<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
[X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended December 31, 1999, or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange
act of 1934 for the transition period from _____ to _____
Commission File No. 000-24757
FASHION DYNAMICS CORP.
(Name of Small Business Issuer as specified in its charter)
Nevada 88-0378451
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
2500 - 1177 West Hastings Street
Vancouver, British Columbia, Canada V6E 2K3
(Address of Principal Executive Offices and Zip Code)
Issuer's Telephone Number: (604) 608-1610
Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act: None
Check whether the issuer (1) filed all reports required to be filed by sections
13 or 15(d) of the Exchange Act during the past 12 months (or such shorter
period that the issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B in this form, and no disclosure will be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
The Registrant's revenues for its most recent fiscal year: $0.
The aggregate market value of voting stock held by non-affiliates: As of
January 15, 2000, the estimated aggregate market value of voting stock held by
nonaffiliates was $91,620.00 (assumes $0.01 per share, no actual trading
occurred on January 15, 2000).
As of December 31, 1999, the Registrant had outstanding 20,156,400 shares of
Common Stock, par value $0.001.
Documents incorporated by reference: None.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM NUMBER AND CAPTION Page
<S> <C>
Part I
1. Description of Business 3
2. Description of Properties 6
3. Legal Proceedings 7
4. Submission of Matters to a Vote of Security Holders 7
Part II
5. Market for Common Equity and Related Stockholder 8
Matters
6. Management's Discussion and Analysis of Financial 8
Condition and Results of Operations
7. Financial Statements 8
8. Changes in and Disagreements with Accountants 8
on Accounting and Financial Disclosure
Part III
9. Directors, Executive Officers, Promoters and Control 8
Persons; Compliance with Section 16(a) of the
Exchange Act
10. Executive Compensation 8
11. Security Ownership of Certain Beneficial Owners and 9
Management
12. Certain Relationships and Related Transactions 9
13. Exhibits and Reports on Form 8-K 9
</TABLE>
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FORWARD-LOOKING STATEMENT NOTICE
When used in this report, the words "may," "will," "expect," "anticipate,"
"continue," "estimate," "project," "intend," and similar expressions are
intended to identify forward-looking statements within the meaning of Section
27a of the Securities Act of 1933 and Section 21e of the Securities Exchange Act
of 1934 regarding events, conditions, and financial trends that may affect the
Company's future plans of operations, business strategy, operating results, and
financial position. Persons reviewing this report are cautioned that any
forward-looking statements are not guarantees of future performance and are
subject to risks and uncertainties and that actual results may differ materially
from those included within the forward-looking statements as a result of various
factors. Such factors are discussed under the headings "Item 1. Description of
Business," and "Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations," and also include general economic factors
and conditions that may directly or indirectly impact the Company's financial
condition or results of operations.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
General
For the past three years the Company has had no active business operations, and
has been seeking to acquire an interest in a business with long-term growth
potential. The Company was formed as a Nevada corporation in January 1996. It
has been an inactive corporation for at least the past three years.
It is emphasized that the business objectives discussed herein are extremely
general and are not intended to be restrictive on the discretion of the
Company's management.
In December of 1999 the Company approved a forward split of the currently issued
and outstanding stock of the Company on a 3.054:1 basis.
Selection of a Business
The Company anticipates that businesses for possible acquisition will be
referred by various sources, including its officers and directors, professional
advisors, securities broker-dealers, venture capitalists, members of the
financial community, and others who may present unsolicited proposals. The
Company will not engage in any general solicitation or advertising for a
business opportunity, and will rely on personal contacts of its officers and
directors and their affiliates, as well as indirect associations between them
and other business and professional people. By relying on "word of mouth", the
Company may be limited in the number of potential acquisitions it can identify.
Compensation to a finder or business acquisition firm may take various forms,
including one-time cash payments, payments based on a percentage of revenues or
product sales volume, payments involving issuance of securities (including those
of the Company), or any combination of these or other compensation arrangements.
Consequently, the Company is currently unable to predict the cost of utilizing
such services.
