agreement, the Premier shareholders received one share of the Company for every
share of Premier common stock they held, all Premier stock was cancelled, and
Premier was merged with and into the Company, leaving the Company as the
surviving entity. The Merger was effective on April 16, 1997. New Directions
changed its name to New Directions Manufacturing, Inc., an Arizona corporation
and the Company (New Directions Manufacturing, Inc., a Nevada corporation) then
became the 100% owner of New Directions (the Arizona corporation) which conducts
business as the Company's wholly-owned operating subsidiary.
The Selling Shareholders hereunder are identified in the "Selling
Shareholders" section of this Prospectus.
The address of the Company's principal executive offices is 2940 W.
Willetta, Phoenix, AZ 85009. The Company's telephone number is (602) 352-1165.
Unless otherwise noted, the "Company" as used in this Prospectus, will refer to
the consolidated entities described above.
Business
New Directions-Manufacturers of Contemporary Furniture, Inc., an Arizona
corporation ("New Directions") was established in 1989 by the Horner family.
Previously, Jack Horner, Sr. and Jr. both owned and managed separate chains of
furniture stores in the Southwest United States. Jack Jr. was also a factory
representative for different furniture manufacturers over a period of 10 years.
In the late 1980's, they saw the increasing demand for quality oak furniture and
the lack of an adequate supply of the product. Consequently, Jack Sr. sold the
furniture store chain and established New Directions with his two sons.
The Company manufactures quality oak furniture using no particle board.
Its product line consists mainly of entertainment centers, wall units, and room
dividers; however, it also offers bookshelves, bedroom suites, and other oak
furniture units.
The Company's customers are located throughout the United States, as well
as Canada and Puerto Rico. Because of its formerly strict credit terms, the
Company limited its opportunities for growth. In particular, its strict credit
terms made it difficult to obtain business with high volume department stores
and large furniture chains.
Despite such limitations, the business expanded from 12 employees and a
10,000 sq. ft. production facility, to 80 employees in a 34,000 sq. ft.
facility. Revenues grew to over $5 million for the fiscal year ending June 30,
1996. The Company's early growth was financed entirely by internally generated
funds.
Primarily due to his declining health, Jack Sr. wished to retire from the
business. For personal reasons, neither of Jack Sr.'s sons desired to assume
control of the Company from their father. Consequently, the family offered the
business for sale. Jack Jr. expressed a strong interest in remaining with the
business after the change in ownership. New management agreed to keep him in
the business to ensure a smooth management transition and to take advantage of
his extensive knowledge gained from 15 years of experience in the furniture
trade.
Market Opportunities
The market for quality oak furniture has grown considerably in the past
five years as demonstrated by the growth of specialty oak furniture stores such
as Oak Express and Oak Showcase. In addition, the oak furniture market has also
grown within the larger department and furniture stores. One reason for the
market's growth has been the aging of the baby boomer population. As the baby
boomers age, they typically prefer and purchase more traditional furniture, such
as oak furniture, as opposed to furniture constructed with more contemporary,
man-made materials. Management
16
<PAGE>
of the Company believes that this factor alone will continue to create
significant growth opportunities in the existing market for entertainment
centers, wall units, bedroom suites, tables, and all other typical home
furniture pieces.
Another market that may be pursued is the international market. Excluding
sales to Canada, the Company does not currently export its products despite the
fact that oak furniture manufactured in the United States is popular in Europe
and other foreign markets.
The Company also has significant opportunities within the existing domestic
United States marketplace. This market could easily be further exploited
through more aggressive marketing, more flexible credit terms (while including
the cost of extending credit in the price of the product), and by exploring
means of further expanding in the United States.
Notably, the Company currently makes minimal expenditures for marketing and
advertising its products. Media advertising has averaged less than $20,000
annually, reflecting the former principals' conservative management style. New
management believes that increased marketing will not only increase sales but
will allow higher pricing of products and increased margins.
Production
The Company maintains its manufacturing operations in a 34,000 sq. ft.
building located in Phoenix, Arizona. Together with its administrative offices,
the Company occupies the entirety of the building under the terms of a lease
expiring March 1, 2000 (which is currently awaiting final authorization from the
lessor). See "Business of the Company--Properties."
The Company's production line was originally designed to be simplistic with
a significant amount of manual labor. However, by minimizing large investments
in manufacturing equipment, former management of the Company significantly
restricted the Company's ability to take advantage of opportunities to reduce
labor costs and to streamline its manufacturing operations. The new management
team believes that the Company is capable of producing higher quality, higher
value products with only a minimal increase in cost.
Major Suppliers/Customers/Contracts
No single customer accounts for more than ten percent of the Company's
annual sales, nor is the Company reliant upon any single supplier for any raw
materials, parts or other supplies used in the Company's manufacturing process
which are not readily available on the open market at reasonable prices and in
adequate quantities for the Company's current and anticipated levels of
operations.
Competition
The Company faces competition from numerous companies, certain of which are
more established, benefit from greater market recognition, and have greater
financial, production and marketing resources than the Company. The Company's
products compete on the basis of certain factors, including quality and price.
The Company's competitors include Thornwood; Aspen, Inc.; and Legends.
Properties
The Company rents a 34,000 square foot facility in Phoenix, Arizona which
includes offices and manufacturing space, pursuant to a lease agreement entered
into on November 11, 1992. The term of the lease covers the period of March
1993 through March 1998, and requires monthly payments of approximately $7,500.
On May 27, 1997, the Company executed a proposal to extend the lease through
March 2000 at an average monthly payment of approximately $8,500 for the first
year of the extension and approximately $9,500 for the second year of the
extension (which is
17
<PAGE>
currently awaiting final authorization from the lessor). The Company also leases
showrooms in San Francisco, California and North Carolina which require
approximate monthly lease payments of $2,037 and $6,000, respectively.
Employees
As of the date of this Memorandum, the Company employs 75 full-time
employees. The Company hires independent contractors on an "as needed" basis
only. The Company has no collective bargaining agreements with its employees.
The Company believes that its employee relationships are satisfactory.
Litigation
On November 10, 1997, the Company was served with a Fourth Amended
Complaint in the matter of Marilyn S. Puniska v. Kane Furniture Corporation, et
al., Circuit Court for the Sixth Judicial Circuit, in and for Pinallas County,
State of Florida, Circuit Civil Case Number 96-5545-CI-15. There are two claims
against the Company, strict liability and negligence, surrounding an accident
with a piece of furniture. The litigation has been turned over to the Company's
insurance carrier who is handling the defense for the Company. Management of
the Company believes that this matter will be completely covered by its
liability insurance and that the Company will not suffer any out-of-pocket cash
losses in defending/settling this matter.
Management of the Company believes that there are no other litigation
matters pending or threatened against the Company.
18
<PAGE>
MANAGEMENT
Directors and Executive Officers
The directors and officers of the Company as of the date of this Prospectus
are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Sean F. Lee 56 Chairman of the Board
Donald A. Metke 62 President, Chief Operating Officer, Chief Financial
Officer, Director
Jack Horner, Jr. 41 Executive Vice President, Secretary, Director
</TABLE>
Sean F. Lee, Chairman of the Board of Directors
Sean F. Lee has served in management positions in the retail industry since
1963. Recently Mr. Lee was co-founder and chairman of INFOPAK, a company which
manufactured a hand held computer and created custom software for the real
estate industry. He held the position of Chairman from inception in January
1991 until its sale in October 1996. In October 1996, Mr. Lee accepted the
position of co-founder Chairman of Soy Environmental Products, Inc., Overland,
Kansas, a manufacturer of cleaners and solvents for the retail market. Mr.
Lee's retail experience includes 18 years with Montgomery Ward, starting as a
trainee and ending in 1981 as merchandise manager for the Western region. In
1982 he joined W.R. Grace as a divisional Vice President ending in 1986 as
C.E.O. of Grace Homecenters West. Mr. Lee was C.E.O. of YellowFront Stores,
Inc. from 1986 through 1988. Mr. Lee was C.E.O. of Homebase a $1.7 billion
home improvement chain in 1988 and 1989. He holds a B.S. in economics from Hood
College, Frederick Maryland.
Donald A. Metke, President, Chief Operating Officer, Chief Financial Officer,
Director
Donald A. Metke's business background includes extensive consulting for
Yucaipa Companies of Los Angeles, California, and Smitty's Supermarkets,
Phoenix, Arizona. From 1990 to 1993 Mr. Metke served as Executive Vice
President for Almac's Supermarkets, Providence, Rhode Island, and from 1988 to
1990 he served as Executive Vice President of Marketing for Chas. P. Young, the
leader in the financial and securities printing fields. Mr. Metke was a partner
with MultiServices of Orlando, Florida from 1983 to 1988 with involvement in
sales, and mergers and acquisitions of small and medium sized companies. He was
President of the Consumer Products Division of Petrolane from 1977 to 1983 with
responsibility for Supermarkets (Stater Brothers, 92 stores in California),
Health Services (44 hospitals in the West and Midwest), and 92 automotive
stores.
Jack Horner, Jr., Executive Vice President, Secretary, Director
Jack Horner, Jr. was a co-founder of New Directions and was instrumental in
its development from inception to over $5 million in sales annually. From 1987
to 1990, he was a manufacturer's representative covering the Southwestern United
States for three separate furniture companies. From 1985 to 1987, he owned and
operated retail furniture stores in Phoenix, Arizona and has been a central
figure in the management of New Directions since its establishment in 1989.
The number of directors may be fixed from time to time by the Board of
Directors. The Board of Directors presently consists of three directors. Each
of the Company's directors hold office until their respective successors are
elected at the next annual meeting of shareholders. Vacancies in the Board of
Directors are filled by a majority vote of the remaining directors or by a
shareholder vote called expressly for such purpose.
19
<PAGE>
Executive Compensation
The following shows the annual amounts which the Company anticipates paying
each executive officer and director for the fiscal year ending June 30, 1998.
The officers and directors were associated with the Company for only six months
in the fiscal year ending June 30, 1997 and received only nominal compensation
for such time. The Company has employment agreements with all of its executive
officers and a consulting agreement with its chairman of the board. The
following officers and directors of the Company receive the following annual
cash salaries and other compensation:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Name and Principal Position Year Annual Salary/(1)(2)(3)/
- --------------------------------------------------------------------------------------
<S> <C> <C>
Sean F. Lee, Chairman 1998 $ 60,000
- --------------------------------------------------------------------------------------
Donald A. Metke, President, Chief Operating 1998 $100,000
Officer, Chief Financial Officer, Director
- --------------------------------------------------------------------------------------
Jack Horner, Jr., Executive Vice President, 1998 $100,000
Secretary, Director
- --------------------------------------------------------------------------------------
All Officers and Directors as a Group (3 persons) 1998 $260,000
- --------------------------------------------------------------------------------------
</TABLE>
_________________
(1) No officers received or will receive any bonus or other annual compensation
other than salaries during fiscal 1998. The Company does not provide any
personal benefits to officers of the Company, such as the cost of
automobiles, life insurance, and supplemental medical insurance. The
officers of the Company have an opportunity to receive additional
compensation to make up for the lack of benefits, such as payment for the
cost of an automobile, payment of a life insurance premium, and monthly
payments for medical insurance. However, such sums are not included herein
because the specific dollar amounts of such personal benefits cannot
presently be ascertained. Management believes that the value of non-cash
benefits and compensation distributed to executive officers of the Company
individually or as a group during fiscal year 1998 will not exceed the
lesser of $50,000 or ten percent of such officers' individual cash
compensation or, with respect to the group, $50,000 times the number of
persons in the group or ten percent of the group's aggregate cash
compensation.
(2) No officers received or will receive any long term incentive plan (LTIP)
payouts or other payouts during fiscal 1998.
(3) No officers received or will receive any awards, including restricted stock
awards or securities underlying options, during fiscal 1998.
Indemnification of Directors and Officers
The laws of the State of Nevada and the Company's Bylaws provide for
indemnification of the Company's directors for liabilities and expenses that
they may incur in such capacities. In general, directors and officers are
indemnified with respect to actions taken in good faith in a manner reasonably
believed to be in, or not opposed to, the best interests of the Company, and
with respect to any criminal action or proceeding, actions that the indemnitee
had no reasonable cause to believe were unlawful.
The Company has been advised that in the opinion of the Securities and
Exchange Commission, indemnification for liabilities arising under the Act is
against public policy as expressed in the Act and is, therefore, unenforceable.
20
<PAGE>
Transactions with Affiliates
In August 1996, Sean F. Lee acquired the Option to purchase the outstanding
shares of New Directions. The Company acquired the Option from Sean F. Lee, a
director of the Company in exchange for the opportunity to purchase 1,530,000
shares of the Company at par value, which purchase was completed, and
reimbursement for his costs associated with acquiring the option ($20,000).
Jack Horner, Jr., an officer and director of the Company, was a
shareholder of New Directions. Mr. Horner held 350 shares (35% of the total
outstanding) of New Directions. The terms of the Option to purchase the
outstanding shares of New Directions provided that the Company pay the then
current shareholders of New Directions a total purchase price of approximately
$2.08 million over a period of four years. As a former shareholder of New
Directions, Mr. Horner will receive a pro rata portion of the purchase price
according to his percentage ownership of New Directions.
As part of Donald Metke and Jack Horner, Jr.'s Employment Agreement, the
Company has issued to both officers/directors 510,000 shares each of the
Company's restricted common stock in consideration for the payment of par value
($510 each) and to ensure their long-term commitment to the Company's future
success.
All future transactions with affiliates will be on terms no less favorable
than could be obtained from unaffiliated third parties, and will be approved by
a majority of the disinterested directors.
