SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
[ ] Transitional Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1997
Commission File No. 0-23535
SILVER QUEST, INC.
------------------
(Name of small business issuer in its charter)
Idaho 82-0391094
----- ----------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
15304 E. Monmouth Place
Aurora, Colorado 80015
(303) 693-0603
--------------
(Address, including zip code and telephone number, including area
code, of registrant's executive offices)
Securities registered under Section 12(b) of the Exchange Act:
none
Securities registered under to Section 12(g) of the Exchange Act:
Common Stock
------------
(Title of class)
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
Company was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes No x
---- ----
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure
will be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this
Form 10-KSB. x
----
Issuer's revenues for its most recent fiscal year: $ -0-
(Continued on Following Page)
<PAGE>
State the aggregate market value of the voting stock held by non-
affiliates, computed by reference to the price at which the stock
was sold, or the average bid and asked prices of such stock, as of
a specified date within the past 60 days: As of March 31, 1998: $0.
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date: As of
March 31, 1998 there were 345,000 shares of the Company's common
stock issued and outstanding.
Documents Incorporated by Reference: None
This Form 10-KSB consists of Twenty-Six pages.
Exhibit Index is Located at Page Twenty-Five.
2
<PAGE>
TABLE OF CONTENTS
FORM 10-KSB ANNUAL REPORT
SILVER QUEST, INC.
PAGE
----
Facing Page
Index
PART I
Item 1. Description of Business..................... 4
Item 2. Description of Property..................... 5
Item 3. Legal Proceedings........................... 5
Item 4. Submission of Matters to a Vote of
Security Holders........................ 5
PART II
Item 5. Market for the Registrant's Common Equity
and Related Stockholder Matters......... 6
Item 6. Management's Discussion and Analysis of
Financial Condition and Results of
Operations.............................. 6
Item 7 Financial Statements........................ 8
Item 8. Changes in and Disagreements on Accounting
and Financial Disclosure................ 19
PART III
Item 9. Directors, Executive Officers, Promoters
and Control Persons, Compliance with
Section 16(a) of the Exchange Act....... 19
Item 10. Executive Compensation...................... 20
Item 11. Security Ownership of Certain Beneficial
Owners and Management................... 21
Item 12. Certain Relationships and Related
Transactions............................ 22
PART IV
Item 13. Exhibits and Reports of Form 8-K............ 23
SIGNATURES............................................. 24
3
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Silver Quest, Inc. (the "Company"), was incorporated on April
11, 1983 under the laws of the State of Idaho, to engage in any
lawful corporate purpose. From inception of the Company through
January 1993, the Company was engaged in the mining business,
wherein it acquired mineral rights on land which management
believed had mining potential and thereafter leased these
properties. Since January 1993, the Company has been dormant, as
it undertook no other operations. Other than issuing shares to its
original shareholders, the Company never commenced any other
operational activities. As such, the Company can be defined as a
"shell" company, whose sole purpose at this time is to locate and
consummate a merger or acquisition with a private entity.
On December 23, 1997, the Company filed a registration
statement on Form 10-SB pursuant to the rules and regulations
included under the Securities Exchange Act of 1934, as amended,
wherein the Company caused to be registered its common stock. This
registration statement became effective 60 days thereafter;
however, the staff of the Commission has not, as of the date of
this report, completed its review of said registration statement.
The purpose of the registration statement was management's belief
that the primary attraction of the Company as a merger partner or
acquisition vehicle will be its status as a public company. Any
business combination or transaction will likely result in a
significant issuance of shares and substantial dilution to present
stockholders of the Company.
The proposed business activities described herein classify the
Company as a "blank check" company. Many states have enacted
statutes, rules and regulations limiting the sale of securities of
"blank check" companies in their respective jurisdictions.
