U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Optimum Source International, Ltd.
(Name of Small Business Issuer in its charter)
Nevada 86-0674322
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
10612 North Sundown Drive, Scottsdale, Arizona 85260
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, (602)-951-6828 ext 228
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None None
Securities to be registered under Section 12(g) of the Act:
Common Stock, $0.001 Par Value
(Title of class)
DOCUMENTS INCORPORATED BY REFERENCE
None.
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PART I
Item 1. Description of Business.
(a) Business Development.
The Company was first incorporated in the State of Utah on October 24,
1984 as A.R.M. Chemical Company, Inc. On November 13, 1984, the name of the
Corporation was changed to E.R.M. Chemical Company, Inc. From 1984 to 1986, the
Company attempted to manufacture, distribute and sell chemical products for the
purification of water. This business activity was abandoned. On September 1,
1988 the Company changed its name to M.P.V. On September 7, 1989, the name of
the Company was changed to Optimum Source International. The Company completed a
plan of reorganization on October 20, 1989 pursuant to which the assets and
corresponding liabilities of LomaCycle, Inc. were spun off to the former
shareholders of that corporation before it became a wholly-owned subsidiary of
M.P.V., Inc. From 1986 to 1990, the Company attempted to acquire interests in
various business opportunities, all attempts were abandoned. On June 29, 1990,
the domicile of the Company was changed to Nevada and the name of the Company
was changed to Optimum Source International, Ltd.
(b) Business of Issuer.
(1) Principal products or services and their markets;
The Company specializes in international communication and interactive
services to the Close-Out Industry, including the Barter and Trade Industry of
surplus goods to wholesalers, retailers, auctioneers and the general public both
domestically and internationally.
Optimum Source International Ltd., (OSI) is poised with products and
services for individuals, entrepreneurs, and companies of all sizes that are
desirous of learning or enhancing their bartering, trading and countertrading
skills. Products are developed to fully integrate with each other or may be used
as stand alone products. All products and services are currently offered on the
internet, and through selected channels of distribution.
Barter, Exchange, Swap, Trade and Countertrade are rapidly becoming the
method of choice for individuals, companies and governments for acquiring what
they want or need because it eliminates the constant monetary change. It is an
industry that has reached sales of $850 billion dollars plus worldwide and is
growing at an incredible annual rate of 20%. The industry though, has lagged in
automating. OSI has focused its efforts on providing solutions for bringing
traders together worldwide. OSI is a provider of surplus consumer goods through
its' international suppliers. Inventories that are owned by OSI and associates
are accessible 24 hours a day via OSI's private network. OSI has developed the
forum for buyers and sellers to locate one another and conduct
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business using the latest networking technologies.
Current products including:
CABLE VIEW
A membership network for companies dealing with premiums, auctions,
small retail dealers, overseas buyers, and corporate users. Members may obtain
additional inventories for non-dealer/members in their areas (with their prior
approval), enter their inventories, and charge a small exchange fee. As a member
in CABLE VIEW, a company has many different close-out and liquidation
inventories at their finger-tips, 24 hours a day. The services offered by CABLE
VIEW are listed below:
E-MAIL - SEARCH - FORUMS - CLASSIFIED ADS
CABLE VIEW is available and is being introduced to the Close-Out industry
throughout the world. This private communication network which the Company
created has the capability of handling thousands of calls, 24 hours a day, and
allows members to display, manipulate, extract and exchange information.
WHAT 'CHA GOT AUCTION SERVICES
What 'Cha Got is a network of auctioning services implemented to provide
a distribution system for selling consumer goods to end users and dealers. OSI
provides complete federally bonded auctioning services. All segments of
operations are controlled by OSI from its corporate headquarters in Scottsdale,
Arizona. Constant communication between all entities are maintained via
computer. Satellite auction sites provide additional sales outlets of consumer
goods flowing to cash buyers nationwide.
COUNTERTRADE/BARTER
Countertrade associations are forming in ever increasing numbers. The
recent world trade agreements open up more opportunities for an already
expanding countertrade industry. A Barter, Exchange, Swap, Trade arrangement
enables a company to exchange finished goods for raw material at a fair price,
in lieu of liquidating inventories at a drastic loss. OSI provides these
services, greatly enhancing the Barter, Exchange, Swap, Trade industry, and
establishing OSI as a world-wide countertrade resource leader.