Employment and Related Agreements
The Company entered into an Employment Agreement with Donald A. Metke,
President, Chief Operating Officer, and Chief Financial Officer of the Company,
on December 31, 1996. Mr. Metke commenced his employment with the Company on
January 1, 1997. Pursuant to that Agreement, Mr. Metke receives a salary of
$8,333.33 per month; eligibility to participate in all employment benefit plans
and arrangements relating to pensions, health and life insurance, and other
similar employee benefit plans or arrangements; and reimbursement of expenses.
Also as part of his Agreement, the Company issued to Mr. Metke 510,000 shares of
the Company's restricted common stock in consideration of the payment of par
value ($510 total) and to ensure his long-term commitment to the Company's
future success. The Employment Agreement has a term of three years and is
terminable at will by Mr. Metke or for cause by the Company. There are no
severance provisions. A covenant not to compete is in effect for a period of
five years from January 1, 1997.
The Company entered into an Employment Agreement with Jack Horner, Jr.,
Executive Vice President and Secretary on December 31, 1996. Mr. Horner
commenced his employment with the Company on January 1, 1997. Pursuant to that
Agreement, Mr. Horner receives a salary of $8,333.33 per month; eligibility to
participate in all employment benefit plans and arrangements relating to
pensions, health and life insurance, and other similar employee benefit plans or
arrangements; and reimbursement of expenses. Also as part of his Agreement, the
Company issued to Mr. Horner 510,000 shares of the Company's restricted common
stock in consideration of the payment of par value ($510 total) and to ensure
his long-term commitment to the Company's future success. The Employment
Agreement has a term of three years and is terminable at will by Mr. Horner or
for cause by the Company. There are no severance provisions. A covenant not to
compete is in effect for a period of five years from January 1, 1997.
The Company entered into a Consulting Agreement with Sean F. Lee on
December 31, 1996 pursuant to which Mr. Lee will consult with the Company to
assist it in its day-to-day business operations, financing, and management. Mr.
Lee also serves on the board of directors of the Company. Pursuant to the
Consulting Agreement, Mr. Lee receives monthly compensation of $5,000 and
expense reimbursement. Mr. Lee is not an employee of the Company and,
therefore, is not eligible to participate in any employment benefit plans or
arrangements relating to pensions, health and life insurance, or other similar
employee benefit plans or arrangements. The Consulting Agreement has a term of
three years and is terminable at will by Mr. Lee or for cause by the Company.
There are no severance provisions. A covenant not to compete is in effect for a
period of five years from January 1, 1997.
21
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of the date of this Memorandum by:
(i) each stockholder known by the Company to be the beneficial owner of more
than five percent of the outstanding Common Stock, (ii) each director of the
Company and (iii) all directors and officers as a group.
<TABLE>
<CAPTION>
Shares of Percent of
Name and Address Common Stock/(1)/ Class/(2)/
- ---------------------------------------------- ----------------- -----------
<S> <C> <C>
Sean F. Lee/(3)(4)/ 1,410,000 28.3%
Donald Metke/(3)/ 510,000 10.2%
Jack Horner, Jr./(3)/ 510,000 10.2%
Winthrop Trust, Ronald W. Tupper, TTEE/(5)/ 494,444 10.0%
P.O. Box 11587
Bainbridge Island, WA 98110
Whittington Investments Limited/(6)/ 297,129 6.0%
Charlotte House
P.O. Box N-4825
Nassau, N.P., Bahamas
All Officers and Directors
as a Group/(7)/ 2,430,000 48.7%
</TABLE>
________________________
* Less than one percent
(1) Except as otherwise indicated, the Company believes that the beneficial
owners of Common Stock listed above, based on information furnished by such
owners, have sole investment and voting power with respect to such shares,
subject to community property laws where applicable. Beneficial ownership
is determined in accordance with the rules of the Securities and Exchange
Commission and generally includes voting or investment power with respect
to securities. Shares of Common Stock subject to options or warrants
currently exercisable, or exercisable within 60 days, are deemed
outstanding for purposes of computing the percentage of the person holding
such options or warrants, but are not deemed outstanding for purposes of
computing the percentage of any other person.
(2) Does not give effect to the sale of any shares offered or sold by the
Selling Shareholders.
(3) c/o Company's address: 2940 West Willetta, Phoenix, AZ 85009.
(4) Mr. Lee was originally issued 1,530,000 shares, but transferred 120,000
shares to a third party, leaving Mr. Lee with 1,410,000 shares.
(5) The beneficiary of the Winthrop Trust is Ronald W. Tupper.
(6) The sole shareholder of Whittington Investments Limited is Niaz Ahmad Khan.
(7) None of the Company's officers or directors have any options, warrants or
rights to acquire shares of the Company's common stock from the Company or
other person.
22
<PAGE>
SELLING SHAREHOLDERS
The following table sets forth the number of shares of Common Stock
which may be offered for sale from time to time by the Selling Shareholders.
The shares offered for sale constitute all of the shares of Common Stock known
to the Company to be beneficially owned by the Selling Shareholders. To the
best of management's knowledge, none of the Selling Shareholders has or have any
material relationship with the Company.
<TABLE>
<CAPTION>
Name of Shares of
Selling Shareholder Common Stock Offered/(1)/
- ------------------- -------------------------
<S> <C>
Winthrop Trust, Ronald W. Tupper TTEE 494,444
Stanley A. Levine and Lois O. Levine, JTWROS 30,000
Earl T. Shannon, an individual 45,000
Bruce Walsh, an individual 4,444
Ronald L. Schneider and Lois C. Schneider, JTWROS 15,556
James L. Walsh, an individual 4,444
Dwight Van Brunt, an individual 27,000
Keith Feingold and Caryn Feingold, JTWROS 4,444
Hugh L. Renfro IRA 45,000
Whittington Investments Limited, a corporation 297,129
Peter W. Mettler, an individual 20,000
David Mark Ocheltree and Kyle Ocheltree, JTWROS 3,500
A. Frederick Bahr and Carole E. Crafts, JTWROS 3,039
Richard Houlihan, an individual 6,000
Total 1,000,000
</TABLE>
_______________
(1) All of these Shares are currently restricted under Rule 144 of the 1933
Act.
Additionally, the Company is registering for sale hereunder, 50,000 Shares
underlying options issued to its legal counsel in exchange for services rendered
in connection with this Registration Statement. Twenty-five thousand options
were issued to counsel on June 9, 1997 and 25,000 options were issued to counsel
on September 15, 1997. All options are exercisable for five years at the option
exercise price of $2.25 per Share. The total of 50,000 Shares underlying the
options to counsel are being registered for resale only. The options are held
in the name of Horwitz & Beam, Inc., a California corporation, dba Horwitz &
Beam and the Shares which will be issued once the options are exercised will be
issued in the name of Horwitz & Beam, Inc., a California corporation, dba
Horwitz & Beam.
PLAN OF DISTRIBUTION
The Shares will be offered and sold by the Selling Shareholders for their
own accounts. The Company will not receive any of the proceeds from the sale of
the Shares pursuant to this Prospectus. The Company will pay all of the
expenses of the registration of the Shares, but shall not pay any commissions,
discounts, and fees of underwriters, dealers, or agents.
The Selling Shareholders may offer and sell the Shares from time to time in
transactions in the over-the-counter market or in negotiated transactions, at
market prices prevailing at the time of sale or at negotiated prices. The
Selling Shareholders have advised the Company that they have not entered into
any agreements, understandings, or arrangements with any underwriters or broker-
dealers regarding the sale of their Shares, nor is there an underwriter or
coordinating broker acting in connection with the proposed sale of Shares by the
Selling Shareholders. Sales may be made directly or to or through broker-
dealers who may received compensation in the for of discounts, concessions, or
23
<PAGE>
commissions from the Selling Shareholders or the purchasers of the Shares for
whom such broker-dealers may act as agent or to whom they may sell as principal,
or both (which compensation as to a particular broker-dealer may be in excess of
customary commissions).
The Selling Shareholders and any broker-dealers acting in connection with
the sale of the Shares hereunder may be deemed to be "underwriters' within the
meaning of Section 2(11) of the Act, and any commissions received by them and
any profit realized by them on the resale of Shares as principals may be deemed
underwriting compensation under the Act.
Under the Exchange Act and the regulations thereunder, any person engaged
in a distribution of the Shares offered by this Prospectus may not
simultaneously engage in market making activities with respect to the Common
Stock of the Company during the applicable "cooling off" periods prior to the
commencement of such distribution. In addition, and without limiting the
foregoing, the Selling Shareholders will be subject to applicable provisions of
the Exchange Act and the rules and regulations thereunder, including, without
limitation, Rules 10b-6 and 10b-7, which provisions may limit the timing of
purchases and sales of Common Stock by the Selling Shareholders.
Selling Shareholders may also use Rule 144 under the Act to sell the Shares
if they meet the criteria and conform to the requirements of such Rule.
DESCRIPTION OF SECURITIES
The authorized capital stock of the Company currently consists of
25,000,000 shares of Common Stock, $0.001 par value. The Company has no shares
of Preferred Stock.
The Company's Transfer Agent is Atlas Stock Transfer Corp., 5899 South
State Street, Salt Lake City, Utah, 84107.
The following summary of certain terms of the Common Stock does not purport
to be complete and is subject to, and qualified in its entirety by, the
provisions of the Company's Articles of Incorporation and Bylaws.
Common Stock
As of the date of this Prospectus, there are 4,987,770 shares of Common
Stock outstanding.
Holders of Common Stock are each entitled to cast one vote for each share
held of record on all matters presented to shareholders. Cumulative voting is
not allowed; hence, the holders of a majority of the outstanding Common Stock
can elect all directors.
Holders of Common Stock are entitled to receive such dividends as may be
declared by the Board of Directors out of funds legally available therefor and,
in the event of liquidation, to share pro rata in any distribution of the
Company's assets after payment of liabilities. The Board of Directors is not
obligated to declare a dividend and it is not anticipated that dividends will be
paid until the Company is profitable.
Holders of Common Stock do not have preemptive rights to subscribe to
additional shares if issued by the Company. There are no conversion,
redemption, sinking fund or similar provisions regarding the Common Stock. All
of the outstanding shares of Common Stock are fully paid and non-assessable and
all of the shares of Common Stock offered hereby will be, upon issuance, fully
paid and non-assessable.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for the
Company by Horwitz & Beam, Irvine, California.
24
<PAGE>
EXPERTS
The Financial Statements of the Company and New Directions for the
fiscal years ended June 30, 1995 , June 30, 1996, and the period from January 9,
1997 (dated of incorporation) through June 30, 1997, included herein and
elsewhere in the registration statement, have been included herein and in the
registration statement in reliance on the report of Evers & Company, Ltd.,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.
25
<PAGE>
<TABLE>
<CAPTION>
NEW DIRECTIONS MANUFACTURING, INC. AND SUBSIDIARY
Unaudited Consolidated Balance Sheet
September 30, 1997
ASSETS
<S> <C>
Current assets:
Cash and cash equivalents $ 355,394
Accounts receivable, net of allowance for doubtful accounts 680,108
Inventory 246,582
Other 20,835
----------
Total current assets 1,302,919
Goodwill, net of accumulated amortization 591,525
Covenant not-to-compete, net of accumulated amortization 680,003
Property and equipment, net 457,516
Other 9,074
----------
$3,041,037
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 187,920
Current portion of capital lease obligations 24,634
Commissions payable 15,679
Accounts payable 273,010
Accrued expenses 26,429
Income taxes payable 7,000
----------
Total current liabilities 534,672
----------
Long-term debt, net of current portion 480,838
Deferred income taxes 35,800
Capital lease obligations, net of current portion 97,448
----------
614,086
----------
Shareholders' equity:
Common stock 4,988
Additional paid-in-capital 1,907,248
Accumulated deficit (19,957)
1,892,279
----------
$3,041,037
==========
</TABLE>
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC. AND SUBSIDIARY
Unaudited Consolidated Statement of Operations
For the Three Months Ended September 30, 1997
<TABLE>
<CAPTION>
<S> <C>
Sales, net of returns and allowances $ 1,567,872
Cost of sales 1,317,748
-----------
Gross profit 250,124
Selling, general and administrative expenses 210,860
-----------
Net income from operations 39,264
-----------
Other income (expense)
Interest and other income 5,758
Interest expense (16,181)
-----------
(10,423)
-----------
Net income before provision for income taxes 28,841
Provision for income taxes 4,000
-----------
Net income 24,841
Accumulated deficit, July 1, 1997 (44,798)
-----------
Accumulated deficit, September 30, 1997 $ (19,957)
===========
Earnings per common share $ 0.01
===========
</TABLE>
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC. AND SUBSIDIARY
Unaudited Consolidated Statement of Cash Flows
For the Three Months Ended September 30, 1997
<TABLE>
<CAPTION>
<S> <C>
Cash flows from operating activities:
Net income $ 24,841
Adjustments to reconcile net income to net
cash used in operating activities:
Amortization of covenant-not-to-compete 39,999
Amortization of goodwill 7,080
Depreciation 6,297
Deferred income taxes (1,000)
Increase in accounts receivable (125,229)
Increase in inventory (9,714)
Decrease in other assets 6,779
Decrease in accounts payable (34,690)
Decrease in accrued expenses (18,566)
Decrease in commissions payable (13,258)
Increase in income taxes payable 5,000
Net cash used in operating activities (112,461)
---------
Cash flows from investing activities:
Purchase of property & equipment (37,770)
---------
Net cash used in investing activities (37,770)
---------
Cash flows from financing activities:
Repayment of debt (44,624)
Payment of capital lease obligations (20,237)
---------
Net cash used in financing activities (64,861)
---------
Net increase in cash (215,092)
Cash - July 1, 1997 570,486
---------
Cash - September 30, 1997 $ 355,394
=========
Supplementary Disclosure of Cash Flow Information
- -------------------------------------------------
Cash paid during the period for interest $ 16,181
=========
Summary of Non-cash Investing and Financing Activities
- ------------------------------------------------------
The Company acquired equipment with a cost of $98,400,
using lease financing
</TABLE>
<PAGE>
Independent Auditors' Report
----------------------------
The Board of Directors
New Directions Manufacturing, Inc.:
We have audited the accompanying consolidated balance sheet of New Directions
Manufacturing, Inc. and subsidiary as of June 30, 1997 and the related
consolidated statements of operations, changes in shareholders' equity and cash
flows for the period from January 9, 1997 (date of incorporation) through June
30, 1997. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of New
Directions Manufacturing, Inc. and subsidiary as of June 30, 1997 and the
consolidated results of their operations and their cash flows for the period
from January 9, 1997 (date of incorporation) through June 30, 1997, in
conformity with generally accepted accounting principles.