The Company will not restrict its search to any particular business, industry,
or geographical location, and management reserves the right to evaluate and
enter into any type of business in any location. The Company may participate in
a newly organized business venture or a more established company entering a new
phase of growth or in need of additional capital to overcome existing financial
problems. Participation in a new business venture entails greater risks since in
many instances management of such a venture will not have proved its ability,
the eventual market of such venture's product or services will likely not be
established, and the profitability of the
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venture will be unproved and cannot be predicted accurately. If the Company
participates in a more established firm with existing financial problems, it may
be subjected to risk because the financial resources of the Company may not be
adequate to eliminate or reverse the circumstances leading to such financial
problems. In seeking a business venture, the decision of management will not be
controlled by an attempt to take advantage of any anticipated or perceived
appeal of a specific industry, management group, product, or industry, but will
be based on the business objective of seeking long-term capital appreciation in
the real value of the Company.
The analysis of new businesses will be undertaken by or under the supervision of
the officers and directors. In analyzing prospective businesses, management will
consider, to the extent applicable, the available technical, financial, and
managerial resources; working capital and other prospects for the future; the
nature of present and expected competition; the quality and experience of
management services which may be available and the depth of that management; the
potential for further research, development, or exploration; the potential for
growth and expansion; the potential for profit; the perceived public recognition
or acceptance of products, services, or trade or service marks; name
identification; and other relevant factors.
The decision to participate in a specific business may be based on management's
analysis of the quality of the other firm's management and personnel, the
anticipated acceptability of new products or marketing concepts, the merit of
technological changes, and other factors which are difficult, if not impossible,
to analyze through any objective criteria. It is anticipated that the results of
operations of a specific firm may not necessarily be indicative of the potential
for the future because of the requirement to substantially shift marketing
approaches, expand significantly, change product emphasis, change or
substantially augment management, and other factors.
The Company will analyze all available factors and make a determination based on
a composite of available facts, without reliance on any single factor. The
period within which the Company may participate in a business cannot be
predicted and will depend on circumstances beyond the Company's control,
including the availability of businesses, the time required for the Company to
complete its investigation and analysis of prospective businesses, the time
required to prepare appropriate documents and agreements providing for the
Company's participation, and other circumstances.
Acquisition of a Business
In implementing a structure for a particular business acquisition, the Company
may become a party to a merger, consolidation, or other reorganization with
another corporation or entity; joint venture; license; purchase and sale of
assets; or purchase and sale of stock, the exact nature of which cannot now be
predicted. Notwithstanding the above, the Company does not intend to participate
in a business through the purchase of minority stock positions. On the
consummation of a transaction, it is likely that the present management and
shareholders of the Company will not be in control of the Company. In addition,
a majority or all of the Company's directors may, as part of the terms of the
acquisition transaction, resign and be replaced by new directors without a vote
of the Company's shareholders.
In connection with the Company's acquisition of a business, the present
shareholders of the Company, including officers and directors, may, as a
negotiated element of the acquisition, sell a portion or all of the Company's
Common Stock held by them at a significant premium over their original
investment in the Company. It is not unusual for affiliates of the entity
participating in the reorganization to negotiate to purchase shares held by the
present shareholders in order to reduce the number of "restricted securities"
held by persons no longer affiliated with the Company and thereby reduce the
potential adverse impact on the public market in the Company's Common Stock that
could result from substantial sales of such shares after the restrictions no
longer apply. As a result of such sales, affiliates of the entity participating
in the business reorganization with the Company would acquire a higher
percentage of equity ownership in the Company. Public investors will not receive
any portion of the premium that may be paid in the foregoing circumstances.
Furthermore, the Company's shareholders may not be afforded an opportunity to
approve or consent to any particular stock buy-out transaction.