Potential negative impact of a participant in a countertrade/barter
action can negatively impact the Company and its services. For example, the
publicity resulting from a participant activities such as inappropriate claims
and product representations by participants can make the sponsoring and
retaining of participants more difficult, thereby negatively impacting sales.
Furthermore, the Company's business and results of operations could be adversely
affected if the
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Company terminates a significant number of participants or certain participants
who play a key role in the Company's distribution system. There can be no
assurance that these or other participant actions will not have a material
adverse effect on the Company or results of operations.
(2) Distribution methods of the products or services;
The infrastructure for all of OSI's operations is its own Interactive
Communications Information Exchange Network. This network allows for the
streamlining of OSI's corporate operations by minimizing paper work. It provides
both buyers and sellers of surplus goods the arena in which to identify and
negotiate transactions. It also provides the interface to wide area networks,
i.e., Internet, Microsoft's "MSN" Network, and various public and private
databases, i.e., real estate, import/export, associations, and corporations. The
Company has developed the first application software for traders worldwide,
"Traders ToolTM". This software automates all aspects of
trade/barter/countertrade, including currency conversions and inventory
tracking. Displays also indicate reminders for expiration dates of scrip or
services. Traders ToolTM interfaces with Excel for tracking trade transactions,
as well as providing statistics, reports and spreadsheets. Traders ToolTM also
has specialty modules, i.e., real estate, gems, and consumer items. Upon
request, Traders ToolTM automatically dials and connects to outside databases
for specific goods information. Traders ToolTM is the only product of its kind
available to the Barter, Exchange, Swap, Trade industry at all levels, from
novice to expert. The Company's focus is automating the liquidation and barter
industry. A network of independent representatives develop sales and marketing,
introduce new services and products, and expand distribution of products while
pursuing strategic alliance worldwide.
(3) Status of any publicly announced new product or service;
None
(4) Competitive business conditions and the small business issuer's
competitive position in the industry and methods of competition;
Competition in the barter, trading and counter trading industry is
vigorous, characterized by a relatively large number of companies (estimated at
approximately 1,500), most of which have relatively small sales. Industry
sources estimate that there are less than 100 companies in the industry that
have annual sales of $2 million or more. Based on its current projected sales,
OSI believes that it will be within the approximately top 6% of the
approximately 1,500 barter companies, based on projected sales. However, since
only one of these companies in this industry is public and the rest are
privately held, little reliable financial data is available. Many of the
companies have established reputations for successfully developing and marketing
barter, trading and countertrading services, with a variety of well-established
marketing outlets. Many of such companies have greater financial, managerial,
and technical resources than OSI. Principal competitors include members of the
International Reciprocal Trade Association, and members of the National
Association of Trade Exchanges.
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The Company competes by emphasizing the value and premium quality of the
Company's products and the convenience of the Company's distribution system.
There can be no assurance that the Company's business and results of operations
will not be affected materially by market conditions and competition in the
future.
(5) Sources and availability of raw material and the names of principal
suppliers;
All the Company's products are currently produced by manufactures
unaffiliated with the Company. The Company's profit margins and its ability to
deliver products on a timely basis are dependent upon the ability of the
Company's outside suppliers to continue to supply products in a timely and cost
efficient manner.
The Company currently acquires products from suppliers that are
considered by the Company to be the superior suppliers of such products. Due to
the nature of the close out market the availability of products varies from day
to day. There can be no assurance that the loss of a supplier would not have a
material adverse effect on the Company's business and results of operations.
(6) Dependence on one or a few major customers;
No customer accounts for more than 10% of sales.
(7) Patents, trademarks, licenses, franchises, concessions, royalty
agreements or labor contracts, including duration;
As a company selling products nationwide and internationally, OSI
believes that establishing trade and service marks and copyrights for brand
names and associated advertising and labeling materials is important in
maintaining company and product identification and integrity. Accordingly, OSI
is engaged on a continuing basis in developing brand names and such associated
materials for its products, securing trade and service mark protection for such
brand names and copyright protection for such associated material, policing its
existing marks, and enforcing its legal rights in cases of potential
infringement by third parties of its legally protected marks and copyrights.
(8) Need for any government approval of principal products or services.
If government approval is necessary and the small business issuer has not yet
received that approval, discuss the status of the approval within the government
approval process;
The Company's products currently do not require government approval.