Management does not intend to undertake any efforts to cause a
market to develop in the Company's securities until such time as
the Company has successfully implemented its business plan
described herein. Relevant thereto, each shareholder of the
Company has executed and delivered a "lock-up" letter agreement,
affirming that they shall not sell their respective shares of the
Company's common stock until such time as the Company has
successfully consummated a merger or acquisition and the Company is
no longer classified as a "blank check" company. In order to
provide further assurances that no trading will occur in the
Company's securities until a merger or acquisition has been
consummated, each shareholder has agreed to place their respective
stock certificate with the Company's legal counsel, who will not
release these respective certificates until such time as legal
counsel has confirmed that a merger or acquisition has been
successfully consummated. However, while management believes that
the procedures established to preclude any sale of the Company's
4
<PAGE>
securities prior to closing of a merger or acquisition will be
sufficient, there can be no assurances that the procedures
established relevant herein will unequivocally limit any
shareholder's ability to sell their respective securities before
such closing.
Management of the Company is of the opinion that the business
objectives of the Company remain viable, despite the Company's
failure to merge with or acquire another business entity to date.
Management of the Company continues to review potential merger
candidates and acquisition opportunities.
Employees
The Company has no full time employees. The Company's
President and Secretary have agreed to allocate a portion of their
time to the activities of the Company, without compensation. These
officers anticipate that the business plan of the Company can be
implemented by their devoting approximately 20 hours per month to
the business affairs of the Company and, consequently, conflicts of
interest may arise with respect to the limited time commitment by
such officers. See "Part III, Item 9, Directors, Executive
Officers, Promoters and Control Persons; Compliance with Section
16(a) of the Exchange Act."
ITEM 2. DESCRIPTION OF PROPERTY
The Company has no properties and at this time has no
agreements to acquire any properties. The Company intends to
attempt to acquire assets or a business in exchange for its
securities, which assets or business is determined to be desirable
for its objectives.
The Company operates from its offices at 15304 East Monmouth
Place, Aurora, Colorado 80015. This space is provided to the
Company on a rent free basis by Cheryl Miller, an officer and
director of the Company, and it is anticipated that this
arrangement will remain until such time as the Company successfully
consummates a merger or acquisition. Management believes that this
space will meet the Company's needs for the foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
There are no material legal proceedings which are pending or
have been threatened against the Company of which management is
aware.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
5
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
(a) Market Information. There is presently no trading market
for the common or preferred equity of the Company.
(b) Holders. There are ten (10) holders of the Company's
Common Stock.
As of the date of this report, all of the Company's Common
Stock are eligible for sale under Rule 144 promulgated under the
Securities Act of 1933, as amended, subject to certain limitations
included in said Rule. In general, under Rule 144, a person (or
persons whose shares are aggregated) who has satisfied a one year
holding period, under certain circumstances, may sell within any
three month period a number of shares which does not exceed the
greater of one percent of the then outstanding Common Stock or the
average weekly trading volume during the four calendar weeks prior
to such sale. Rule 144 also permits, under certain circumstances,
the sale of shares without any quantity limitation by a person who
has satisfied a two-year holding period and who is not, and has not
been for the preceding three months, an affiliate of the Company.
(c) Dividends.
(1) The Company has not paid any dividends on its Common
Stock. The Company does not foresee that the Company will have the
ability to pay a dividend on its Common Stock in the fiscal year
ended December 31, 1998, unless the Company successfully
consummates a merger or acquisition. There can be no assurances
that a dividend will be issued even if a merger or acquisition is
so consummated.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with
the Company's audited financial statements and notes thereto
included herein. In connection with, and because it desires to
take advantage of, the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the Company cautions
readers regarding certain forward looking statements in the
following discussion and elsewhere in this report and in any other
statement made by, or on the behalf of the Company, whether or not
in future filings with the Securities and Exchange Commission.
Forward looking statements are statements not based on historical
information and which relate to future operations, strategies,
financial results or other developments. Forward looking
statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic and
6
<PAGE>
competitive uncertainties and contingencies, many of which are
beyond the Company's control and many of which, with respect to
future business decisions, are subject to change. These
uncertainties and contingencies can affect actual results and could
cause actual results to differ materially from those expressed in
any forward looking statements made by, or on behalf of, the
Company. The Company disclaims any obligation to update forward
looking statements.
(a) Plan of Operation.