August 27, 1997, except as to Note 12,
which is dated November 10, 1997
Phoenix, Arizona
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC. AND SUBSIDIARY
Consolidated Balance Sheet
As of June 30, 1997
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash and cash equivalents $ 481,391
Cash held in escrow from offering 89,095
Accounts receivable, net of allowance for doubtful accounts
of $14,938 554,879
Inventory 236,868
Other 27,614
----------
Total current assets 1,389,847
Goodwill, net of accumulated amortization of $14,000 598,605
Covenant not-to-compete, net of accumulated amortization of $79,998 720,002
Property and equipment, net 327,643
Other 9,074
----------
$3,045,171
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 184,215
Current portion of capital lease obligations 25,239
Commissions payable 28,937
Accounts payable 307,700
Accrued expenses 44,995
Income taxes payable 2,000
----------
Total current liabilities 593,086
----------
Long-term debt, net of current portion 529,167
Deferred income taxes 36,800
Capital lease obligations, net of current portion 18,680
----------
584,647
----------
Commitments, contingencies and subsequent events (see notes)
Shareholders' equity:
Common stock, par value $.001; 25,000,000 shares
authorized, 4,987,770 shares issued and outstanding 4,988
Additional paid-in-capital 1,907,248
Accumulated deficit (44,798)
1,867,438
----------
$3,045,171
==========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC. AND SUBSIDIARY
Consolidated Statement of Operations
For the Period From January 9, 1997 (Date of Incorporation)
Through June 30, 1997
<TABLE>
<CAPTION>
<S> <C>
Sales, net of returns and allowances $3,215,985
----------
Cost of sales
Materials 1,913,273
Payroll costs 511,020
Overhead 105,392
----------
2,529,685
----------
Gross profit 686,300
----------
Selling, general and administrative expenses
Advertising and show expenses 58,699
Amortization of goodwill and covenant-not-to-compete 93,998
Other 567,273
----------
719,970
----------
Net loss from operations (33,670)
----------
Other income (expense)
Interest and other income 15,001
Interest expense (35,029)
----------
(20,028)
----------
Net loss before provision for income taxes (recovery) (53,698)
Provision for income taxes (recovery) (8,900)
----------
Net loss (44,798)
==========
Loss per common share $ (0.01)
==========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC. AND SUBSIDIARY
Statement of Changes in Shareholders' Equity
For the Period From January 9, 1997 (Date of Incorporation)
Through June 30, 1997
<TABLE>
<CAPTION>
Common Stock Additional
-----------------------
Number of Paid-In Accumulated
Shares Amount Capital Deficit Total
------------- ----------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Incorporation of New Direction 2,550,000 $ 2,550 - - 2,550
Private placement of stock 1,000,000 1,000 1,908,686 - 1,909,686
Merger with Premier Ventures 1,437,770 1,438 (1,438) - -
Net loss - - - (44,798) (44,798)
------------- ----------- ------------- ------------ --------------
Balance June 30, 1997 4,987,770 $ 4,988 1,907,248 $ (44,798) 1,867,438
============ =========== ============ ============ =============
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC. AND SUBSIDIARY
Consolidated Statement of Cash Flows
For the Period From January 9, 1997 (Date of Incorporation)
Through June 30, 1997
<TABLE>
<CAPTION>
<S> <C>
Cash flows from operating activities:
Net loss $ (44,798)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Amortization of covenant-not-to-compete 79,998
Amortization of goodwill 14,000
Depreciation 12,580
Deferred income taxes (10,900)
Increase in accounts receivable (254,879)
Increase in inventory (97,695)
Increase in other assets (28,590)
Increase in accounts payable 307,700
Increase in accrued expenses 44,995
Increase in commissions payable 28,937
Increase in income taxes payable 2,000
-----------
Net cash provided by operating activities 53,348
-----------
Cash flows from investing activities:
Purchase of property & equipment (14,973)
Cash payment for stock of New Directions - Arizona (1,280,000)
-----------
Net cash used in investing activities (1,294,973)
-----------
Cash flows from financing activities:
Repayment of debt (86,618)
Payment of capital lease obligations (13,507)
Proceeds from issuance of stock 1,912,236
-----------
Net cash provided by financing activities 1,812,111
-----------
Net increase in cash 570,486
Cash, January 9, 1997 -
-----------
Cash, June 30, 1997 $ 570,486
===========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC. AND SUBSIDIARY
Consolidated Statement of Cash Flows
For the Period From January 9, 1997 (Date of Incorporation)
Through June 30, 1997
<TABLE>
<CAPTION>
Supplementary Disclosure of Cash Flow Information
- -------------------------------------------------
<S> <C>
Cash paid during the period for interest $ 35,029
===========
</TABLE>
Summary of Non-cash Investing and Financing Activities
- ------------------------------------------------------
In January, 1997, the Company acquired New Directions-Manufacturers of
Contemporary Furniture, Inc. The Company paid cash of $1,280,000 and signed a
note for $800,000. The values assigned to the assets and liabilities acquired
are as follows:
<TABLE>
<S> <C>
Accounts receivable $ 300,000
Inventory 139,173
Property and equipment 325,250
Other 8,098
Covenant-not-to-compete 800,000
Goodwill 612,605
Capital lease obligations assumed. (57,426)
Deferred tax liability (47,700)
-----------
$ 2,080,000
===========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
June 30, 1997
1. Summary of Significant Accounting Policies
------------------------------------------
The following is a summary of the significant accounting policies followed by
New Directions Manufacturing, Inc. The policies conform with generally
accepted accounting principles, which requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
a. Operations
----------
New Directions Manufacturing, Inc. manufactures oak furniture in Phoenix,
Arizona and sells to customers located throughout the United States and
Canada.
b. Consolidation
-------------
The accompanying financial statements include the activity of New
Directions Manufacturing, Inc. (The Company or NDM-NV, a Nevada
corporation) and its wholly-owned subsidiary, New Directions
Manufacturing, Inc., (formerly New Directions-Manufacturers of
Contemporary Furniture, Inc. - NDMCF). All significant intercompany
transactions and accounts have been eliminated in consolidation.
c. Cash Equivalents
----------------
Cash equivalents include money market accounts and other short-term
investments with an original maturity of three months or less.
d. Inventory
---------
Inventory is stated at the lower of cost or market. Cost is determined
using the first-in, first-out method.
e. Goodwill
--------
Goodwill, which resulted from the acquisition of NDMCF, is being amortized
over twenty years on the straight line basis.
f. Covenant-not-to-compete
-----------------------
The covenant-not-to-compete is being amortized over five years on the
straight line basis.
g. Property and Equipment
----------------------
Property and equipment are recorded at cost and are being depreciated over
estimated useful lives of six to seven years using the straight-line
method.
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
June 30, 1997
1. Summary of Significant Accounting Policies, continued
-----------------------------------------------------
h. Income taxes
------------
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amount of existing assets and liabilities and their respective
tax bases, including operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The
effect in deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date.
Valuation allowances are established when necessary to reduce deferred
tax assets to the amount expected to be realized.
i. Advertising costs:
-----------------
Advertising costs are expensed as incurred
j. Net Loss Per Share
------------------
Net loss per share is computed based upon the weighted average number of
shares outstanding during the period, which was assumed to be 4,987,770
for the period ended June 30, 1997. Options are considered antidilutive
and were not considered in the calculation.
2. Organization and Capital Transactions
-------------------------------------
New Directions Manufacturing, Inc.-Nevada was incorporated on January 9,
1997. The Company's chairman acquired 1,530,000 shares of common stock in
exchange for $1,530 and the assignment of his option to acquire the stock
of NDMCF. At the same time, the Company's President and Vice President
each acquired 510,000 shares of common stock for $510 each. NDM-NV had no
significant assets, liabilities or operations prior to its acquisition of
NDMCF.
On January 9, 1997, the Company prepared a private placement memorandum that
offered 1,000,000 shares of common stock for sale at $2.25 per share The
offering was successful and the Company received cash proceeds of
$1,910,237, which was net of offering costs.
In January 1997, the Company acquired 100% of the stock of New Directions-
Manufacturers of Contemporary Furniture, Inc. Except for the Company's
vice president, who currently owns 510,000 shares of the Company's common
stock, the stock ownership of NDMCF was different from that of NDM-NV. The
selling shareholders of NDMCF received cash of $1,280,000 at closing and
agreed to finance $800,000 over four years at 8% interest. The Company
used proceeds from the private placement and a short term loan for the
cash payment at closing.
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
June 30, 1997
2. Organization and Capital Transactions, continued
------------------------------------------------
The sellers were responsible for the payment of substantially all liabilities
existing at the time of the sale and distributed all excess cash to
themselves as bonuses. In addition, the sellers were entitled to receive
all accounts receivable in excess of $300,000 as part of the purchase
price. The agreement provides for a five-year covenant not-to-compete by
the original shareholders of NDMCF. This transaction is being accounted
for as a purchase and includes the operations of NDMCF effective January 1,
1997.
In March 1997, the Company merged with Premier Ventures and Exploration, Inc.
with the Company being the surviving corporation. The shareholders of NDM-
NV and Premier received 3,550,000 and 1,437,770 shares, respectively, of
the merged Company. The merger is being accounted for as purchase
transaction. Premier had no significant assets or operations at the time
of the merger and management believes that no shareholder owned five-
percent or more of Premier's stock at that time. Prior to the merger,
Premier effected a reverse stock split of 415 to 1 and issued approximately
1,400,000 shares of common stock at $.01 per share.
In conjunction with the private placement and subsequent registration
statement, the Company's legal counsel received options to acquire 25,000
shares at $2.25 per share.
The following unaudited proforma summary presents the consolidated results of
operations of the company as if the acquisition had occurred on July 1,
1996. These proforma results are based upon certain assumptions and
estimates which the company believes are reasonable. They are not
necessarily indicative of the results of operations which would have
occurred had the acquisition taken place on July 1, 1996 or results which
may occur in the future.
Net sales $6,089,000
Net loss (75,000)
Loss per share (.02)
3. Concentration of Risk
---------------------
At June 30, 1997, the Company maintained cash accounts in a single financial
institution that exceeded federally insured limits by approximately
$441,000.
4. Inventory
---------
Inventory consists of the following:
Raw materials $178,703
Work-in-process 39,790
Finished goods 18,375
--------
$236,868
========
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
June 30, 1997
5. Property and Equipment
----------------------
Property and equipment consist of the following:
<TABLE>
<S> <C>
Machinery and equipment $303,087
Office furniture & equipment 36,681
--------
339,768
Less: Accumulated depreciation 12,125
--------
$327,643
========
</TABLE>
6. Lease Commitments
-----------------
The Company leases its plant in Phoenix and showrooms in San Francisco and
North Carolina under non-cancelable operating leases. In addition to rent,
the leases generally require the Company to pay increases in the operating
expenses of the properties.
The Company also leases certain equipment, under non-cancelable financing
leases, with a cost of approximately $114,000 and accumulated depreciation
of $4,000 at June 30, 1997. Certain leases contain purchase options. The
leases require the Company to pay all operating expenses and taxes related
to the equipment.
Future minimum lease obligations, are as follows:
<TABLE>
<CAPTION>
Year ending June 30, Capital Operating
-------------------- ------- ---------
<S> <C> <C>
1998 $29,282 $145,795
1999 11,612 81,000
2000 8,013 21,600
2001 2,576 -
------- --------
51,483 $248,395
========
Less amounts representing
interest at rates ranging
from 16% to 19% 7,564
-------
Present value of capital
lease obligations 43,919
Current portion 25,239
-------
Capital lease obligations,
net of current portion $18,680
=======
</TABLE>
<PAGE>
6. Lease Commitments, continued
----------------------------
Rent expense for the period ended June 30, 1997 was $99,627.
Subsequent to June 30, 1997, the Company leased equipment with a cost of
$98,400. The lease requires 60 monthly payments of $2,077, with a buyout
for $1 at the end of the lease term. The Company intends to record the
lease as capital lease.
The Company is currently negotiating an extension of the lease for its
manufacturing facilities in Phoenix.
7. Debt
----
Debt consists of an 8% promissory note to the former shareholders of NDMCF,
due January 2001. The unpaid balance of the note was $713,382 at June 30,
1997.
Future minimum principal payments required in accordance with the terms of
this agreement are:
<TABLE>
<CAPTION>
Year ending June 30,
--------------------
<S> <C>
1998 $184,215
1999 199,231
2000 215,767
2001 114,169
--------
$713,382
========
</TABLE>
In May 1997, the Company obtained a $500,000 revolving line of credit from a
bank, which expires on April 15, 1998. The line bears interest at prime
plus 1% and is secured by accounts receivable and inventory. Advances on
the line may not exceed 75% of eligible accounts receivable. The line
contains various restrictive covenants, including minimum equity, working
capital and tangible net worth.