(9) Effect of existing or probable governmental regulations on the
business;
The Company is not aware of any existing or probable governmental
regulations on the business.
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(10) Estimate the amount spent during each of the last two fiscal years
on research and development activities, and if applicable the extent to which
the cost of such activities are borne directly by customers;
For the years ended December 31, 1997 and 1996 there was no money
allocated to research and development. Royalty agreements provided that the
research and development expenses are to be paid by the royalty holder.
(11) Costs and effects of compliance with environmental laws (federal,
state and local);
None
(12) Number of total employees and number of full time employees.
As of February 13, 1998 the Company had no full time employees. There
are a total of 2 contract employees engaged in the general management and
administration.
Item 2. Management's Discussion and Analysis or Plan of Operation.
General
The following discusses the financial position and results of operations
of the Company.
Liquidity and Capital Resources
The Company requires working capital principally to fund its current
operations. Generally the Company has adequate funds for its activities. There
are no formal commitments from banks or other lending sources for lines of
credit or similar short-term borrowing. It is anticipated that the current
operations will expand and the funds generated will exceed the Company's working
capital requirements for the next year.
The Company intends to seek an acquisition of a larger and potentially
more profitable business. The Company intends to focus on opportunities to
acquire new products or technologies in development as well as those currently
being operated, including a complete operating business that has demonstrated
long-term growth potential, strong marketing presence, and the basis for
continuing profitability. The Company has not identified any specific target or
possible acquisition. As the Company pursues its acquisition program, it will
incur costs for ongoing general and administrative expenses as well as for
identifying, investigating, and negotiating a possible acquisition.
In order to complete any acquisition, the Company may be required to
supplement its available cash and other liquid assets with proceeds from
borrowings, the sale of additional
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securities, or other sources. There can be no assurance that any such required
additional funding will be favorable to the Company.
Management believes that the Company's current cash and funds available
will be sufficient to meet capital requirements and short term and long term
working capital needs in the fiscal year ending December 31, 1998 and beyond,
unless a significant acquisition or expansion is undertaken. The Company is
constantly searching for potential acquisitions and/or expansion opportunities.
However, there are no arrangements or ongoing negotiations for any acquisition
or expansion.
Results of Operations
From 1984 to 1986, the Company attempted to manufacture, distribute and
sell chemical products for the purification of water. This business activity was
abandoned. From 1986 to 1990, the Company attempted to acquire interests in
various business opportunities, all attempts were abandoned. The Company was
inactive from 1990 to 1992. The Company has been in the development stage since
December 31, 1992, and has not commenced planned principal operations.
Inflation and Regulation
The Company's operations have not been, and in the near term are not
expected to be, materially affected by inflation or changing prices. The Company
will encounter competition from a variety of firms selling barter/trade services
in its market area. Many of these firms have long standing customer
relationships and are well-staffed and well financed. The Company believes that
competition in the barter/trade industry is based on competitive pricing,
although the ability, reputation and support of a marketing network is also
significant. The Company does not believe that any recently enacted or presently
pending proposed legislation will have a material adverse effect on its results
of operations.
Factors That May Affect Future Results
Management's Discussion and Analysis and other parts of this
registration statement contain information based on management's beliefs and
forward-looking statements that involve a number of risks, uncertainties, and
assumptions. There can be no assurance that actual results will not differ
materially for the forward-looking statements as a result of various factors,
including but not limited to the following:
The markets for many of the Company's offerings are characterized by
rapidly changing technology, evolving industry standards, and frequent new
product introductions. The Company's operating results will depend to a
significant extent on its ability to design, develop, or otherwise obtain and
introduce new products, services, systems, and solutions and to reduce the costs
of these offerings. The success of these and other new offerings is dependent on
many factors, including proper identification of customer needs, cost, timely
completion and introduction, differentiation from offerings of the Company's
competitors, and market acceptance. The ability to successfully
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introduce new products and services could have an impact on future results of
operations.
Item 3. Description of Property.
The Company at this time has no properties. As of December 31, 1997, all
activities of the Company have been conducted by corporate officers from either
their homes or business offices. Currently, there are no outstanding debts owed
by the company for the use of these facilities and there are no commitments for
future use of the facilities.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
(a) Security ownership of certain beneficial owners.
The following table sets forth the number and percentage of the
Company's common shares owned of record and beneficially by each person owning
more than 5% of such common shares at December 31, 1997.