The Company intends to seek to acquire assets or shares of an
entity actively engaged in business which generates revenues, in
exchange for its securities. The Company has no particular
acquisitions in mind and has not entered into any negotiations
regarding such an acquisition. None of the Company's officers,
directors, promoters or affiliates have engaged in any preliminary
contact or discussions with any representative of any other company
regarding the possibility of an acquisition or merger between the
Company and such other company as of the date of this report.
The Company's Board of Directors intends to provide the
Company's shareholders with complete disclosure documentation
concerning a potential business opportunity and the structure of
the proposed business combination prior to consummation of the
same, which disclosure is intended to be in the form of a proxy
statement. While such disclosure may include audited financial
statements of such a target entity, there is no assurance that such
audited financial statements will be available. The Board of
Directors does intend to obtain certain assurances of value of the
target entity assets prior to consummating such a transaction, with
further assurances that an audited statement would be provided
within sixty days after closing of such a transaction. Closing
documents relative thereto will include representations that the
value of the assets conveyed to or otherwise so transferred will
not materially differ from the representations included in such
closing documents, or the transaction will be voidable.
The Company has no full time employees. The Company's
President and Secretary-Treasurer have agreed to allocate a portion
of their time to the activities of the Company, without
compensation. These officers anticipate that the business plan of
the Company can be implemented by their devoting approximately 20
hours per month to the business affairs of the Company and,
consequently, conflicts of interest may arise with respect to the
limited time commitment by such officers. See "Part III,
Directors, Executive Officers, Promotors and Control Persons;
Compliance with Section 16(a) of the Exchange Act - Resumes."
Because the Company presently has nominal overhead and no
other material financial obligations, management of the Company
believes that the Company's short term cash requirements can be
7
<PAGE>
satisfied by management injecting whatever nominal amounts of cash
into the Company to cover these incidental expenses. There are no
assurances whatsoever that any additional cash will be made
available to the Company through any means.
Year 2000 Disclosure
Many existing computer programs use only two digits to
identify a year in the date field. These programs were designed
and developed without considering the impact of the upcoming change
in the century. If not corrected, many computer applications could
fail or create erroneous results by or at the Year 2000. As a
result, many companies will be required to undertake major projects
to address the Year 2000 issue. Because the Company has no assets,
including any personal property such as computers, it is not
anticipated that the Company will incur any negative impact as a
result of this potential problem. However, it is possible that
this issue may have an impact on the Company after the Company
successfully consummates a merger or acquisition. Management
intends to address this potential problem with any prospective
merger or acquisition candidate. There can be no assurances that
new management of the Company will be able to avoid a problem in
this regard after a merger or acquisition is so consummated.
ITEM 7. FINANCIAL STATEMENTS
8
<PAGE>
SILVER QUEST, INC.
(A Development Stage Company)
Audited Financial Statements
For the Years Ended December 31, 1997 and 1996
and the Period January 1, 1995 (Inception) Through December 31, 1997
9
<PAGE>
SILVER QUEST, INC.
TABLE OF CONTENTS
Page
----
Independent Auditors' Report 1
Financial Statements
Balance Sheet 2
Statement of Operations 3
Statement of Cash Flow 4
Statement of Shareholders' Equity 5
Notes to the Financial Statements 6-7
10
<PAGE>
Kish Leake & Associates, P.C.
Certified Public Accountants
J.D. Kish, C.P.A., M.B.A. 7901 E. Belleview Ave., Suite 220
James D. Leake, C.P.A., M.T. Englewood, Colorado 80111
------------------- Telephone (303) 779-5006
Facsimile (303) 779-5724
Independent Auditor's Report
----------------------------
We have audited the accompanying balance sheet of Silver Quest, Inc. (a
development stage company), as of December 31, 1997 and the related statements
of income, shareholders' equity, and cash flows for the fiscal years ended
December 31, 1997 and 1996, and the period January 1, 1995 (inception) through
December 31, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. 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 the overall
financial statement presentation. We believe that our audit provides 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 Silver Quest, Inc. at
December 31, 1997 and the results of its operations and its cash flows for the
fiscal years ended December 31, 1997 and 1996, and the period January 1, 1995
(inception) through December 31, 1997, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The deficiency in working capital
as of December 31, 1997 raise substantial doubt about its ability to continue
as a going concern. Management's plans concerning these matters are described
in Note 1. The financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
s/Kish, Leake & Associates, P.C.