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In the event sales of shares by present shareholders of the Company, including
officers and directors, is a negotiated element of a future acquisition, a
conflict of interest may arise because directors will be negotiating for the
acquisition on behalf of the Company and for sale of their shares for their own
respective accounts. Where a business opportunity is well suited for acquisition
by the Company, but affiliates of the business opportunity impose a condition
that management sell their shares at a price which is unacceptable to them,
management may not sacrifice their financial interest for the Company to
complete the transaction. Where the business opportunity is not well suited, but
the price offered management for their shares is high, management will be
tempted to effect the acquisition to realize a substantial gain on their shares
in the Company. Management has not adopted any policy for resolving the
foregoing potential conflicts, should they arise, and does not intend to obtain
an independent appraisal to determine whether any price that may be offered for
their shares is fair. Stockholders must rely, instead, on the obligation of
management to fulfill its fiduciary duty under state law to act in the best
interests of the Company and its stockholders.
It is anticipated that any securities issued in any such reorganization would be
issued in reliance on exemptions from registration under applicable federal and
state securities laws. In some circumstances, however, as a negotiated element
of the transaction, the Company may agree to register such securities either at
the time the transaction is consummated, under certain conditions, or at
specified times thereafter. Although the terms of such registration rights and
the number of securities, if any, which may be registered cannot be predicted,
it may be expected that registration of securities by the Company in these
circumstances would entail substantial expense to the Company. The issuance of
substantial additional securities and their potential sale into any trading
market that may develop in the Company's securities may have a depressive effect
on such market.
It may be expected that the parties to the business transaction will find it
desirable to structure the acquisition as a so-called "tax-free" event under
sections 351 or 368(a) of the Internal Revenue Code of 1986, (the "Code"). In
order to obtain tax-free treatment under section 351 of the Code, it would be
necessary for the owners of the acquired business to own 80% or more of the
voting stock of the surviving entity. In such event, the shareholders of the
Company would retain less than 20% of the issued and outstanding shares of the
surviving entity. Section 368(a)(1) of the Code provides for tax-free treatment
of certain business reorganizations between corporate entities where one
corporation is merged with or acquires the securities or assets of another
corporation. Generally, the Company will be the acquiring corporation in such a
business reorganization, and the tax-free status of the transaction will not
depend on the issuance of any specific amount of the Company's voting
securities. It is not uncommon, however, that as a negotiated element of a
transaction completed in reliance on section 368, the acquiring corporation
issue securities in such an amount that the shareholders of the acquired
corporation will hold 50% or more of the voting stock of the surviving entity.
Consequently, there is a substantial possibility that the shareholders of the
Company immediately prior to the transaction would retain less than 50% of the
issued and outstanding shares of the surviving entity. Therefore, regardless of
the form of the business acquisition, it may be anticipated that stockholders
immediately prior to the transaction will experience a significant reduction in
their percentage of ownership in the Company.
Notwithstanding the fact that the Company is technically the acquiring entity in
the foregoing circumstances, generally accepted accounting principles may
require that such transaction be accounted for as if the Company had been
acquired by the other entity owning the business and, therefore, will not permit
a write-up in the carrying value of the assets of the other company.
The manner in which the Company participates in a business will depend on the
nature of the business, the respective needs and desires of the Company and
other parties, the management of the business, and the relative negotiating
strength of the Company and such other management.
The Company will participate in a business only after the negotiation and
execution of appropriate written agreements. Generally such agreements will
require specific representations and warranties by all of the parties thereto,
will specify certain events of default, will detail the terms of closing and the
conditions which must be
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satisfied by each of the parties prior to such closing, will outline the manner
of bearing costs if the transaction is not closed, will set forth remedies on
default, and will include miscellaneous other terms.
Operation of Business After Acquisition
The Company's operation following its acquisition of a business will be
dependent on the nature of the business and the interest acquired. The Company
is unable to predict whether the Company will be in control of the business or
whether present management will be in control of the Company following the
acquisition. It may be expected that the business will present various risks,
which cannot be predicted at the present time.