8. Income Taxes
------------
Deferred income tax liabilities consist of the following:
<TABLE>
<S> <C>
Difference in basis of property and equipment $ 65,200
Difference in basis of covenant-not-to-compete (12,200)
State net operating loss carryforward (12,800)
Other (3,400)
--------
$ 36,800
========
</TABLE>
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
June 30, 1997
8. Income Taxes, continued
-----------------------
A reconciliation of expected to actual taxes follows:
<TABLE>
<S> <C>
Expected tax recovery at rate of 34% $(18,300)
Amortization of goodwill 4,800
Surtax exemption and other 4,600
--------
Financial statement recovery of income taxes $ (8,900)
========
</TABLE>
NDMCF filed federal and state corporate tax returns through its tax year ended
December 31, 1996.
NDMCF had an Arizona net operating loss carryforward of approximately $142,000
at June 30, 1997, which may be used to offset future state income taxes
through 2001.
9. Profit Sharing Plan
-------------------
NDMCF adopted a profit sharing plan on January 1, 1992, which covers
substantially all full-time employees with more than one year of service.
Contributions to the plan are at the discretion of the board of directors.
The board has not approved any contributions for the period ended June 30,
1997. Management intends to terminate the plan and does not expect to
incur additional cost related to the plan.
10. Related Party Transactions
--------------------------
The Company has entered into employment and consulting agreements with the
principal officers and directors of the Company. The agreements have an
initial term of three years and contain five year covenants-not-to-
compete. Consulting fees paid to the Company's chairman were $30,000
through June 30, 1997.
In conjunction with the acquisition of NDMCF, the Company's president
received compensation of $30,000. The Company's chairman also received
reimbursement for costs he incurred related to the acquisition of
approximately $42,000.
The Company's vice president was also an officer and stockholder of NDMCF,
prior to the acquisition. As such, he received his proportionate share of
the $1,280,000 cash payment made to acquire NDMCF. He also received his
pro-rata share of all principal and interest payments made through June
30, 1997. Total principal and interest payments to all former shareholders
through June 30, 1997 were $117,180.
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
June 30, 1997
11. Disclosures about fair value of financial instruments
-----------------------------------------------------
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments," requires that the Company disclose
estimated fair values for its financial instruments. The following summary
presents a description of the methodologies and assumptions used to
determine such amounts.
Fair value estimates are made at a specific point in time and are based on
relevant market information and information about the financial
instrument; they are subjective in nature and involve uncertainties,
matters of judgment and, therefore, cannot be determined with precision.
These estimates do not reflect any premium or discount that could result
from offering for sale at one time the Company's entire holdings of a
particular instrument. Changes in assumptions could significantly affect
the estimates.
Since the fair value is estimated as of June 30, 1997, the amounts that will
actually be realized or paid at settlement of the instruments could be
significantly different.
The carrying amount of cash and cash equivalents is assumed to be the fair
value because of the liquidity of these instruments. Accounts receivable,
accounts payable and accrued expenses approximate fair value because of
the short maturity of these instruments. The recorded balance of notes
payable are assumed to be the fair value since the rates specified in the
notes approximate current market rates.
12. Subsequent event - litigation
-----------------------------
On November 10, 1997, the Company was served with a complaint, which alleges
claims for strict liability and negligence, surrounding an accident with a
piece of furniture. The litigation has been turned over to the Company's
insurance carrier, who is handling the defense for the Company. Management
of the Company believes that this matter will be completely covered by its
liability insurance and that the Company will not suffer any out-of-pocket
cash losses in defending/settling this matter.
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC. AND SUBSIDIARY
Proforma Unaudited Consolidated Balance Sheet
June 30, 1997
<TABLE>
<CAPTION>
ASSETS
New Directions Pro Forma
Actual Pro Forma Balance Sheet
--------------- ---------------
June 30, 1997 Adjustments June 30, 1997
--------------- ------------- ---------------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 481,391 A 504,327 501,388
B 25,878
C (218,025)
F (60,000)
G (15,000)
H (117,183)
J (100,000)
Cash held in escrow from offering 89,095 - 89,095
Accounts receivable, net of allowance for doubtful accounts 554,879 E (28,730) 526,149
Inventory 236,868 - 236,868
Other 27,614 - 27,614
----------- ---------- -----------
Total current assets 1,389,847 (8,733) 1,381,114
Goodwill, net of accumulated amortization 598,605 I (14,000) 572,880
K (33,000)
D 21,275
Covenant not-to-compete, net of accumulated amortization 720,002 I (79,998) 640,004
Property and equipment, net 327,643 D (12,580) 315,063
Other 9,074 - 9,074
----------- ---------- -----------
$ 3,045,171 (127,036) 2,918,135
=========== ========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ (184,215) - (184,215)
Current portion of capital lease obligations (25,239) - (25,239)
Commissions payable (28,937) - (28,937)
Accounts payable (307,700) - (307,700)
Accrued expenses (44,995) - (44,995)
Income taxes payable (2,000)K (10,600) (12,600)
----------- ---------- -----------
Total current liabilities (593,086) (10,600) (603,686)
----------- ---------- -----------
Long-term debt, net of current portion (529,167)H 90,148 (439,019)
Deferred income taxes (36,800)K 17,200 (19,600)
Capital lease obligations, net of current portion (18,680) - (18,680)
----------- ---------- -----------
(584,647) 107,348 (477,299)
----------- ---------- -----------
Shareholders' equity:
Common stock (4,988) - (4,988)
Additional paid-in-capital (1,907,248) (14,000) (1,921,248)
Accumulated deficit 44,798 M 44,288 89,086
----------- ---------- -----------
(1,867,438) 30,288 (1,837,150)
----------- ---------- -----------
$(3,045,171) 127,036 (2,918,135)
=========== ========== ===========
</TABLE>
See accompanying notes to unaudited consolidated proforma financial statements
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC. AND SUBSIDIARY
Proforma Unaudited Consolidated Statement of Operations
Year Ended June 30, 1997
<TABLE>
<CAPTION>
Premier Ventures New Directions Manufacturing, Inc. Proforma
------------------- ----------------------------------- --------
Six Months Ended Six months ended Year Ended
October 31, 1996 December 31, 1996 June 30, 1997 Adjustments June 30, 1997
---------------- ----------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Sales, net of returns and allowances $ 520 2,872,989 3,215,985 - 6,089,494
------------ ----------- ---------- ----------- -------------
Cost of sales
Materials - 1,841,993 1,913,273 - 3,755,266
Payroll costs - 408,091 511,020 - 919,111
Overhead - 169,489 105,392 - 274,881
------------ ----------- ---------- ----------- -------------
- 2,419,573 2,529,685 - 4,949,258
------------ ----------- ---------- ----------- -------------
Gross profit 520 453,416 686,300 - 1,140,236
------------ ----------- ---------- ----------- -------------
Selling, general and administrative
expenses
Advertising and show expenses - 72,798 58,699 - 131,497
Amortization of goodwill and covenant - - 93,998 I 93,998 187,996
Other 10,513 626,628 567,273 A (504,327) 883,244
B (25,878)
D (8,695)
E 28,730
F 60,000
G 15,000
J 100,000
L 14,000
------------ ----------- ---------- ----------- -------------
10,513 699,426 719,970 (227,172) 1,202,737
------------ ----------- ---------- ----------- -------------
Net loss from operations (9,993) (246,010) (33,670) 227,172 (62,501)
------------ ----------- ---------- ----------- -------------
Other income (expense)
Interest and other income - 3,790 15,001 - 18,791
Interest expense - (4,514) (35,029)H (27,035) (66,578)
------------ ----------- ---------- ----------- -------------
- (724) (20,028) (27,035) (47,787)
------------ ----------- ---------- ----------- -------------
Net loss before provision for income taxes (9,993) (246,734) (53,698) 200,137 (110,288)
Provision for income taxes (recovery) - (33,000) (8,900)K 26,400 (15,500)
------------ ----------- ---------- ----------- -------------
Net loss $ (9,993) (213,734) (44,798) 173,737 (94,788)
============ =========== ========== =========== =============
=============
Loss per common share $ (0.02)
=============
</TABLE>
See accompanying notes to unaudited consolidated proforma financial statements
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC.
Notes to Unaudited Consolidated Proforma Financial Statements
June 30, 1997
1. Basis of Presentation
---------------------
In January 1997, New Directions Manufacturing, Inc. (a Nevada corporation)
acquired 100% of the stock of New Directions-Manufacturers of Contemporary
Furniture, Inc. (NDMCF) Except for the Company's vice president, who
currently owns 510,000 shares of the Company's common stock, the stock
ownership of NDMCF was different from that of NDM-NV. The selling
shareholders of NDMCF received cash of $1,280,000 at closing and agreed to
finance $800,000 over four years at 8% interest. The Company used proceeds
from a private placement and a short term loan for the cash payment at
closing. This transaction is being accounted for as a purchase.
In March 1997, the Company merged with Premier Ventures and Exploration, Inc.
with the Company being the surviving corporation. The shareholders of NDM-
NV and Premier received 3,550,000 and 1,437,770 shares, respectively, of
the merged Company. The merger is being accounted for as purchase
transaction. Premier had no significant assets or operations at the time
of the merger and management believes that no shareholder owned five-
percent of Premier's stock at the time of the merger. Prior to the merger,
Premier effected a reverse stock split of 415 to 1 and issued approximately
1,400,000 shares of common stock at $.01 per share.
The unaudited proforma consolidated balance sheet and statement of operations
of the company are presented as if the acquisition had occurred on July 1,
1996. These proforma results are based upon certain assumptions and
estimates which the company believes are reasonable. They are not
necessarily indicative of the results of operations which would have
occurred had the acquisition taken place on July 1, 1996 or results which
may occur in the future.
As summary of the proforma adjustments reflected in the accompanying
unaudited proforma financial statements is as follows:
A. To reflect reduction in compensation for earnings of prior officers and
stockholders
B. To reflect reduction in vehicle and other expenses for prior officers
C. To reflect operations of Omni Answers/Premier Ventures through December
31, 1996
D. To reflect changes in depreciation from June 1, 1996 through December
31, 1996
E. To increase allowance for doubtful accounts based upon 1% of sales
F. To reflect consulting fees to chairman and other consultants
G. To reflect estimated bonuses to management and other employees
H. To reflect payment of principal and interest on note payable to sellers
I. To amortize Covenant and goodwill from July 1, 1996 through
December 31, 1996
J. To reflect additional compensation to current officers
K. To record tax provision
L. To reflect purchase of 1,400,000 shares of common stock for services
M. To reflect total changes in net earnings (loss) in the proforma
financial statements
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC.
Unaudited Balance Sheets
<TABLE>
<CAPTION>
Dec. 31, Dec. 31,
Assets 1996 1995
------ ---------- ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ - $ 55,238
Accounts receivable, net 483,251 520,412
Inventory 151,704 122,381
-------- --------
Total current assets 634,955 698,031
-------- --------
Property and equipment, net 37,588 61,092
Deposits 8,520 8,520
-------- --------
$681,063 $767,643
======== ========
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Current portion of capital lease obligations $ 25,339 $ 19,716
Accounts payable 206,121 234,315
Accrued Rent 8,000 7,900
Commissions payable 9,806 8,450
Other - 457
-------- --------
Total current liabilities 249,266 270,838
-------- --------
Capital lease obligations, net of current portion 24,387 36,948
-------- --------
Stockholders' equity
Common stock, $1.00 par value. 1,000,000 shares
authorized; 1,000 shares issued and outstanding 1,000 1,000
Retained earnings 406,410 458,857
-------- --------
407,410 459,857
-------- --------
Commitments and subsequent events (see notes)
$681,063 $767,643
======== ========
</TABLE>
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC.
Unaudited Statements of Operations
<TABLE>
<CAPTION>
Six months ended December 31,
-----------------------------
1996 1995
------------ ------------
<S> <C> <C>
Sales, net of returns and allowances $2,872,989 $2,789,447
---------- ----------
Cost of sales:
Materials 1,841,993 1,943,650
Labor 408,091 389,742
Overhead 169,489 107,726
---------- ----------
2,419,573 2,441,118
---------- ----------
Gross profit 453,416 348,329
---------- ----------
Selling, general and administrative expenses:
Officers' compensation 427,701 266,382
Administrative salaries 71,165 33,708
Advertising and promotion 72,798 35,434
Commissions 30,007 22,232
Travel and entertainment 7,946 10,060
Vehicle leasing 10,267 9,172
Other 79,542 80,197
---------- ----------
699,426 457,185
---------- ----------
Loss from operations (246,010) (108,856)
---------- ----------
Other income (expense)
Interest income 3,790 2,438
Interest expense (4,514) (4,792)
---------- ----------
(724) (2,354)
---------- ----------
Net loss before provision for
income taxes (benefit) (246,734) (111,210)
Provision for incomes taxes (benefit) (33,000) -
---------- ----------
Net loss (213,734) (111,210)
Retained earnings, beginning 620,144 570,067
---------- ----------
Retained earnings, ending $ 406,410 $ 458,857
========== ==========
</TABLE>
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC.
Unaudited Statements of Cash Flows
<TABLE>
<CAPTION>
Six Months Ended December 31,
-----------------------------
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(213,734) $(111,210)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation & amortization 24,775 13,749
Increase in receivables (137,806) (204,954)
Decrease in inventory 59,296 88,619
Decrease in prepaid expenses 7,790 -
Decrease in deferred taxes 11,000 -
Increase (decrease) in rent payable 8,000 (52)
Increase in accounts payable 62,357 111,562
Decrease in commissions payable (6,784) (4,765)
Decrease in accrued payroll and payroll taxes (3,146) (8,234)
Decrease in accrued retirement contribution (40,000) -
Decrease in other liabilities (457) -
Decrease in income taxes payable (44,000) -
--------- ---------
Net cash used in operating activities (232,709) (155,285)
--------- ---------
Cash flows for financing activities:
Payment of capital lease obligations (11,242) (8,777)
--------- ---------
Net decrease in cash and cash equivalents (243,951) (164,062)
Cash and cash equivalents, beginning of period 243,951 219,300
--------- ---------
Cash and cash equivalents, end of period $ 0 $ 55,238
========= =========
</TABLE>
<PAGE>
OMNI ANSWERS, INC.