(1) (2) (3) (4)
Title of Class Name and Amount and Percent of Class
Address of Nature of
Beneficial Beneficial
Owner Owner
Common Stock James O'Brien 5,000,000 59.83%
10612 N. Sundown Dr.
Scottsdale, AZ 85260
The following table set forth the number and percentage as of the date
of this filing, the shares beneficially owned by all directors and nominees:
(1) (2) (3) (4)
Title of Class Name and Amount and Percent of Class
Address of Nature of
Beneficial Beneficial
Owner Owner
Common Shares James O'Brien ---see above---
There have been no common shares issued to any of the directors of the Company.
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Item 5. Directors, Executive Officers, Promoters and Control Persons.
Directors and Executive Officers.
(1) (2) (3)
NAME and AGE POSITION TERM OF OFFICE
James O'Brien ............ 61 CEO/President 1990 to Present
Susan Conwisar ........... 56 Secretary/Treasurer 1990 to Present
Rose Fischer ............. 45 Director 1996 to Present
Goldie Hunt .............. 70 Director 1992 to Present
Mark Niver ............... 35 Director 1995 to Present
Patrick Matzelle ......... 51 Director 1996 to Present
Business Experience
James O'Brien, CEO/President, founded Optimum Source International Ltd., during
the past five years Mr. O'Brien developed software, established trade and
countertrade exchanges for Optimum Source International, Ltd.
Susan Conwisar, Secretary/Treasurer, during the past five years Ms. Conwisar has
been a licensed realtor in the State of Arizona specializing in the areas of
commercial real estate and business brokerage as well as serving Optimum Source
International Ltd. Ms. Conwisar attended Brooklyn College, Brooklyn, New York
emphasizing accounting, business and insurance law.
Rose Fischer, with an associate degree in accounting, has been Director and
Operations Facilitator for the past two years, which includes finalization and
implementation of all electronic commerce. Prior to OSI, Ms. Ros's experience
was as a financial consultant with a privately held firm since 1985.
Goldie Hunt, Director, for the past six years has pursued her personal interests
since retiring from the retail industry.
Mark Niver, Director, since 1992, Mr. Niver has been the Secretary/Treasurer of
Merit Diversified Internation, Incorporated, a R&D public company as well as the
senior data manager of Optimum Source International Ltd. Mr. Niver attended Rio
Salado Community College in Phoenix, Arizona and Grand Canyon University
(computer science).
Patrick Matzelle, Director, for the past five years Mr. Matzelle has been
self-employed as an
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independent consultant providing management services to clients to develop and
implement business plans, marketing plans, and training programs. Mr. Matzelle
attended Arizona State University, College of Engineering for two years.
Item 6. Executive Compensation.
Annual Compensation
(a) (b) (c) (e)
Name Other
and Annual
Principal Salary Compensation
Position Year $ $
There has been no executive compensation.
Item 7. Certain Relationships and Related Transactions.
James O'Brien, the President of the Company, provided the Company with
the marketing distribution plans, compensation program, commission payout
structure, operations, and automated monthly ordering system.
During 1997 and 1996 the Company borrowed money from James O'Brien to
pay administrative expenses. The loan is payable on demand and carries an annual
interest rate of 10 percent. As of December 31, 1997, the principal owing is
$54,580 with accrued interest of $8,355.
During 1996 the Company paid $7,500 to James O'Brien for rent of office
space. As of December 31, 1997 all activities of the Company have been conducted
by corporate officers from either their homes or business offices. Currently,
there are no outstanding debts owed by the Company for the use of these
facilities and there are no commitments for future use of the facilities.
Item 8. Description of Securities.
The corporation has authorized fifty million (50,000,000) shares of
common stock with a par value of $0.001 per share, and no other class or classes
of stock, for a total capitalization of $50,000. The corporation's capital stock
may be sold from time to time for such consideration as may be fixed by the
Board of Directors, provided that no consideration so fixed shall be less than
par value. There are no preemptive rights. No dividends have been declared.
Fully-paid stock of this corporation shall not be liable to any further call or
assessment.
As of February 4, 1998 there are 8,357,210 shares of common stock issued
and outstanding.
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PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters.
The stock is traded over-the-counter on the NASDAQ Bulletin Board with
the trading symbol "OSIN". The following high and low bid information was
provided by PC Financial Network. The quotations provided reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not represent
actual transactions.