Kish, Leake & Associates, P.C.
Certified Public Accountants
Englewood, Colorado
March 25, 1998
-1-
11
<PAGE>
<TABLE>
Silver Quest, Inc.
(A Development Stage Company)
Balance Sheet
______________________________________________________________________________
<CAPTION>
December
31, 1997
--------
<S> <C>
ASSETS $ 0
========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Accounts Payable 500
--------
SHAREHOLDERS' EQUITY
Common Stock, .01 Par Value
Authorized 50,000,000 Shares; Issued
And Outstanding 345,000 Shares 3,450
Additional Paid In Capital 19,361
Retained Deficit (23,311)
--------
TOTAL SHAREHOLDERS' EQUITY (500)
--------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 0
========
<FN>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
</TABLE>
-2-
12
<PAGE>
<TABLE>
Silver Quest, Inc.
(A Development Stage Company)
Statement Of Operations
______________________________________________________________________________
<CAPTION>
January
1, 1995
(Inception)
through
December December December
31, 1997 31, 1996 31, 1997
-------- -------- --------
<S> <C> <C> <C>
REVENUE $ 0 $ 0 $ 0
-------- -------- --------
EXPENSES
Professional Fees 10,500 1,250 11,750
-------- -------- --------
Total 10,500 1,250 11,750
-------- -------- --------
Net (Loss) ($ 10,500) ($ 1,250) ($ 11,750)
======== ======== ========
Net (Loss) Per
Common Share ($0.03) ($0.00) ($0.03)
======== ======== ========
Common Shares
Outstanding 345,000 345,000 345,000
======== ======== ========
<FN>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
</TABLE>
-3-
13
<PAGE>
<TABLE>
Silver Quest, Inc.
(A Development Stage Company)
Statement Of Cash Flows
______________________________________________________________________________
<CAPTION>
January
1, 1995
(Inception)
through
December December December
1997 1996 31, 1997
-------- ------- --------
<S> <C> <C> <C>
Net (Loss) Accumulated
During The Development
Stage ($ 10,500) ($ 1,250) ($ 11,750)
Items Not Affecting Cash Flow:
Expenses Paid By Shareholders'
On Behalf Of The Company 11,250 0 11,250
Increase (Decrease) In
Accounts Payable ($ 750) $ 1,250 500
-------- ------- --------
Cash Flows From Operations 0 0 0
-------- ------- --------
CASH FLOWS FROM
FINANCING ACTIVITIES 0 0 0
-------- ------- --------
Cash Flows From Investing 0 0 0
-------- ------- --------
CASH FLOWS FROM
INVESTING ACTIVITIES 0 0 0
-------- ------- --------
Cash Flows From Investing 0 0 0
-------- ------- --------
Net Increase In Cash 0 0 0
Cash At Beginning Of Period 0 0 0
-------- ------- --------
Cash At End Of Period $ 0 $ 0 $ 0
======== ======= ========
Non-Cash Activities:
Expenses Paid By Shareholders'
On Behalf Of The Company $ 11,250 $ 0 $ 11,250
======== ======= ========
<FN>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
</TABLE>
-4-
14
<PAGE>
<TABLE>
Silver Quest, Inc.
(A Development Stage Company)
Statement Of Shareholders' Equity
____________________________________________________________________________________
Number Of Additional
Common Common Paid-In Retained
Shares ** Stock Capital Deficit Total
--------- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C>
Balance At December 31, 1994, 1995 345,000 $3,450 $ 8,111 ($11,561) $ 0
--------- ------ ------- ------- -------
Net Loss December 31, 1996 (1,250) (1,250)
-------
Balance At December 31, 1996 345,000 3,450 8,111 (12,811) (1,250)
--------- ------ ------- ------- -------
Net Loss December 31, 1997 (10,500) (10,500)
Additional Paid In Capital 11,250 11,250
Balance At September 30, 1997 345,000 $3,450 $19,361 ($23,311) ($ 500)
========= ====== ======= ======= =======
** Reflects 10 for 1 Stock Split.
<FN>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
</TABLE>
-5-
15
<PAGE>
Silver Quest, Inc.