COMPILED FINANCIAL STATEMENTS
OCTOBER 31, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
COMPILATION REPORT 1
FINANCIAL STATEMENTS
Balance Sheet 2
Income Statements 3
Statements of Cash Flows 4-5
Statement of Stockholders' Equity/Deficit 6-9
Notes to Financial Statements 10-15
</TABLE>
<PAGE>
To the Shareholders and Board of Directors
Omni Answers, Inc.
We have compiled the accompanying balance sheet of Omni Answers, Inc. (a
development stage company) as of October 31, 1996, and the related statements of
income, stockholders' equity and cash flows for the period ended October 31,
1996, and for the period from September 11, 1985 (inception) to October 31,
1996 in accordance with Statements on Standards for Accounting and Review
Services issued by the American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
Reno, Nevada
November 10, 1997
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
OCTOBER 31, 1996
(See Accountants' Compilation Report)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current Assets
Cash $ (3)
-----------
Other Assets
Deferred tax asset, net of valuation allowance -
-----------
-
-----------
Total Assets $ (3)
===========
LIABILITIES AND STOCKHOLDERS' EQUITY/DEFICIT
Current Liabilities
Advances from stockholders $ -
-----------
Stockholders' Equity/Deficit
Common stock, no par value
authorized 10,000,000 shares,
issued and outstanding 2,394,600
shares at October 31, 1996 239,460
Additional paid-in-capital 36,825
Deficit accumulated during the development stage (276,288)
-----------
(3)
-----------
Total Liabilities and Stockholders' Equity $ (3)
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
INCOME STATEMENT
FOR THE PERIOD ENDED OCTOBER 31, 1996
AND THE PERIOD FROM INCEPTION THROUGH OCTOBER 31, 1996
(See Accountants' Compilation Report)
<TABLE>
<CAPTION>
Six
Months Inception
Ended Through
October 31, October 31,
1996 1996
------------ ------------
<S> <C> <C>
Net Sales $ 520 $ 520
---------- ----------
Cost of Goods Sold - -
---------- ----------
Gross Profit 520 520
---------- ----------
Costs and expenses
Bank Charges 40 55
Legal & Accounting 2,317 2,317
Professional Services 8,050 274,330
Taxes & Licenses 40 40
Travel 50 50
Miscellaneous 16 16
---------- ----------
10,513 276,808
---------- ----------
Net (loss) before
income taxes (9,993) (276,288)
Income Taxes - -
---------- ----------
Net (loss) $ (9,993) $ (276,288)
========== ==========
Net income (loss) per
common share
Continuing operations $ (.00) $ (.14)
========== ==========
Weighted average
shares outstanding 2,394,600 2,015,919
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE PERIOD ENDED OCTOBER 31, 1996
AND THE PERIOD FROM INCEPTION THROUGH OCTOBER 31, 1996
(See Accountants' Compilation Report)
<TABLE>
<CAPTION>
Six
Months Inception
Ended Through
October 31, October 31,
1996 1996
------------ ------------
<S> <C> <C>
Cash Flows from (for) Operating Activities:
Continuing operations
Net income (loss) $ (9,993) $(276,288)
-------- ---------
Noncash items included in net income (loss)
Stock issued for professional services
rendered - 266,185
Changes in assets and liabilities:
Increase in deferred tax asset (1,499) (41,443)
Increase in valuation allowance 1,499 41,443
-------- ---------
Net Adjustments - 266,185
-------- ---------
Cash Provided (Used) by Operating Activities (9,993) (10,103)
-------- ---------
Cash Flows Provided (Used) by Investing
Activities:
Proceeds from issuance of common stock - 10,100
-------- ---------
Cash Provided (Used) by Investing
Activities - 10,100
-------- ---------
Cash Flows Provided (Used) by Financing
Activities:
Proceeds from stockholder advances - 20
Repayment of stockholder advances (20) (20)
-------- ---------
Cash Provided (Used) by Financing
Activities (20) -
-------- ---------
Net change in cash (10,013) (3)
Cash at beginning of period 10,010 -
-------- ---------
Cash at end of period $ (3) $ (3)
======== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE PERIOD ENDED OCTOBER 31, 1996
AND THE PERIOD FROM INCEPTION THROUGH OCTOBER 31, 1996
(See Accountants' Compilation Report)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
Six
Months Inception
Ended Through
October 31, October 31,
1996 1996
----------- -----------
<S> <C> <C>
Interest Paid $ - $ -
=========== ===========
Income Taxes Paid $ - $ -
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY/DEFICIT
FOR THE PERIOD FROM INCEPTION THROUGH OCTOBER 31. 1996
(See Accountants' Compilation Report)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the
------------------------- Paid-in Development
Shares Amount Capital Stage Total
------------ ---------- ---------- ----------- -----
<S> <C> <C> <C> <C> <C>
Issuance of shares of common stock on August 5, 1985,
for professional services rendered 175,000 $17,500 $- $- $17,500
Issuance of shares of common stock on August 15, 1985,
for professional services rendered 175,000 17,500 - - 17,500
Issuance of shares of common stock on November 5, 1985,
for professional services rendered 500,000 50,000 - - 50,000
Issuance of shares of common stock on November 7, 1985,
for professional services rendered 200,000 20,000 - - 20,000
Issuance of shares of common stock on November 9, 1985,
for professional services rendered 25,000 2,500 - - 2,500
Issuance of shares of common stock on November 16, 1985,
for professional services rendered 500,000 50,000 - - 50,000
Issuance of shares of common stock on November 17, 1985,
for professional services rendered 250,000 25,000 - - 25,000
Issuance of shares of common stock on November 22, 1985,
for professional services rendered 50,000 5,000 - - 5,000
Issuance of shares of common stock on February 10, 1986,
for professional services rendered 2,000 200 - - 200
Issuance of shares of common stock on February 11, 1986,
for professional services rendered 17,000 1,700 - - 1,700
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY/DEFICIT
FOR THE PERIOD FROM INCEPTION THROUGH OCTOBER 31, 1996
(See Accountants' Compilation Report)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the
------------------------- Paid-in Development
Shares Amount Capital Stage Total
------------ ---------- ---------- ----------- -----
<S> <C> <C> <C> <C> <C>
Issuance of shares of common stock on February 13, 1986,
for professional services rendered 11,000 1,100 - - 1,100
Issuance of shares of common stock on February 17, 1986,
for professional services rendered 1,000 100 - - 100
Issuance of shares of common stock on February 20, 1986,
for professional services rendered 1,000 100 - - 100
Net loss for the year ended May 31, 1986 - - - (190,700) (190,700)
--------- ------- ---------- -------- --------
Balance - May 31, 1986 1,907,000 190,700 - (190,700) -
Issuance of shares of common stock on August 15, 1986,
for professional services rendered 200 20 - - 20
Issuance of shares of common stock on November 17, 1986,
for deemed donations 60,000 6,000 (6,000) - -
Issuance of shares of common stock on November 17, 1986,
for professional services rendered 100 10 - - 10
Issuance of shares of common stock on November 19, 1986,
for professional services rendered 10,000 1,000 - - 1,000
Issuance of shares of common stock on December 1, 1986,
for professional services rendered 50,000 5,000 - - 5,000
Net loss for the year ended May 31, 1987 - - - (6,030) (6,030)
--------- ------- ---------- -------- --------
Balance - May 31, 1987 and May 31, 1988 2,027,300 202,730 (6,000) (196,730) -
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY/DEFICIT
FOR THE PERIOD FROM INCEPTION THROUGH OCTOBER 31, 1996
(See Accountants' Compilation Report)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the
------------------------- Paid-in Development
Shares Amount Capital Stage Total
------------ ---------- ---------- ----------- -----
<S> <C> <C> <C> <C> <C>
Issuance of shares of common stock on February 16, 1989,
for professional services rendered 20,000 2,000 - - 2,000
Net loss for the year ended May 31, 1989 - - - (2,000) (2,000)
--------- ------- ------ -------- ------
Balance - May 31, 1989, 1990, 1991, 1992, 1993 and 1994 2,047,300 204,730 (6,000) (198,730) -
Issuance of shares of common stock on July 30, 1994,
for professional services rendered 50,000 5,000 - - 5,000
Issuance of shares of common stock on August 15, 1994,
for professional services rendered 9,000 900 - - 900
Issuance of shares of common stock on September 8, 1994,
for professional services rendered 2,800 280 - - 280
Net loss for the year ended May 31, 1995 - - - (6,180) (6,180)
--------- ------- ------ -------- ------
Balance - May 31, 1995 2,109,100 210,910 (6,000) (204,910) -
Issuance of shares of common stock on August 3, 1995
for professional services rendered 1,000 100 150 - 250
Issuance of shares of common stock on December 2, 1995,
for professional services rendered 1,000 100 150 - 250
Issuance of shares of common stock on December 20, 1995,
for professional services rendered 54,500 5,450 8,175 - 13,625
Issuance of shares of common stock on March 22, 1996,
for professional services rendered and cash 10,000 1,000 1,500 - 2,500
Issuance of shares of common stock on April 8, 1996,
for professional services rendered and cash 10,000 1,000 1,500 - 2,500
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY/DEFICIT
FOR THE PERIOD FROM INCEPTION THROUGH OCTOBER 31, 1996
(See Accountants' Compilation Report)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the
------------------------- Paid-in Development
Shares Amount Capital Stage Total
------------ ---------- ---------- ----------- -----
<S> <C> <C> <C> <C> <C>
Issuance of shares of common stock on April 12, 1996,
for professional services rendered and cash 10,000 1,000 1,500 - 2,500
Issuance of shares of common stock on April 13, 1996,
for professional services rendered and cash 20,000 2,000 3,000 - 5,000
Issuance of shares of common stock on April 22, 1996,
for professional services rendered and cash 24,000 2,400 3,600 - 6,000
Issuance of shares of common stock on April 30, 1996,
for professional services rendered and cash 20,000 2,000 3,000 - 5,000
Issuance of shares of common stock on April 30, 1996,
for professional services rendered 135,000 13,500 20,250 - 33,750
Net loss for the period ended May 1, 1996 - - - (61,385) (61,385)
--------- -------- ------- --------- --------
Balance - May 1, 1996 2,394,600 239,460 36,825 (266,295) 9,990
Net loss for the period ended October 31, 1996 - - - (9,993) (9,993)
--------- -------- ------- --------- --------
Balance - October 31, 1996 2,394,600 $239,460 $36,825 $(276,288) $ (3)
========= ======== ======= ========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (September 11, 1985) TO OCTOBER 31, 1996
(See Accountants' Compilation Report)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BUSINESS ACTIVITY
- -------------------------------------------------------------------------
This summary of significant accounting policies of Omni Answers, Inc. (the
Company) is presented to assist in understanding the Company's financial
statements. The financial statements and notes are representations of the
Company's management, which is responsible for their integrity and objectivity.
These accounting policies conform to generally accepted accounting principles
and have been consistently applied in the preparation of the financial
statements.
Business Activity
- -----------------
The Company, a Louisiana corporation located in Mansura, Louisiana was
incorporated on September 11, 1985, and is currently in the development stage.
While the purpose for organizing the Company was to provide a shell corporation
for possible future mergers with privately-held companies seeking to go public,
the Company is currently becoming active in its original concept as a
consultation by mail enterprise. At the current time, the Company is
entertaining different proposals by entities to market their products via the
worldwide net.
Noncash Securities Issuance
- ---------------------------
Shares of common stock issued for other than cash have been assigned amounts
equivalent to the fair value of the services received in exchange.
Accounting Method
- -----------------
The Company's financial statements are prepared using the accrual method of
accounting.
Income (Loss) per Share
- -----------------------
The computation of income (loss) per share of common stock is based on the
weighted average number of shares outstanding during the periods presented.
Statement of Cash Flows
- -----------------------
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents for purposes of the
statement of cash flows.
10
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (September 11, 1985) TO OCTOBER 31, 1996
(See Accountants' Compilation Report)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BUSINESS ACTIVITY -
- -------------------------------------------------------------------------
Continued
Income Taxes
- ------------
Effective January 1, 1993, Omni Answers, Inc. adopted SFAS No. 109,
"Accounting for Incomes Taxes," which requires a liability approach to financial
accounting and reporting for incomes taxes. The differences between the
financial statement and tax bases of assets and liabilities is determined
annually. Deferred income tax assets and liabilities are computed for those
differences that have future tax consequences using the currently enacted tax
laws and rates that apply to the periods in which they are expected to affect
taxable income. Valuation allowances are established, if necessary, to reduce
deferred tax asset accounts to the amounts that will more likely than not be
realized. Income tax expense is the current tax payable or refundable for the
period, plus or minus the net change in the deferred tax asset and liability
accounts.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Company to make estimates and assumptions
that affect (1) the reported amounts of assets and liabilities, (2) disclosure
of contingent assets and liabilities at the date of the financial statements,
and (3) reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE 2 - BASIS OF PRESENTATION AND CONSIDERATIONS RELATED TO CONTINUED EXISTENCE
- --------------------------------------------------------------------------------
The Company's financial statements have been presented on the basis that it
is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company
incurred net losses of $276,288 for the period from inception (September 11,
1985) to October 31, 1996. This factor, among others, raises substantial doubt
as to the Company's ability to obtain additional long-term debt and/or equity
financing and achieve profitable operations. The financial statements do not
include any adjustments relating to the recoverability and classification of
recorded asset amounts or the amounts and classification of liabilities that
might be necessary should the Company be unable to continue in existence. In
the interim period, management is still seeking additional investment capital to
support its entrance into a new business venture and provide the capital needed
to operate.