Governmental Regulation
It is impossible to predict the government regulation, if any, to which the
Company may be subject until it has acquired an interest in a business. The use
of assets and/or conduct of businesses that the Company may acquire could
subject it to environmental, public health and safety, land use, trade, or other
governmental regulations and state or local taxation. In selecting a business in
which to acquire an interest, management will endeavor to ascertain, to the
extent of the limited resources of the Company, the effects of such government
regulation on the prospective business of the Company. In certain circumstances,
however, such as the acquisition of an interest in a new or start-up business
activity, it may not be possible to predict with any degree of accuracy the
impact of government regulation. The inability to ascertain the effect of
government regulation on a prospective business activity will make the
acquisition of an interest in such business a higher risk.
Competition
The Company will be involved in intense competition with other business
entities, many of which will have a competitive edge over the Company by virtue
of their stronger financial resources and prior experience in business. There is
no assurance that the Company will be successful in obtaining suitable
investments.
Employees
The Company is a development stage company and currently has no employees.
Executive officers, who are not compensated for their time contributed to the
Company, will devote only such time to the affairs of the Company as they deem
appropriate, which is estimated to be approximately 20 hours per month per
person. Management of the Company expects to use consultants, attorneys, and
accountants as necessary, and does not anticipate a need to engage any full-time
employees so long as it is seeking and evaluating businesses. The need for
employees and their availability will be addressed in connection with a decision
whether or not to acquire or participate in a specific business industry.
Recent Developments
On March 13, 2000, the Company entered into an Agreement and Plan of Merger
whereby the Company through a wholly owned subsidiary, will acquire all of
the outstanding capital stock of FED Corporation, a Delaware corporation, in
exchange for the issuance of shares and options to purchase an aggregate of
11,350,314 shares of common stock of the Company (the "Merger"). The business
of FED Corporation is the design, development and production of organic light
emitting diode micro displays and micro display modules. There can be no
assurance that the acquisition of FED Corporation will be consummated.
ITEM 2. DESCRIPTION OF PROPERTIES
The Company utilizes office space at 2500-1177 West Hastings Street, Vancouver,
British Columbia, Canada V6E 2K3 provided by Yiu Joe Cheung, an officer and
director. The Company does not pay rent for this office space.
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ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings, and to the best of its
knowledge, no such proceedings by or against the Company have been threatened.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders in the fourth quarter of
fiscal year 1999.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is currently quoted on the OTC Bulletin Board
operated by the National Association of Securities Dealers, Inc. Upon
consummation of a merger with an operating company, the Company will seek to
have its shares listed for trading on a national exchange or trading system.
There can be no assurance that such listing will be successfully obtained.
There has been no public trading market for the Company's shares for the past
two fiscal years.
Since its inception, no dividends have been paid on the Company's common stock.
The Company intends to retain any earnings for use in its business activities,
so it is not expected that any dividends on the common stock will be declared
and paid in the foreseeable future.
On December 31, 1999, there were approximately 430 holders of record of the
Company's Common Stock.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Years Ended December 31, 1999 and 1998
The Company had no revenue during the last two years. The Company had general
and administrative expenses of $3,477 in 1998, and incurred $18,452 of such
expenses in 1999. General and administrative expenses during 1999, consisted of
fees and related expenses associated with reviving the Company. In 1998 and 1999
the Company recognized no interest expenses. The Company realized a net loss of
$18,452 in 1999. The Company does not expect to generate any revenue unless and
until it acquires an interest in an operating company.
Liquidity and Capital Resources
At December 31, 1999, the Company had working capital deficit of $31,000. This
deficit is largely attributable to debt owed to affiliates of the Company, who
have not pressed the Company for payment in hopes the Company will locate a
business venture in which to participate that will serve as a resource for
payment of the obligations. The Company's current plan is to handle the
administrative and reporting requirements of a public company; and search for
potential businesses, products, technologies and companies for acquisition.
Further, there can be no assurance that the Company would be successful in
consummating any acquisition on favorable terms or that it will be able to
profitably manage the business, product, technology or company it acquires. The
Company's ability to pursue its plan is dependent on the continued forbearance
of its affiliated creditors and their willingness to advance additional funds to
the Company as needed.