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal Years Ended December 31, 1997 and 1996
- -----------------------------------------------------
Note 1 - Organization and Summary of Significant Accounting Policies
- --------------------------------------------------------------------
Organization:
On April 11, 1983, Silver Quest, Inc. (the Company) was incorporated under the
laws of Idaho for the purpose of engaging in the mining business. In December
1986 the Company ceased operations in the mining business.
On January 1, 1995 the Company's management decided to search for a merger or
acquisition candidate and therefore has entered into the development stage.
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. The ability of the Company to continue as a going concern is
dependent upon an acquisition.
Developmental Stage:
The Company is currently in the developmental stage and has no significant
operations to date.
Statement of Cash Flows:
For the purpose of the statement of cash flows, the Company considers demand
deposits and highly liquid-debt instruments purchased with a maturity of three
months or less to be cash equivalents.
Cash paid for interest for the years ended December 31, 1997 and 1996 was
$-0-. Cash paid for income taxes for the years ended December 31, 1997 and
1996 was $-0-.
Net (Loss) per Common Share:
Net (Loss) per common share is computed by dividing the net loss for the
period by the number of shares outstanding for the period ended December 31,
1997 and December 31, 1996.
-6-
16
<PAGE>
Silver Quest, Inc.
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal years Ended December 31, 1997 and 1996
- -----------------------------------------------------
Use of 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. Actual results could differ from those
estimates.
Note 2 - Equity
- ---------------
The Company initially authorized 50,000 shares of $.01 par value common stock.
In July 1997 the board of directors of the Company approved a 10 to 1 forward
split making the outstanding common stock equal to 345,000 shares.
Note 3 - Related Party Events
- -----------------------------
The Company maintains a mailing address provided by an officer and director on
a cost free basis at their residence. No expense has been recorded as the
value of the address is considered immaterial.
Note 4 - Income Taxes
- ---------------------
At December 31, 1997 the Company had net operating loss carry forwards
available for financial statement and Federal income tax purposes of
approximately $11,750 which, if not used, will expire in the year 2011 and
2012.
The Company follows Financial Accounting Standards Board Statement No. 109,
"Accounting for Income Taxes" (SFAS #109), which requires, among other things,
an asset and liability approach to calculating deferred income taxes. As of
December 31, 1997 and 1996 there is no material difference between recorded
book basis and tax basis. The Company has made no provision for income taxes
because there have been no operations generating taxable income for financial
statement or tax purposes.
-7-
17
<PAGE>
Silver Quest, Inc.
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal years Ended December 31, 1997 and 1996
- -----------------------------------------------------
The Company had a deferred tax asset of $250 as of December 31, 1996, and
$2,350 as of December 31, 1997 primarily for its net operating loss carry
forward which has been fully reserved through a valuation allowance. The
change in valuation allowance for 1997 is $2,100.
Note 5 - Basis of Presentation
- ------------------------------
In the course of its development activities the Company has sustained
continuing losses and expects such losses to continue for the foreseeable
future. The Company's management plans on advancing funds on an as needed
basis and in the longer term, revenues from the operations of a merger
candidate, if found. The Company's ability to continue as a going concern is
dependent on these additional management advances, and, ultimately, upon
achieving profitable operations through a merger candidate.
-8-
18
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
Directors are elected for one-year terms or until the next
annual meeting of shareholders and until their successors are duly
elected and qualified. Officers continue in office at the pleasure
of the Board of Directors.
The Directors and Officers of the Company as of the date of
this report are as follows:
Name Age Position
- ---- --- --------
Lowell S. Miller 53 President, Director
Cheryl J. Miller 46 Secretary, Treasurer,
Director
Carolyn Sagara 34 Vice President,
Director
All Directors of the Company will hold office until the next
annual meeting of the shareholders and until successors have been
elected and qualified. Officers of the Company are elected by the
Board of Directors and hold office until their death or until they
resign or are removed from office.