11
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (September 11, 1985) TO OCTOBER 31, 1996
(See Accountants' Compilation Report)
NOTE 3 - DEVELOPMENT STAGE COMPANY
- ----------------------------------
The Company is a development stage company as defined in Financial Accounting
Standards Board Statement No. 7. It has yet to commence full-scale operations.
From inception through the date of these financial statements, the Company did
not have any revenues or earnings. At the current time, the Company has no
assets or liabilities.
If a public market develops for the Company's shares, certain privately-held
companies or business opportunities may be interested in merging with the
Company because the Company's securities would be publicly traded, thereby
allowing the privately-held company to become publicly traded through the
merger.
At the current time, the Company has no agreement, understanding or
arrangement to acquire or participate in any specific business opportunity,
however, it has identified several entities who are interested in its worldwide
marketing concepts. The Company's potential future success depends upon its
management and its continuing search for a business opportunity.
NOTE 4 - INCOME TAXES
- ---------------------
Deferred income taxes arise from temporary differences resulting from income
and expense items reported for financial accounting and tax purposes in
different periods. Deferred taxes are classified as current or noncurrent,
depending on the classification of the assets and liabilities to which they
relate. Deferred taxes arising from temporary differences that are not related
to an asset or liability are classified as current or noncurrent depending on
the periods in which the temporary differences are expected to reverse.
Amounts for deferred tax assets are as follows:
<TABLE>
<CAPTION>
Six Month Inception
Period Ended Through
October 31, October 31,
1996 1996
------------ -----------
<S> <C> <C>
Deferred tax asset, net of valuation
allowance of $1,499 for the six month
period ended October 31, 1996 and
$41,443 from inception through
October 31, 1996 $ - $ -
============ ===========
</TABLE>
12
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (September 11, 1985) TO OCTOBER 31, 1996
(See Accountants' Compilation Report)
NOTE 4 - INCOME TAXES - Continued
- ---------------------
The following temporary differences gave rise to the deferred tax asset at
October 31, 1996:
<TABLE>
<CAPTION>
Six Month Inception
Period Ended Through
October 31, October 31,
1996 1996
------------ -----------
<S> <C> <C>
Tax benefit of net operating loss
carryforward $ 1,499 $ 41,443
Valuation allowance for judgement of
realizability of net operating loss
carryforward in future years (1,499) (41,443)
</TABLE>
Because the Company has not generated taxable income since its inception,
no provision for income taxes has been made.
The Company can carry forward its $276,288 net operating loss as follows:
<TABLE>
<CAPTION>
Year Ended
December 31,
- ------------
<S> <C>
2001 $190,700
2002 6,030
2003 -
2004 2,000
2005 -
2006 -
2007 -
2008 -
2009 -
2010 6,180
2011 61,385
2011 9,993
--------
$276,288
========
</TABLE>
13
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (September 11, 1985) TO OCTOBER 31, 1996
(See Accountants' Compilation Report)
NOTE 5 - PUBLIC OFFERING OF COMMON STOCK
- ----------------------------------------
The Company is currently in the process of completing a limited public
offering of up to 300,000 shares of its common stock. The offering began in
October, 1995 and is to expire on August 31, 1996. To date, the Company has
issued 40,400 shares of common stock in connection with this offering at an
offering price of $.25 per share. The gross proceeds to the Company from this
offering was $10,100. The cost of the offering was nominal and was expensed as
ordinary expenses in the year incurred.
NOTE 6 - FINANCIAL INSTRUMENTS
- ------------------------------
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of temporary cash investments.
The Company places its temporary cash investments with a financial institution
and limits the amount of credit exposure to any one financial institution. As
of May 1, 1996, the Company had no significant concentrations of credit risk.
NOTE 7 - EARNINGS PER SHARE
- ---------------------------
Primary earnings per share amounts are computed based on the weighted
average number of shares actually outstanding since there are no convertible
securities or other stock options that are considered to be common stock
equivalents. Fully diluted earnings per share amounts are not presented because
there is no material dilution.
NOTE 8 - SUBSEQUENT EVENTS
- --------------------------
On December 10, 1996, the Company issued 2,500,000 shares of common
stock for cash of $2,500.
On December 17, 1996, the Company changed its name to Premier Ventures
& Exploration, Inc., authorized the sale of 5,105,400 shares of stock for cash
at $.001 per share, and amended the Company's articles of incorporation for the
name change and a change in the authorized capital of the Company, increasing
the authorized shares from 10,000,000 to 50,000,000.
On January 10, 1997, the Company entered into an Exchange Agreement
with New Directions Manufacturing, Inc.-Nevada whereby New Directions became a
wholly-owned subsidiary of the Company.
14
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (September 11, 1985) TO OCTOBER 31, 1996
(See Accountants' Compilation Report)
NOTE 8 - SUBSEQUENT EVENTS - Continued
- --------------------------
On February 25, 1997, the Company entered into a Plan of Merger with
New Directions to change the corporate domicile of the Company from Louisiana to
Nevada. Pursuant to the terms of the merger, the Company's shareholders
received one share of New Directions for every share of the Company's common
stock they held, all the Company's stock was canceled, and the Company was
merged with and into New Directions, leaving New Directions as the surviving
entity. The merger was effective on April 16, 1997.
Prior to the merger, on December 23, 1996, the Company effected a
reverse stock split of 415 to 1 and issued approximately 1,400,000 shares of
common stock at $.01 per share.
15
<PAGE>
[LETTERHEAD OF EVERS & COMPANY, LTD.]
Independent Auditors' Report
----------------------------
The Board of Directors
New Directions Manufacturing, Inc.:
We have audited the accompanying balance sheet of New Directions Manufacturing,
Inc. as of June 30, 1996 and the related statements of operations and cash flows
for the years ended June 30, 1996 and 1995. 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.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of New Directions Manufacturing,
Inc. as of June 30, 1996 and the results of its operations and its cash flows
for the years ended June 30, 1996 and 1995, in conformity with generally
accepted accounting principles.
Evers & Company, Ltd.
June 26, 1997
Phoenix, Arizona
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC.
Balance Sheet
June 30, 1996
<TABLE>
<S> <C>
Assets
------
Current assets:
Cash and cash equivalents $243,951
Accounts receivable, net of allowance
for doubtful accounts of $26,000 345,446
Inventory 211,000
Prepaid expenses 7,790
--------
Total current assets 808,187
--------
Property and equipment, net 62,363
Deferred income taxes 11,000
Deposits 8,520
--------
$890,070
========
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Current portion of capital lease obligations $ 23,418
Accounts payable 143,764
Commissions payable 16,590
Advances from officers 457
Accrued payroll and payroll taxes 3,146
Income taxes payable 44,000
--------
Total current liabilities 231,375
--------
Capital lease obligations, net of current portion 37,550
--------
Stockholders' equity
Common stock, $1.00 par value. 1,000,000 shares
authorized; 1,000 shares issued and outstanding 1,000
Retained earnings 620,145
--------
621,145
--------
Commitments and subsequent events (see notes)
$890,070
========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC.
Statements of Operations
For the years ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Sales, net of returns and allowances $5,802,480 $4,607,085
---------- ----------
Cost of sales:
Materials 3,747,999 2,902,099
Labor 758,343 590,822
Overhead 264,004 231,466
---------- ----------
4,770,346 3,724,387
---------- ----------
Gross profit 1,032,134 882,698
---------- ----------
Selling, general and administrative expenses:
Officers' compensation 560,122 510,144
Administrative salaries 59,887 88,403
Advertising and promotion 102,706 103,965
Commissions 84,003 51,582
Retirement plan contribution - 40,000
Travel and entertainment 11,898 21,210
Contributions 25,887 20,419
Vehicle leasing 18,310 16,155
Other 81,846 67,803
---------- ----------
944,659 919,681
---------- ----------
Income (loss) from operations 87,475 (36,983)
---------- ----------
Other income (expense)
Interest income 5,774 6,369
Interest expense (10,171) (10,756)
---------- ----------
(4,397) (4,387)
---------- ----------
Net income (loss) before income taxes
(benefit) 83,078 (41,370)
Provision for income taxes (benefit) 33,000 (11,000)
---------- ----------
Net income (loss) 50,078 (30,370)
Retained earnings, beginning 570,067 600,437
---------- ----------
Retained earnings, ending $ 620,145 $ 570,067
========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC.
Statements of Cash Flows
Years ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 50,078 $(30,370)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 27,496 30,961
Decrease (increase) in receivables (29,988) 142,451
Increase in inventory - (20,000)
Increase in prepaid expenses (7,790) 6,738
Increase in accounts payable 11,075 17,462
Increase (decrease) in commissions payable 3,375 (3,520)
Decrease in accrued payroll and payroll taxes (3,104) (12,349)
Decrease in officer advances - (52,086)
Increase (decrease) in accrued retirement
contribution (40,000) 5,000
Increase (decrease) in income taxes payable 33,000 (11,000)
-------- --------
Net cash provided by operating activities 44,142 73,287
-------- --------
Cash flows for investing activities:
Acquisition of property and equipment - (4,985)
-------- --------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC.
Statements of Cash Flows, Continued
For the years ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Cash flows for financing activities:
Payment of capital lease obligations (19,491) (14,697)
-------- --------
Net increase in cash and cash equivalents 24,651 53,605
Cash and cash equivalents, beginning of period 219,300 165,695
-------- --------
Cash and cash equivalents, end of period $243,951 $219,300
======== ========
Supplemental disclosures of cash flow information:
- -------------------------------------------------
Cash paid during the period for:
Interest $10,171 $10,756
Income taxes
------- -------
</TABLE>
Supplemental schedule of noncash investing and financing activities:
- -------------------------------------------------------------------
During 1996 and 1995, the Company acquired equipment costing $15,018 and
$25,575, respectively using financing leases.
See accompanying notes to financial statements.
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC.
Notes to Financial Statements
June 30, 1996
(1) Summary of Significant Accounting Policies
------------------------------------------
(a) Basis of Presentations
----------------------
New Directions Manufacturing, Inc. (The Company) manufactures oak
furniture in Phoenix, Arizona and primarily sells to customers in
the western United States. The accompanying financial statements
were prepared in accordance with generally accepted accounting
principles which necessitate the use of management estimates in
preparing the statements.
(b) Cash Equivalents
----------------
Cash equivalents include money market accounts and other short-term
investments with an original maturity of three months or less.
(c) Inventory
---------
Inventory is stated at the lower of cost or market. Cost is
determined using the first-in, first-out method.
(d) Property and Equipment
----------------------
Property and equipment is recorded at cost and is being depreciated
over estimated useful lives of five years using the straight-line
method.
(e) Income Taxes
------------
The Company accounts for income taxes in accordance with Statement
of Financial Accounting Standards #109.
(2) Inventory
---------
Inventory consists of the following:
<TABLE>
<S> <C>
Raw materials $120,800
Work-in-process 74,500
Finished goods 15,700
--------
$211,000
========
</TABLE>
<PAGE>
(3) Property and Equipment
----------------------
Property and equipment consists of the following:
<TABLE>
<S> <C>
Machinery and equipment $203,572
Office furniture & equipment 18,463
--------
222,035
Less: Accumulated depreciation 159,672
--------
$ 62,363
========
</TABLE>
(4) Lease Commitments
-----------------
The Company leases its plant in Phoenix and showrooms in San Francisco and
North Carolina under non-cancelable operating leases. In addition to rent,
the leases generally require the Company to pay increases in the operating
expenses of the properties.
The Company also leases certain equipment, with a cost of $110,550 and
accumulated depreciation of $58,044, under non-cancelable financing
leases. Certain leases contain purchase options. The leases require the
Company to pay all operating expenses and taxes related to the equipment.
Future minimum lease obligations at June 30, 1996, are as follows:
<TABLE>
<CAPTION>
Year ending June 30, Capital Operating
-------------------- ------- ---------
<S> <C> <C>
1997 $31,552 $100,748
1998 22,894 59,773
1999 11,612
2000 8,013
2001 2,567
------- --------
76,638 $160,521
========
Less amounts representing interest
at rates ranging from 16% to 19% 15,670
-------
Present value of capital lease obligations 60,968
Current portion 23,418
-------
Capital lease obligations, net of
current portion $37,550
=======
</TABLE>
Rent expense for the years ended June 30, 1996 and 1995 was $99,627 and
$91,518, respectively.
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC.
Notes to Financial Statements
June 30, 1996
(5) Income Taxes
------------
Deferred income taxes consists of the following:
<TABLE>
<S> <C>
Leases capitalized for financial
statement purposes $ 3,400
Differences in tax and book
depreciation 7,600
-------
$11,000
=======
</TABLE>
(6) Profit Sharing Plan
-------------------
The Company adopted a profit sharing plan on January 1, 1992 which covers
substantially all full-time employees with more than one year of service.
Contributions to the plan are at the discretion of the board of directors.
No contributions were approved for the year ended June 30, 1996. The board
granted a $40,000 contribution during the year ended June 30, 1995.
Management intends to terminate the plan upon completion of the sale
described in note 8.
(7) Concentration of Risk
---------------------
As of June 30, 1996, the Company maintained cash accounts in a single
financial institution which exceeded federally insured limits by
approximately $230,000.