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ITEM 7. FINANCIAL STATEMENTS
The financial statements of the Company appear at the end of this report
beginning with the Index to Financial Statements on page F-1.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no changes in or disagreements with accountants in the past
three years.
PART IV
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Directors and Officers
The following table sets forth the names, ages, and positions with the Company
for each of the directors and officers of the Company.
Name Age Positions Since
Yiu Joe Cheung 28 President, Secretary, 1999
Treasurer and Director
All directors hold office until the next annual meeting of stockholders and
until their successors are elected and qualify. Officers serve at the discretion
of the Board of Directors.
The following is information on the business experience of each director and
officer.
Over the past five years, Yiu Joe Cheung, has been advising, facilitating and
investing in various venture capital opportunities in North America and Asia.
ITEM 10. EXECUTIVE COMPENSATION
The Company has no agreement or understanding, express or implied, with any
officer, director, or principal stockholder, or their affiliates or associates,
regarding employment with the Company or compensation for services. There is no
understanding between the Company and any of its present stockholders regarding
the sale of a portion or all of the common stock currently held by them in
connection with any future participation by the Company in a business. There are
no other plans, understandings, or arrangements whereby any of the Company's
officers, directors, or principal stockholders, or any of their affiliates or
associates, would receive funds, stock, or other assets in connection with the
Company's participation in a business. No advances have been made or
contemplated by the Company to any of its officers, directors, or principal
stockholders, or any of their affiliates or associates.
There is no policy that prevents management from adopting a plan or agreement in
the future that would provide for cash or stock based compensation for services
rendered to the Company.
On acquisition of a business, current management is expected to resign and be
replaced by persons associated with the business acquired.
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ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
In December 1999, the board of directors approved a 3.054 to 1 forward split of
the Company's outstanding common stock. The following table sets forth as of
December 31, 1999, the number and percentage of the outstanding shares of common
stock which, according to the information supplied to the Company, were
beneficially owned by (i) each person who is currently a director of the
Company, (ii) each executive officer, (iii) all current directors and executive
officers of the Company as a group and (iv) each person who, to the knowledge of
the Company, is the beneficial owner of more than 5% of the outstanding common
stock. Except as otherwise indicated, the persons named in the table have sole
voting and dispositive power with respect to all shares beneficially owned,
subject to community property laws where applicable.
<TABLE>
<CAPTION>
Common Shares Percent of Class
<S> <C> <C>
PRINCIPAL
SHAREHOLDERS
Verus International Limited 10,994,400 54.5%
Lauriston House Suite 101
Lower Collymore Rock
St. Michael, Barbados
OFFICERS AND DIRECTORS
Yiu Joe Cheung -0- -0-
All officers and directors (1 person) -0- -0-
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
Copies of the following documents are included as exhibits to this report
pursuant to Item 601 of Regulation S-B.
Exhibits.
<TABLE>
<CAPTION>
Exhibit SEC Ref. Title of Document Location
No. No.
<S> <C> <C> <C>
1 (3)(i) Articles of Incorporation 1
2 (3)(ii) By-Laws 1
3 (27) Financial Data Schedules 2
</TABLE>
1 Items Nos. 1 and 2 are incorporated by reference to the Company's Form 10SB
filed with the Securities and Exchange Commission May 25, 1999.
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2 The Financial Data Schedule is presented only in the electronic filing with
the Securities and Exchange Commission.
FORM 8-K FILINGS
No reports on Form 8-K were filed in the last fiscal quarter of 1999.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
FASHION DYNAMICS CORP.
Date: March 14, 2000 By: /s/ Yiu Joe Cheung, President
In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Dated: March 14, 2000 /s/ Yiu Joe Cheung, Director
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FASHION DYNAMICS CORP.
(A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 1999
C O N T E N T S
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<S> <C>
Independent Auditors' Report F-2
Balance Sheet F-3
Statements of Operations F-4
Statements of Stockholders' Equity (Deficit) F-5
Statements of Cash Flows F-6
Notes to the Financial Statements F-7
</TABLE>
F-1
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Board of Directors February 17, 2000
FASHION DYNAMICS CORP.