1996 HIGH BID LOW BID
(To the best knowledge of
management, there was no
trading of shares for fiscal
1996.)
First Quarter (3/31/97) $ 1.750 $ 1.500
Second Quarter (6/30/97) $ .9375 $ .480
Third Quarter (9/30/97) (To the best knowledge of
management, there was no
trading of shares for the
third quarter 1997.)
Fourth Quarter (12/31/97) $ .250 $ .250
The number of shareholders of record of the Company's common stock as of
November 12, 1997 was approximately 259.
The Company has not paid any cash dividends to date and does not
anticipate paying dividends in the foreseeable future. It is the present
intention of management to utilize all available funds for the development of
the Company's business.
Item 2. Legal Proceedings.
The Company is not presently involved in any legal proceedings.
Item 3. Changes in and Disagreements with Accountants.
There are not and have not been any disagreements between the Company
and its accountants on any matter of accounting principles, practices or
financial statements disclosure.
Item 4. Recent Sales of Unregistered Securities.
The Company over the past three years has not sold any shares of common
stock.
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Part F/S
The following documents are filed as part of this report.
Independent Auditor's Report .............................................. 13
Balance Sheet,
December 31, 1997 and 1996 ................................................ 14
Statements of Loss,
For the Years Ended December 31, 1997 and 1996 ........................... 15
Statements of Changes in Stockholders' Equity,
For the Years Ended December 31, 1997 and 1996 ............................ 16
Statements of Cash Flows,
For the Years Ended December 31, 1997 and 1996 ........................... 17
Notes to Financial Statements ............................................. 18
Schedule I, Condensed Financial Information
of Registrant (All Required Information
Reported in Financial Statements
and Notes to the Financial Statements)
Schedule II, Valuation of Qualifying Accounts
(All Required Information Reported in
Financial Statements and Notes to the
Financial Statements)
Schedule III, Real Estate and Accumulated Depreciation
(Not Applicable)
Schedule IV, Mortgage Loans on Real Estate
(Not Applicable)
Schedule V, Supplemental Information Concerning
Property-Casualty Insurance Operations
(Not Applicable)
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INDEPENDENT AUDITOR'S REPORT
Board of Directors
Optimum Source International, LTD.
(a Development Stage Company)
We have audited the accompanying balance sheets of Optimum Source
International, LTD., as of December 31, 1997 and 1996, and the related
statements of loss, retained earnings, and cash flows for the years then ended.
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 Optimum Source
International, LTD., (A development Stage Company) as of December 31, 1997 and
1996 and the results of its operations, and its cash flows for the years then
ended in conformity with generally accepted accounting principles.
Respectfully submitted,
\s\ Robison, Hill & Co.
Certified Public Accountants
Salt Lake City, Utah
February 4, 1998
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EXHIBIT "A"
OPTIMUM SOURCE INTERNATIONAL, LTD.
(A Development Stage Company)
BALANCE SHEETS
December 31, 1997 and 1996
1997 1996
Assets
Current Assets
Inventory .......................................... $ 14,013 $ 14,013
Prepaid Expense .................................... 10,000 10,000
-------- --------
Total Current Assets .............................. $ 24,013 $ 24,013
======== ========
Liabilities and Stockholders' Equity
Liabilities
Accounts Payable .................................... $ 2,455 $ 1,600
Accrued Liabilities ................................. 8,455 2,649
Loans From Shareholder .............................. 54,580 52,980
-------- --------
Total Liabilities ................................. 65,490 57,229
-------- --------
Stockholders' Equity
Common Stock, authorized 50,000,000 shares of
$.001 par value, issued and outstanding 8,357,210 8,357 8,357
Additional Paid in Capital ......................... 87,173 87,173
Retained Deficit ................................... (65,022) (65,022)
Deficit Accumulated
During Development Stage ......................... (70,874) (62,613)
Less: Treasury Stock
59,738 shares at Cost ............................ (1,111) (1,111)
-------- --------
Total Stockholders' Equity
(Deficit) ....................................... (41,477) (33,216)
-------- --------
Total Liabilities and
Stockholders' Equity ............................ $ 24,013 $ 24,013
======== ========
The accompanying notes are an integral part of these financial statements.
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EXHIBIT "B"
OPTIMUM SOURCE INTERNATIONAL, LTD.