(8) Subsequent Sale of Shareholders' Interests
------------------------------------------
On July 17, 1996, the shareholders and the Company entered into an
agreement whereby the shareholders of New Directions will sell all of
their stock to a newly-formed corporation, New Directions Manufacturing,
Inc. The stock ownership of the new Company is substantially different
than that of the existing Company. The selling shareholders are to receive
cash of $1,480,000 at closing and will finance $800,000 over four years at
8% interest. The seller will retain all cash in the corporation on the
closing date and will be responsible for the payment of all payables
existing on the closing date. In addition, any excess of receivables over
payables which exceeds $300,000 (net receivables) at closing will be paid
to the sellers as those receivables are collected. Any shortage in net
receivables at closing will reduce the purchase price and the cash payment
required.
The agreement provides for a five-year covenant not-to-compete by the
original shareholders of New Directions Manufacturing, Inc.
<PAGE>
OMNI ANSWERS, INC.
AUDITED FINANCIAL STATEMENTS
MAY 1, 1996, AND MAY 31, 1995 AND 1994
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS
Balance Sheets 2
Income Statement 3
Statements of Cash Flows 4-5
Statements of Stockholders' Equity/Deficit 6-9
Notes to Financial Statements 10-14
</TABLE>
<PAGE>
[LETTERHEAD OF ALBRIGHT, PERSING & ASSOCIATES, LTD.]
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Shareholders and Board of Directors
Omni Answers, Inc.
We have audited the accompanying balance sheets of Omni Answers, Inc. (a
development stage company) as of May 1, 1996 and May 31, 1995 and 1994, and the
related statements of income, stockholders' equity and cash flows for the period
ended May 31, 1996 and the years ended May 31, 1995 and 1994 and for the period
from inception (September 11, 1985) to May 1, 1996. 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.
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 provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Omni Answers, Inc. (a
development stage company) as of May 1, 1996, and May 31, 1995 and 1994, and the
results of its operations and its cash flows for the period ended May 1, 1996,
and the years ended May 31, 1995 and 1994 and for the period from inception
(September 11, 1985) to May 1, 1996 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses from operations
that raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to this matter are to raise additional capital and
acquire any and all types of assets, properties and businesses, which management
expects will result in profitable operations for the Company. The financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts and classification of liabilities that
might result from the outcome of these uncertainties.
/s/ ALRBIGHT, PERSING & ASSOCIATES, LTD.
Reno, Nevada
May 30, 1996
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
MAY 1, 1996, AND MAY 31, 1995 AND 1994
(See Independent Auditors' Report)
<TABLE>
<CAPTION>
ASSETS
Eleven
Month
Period
Ended Years Ended May 31
May 1, --------------------------
1996 1995 1994
--------- --------- -----------
<S> <C> <C> <C>
Current Assets
Cash $ 10,010 $ -- $ --
--------- --------- ----------
Other Assets
Deferred tax asset, net of valuation
allowance -- -- --
--------- --------- ----------
Total Assets $ 10,010 $ -- $ --
========= ========= ==========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY/DEFICIT
Current Liabilities
Advances from stockholders $ 20 $ -- $ --
--------- --------- ==========
Stockholders' Equity/Deficit
Common stock, no par value
authorized 10,000,000 shares,
issued and outstanding 2,394,600
shares at May 1, 1996,
2,109,100 at May 31, 1995,
and 2,047,300 at May 31, 1994 239,460 210,910 204,730
Additional paid-in-capital 36,825 (6,000) (6,000)
Deficit accumulated during the develop-
ment stage (266,295) (204,910) (198,730)
--------- --------- ==========
9,990 -- --
--------- --------- ==========
Total Liabilities and Stockholders'
Equity $ 10,010 $ -- $ --
========= ========= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
INCOME STATEMENT
FOR THE PERIOD ENDED MAY 1, 1996, THE YEARS ENDED MAY 31, 1995
AND 1994, AND INCEPTION (September 11, 1985) TO MAY 1, 1996
(See Independent Auditors' Report)
<TABLE>
<CAPTION>
Eleven
Month
Period Cumulative
Ended Years Ended May 31 During
May 1, ------------------------ Development
1996 1995 1994 Stage
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Net Sales $ - $ - $ - $ -
---------- ---------- ---------- ----------
Cost of Goods Sold - - - -
---------- ---------- ---------- ----------
Gross Profit - - - -
---------- ---------- ---------- ----------
Costs and expenses
Bank Charges 15 - - -
Gas - - - -
Miscellaneous - - - -
Office Expense - - - -
Printing - - - -
Professional Services 61,370 6,180 - 266,185
Telephone - - - -
Travel - - - -
Typesetting - - - -
---------- ---------- ---------- ----------
61,385 6,180 - 266,185
---------- ---------- ---------- ----------
Net (loss) before income taxes (61,385) (6,180) - (266,185)
Income Taxes - - - -
---------- ---------- ---------- ----------
Net (loss) $ (61,385) $ (6,180) $ - $ (266,185)
========== ========== ========== ==========
Net income (loss) per
common share
Continuing operations $ (.03) $ (.00) $ - $ (.13)
========== ========== ========== ==========
Weighted average
shares outstanding 2,136,548 2,098,240 2,047,300 2,014,397
========== =========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE PERIOD ENDED MAY 1, 1996, THE YEARS ENDED MAY 31, 1995
AND 1994, AND INCEPTION (September 11, 1985) TO MAY 1, 1996
(See Independent Auditors' Report)
<TABLE>
<CAPTION>
Eleven
Month
Period Cumulative
Ended Years Ended May 31 During
May 1, ---------------------- Development
1996 1995 1994 Stage
-------- -------- ---------- ---------
<S> <C> <C> <C> <C>
Cash Flows from/(for) Operating Activities:
Continuing operations
Net income (loss) $(61,385) $ (6,180) $ - $(266,185)
-------- -------- ---------- ---------
Noncash items included in net income (loss)
Stock issued for professional services
rendered 61,275 6,180 - 266,185
Changes in assets and liabilities:
Increase in deferred tax asset (9,208) (927) - (39,928)
Increase in valuation allowance 9,208 927 - 39,928
-------- -------- ---------- ---------
Net Adjustments 61,275 6,180 - 266,185
-------- -------- ---------- ---------
Cash Provided (Used) by
Operating Activities (110) - - -
-------- -------- ---------- ---------
Cash Flows from/(for) Investing Activities:
Proceeds from issuance of common stock,
including paid-in capital 10,100 - - -
-------- -------- ---------- ---------
Cash Provided by Investing
Activities 10,100 - - -
-------- -------- ---------- ---------
Cash Flows from/(for) Financing Activities:
Proceeds from stockholder advances 20 - - -
-------- -------- ---------- ----------
Cash Provided by Investing
Activities 20 - - -
-------- -------- ---------- ----------
Net change in cash 10,010 - - -
Cash at beginning of period - - - -
-------- -------- ---------- ----------
Cash at end of period $ 10,010 $ - $ - $ -
======== ======== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE PERIOD ENDED MAY 1, 1996, THE YEARS ENDED MAY 31, 1995
AND 1994, AND INCEPTION (September 11, 1985) TO MAY 1, 1996
(See Independent Auditors' Report)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
Eleven
Month
Period Cumulative
Ended Years Ended May 31, During
May 1, ------------------- Development
1996 1995 1994 Stage
------ ------- -------- -----------
<S> <C> <C> <C> <C>
Interest Paid $ - $ - $ - $ -
====== ======= ======== ===========
Income Taxes Paid $ - $ - $ - $ -
====== ======= ======== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY/DEFICIT
FOR THE PERIOD ENDED MAY 1, 1996, THE YEARS ENDED MAY 31, 1995
AND 1994, AND INCEPTION (September 11, 1985) TO MAY 1, 1996
(See Independent Auditors' Report)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the
--------------------- Paid-in Development
Shares Amount Capital Stage Total
------- -------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
Issuance of shares of common stock on
August 5, 1985, for professional
services rendered 175,000 $17,500 $ - $ - $17,500
Issuance of shares of common stock on
August 15, 1985, for professional
services rendered 175,000 17,500 - - 17,500
Issuance of shares of common stock on
November 5, 1985, for professional
services rendered 500,000 50,000 - - 50,000
Issuance of shares of common stock on
November 7, 1985, for professional
services rendered 200,000 20,000 - - 20,000
Issuance of shares of common stock on
November 9, 1985, for professional
services rendered 25,000 2,500 - - 2,500
Issuance of shares of common stock on
November 16, 1985, for professional
services rendered 500,000 50,000 - - 50,000
Issuance of shares of common stock on
November 17, 1985, for professional
services rendered 250,000 25,000 - - 25,000
Issuance of shares of common stock on
November 22, 1985, for professional
services rendered 50,000 5,000 - - 5,000
Issuance of shares of common stock on
February 10, 1986, for professional
services rendered 2,000 200 - - 200
Issuance of shares of common stock on
February 11, 1986, for professional
services rendered 17,000 1,700 - - 1,700
Issuance of shares of common stock on
February 13, 1986, for professional
services rendered 11,000 1,100 - - 1,100
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY/DEFICIT
FOR THE PERIOD ENDED MAY 1, 1996, THE YEARS ENDED MAY 31, 1995
AND 1994, AND INCEPTION (September 11, 1985) TO MAY 1, 1996
(See Independent Auditors' Report)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the
--------------------------- Paid-in Development
Shares Amount Capital Stage Total
------------- ----------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Issuance of shares of common stock on
February 17, 1986, for professional
services rendered 1,000 100 - - 100
Issuance of shares of common stock on
February 20, 1986, for professional
services rendered 1,000 100 - - 100
Net loss for the year ended
May 31, 1986 - - - (190,700) (190,700)
Balance - May 31, 1986 1,907,000 190,700 - (190,700) -
Issuance of shares of common stock on
August 15, 1986, for professional
services rendered 200 20 - - 20
Issuance of shares of common stock on
November 17, 1986, for deemed
donations 60,000 6,000 (6,000) - -
Issuance of shares of common stock on
November 17, 1986, for professional
services rendered 100 10 - - 10
Issuance of shares of common stock on
November 19, 1986, for professional
services rendered 10,000 1,000 - - 1,000
Issuance of shares of common stock on
December 1, 1986, for professional
services rendered 50,000 5,000 - - 5,000
Net loss for the year ended May 31, 1987 - - - (6,030) (6,030)
--------- ------- ------ -------- -------
Balance - May 31, 1987 and May 31, 1988 2,027,300 202,730 (6,000) (196,730) -
Issuance of shares of common stock on
February 16, 1989, for professional
services rendered 20,000 2,000 - - 2,000
Net loss for the year ended May 31, 1989 - - - (2,000) (2,000)
--------- ------- ------ -------- -------
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY/DEFICIT
FOR THE PERIOD ENDED MAY 1, 1996, THE YEARS ENDED MAY 31, 1995
AND 1994, AND INCEPTION (September 11, 1985) TO MAY 1, 1996
(See Independent Auditors' Report)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the
--------------------- Paid-in Development
Shares Amount Capital Stage Total
--------- -------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
Balance - May 31, 1989, 1990, 1991, 1992
1993 and 1994 2,047,300 204,730 (6,000) (198,730) -
Issuance of shares of common stock on
July 30, 1994, for professional
services rendered 50,000 5,000 - - 5,000
Issuance of shares of common stock on
August 15, 1994, for professional
services rendered 9,000 900 - - 900
Issuance of shares of common stock on
September 8, 1994, for professional
services rendered 2,800 280 - - 280
Net loss for the year ended May 31, 1995 - - - (6,180) (6,180)
--------- -------- ------ -------- ------
Balance - May 31, 1995 2,109,100 210,910 (6,000) (204,910) -
Issuance of shares of common stock on
August 3, 1995 for professional
services rendered 1,000 100 150 - 250
Issuance of shares of common stock on
December 2, 1995, for professional
services rendered 1,000 100 150 - 250
Issuance of shares of common stock on
December 20, 1995, for professional
services rendered 54,500 5,450 8,175 - 13,625
Issuance of shares of common stock on
March 22, 1996, for professional
services rendered and cash 10,000 1,000 1,500 - 2,500
Issuance of shares of common stock on
April 8, 1996, for professional
services rendered and cash 10,000 1,000 1,500 - 2,500
Issuance of shares of common stock on
April 12, 1996, for professional
services rendered and cash 10,000 1,000 1,500 - 2,500
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY/DEFICIT
FOR THE PERIOD ENDED MAY 1, 1996, THE YEARS ENDED MAY 31, 1995
AND 1994, AND INCEPTION (September 11, 1985) TO MAY 1, 1996
(See Independent Auditors' Report)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the
----------------------- Paid-in Development
Shares Amount Capital Stage Total
------- ---------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
Issuance of shares of common stock on
April 13, 1996, for professional
services rendered and cash 20,000 2,000 3,000 - 5,000
Issuance of shares of common stock on
April 22, 1996, for professional
services rendered and cash 24,000 2,400 3,600 - 6,000
Issuance of shares of common stock on
April 30, 1996, for professional
services rendered and cash 20,000 2,000 3,000 - 5,000
Issuance of shares of common stock on
April 30, 1996, for professional
services rendered 135,000 13,500 20,250 - 33,750
Net loss for the period ended May 1, 1996 - - - (61,385) (61,385)
--------- -------- ------- --------- --------
Balance - May 1, 1996 2,394,600 $239,460 $36,825 $(266,295) $ 9,990
========= ======== ======= ========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (September 11, 1985) TO MAY 1, 1996
(See Independent Auditors' Report)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BUSINESS ACTIVITY
- -------------------------------------------------------------------------
This summary of significant accounting policies of Omni Answers, Inc. (the
Company) is presented to assist in understanding the Company's financial
statements. The financial statements and notes are representations of the
Company's management, which is responsible for their integrity and objectivity.
These accounting policies conform to generally accepted accounting principles
and have been consistently applied in the preparation of the financial
statements.
Business Activity
- -----------------
The Company, a Louisiana corporation located in Mansura, Louisiana was
incorporated on September 11, 1985, and is currently in the development stage.