Las Vegas, Nevada
I have audited the accompanying Balance Sheets of FASHION DYNAMICS
CORP. (A Development Stage Company), as of December 31, 1999, December 31, 1998,
and December 31, 1997, and the related statements of operations, stockholders'
equity and cash flows for the three years ended December 31, 1999, December 31,
1998, and December 31, 1997. These financial statements are the responsibility
of the Company's management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of FASHION DYNAMICS
CORP. (A Development Stage Company), as of December 31, 1999, December 31, 1998,
and December 31, 1997, and the results of its operations and cash flows for the
three years ended December 31, 1999, December 31, 1998, and December 31, 1997,
in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note #5 to the
financial statements, the Company has suffered recurring losses from operations
and has no established source of revenue. This raises substantial doubt about
its ability to continue as a going concern. Management's plan in regard to these
matters is described in Note #5. These financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Barry L. Friedman
Certified Public Accountant
1582 Tulita Drive
Las Vegas, NV 89123
702-361-8414
F-2
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BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
December December December
31, 1999 31, 1998 31, 1997
-------- -------- --------
<S> <C> <C> <C>
CURRENT ASSETS
Cash $ 0 $16,255 $19,145
------- ------- -------
TOTAL CURRENT ASSETS $ 0 $16,255 $19,145
------- ------- -------
FIXED ASSETS
Equipment (Net) $ 0 $ 2,103 $ 2,645
------- ------- -------
TOTAL FIXED ASSETS $ 0 $ 2,103 $ 2,645
------- ------- -------
OTHER ASSETS
Organization Costs (Net) $ 0 $ 94 $ 139
------- ------- -------
TOTAL OTHER ASSETS $ 0 $ 94 $ 139
------- ------- -------
TOTAL ASSETS $ 0 $18,452 $21,929
------- ------- -------
</TABLE>
The accompanying notes are an integral part of these financial statements
F-3
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BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December December December
31, 1999 31, 1998 31, 1997
-------- -------- --------
<S> <C> <C> <C>
CURRENT LIABILITIES $ 0 $ 0 $ 0
-------- -------- --------
TOTAL CURRENT LIABILITIES $ 0 $ 0 $ 0
-------- -------- --------
STOCKHOLDERS' EQUITY (Note #4)
Common stock
Par value $0.001
Authorized 25,000,000 shares
Issued and outstanding at
December 31, 1997 -
1,100,000 shares $ 1,100
December 31, 1998 -
6,600,000 shares $ 6,600
December 31, 1999 -
20,156,400 shares $ 20,156
Additional paid-in capital 10,844 24,400 29,900
Deficit Accumulated during
The Development Stage -31,000 -12,548 -9,071
-------- -------- --------
TOTAL STOCKHOLDERS' EQUITY $ 0 $ 18,452 $ 21,929
-------- -------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 0 $ 18,452 $ 21,929
-------- -------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements
F-4
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STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Year Year Year Jan. 23,1996
Ended Ended Ended (Inception)
Dec. 31, Dec. 31, Dec. 31, to Dec. 31,
1999 1998 1997 1999
<S> <C> <C> <C> <C>
INCOME
Revenue $ 0 $ 0 $ 0 $ 0
------------ ------------ ------------ ------------
EXPENSES
Accounting $ 5,575 $ 675 $ 850 $ 7,450
Bank Charges 0 0 43 113
Consulting Fees 0 200 0 200
Escrow Fees 0 0 500 500
Filing Fees 0 0 170 270
Legal Fees 0 2,000 1,905 3,905
Professional Fees 0 0 0 3,000
Sales Commission 0 0 1,250 1,250
Services 10,680 0 0 10,680
Transfer Fees 0 15 437 452
Travel 0 0 0 242
Abandoned Equipment 2,103 0 0 2,103
Depreciation 0 542 68 610
Amortization of
Organization Costs 94 41 45 225
------------ ------------ ------------ ------------
TOTAL EXPENSES $ 18,452 $ 3,477 $ 5,268 $ 31,000