(A Development Stage Company)
STATEMENTS OF LOSS
FOR THE YEARS ENDED December 31, 1997 and 1996
Cumulative
Since
Inception Of
Development
1997 1996 Stage
Revenues .......................... $ -- $ -- $ --
-------- ------- -------
Expenses
General and Administrative
Expenses ......................... 2,554 30,567 62,518
Other Expense - Interest .......... 5,707 2,649 8,356
---------- ----------- -----------
Total Expenses ............... 8,261 33,216 70,874
----------- -----------
Net Loss .......................... $ (8,261) $ (33,216) (70,874)
========== =========== ===========
Net Loss Per Share ................ $ -- $ --
Weighted Average shares
Outstanding ...................... $ 8,297,472 $ 8,297,472
=========== ===========
The accompanying notes are an integral part of these financial statements.
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EXHIBIT "C"
<TABLE>
OPTIMUM SOURCE INTERNATIONAL, LTD.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<CAPTION>
Deficit
Accumulated
Additional During
Common Stock Paid-in Retained Development Treasury
Shares Amount Capital Deficit Stage Stock
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996 . 8,357,210 $ 8,357 $ 87,173 $ (65,022) $ (29,397) $ (1,111)
Net Loss ................... -- -- -- -- (33,216) --
--------- ---------
Balance at December 31, 1996 8,357,210 8,357 87,173 (65,022) (62,613) (1,111)
Net Loss ................... -- -- -- -- (8,261) --
---------
Balance at December 31, 1997 8,357,210 $ 8,357 $ 87,173 $ 65,022 $ (70,874) $ (1,111)
========= ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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EXHIBIT "D"
OPTIMUM SOURCE INTERNATIONAL, LTD.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED December 31, 1997 and 1996
Cumulative
Since
Inception of
December Development
1997 1996 Stage
Cash Flows From Operating
Net cash used by operating activities .... $ (1,600) $(52,980) $(54,580)
-------- -------- --------
Cash Flows From Investing Activites
Net cash used by investing activities .... -- -- --
-------- -------- --------
Cash flows From Financing Activities
Loans from shareholder ................... 1,600 52,980 54,580
----- ------ ------
Net cash provided by financing activities 1,600 52,980 54,580
----- ------ ------
Net increase (decrease) in cash and
Cash equivalents ....................... -- -- --
-------- -------- --------
Cash and cash equivalents at beginning
of year ................................. -- -- --
-------- -------- --------
Cash and cash equivalents at end of year . $ -- $ -- $ --
========= ======== =========
Reconciliation of Net Loss to Cash Provided (Used)
by Operating Activities
Net loss ................................. $ (8,261)$ (33,216) $(70,874)
Changes in Assets and Liabilities
Amortization ............................. -- -- 29,397
Increase in inventory .................... -- (14,013) (14,013)
Increase in prepaid expense .............. -- (10,000) (10,000)
Increase in accounts payable ............. 855 1,600 2,455
Increase in accrued expenses ............. 5,806 2,649 8,455
----- ----- -----
Net Cash Used by Operating Activities .... $ (1,600)$ (52,980) $(54,580)
======== ======== ========
Supplemental Disclosure of Cash Flow Information
Interest ................................. $ -- $ --
Income Taxes ............................. $ -- $ --
The accompanying notes are an integral part of these financial statements
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EXHIBIT "E"
OPTIMUM SOURCE INTERNATIONAL, LTD.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1997 and 1996
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for Optimum Source International,
LTD. is presented to assist in understanding the Company's financial statements.
The accounting policies conform to generally accepted accounting principles and
have been consistently applied in the preparation of the financial statements.
Organization and History
The Company was incorporated under the laws of the State of Utah on
October 24, 1984. The Company Redomiciled to the State of Nevada on June 29,
1990. From 1984 to 1986, the Company attempted to manufacture, distribute and
sell chemical products for the purification of water. This business activity was
abandoned. From 1986 to 1990, the Company attempted to acquire interests in
various business opportunities, all attempts were abandoned. The Company was
inactive from 1990 to 1992. The Company has been in the development stage since
December 31, 1992, and has not commenced planned principal operations.
Nature of Business
The Company specializes in international communication and interactive
services to the Close-Out Industry, including the Barter and Trade Industry of
surplus goods to wholesalers, retailers, auctioneers and the general public both
domestically and internationally.