Lowell S. Miller and Cheryl J. Miller are brother and sister.
Other than this relationship, there are no other family
relationships among the officers and directors. There is no
arrangement or understanding between the Company (or any of its
directors or officers) and any other person pursuant to which such
person was or is to be selected as a director or officer.
(b) Resumes:
Lowell S. Miller, President and a director of the Company, has
held his positions with the Company since its inception. In
addition to his positions with the Company, since 1992 Mr. Miller
has been President of Win, Inc., St. Joseph, Michigan, which is
involved in structuring mining and real estate ventures. Mr.
Miller received a Master's Degree in 1967 from the University of
Chicago and a Bachelor of Science degree in 1965 from the
University of Arizona. He devotes only such time as necessary to
the business of the Company, which time is expected to be nominal.
19
<PAGE>
Cheryl J. Miller, Secretary, Treasurer and a director of the
Company, has held her position as a director of the Company since
February 1984, as Secretary since November 1994, and as Treasurer
since April 1996. In addition to her positions with the Company,
since August 1991, Ms. Miller has been a registered representative
with Rocky Mountain Securities & Investments, an Englewood,
Colorado, stock brokerage firm. Ms. Miller received a Masters
Degree in Arts in 1973 from Creighton University and a Bachelor of
Science degree in 1970 from Colorado Woman's College. She devotes
only such time as necessary to the business of the Company, which
time is expected to be nominal.
Carolyn Sagara, Vice President and a director of the Company,
has held her position with the Company since April 1996. In
addition to her positions with Company, since May 1996, Ms. Sagara
has been a social worker with the Denver Department of Social
Services, Denver, Colorado. From May 1995 to May 1996, Ms. Sagara
was a therapist with Denver Mental Health Corp., Denver, Colorado,
and from September 1987 to May 1995, a therapist with Arapahoe
County Mental Health Center, Inc., Englewood, Colorado. Ms. Sagara
received her Masters Degree in Counseling in 1987 from University
of Colorado at Denver, Colorado, and her Bachelor of Science Degree
in education in 1979 from Metro State College, Denver, Colorado.
She devotes only such time as necessary to the business of the
Company, which time is expected to be nominal.
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's officers, directors and persons who own more than 10%
of the Company's Common Stock to file reports of ownership and
changes in ownership with the Securities and Exchange Commission.
All of the aforesaid persons are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they
file. There were no changes in the securities holdings of any
person during the fiscal year ended December 31, 1997, as all
issued and outstanding share certificates issued by the Company are
presently held in escrow with the Company's legal counsel, until
such time as the Company successfully consummates a merger or
acquisition.
ITEM 10. EXECUTIVE COMPENSATION.
None of the Company's officers and/or directors receive any
compensation for their respective services rendered unto the
Company, nor have they received such compensation in the past.
They all have agreed to act without compensation until authorized
by the Board of Directors, which is not expected to occur until the
Company has generated revenues from operations after consummation
of a merger or acquisition. As of the date of this report, the
Company has no funds available to pay directors. Further, none of
the directors are accruing any compensation pursuant to any
agreement with the Company.
20
<PAGE>
It is possible that, after the Company successfully
consummates a merger or acquisition with an unaffiliated entity,
that entity may desire to employ or retain one or a number of
members of the Company's management for the purposes of providing
services to the surviving entity or otherwise provide other
compensation to such persons. However, the Company has adopted a
policy whereby the offer of any post-transaction remuneration to
members of management will not be a consideration in the Company's
decision to undertake any proposed transaction. Each member of
management has agreed to disclose to the Company's Board of
Directors any discussions concerning possible compensation to be
paid to them by any entity which proposes to undertake a
transaction with the Company and further, to abstain from voting on
such transaction. Therefore, as a practical matter, if each member
of the Company's Board of Directors is offered compensation in any
form from any prospective merger or acquisition candidate, the
proposed transaction will not be approved by the Company's Board of
Directors as a result of the inability of the Board to
affirmatively approve such a transaction.