------------ ------------ ------------ ------------
NET PROFIT/LOSS (-) $ -18,452 $ -3,477 $ -5,268 $ -31,000
------------ ------------ ------------ ------------
Net Profit/Loss(-)
per weighted share
(Note # 1) $ -.0009 $ -.0002 $ -.0003 $ -.0015
------------ ------------ ------------ ------------
Weighted average
Number of common
shares outstanding 21,156,400 21,156,400 21,156,400 21,156,400
------------ ------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements
F-5
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STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional Accumu-
Common Stock paid-in lated
Shares Amount Capital Deficit
------ ------ ------- -------
<S> <C> <C> <C> <C>
Balance,
December 31, 1996 600,000 $ 600 $ 5,400 $ -3,803
August 28, 1997
Issued for Cash 500,000 500 24,500
Net loss year ended
December 31, 1997 -5,268
Balance,
December 31, 1997 1,100,000 $ 1,100 $ 29,900 $ -9,071
March 30, 1998
Forward Stock Split
6:1 5,500,000 +5,500 -5,500
December 31, 1999
Forward Stock Split
3:054:1 13,556,400 +13,556 -13,556
Net Loss Year ended
December 31, 1999 -18452
---------- ---------- ----------
Balance,
December 31, 1999 20,156,400 $ 20,156 $ 10,844 $ -31,000
---------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements
F-6
<PAGE>
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year Year Year Jan. 23,1996
Ended Ended Ended (Inception)
Dec. 31, Dec. 31, Dec. 31, to Dec. 31,
1999 1998 1997 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net Loss $ -18,452 $ -3,477 $ -5,268 $ -31,000
Adjustment to
Reconcile net loss
To net cash provided
by operating
Activities
Amortization +94 +45 +45 +225
Depreciation +0 +542 +68 +610
Abandoned Equipment +2,103 0 0 +2,103
Changes in assets and
Liabilities
Organization Costs 0 0 0 -225
Equipment 0 0 -2713 -2,713
------- ------- ---------- ----------
NET CASH USED IN
OPERATING ACTIVITIES: $ -16,255 $ -2,890 $ -7,868 $ -31,000
CASH FLOWS FROM
INVESTING ACTIVITIES: 0 0 0 0
CASH FLOWS FROM
FINANCING ACTIVITIES:
Issuance of Common
Stock for Cash 0 0 +25,000 +31,000
------- ------- ---------- ----------
Net Increase (decrease) $ -16,255 $ -2,890 $ +17,132 $ 0
Cash,
Beginning of period: 16,255 19,145 2,013 0
------- ------- ---------- ----------
Cash, End of Period: $ 0 $16,255 $ 19,145 $ 0
------- ------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements
F-7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized January 23, 1996, under the laws of the State
of Nevada as Fashion Dynamics Corp. The Company currently has no
operations and in accordance with SFAS #7, is considered a development
company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING METHOD
The Company records income and expenses on the accrual method.
ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those
estimates.
CASH AND EQUIVALENTS
From time to time, the Company maintains cash balances in a
non-interest-bearing bank that currently does not exceed
federally insured limits. For the purpose of the statements
of cash flows, all highly liquid investments with the
maturity of three months or less are considered to be cash
equivalents. There are no cash equivalents as of December 31,
1999.
INCOME TAXES
Income taxes are provided for using the liability method of
accounting in accordance with Statement of Financial
Accounting Standards No. 109 (SFAS #109) "Accounting for
Income Taxes". A deferred tax asset or liability is recorded
for all temporary difference between financial and tax
reporting. Deferred tax expense (benefit) results from the net
change during the year of deferred tax assets and liabilities.
REPORTING ON COSTS OF START-UP ACTIVITIES
Statement of Position 98-5 ("SOP 98-5"), "Reporting on the
Costs of Start-Up Activities" which provides guidance on the
financial reporting of start-up costs and organization costs.