Cash and Cash Equivalents
For purposes of the 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 to the extent the funds are not being held for investment
purposes.
Loss per Share
The following data show the amounts used in computing loss per share and
the effect on income and the weighted average number of shares of dilutive
potential common stock.
18
<PAGE>
EXHIBIT "E"
(Continued
OPTIMUM SOURCE INTERNATIONAL, LTD.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1997 and 1996
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Loss per Share (Continued)
Per-Share
Income Shares Amount
For the year ended December 31, 1996
Net Loss .................................... (33,216)
Basic Earnings per Share
Income available to common shareholders ..... (33,216) 8,297,472 $ --
------- --------- -------
For the year ended December 31, 1997
Net Loss .................................... (8,261)
Basic Earnings per Share
Income available to common shareholders ..... (8,261) 8,297,472 $ --
------ --------- -------
Basic earnings per common share were computed by dividing net income by
the weighted average number of shares of common stock outstanding during the
year. Diluted earnings per common share for the years ended December 31, 1997
and 1996 are not presented as the Company does not have potential common stock.
In 1997, the Company adopted SFAS No. 128, "Earnings per Share," effective
December 15, 1997. As a result, the Company's reported earnings per share for
1996 were restated. The effect of this accounting change on previously reported
earnings per share (EPS) data was as follows:
Per share amounts 1996
Primary EPS as reported $ -
Effect of SFAS No. 128 -
-------------
Basic EPS as restated $ -
19
<PAGE>
EXHIBIT "E"
(Continued
OPTIMUM SOURCE INTERNATIONAL, LTD.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1997 and 1996
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Pervasiveness of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles required 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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2 - INCOME TAXES
As of December 31, 1997, the Company had a net operating loss
carryforward for income tax reporting purposes of approximately $110,000
expiring in 1999. Through 2012, current tax laws limit the amount of loss that
can offset future taxable income when there is a substantial change in
ownership. The amount of net operating loss available to offset future income
will be limited if there is a substantial change in ownership.
NOTE 3 - DEVELOPMENT STAGE
The Company has not begun principal operations and as is common with a
development stage company, the Company has had recurring losses during its
development stage.
NOTE 4 - COMMITMENTS
As of December 31, 1997 and 1996 all activities of the Company have been
conducted by corporate officers from either their homes or business offices.
Currently, there are no outstanding debts owed by the company for the use of
these facilities and there are no commitments for future use of the facilities.
20
<PAGE>
EXHIBIT "E"
(Continued
OPTIMUM SOURCE INTERNATIONAL, LTD.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996 and 1995
(Continued)
NOTE 5 - RELATED PARTY TRANSACTIONS
During 1997 and 1996 the Company borrowed money from an officer to pay
administrative expenses. The loan is payable on demand and carries an annual
interest rate of 10 percent. As of December 31, 1997, the principal owing is
$54,580 with accrued interest of $8,355.
During 1996 the Company paid $7,500 to an officer and shareholder for
rent of office space.
21
<PAGE>
PART III
Item 1. Index to Exhibits.
Item 2. Description of Exhibits.
EXHIBIT INDEX PAGE Exhibit 2 - Articles of Incorporation and By-Laws:
Optimum Source International, Ltd. Incorporated
by reference
Exhibit 11 - Computation of Per Share Earnings:
(Refer to Independent Auditors Report Page "Note 1")
Exhibit 23 - Consent of Robison, Hill & Co.
Exhibit 27 - Financial Data Schedule
22
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
Optimum Source International, Ltd.
DATE: February 19, 1998
By /s/
James O'Brien, President
(Principal Financial and
Accounting Officer)
23
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet of Optimum Source International, Ltd. as of December 31, 1997 and the
related statements of income, equity and cash flows for the year then ended and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 14
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 10
<CURRENT-ASSETS> 24
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 24
<CURRENT-LIABILITIES> 65
<BONDS> 0
0
0
<COMMON> 8
<OTHER-SE> (49)
<TOTAL-LIABILITY-AND-EQUITY> 24
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6
<INCOME-PRETAX> (8)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Optimum Source International, Ltd.,
A Nevada Corporation
We hereby consent to the use of our report respecting Optimum Source
International, Ltd. dated February 4, 1998 in Part F/S of Form 10-SB.
/s/ Robison, Hill & Co.
Certified Public Accountants
Salt Lake City, Utah
February 19, 1998