While the purpose for organizing the Company was to provide a shell corporation
for possible future mergers with privately-held companies seeking to go public,
the Company is currently becoming active in its original concept as a
consultation by mail enterprise. At the current time, the Company is
entertaining different proposals by entities to market their products via the
worldwide net.
Noncash Securities Issuance
- ---------------------------
Shares of common stock issued for other than cash have been assigned amounts
equivalent to the fair value of the services received in exchange.
Accounting Method
- -----------------
The Company's financial statements are prepared using the accrual method of
accounting.
Income (Loss) per Share
- -----------------------
The computation of income (loss) per share of common stock is based on the
weighted average number of shares outstanding during the periods presented.
Statement of Cash Flows
- -----------------------
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents for purposes of the
statement of cash flows.
10
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (September 11, 1985) TO MAY 1, 1996
(See Independent Auditors' Report)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BUSINESS ACTIVITY -
- -------------------------------------------------------------------------
Continued
Income Taxes
- ------------
Effective January 1, 1993, Omni Answers, Inc. adopted SFAS No. 109,
"Accounting for Incomes Taxes," which requires a liability approach to financial
accounting and reporting for incomes taxes. The differences between the
financial statement and tax bases of assets and liabilities is determined
annually. Deferred income tax assets and liabilities are computed for those
differences that have future tax consequences using the currently enacted tax
laws and rates that apply to the periods in which they are expected to affect
taxable income. Valuation allowances are established, if necessary, to reduce
deferred tax asset accounts to the amounts that will more likely than not be
realized. Income tax expense is the current tax payable or refundable for the
period, plus or minus the net change in the deferred tax asset and liability
accounts.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Company to make estimates and assumptions
that affect (1) the reported amounts of assets and liabilities, (2) disclosure
of contingent assets and liabilities at the date of the financial statements,
and (3) reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE 2 - BASIS OF PRESENTATION AND CONSIDERATIONS RELATED TO CONTINUED EXISTENCE
- --------------------------------------------------------------------------------
The Company's financial statements have been presented on the basis that it
is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company
incurred net losses of $266,295 for the period from inception (September 11,
1985) to May 1, 1996. This factor, among others, raises substantial doubt as to
the Company's ability to obtain additional long-term debt and/or equity
financing and achieve profitable operations. The financial statements do not
include any adjustments relating to the recoverability and classification of
recorded asset amounts or the amounts and classification of liabilities that
might be necessary should the Company be unable to continue in existence. In
the interim period, management is still seeking additional investment capital to
support its entrance into a new business venture and provide the capital needed
to operate.
11
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (September 11, 1985) TO MAY 1, 1996
(See Independent Auditors' Report)
NOTE 3 - DEVELOPMENT STAGE COMPANY
- ----------------------------------
The Company is a development stage company as defined in Financial Accounting
Standards Board Statement No. 7. It has yet to commence full-scale operations.
From inception through the date of these financial statements, the Company did
not have any revenues or earnings. At the current time, the Company has no
assets or liabilities.
If a public market develops for the Company's shares, certain privately-held
companies or business opportunities may be interested in merging with the
Company because the Company's securities would be publicly traded, thereby
allowing the privately-held company to become publicly traded through the
merger.
At the current time, the Company has no agreement, understanding or
arrangement to acquire or participate in any specific business opportunity,
however, it has identified several entities who are interested in its worldwide
marketing concepts. The Company's potential future success depends upon its
management and its continuing search for a business opportunity.
NOTE 4 - INCOME TAXES
- ---------------------
Deferred income taxes arise from temporary differences resulting from income
and expense items reported for financial accounting and tax purposes in
different periods. Deferred taxes are classified as current or noncurrent,
depending on the classification of the assets and liabilities to which they
relate. Deferred taxes arising from temporary differences that are not related
to an asset or liability are classified as current or noncurrent depending on
the periods in which the temporary differences are expected to reverse.
Amounts for deferred tax assets are as follows:
<TABLE>
<CAPTION>
Eleven Month
Period Ended Year Ended May 31,
May 1, ------------------------
1996 1995 1994
------------- -------- --------
<S> <C> <C> <C>
Deferred tax asset, net of valuation
allowance of $39,944 in 1996, $30,737
in 1995 and $29,810 in 1994 $ - $ - $ -
============= ======== =======
</TABLE>
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (September 11, 1985) TO MAY 1, 1996
(See Independent Auditors' Report)
NOTE 4 - INCOME TAXES - Continued
- ---------------------
The following temporary differences gave rise to the deferred tax asset at
March 31, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
Eleven Month
Period Ended Year Ended May 31,
May 1, ------------------
1996 1995 1994
------------ ------- -------
<S> <C> <C> <C>
Tax benefit of net operating loss
carryforward $ 9,208 $ 927 $ -
Valuation allowance for judgement of
realizability of net operating loss
carryforward in future years (9,208) (927) -
</TABLE>
Because the Company has not generated taxable income since its inception, no
provision for income taxes has been made.
The Company can carry forward its $266,295 net operating loss as follows:
Year Ended
December 31,
-------------
2001 $ 190,700
2002 6,030
2003 -
2004 2,000
2005 -
2006 -
2007 -
2008 -
2009 -
2010 6,180
2011 61,385
---------
$ 266,295
=========
13
<PAGE>
OMNI ANSWERS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (September 11, 1985) TO MAY 1, 1996
(See Independent Auditors' Report)
NOTE 5 - PUBLIC OFFERING OF COMMON STOCK
- ----------------------------------------
The Company is currently in the process of completing a limited public
offering of up to 300,000 shares of its common stock. The offering began in
October, 1995 and is to expire on August 31, 1996. To date, the Company has
issued 40,400 shares of common stock in connection with this offering at an
offering price of $.25 per share. The gross proceeds to the Company from this
offering was $10,100. The cost of the offering was nominal and was expensed as
ordinary expenses in the year incurred.
NOTE 6 - FINANCIAL INSTRUMENTS
- ------------------------------
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of temporary cash investments.
The Company places its temporary cash investments with a financial institution
and limits the amount of credit exposure to any one financial institution. As
of May 1, 1996, the Company had no significant concentrations of credit risk.
NOTE 7 - EARNINGS PER SHARE
- ---------------------------
Primary earnings per share amounts are computed based on the weighted
average number of shares actually outstanding since there are no convertible
securities or other stock options that are considered to be common stock
equivalents. Fully diluted earnings per share amounts are not presented because
there is no material dilution.
NOTE 8 - SUBSEQUENT EVENTS
- --------------------------
On May 20, 1996, the Company purchased a new computer for a total cost
of $5,000.
14
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
- -------- ------------------------------------------
The Nevada Corporation Law and the Company's Certificate of Incorporation
and Bylaws authorize indemnification of a director, officer, employee or agent
of the Company against expenses incurred by him or her in connection with any
action, suit, or proceeding to which such person is named a party by reason of
having acted or served in such capacity, except for liabilities arising from
such person's own misconduct or negligence in performance of duty. In addition,
even a director, officer, employee or agent of the Company who was found liable
for misconduct or negligence in the performance of duty may obtain such
indemnification if, in view of all the circumstances in the case, a court of
competent jurisdiction determines such person is fairly and reasonably entitled
to indemnification. Insofar as indemnification for liabilities arising under
the Securities Act of 1933 (the "Act") may be permitted to directors, officers,
or persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is therefore unenforceable.
Item 25. Other Expenses of Issuance and Distribution
- -------- -------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
SEC Registration Fee $ 1,531
Accounting Fees and Expenses $ 5,000
Legal Fees and Expenses $25,000
Printing Expenses $ 5,000
Miscellaneous $ 469
-------
Total $37,000
</TABLE>
Item 26. Recent Sales of Unregistered Securities
- -------- ---------------------------------------
On January 9, 1997, the Company commenced a private placement of 1,000,000
shares of Common Stock at $2.25 per share (the "Private Placement"). The
Private Placement was exempt from the registration provisions of the Act by
virtue of Section 4(2) of the Act, as transactions by an issuer not involving
any public offering. The securities issued pursuant to the Private Placement
were restricted securities as defined in Rule 144. The shares sold in the
Private Placement are being registered herein. The offering generated net
proceeds of approximately $1,909,686, net of offering costs and expenses of
$340,314. See the "Selling Shareholders" section of the Prospectus for a
complete list of the investors in the Private Placement.
On June 9, 1997, the Company issued 25,000 options to counsel, and on
September 15, 1997, the Company issued an additional 25,000 options to counsel
(for a total of 50,000 options) in exchange for services rendered. All options
are exercisable for five years at the option exercise price of $2.25 per Share.
The total of 50,000 Shares underlying the options to counsel are being
registered herein for resale only. The options are held in the name of Horwitz
& Beam, Inc., a California corporation, dba Horwitz & Beam and the Shares which
will be issued once the options are exercised will be issued in the name of
Horwitz & Beam, Inc., a California corporation, dba Horwitz & Beam.
Item 27. Exhibits
- -------- --------
Exhibit
-------
3.1 Articles of Incorporation of New Directions Manufacturing, Inc., a
Nevada corporation, dated January 9, 1997*
26
<PAGE>
<TABLE>
<C> <S>
3.2 Amendment to Articles of Incorporation of New Directions
Manufacturing, Inc., a Nevada corporation, dated May 29, 1997*
3.3 Bylaws of New Directions Manufacturing, Inc., dated May 29, 1997*
4 Option Agreement between New Directions Manufacturing, Inc. and
Horwitz & Beam, Inc., dated June 9, 1997*
4.1 Option Agreement between New Directions Manufacturing, Inc. and
Horwitz & Beam, Inc., dated September 15, 1997*
5 Opinion of Horwitz & Beam*
10.1 Employment Agreement, dated December 31, 1996, between New Directions
Manufacturing, Inc. and Donald A. Metke*
10.2 Employment Agreement, dated December 31, 1996, between New Directions
Manufacturing, Inc. and Jack Horner, Jr.*
10.3 Consulting Agreement, dated December 31, 1996, between New Directions
Manufacturing, Inc. and Sean F. Lee*
10.4 Lease Agreement, dated November 11, 1992 *
10.5 Plan of Merger between Premier Ventures, Inc. and New Directions
Manufacturing, Inc., dated February 25, 1997*
10.6 Articles of Merger between Premier Ventures, Inc. and New Directions
Manufacturing, Inc., dated March 14, 1997*
10.7 Stock Purchase Agreement between New Directions, Inc., an Arizona
corporation and the Lee Family Partnership, a limited partnership
organized under the laws of the State of Arizona, dated July 17, 1996*
10.8 Exchange Agreement between New Directions Manufacturing, Inc., a
Nevada corporation and Premier Ventures & Explorations, Inc., a Louisiana
corporation, dated January 10, 1997*
24.1 Consent of Horwitz & Beam (included in their opinion set forth in
Exhibit 5 hereto)*
24.2 Consent of Evers & Company, Ltd.
24.3 Consent of Albright, Persing & Associates, Ltd.
25 Power of Attorney (see signature page)
</TABLE>
____________
* Previously filed
Item 28. Undertakings
- ----------------------
The undersigned registrant hereby undertakes to:
(1) Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Company pursuant
to the foregoing provisions, or otherwise, the Company has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Company will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(2) File, during any period in which it offers or sells securities, a
post effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the Act;
(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the registration
statement; and
(iii) Include any additional or changed material information on the plan
of distribution.
27
<PAGE>
For determining liability under the Securities, treat each post-effective
amendment as a new registration statement of the securities offered, and the
offering of the securities at that time to be the initial bona fide offering.
28
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City of Phoenix,
State of Arizona on November 12, 1997.
NEW DIRECTIONS MANUFACTURING, INC.
By: *
----------------------------------------------------
Donald A. Metke, President, Chief Operating Officer,
Chief Financial Officer, Director
POWER OF ATTORNEY
Each person whose signature appears appoints Donald A. Metke as his agent
and attorney-in-fact, with full power of substitution to execute for him and in
his name, in any and all capacities, all amendments (including post-effective
amendments) to this Registration Statement to which this power of attorney is
attached. In accordance with the requirements of the Securities Act of 1933,
this Registration Statement was signed by the following persons in the
capacities and on the dates stated.
<TABLE>
Signature Title Date
--------- ----- ----
<S> <C> <C>
*
___________________ President, Chief Operating Officer, November 12, 1997
Donald A. Metke Chief Financial Officer, Director
*
____________________ Executive Vice President, Secretary, Director November 12, 1997
Jack Horner, Jr.
*
____________________ Director November 12, 1997
Sean F. Lee
</TABLE>
*By: /s/ DONALD A. METKE
-------------------
Donald A. Metke
Attorney in Fact
29
<PAGE>
EXHIBIT 24.2
CONSENT OF EVERS & COMPANY, LTD.
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the use in Amendment #3 to the Registration Statement of New
Directions Manufacturing, Inc. on Form SB-2 of our reports dated August 27, 1997
and November 20, 1996, appearing in the Prospectus, which is part of this
Registration Statement.
We also consent to the reference to us under the headings "Selected
Financial Data" and "Experts" in such Prospectus.
/s/ EVERS & COMPANY, LTD.
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EVERS & COMPANY, LTD.
Phoenix, Arizona
November 18, 1997
<PAGE>
EXHIBIT 24.3
CONSENT OF ALBRIGHT, PERSING & ASSOCIATES, LTD.
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the use in Amendment #3 to the Registration Statement of New
Directions Manufacturing, Inc. on Form SB-2 of our reports dated May 30, 1996
and November 10, 1997, appearing in the Prospectus, which is part of this
Registration Statement.
/s/ ALBRIGHT, PERSING & ASSOCIATES, LTD.
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ALBRIGHT, PERSING & ASSOCIATES, LTD.
Reno, Nevada
November 19, 1997