It is possible that persons associated with management may
refer a prospective merger or acquisition candidate to the Company.
In the event the Company consummates a transaction with any entity
referred by associates of management, it is possible that such an
associate will be compensated for their referral in the form of a
finder's fee. It is anticipated that this fee will be either in
the form of restricted common stock issued by the Company as part
of the terms of the proposed transaction, or will be in the form of
cash consideration. However, if such compensation is in the form
of cash, such payment will be tendered by the acquisition or merger
candidate because the Company has insufficient cash available. The
amount of such finder's fee cannot be determined as of the date of
this report, but is expected to be comparable to consideration
normally paid in like transactions. No member of management of the
Company will receive any finders fee, either directly or
indirectly, as a result of their respective efforts to implement
the Company's business plan outlined herein.
No retirement, pension, profit sharing, stock option or
insurance programs or other similar programs have been adopted by
the Company for the benefit of its employees.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
(a) and (b) Security Ownership of Certain Beneficial Owners
and Management.
The table below lists the beneficial ownership of the
Company's voting securities by each person known by the Company to
be the beneficial owner of more than 5% of such securities, as well
as by all directors and officers of the issuer. Unless otherwise
21
<PAGE>
indicated, the shareholders listed possess sole voting and
investment power with respect to the shares shown.
Name and Amount and
Address of Nature of
Beneficial Beneficial Percent of
Title of Class Owner Owner Class
- -------------- ------------------ ---------- ----------
Common Cheryl Miller(1) 150,000 43.5%
15304 E. Monmouth Place
Aurora, CO 80015
Common Lowell Miller(1) 30,000 8.7%
2500 Niles Avenue
St. Joseph, MI 49085
Common Carolyn H. Sagara(1) 30,000 8.7%
8221 W. Walker Dr.
Littleton, CO 80123
Common Phyliss C. Miller 26,000 7.5%
2609 Lake View Avenue
St. Joseph, MI 49085
Common Vance B. Miller 20,000 5.8%
Box 100
Wickenburg, AZ 85358-0100
Common Wallace Westwood 20,000 5.8%
5900 W. Rowland Avenue
Littleton, CO 80123
Common William Miller 25,000 7.3%
6979 W. Quarto Place
Littleton, CO 80123
Common All Officers and 210,000 60.9%
Directors as a
Group (3 persons)
____________________
(1) Officer and director.
The balance of the Company's outstanding Common Shares are
held by 3 persons.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
There have been no related party transactions, or any other
transactions or relationships required to be disclosed pursuant to
Item 404 of Regulation S-B.
22
<PAGE>
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
3.1* Certificate and Articles of Incorporation and
Amendments thereto.
3.2* Bylaws.
4.1* Copies of All Lock-up Agreements by the Company's
Shareholders
EX-27 Financial Data Schedule
* Filed with the Securities and Exchange Commission in the Exhibits
to Form 10-SB, filed on December 23, 1997 and are incorporated by
reference herein.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
last calendar quarter of the fiscal year ended December 31, 1997.
23
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on
April 9, 1998.
SILVER QUEST, INC.
(Registrant)
By:/s/ Lowell S. Miller
---------------------------
Lowell S. Miller,
President
By:/s/ Cheryl J. Miller
---------------------------
Cheryl J. Miller,
Secretary/Treasurer
In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant
and in the capacities indicated on April 9, 1998.
/s/ Lowell S. Miller
- -----------------------------------
Lowell S. Miller,
President and Director
/s/ Cheryl J. Miller
- -----------------------------------
Cheryl J. Miller,
Secretary, Treasurer and Director
/s/ Carolyn Sagara
- -----------------------------------
Carolyn Sagara,
Vice President and Director
24
<PAGE>
SILVER QUEST, INC.
Exhibit Index to Annual Report on Form 10-KSB
For the Fiscal Year Ended December 31, 1997
EXHIBITS Page No.
EX-27 Financial Data Schedule 26
25
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 500
<BONDS> 0
0
0
<COMMON> 3,450
<OTHER-SE> (3,950)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 10,500
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (10,500)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,500)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> 0
</TABLE>