It requires most costs of start-up activities and organization
costs to be expensed as incurred. SOP 98-5 is effective for
fiscal years beginning after December 15, 1998. With the
adoption of SOP 98-5, there has been little or no effect on
the company's financial statements.
F-8
<PAGE>
DEPRECIATION
Depreciation is calculated on the equipment on the basis of
5-year straight line. During 1999 this equipment was
abandoned.
LOSS PER SHARE
Net loss per share is provided in accordance with Statement of
Financial Accounting Standards No. 128 (SFAS #128) "Earnings
Per Share". Basic loss per share is computed by dividing
losses available to common stockholders by the weighted
average number of common shares outstanding during the period.
Diluted loss per share reflects per share amounts that would
have resulted if dilative common stock equivalents had been
converted to common stock. As of September 30, 1999 the
Company had no dilative common stock equivalents such as stock
options.
YEAR END
The Company has selected December 31st as its year-end.
YEAR 2000 DISCLOSURE
The year 2000 issue is the result of computer programs being
written using two digits rather than four to define the
applicable year. Computer programs that have time sensitive
software may recognize a date using "00" as the year 1900
rather than the year 2000. This could result in a system
failure or miscalculations causing disruption of normal
business activities. Since the Company currently has no
operating business and does not use any computers, and since
it has no customers, suppliers or other constituents, there
are no material Year 2000 concerns.
NOTE 3 - INCOME TAXES
There is no provision for income taxes for the period ended December
31, 1999, due to the net loss and no state income tax in Nevada, the
state of the Company's domicile and operations. The Company's total
deferred tax asset as of December 31, 1999, is as follows:
<TABLE>
<S> <C>
Net operation loss carry forward $ 31,000
Valuation allowance $ 31,000
Net deferred tax asset $ 0
</TABLE>
The federal net operating loss carry forward will expire between 2016
and 2019.
This carry forward may be limited upon the consummation of a business
combination under IRC Section 381.
NOTE 4 - STOCKHOLDERS' EQUITY
COMMON STOCK
The authorized common stock of Fashion Dynamics Corp. consists of
25,000,000 shares with a par value of $0.001 per share.
PREFERRED STOCK
F-9
<PAGE>
Fashion Dynamics Corp. has no preferred stock.
On February 6, 1996, the Company issued 600,000 shares of its $0.001
par value common stock in consideration of $6,000.00 in cash under
Rule 504 of Regulation D under the Securities Act of 1933.
On August 27, 1997, the Company completed an offering of its Common
Stock under Rule 504 of Regulation D, for 500,000 Common Shares of
stock at $0.05 per share or $25,000.00.
On March 30, 1998, the Company forward split its Common Stock 6:1,
increasing the number of issued and outstanding Common Stock shares
from 1,100,000 to 6,600,000.
On December 31, 1999, the Company forward split its Common Stock
3:054:1, thus increasing the number of issued and outstanding Common
Stock shares from 6,600,000 to 20,156,400.
NOTE 5 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and liquidation of liabilities
in the normal course of business. However, the Company does not have
significant cash or other material assets, nor does it have an
established source of revenues sufficient to cover its operating costs
and to allow it to continue as a going concern. It is the intent of the
Company to seek a merger with an existing, operating company. Until
that time, the stockholders/officers and or directors have committed to
advancing the operating costs of the Company interest free if
necessary.
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property. An
officer of the corporation provides office services without charge.
Such costs are immaterial to the financial statements and accordingly,
have not been reflected therein. The officers and directors of the
Company are involved in other business activities and may, in the
future, become involved in other business opportunities. If a specific
business opportunity becomes available, such persons may face a
conflict in selecting between the Company and their other business
interests. The Company has not formulated a policy for the resolution
of such conflicts.
NOTE 7 - WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional
shares of common stock.
F-10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 20,156
<OTHER-SE> 10,844
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 18,452
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (18,452)
<INCOME-TAX> 0
<INCOME-CONTINUING> (18,452)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (18,452)
<EPS-BASIC> (.001)
<EPS-DILUTED> (.001)
</TABLE>
