U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE FISCAL YEAR ENDED APRIL 30, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD OF TO .
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Commission File Number: 0-24211
National Venture Capital Fund, Inc.
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(Exact Name of Small Business Registrant as specified in its charter)
Colorado 84-1432661
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1977 S. Vivian Street, Lakewood, Colorado 80228
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(Address of principal executive offices)
Registrant's telephone number: 303-763-5630
Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act:
Common Stock, $0.0001 per share Par Value
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(Title of Class)
Check whether the Registrant (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 registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
Yes [x] No [ ]
Check here if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B 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. [ ]
Registrant's revenues for its most recent fiscal year: $-0-.
The aggregate market value of the voting stock of the Registrant held by
non-affiliates as of July 1, 1999 was not able to be determined since the
Registrant's stock has not ever traded.
The number of shares outstanding of the Registrant's common stock, as of the
last practicable date, July 1, 1999, was 20,101,000.
<PAGE>
National Venture Capital Fund, Inc.
FORM 10-KSB
PART I
Item 1. Description of Business
General Development of Business.
National Venture Capital Fund, Inc. (the "Company" or the "Registrant") is a
Colorado corporation. The principal business address is 1977 S. Vivian Street,
Lakewood, Colorado 80228.
The Company was incorporated under the laws of the State of Colorado on June 12,
1997. Since inception, the primary activity of the Company has been directed
towards organizational efforts. During this fiscal year, the Company plans to
implement a program to identify potential acquisition candidates.
As of the date hereof, the Company has not engaged in any preliminary efforts
intended to identify possible business opportunities and has neither conducted
negotiations nor entered into a letter of intent concerning any business
opportunity. The Company is a shell corporation whose principal purpose is to
locate and consummate a merger or acquisition with a private entity.
The Company has not been subject to any bankruptcy, receivership or similar
proceeding.
Narrative Description of the Business.
From inception to the date hereof, the Company has had no activities. During
this period, the Company has carried no inventories or accounts receivable. No
independent market surveys have ever been conducted to determine demand for the
Company's products and services, since the Company has never had any products or
services which it has provided to anyone. During this period, the Company has
carried on no operations and generated no revenues. The Company's fiscal year
end is April 30th.
The Company presently comprises one corporation with no subsidiaries or parent
entities and is in the developmental stage.
The Company proposes to implement a business plan to investigate and, if
warranted, merge with or acquire the assets or common stock of an entity
actively engaged in business which generates revenues. The Company will seek
opportunities for long-term growth potential as opposed to short-term earnings.
As of the date hereof, the Company has no business opportunities under
investigation. 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. Further, there is no
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present potential that the Company may acquire or merge with a business or
company in which the Company's promoters, management or their affiliates or
associates directly or indirectly have an ownership interest.
The Company's Board of Directors intends to provide the Company's shareholders
with complete disclosure documentation in the form of a proxy statement
concerning any potential business opportunity and the structure of the proposed
business combination prior to its consummation. 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's 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.
As a result of its filing of a Form 10-SB, the Company became subject to the
reporting obligations under the Exchange Act. These include this annual report
under cover of Form 10-KSB, with audited financial statements, unaudited
quarterly reports, and proxy statements in regard to annual shareholder
meetings. Any potential acquisition or merger candidates will be required to
meet these same requirements, including the necessity of audited financial
statements. Such requirements may have the effect of restricting the potential
pool of candidates for merger or acquisition. The Company will voluntarily file
periodic reports in the event that its obligation to file such reports is
suspended under the Exchange Act.
The Registrant has no full-time employees. The Registrant's President and
Secretary-Treasurer have agreed to allocate a portion of their time to the
activities of the Registrant, without compensation. These officers anticipate
that the business plan of the Company can be implemented by their collectively
devoting approximately twenty hours per month to the business affairs of the
Company and, consequently, conflicts of interest may arise with respect to the
limited time commitment of such officers.
Some of the Company's officers and directors are presently involved and plan to
be involved with other "blank check" companies and, as a result, additional
potential conflicts of interest may arise. If such a conflict does arise in the
future and an officer or director of the Company is presented with business
opportunities under circumstances where there may be doubt as to whether the
opportunity should belong to the Company or another "blank check" company with
which they are affiliated, they will disclose the opportunity to the Boards of
Directors of all such companies. If a situation arises in which more than one
company desires to merge with or acquire that target company, and the principals
of the proposed target company have no preference as to which company will merge
with or acquire such target company, the company which first filed a
Registration Statement with the U.S. Securities and Exchange Commission will be
entitled to proceed with the proposed transaction.
The primary attraction of the Registrant as a merger partner or as an
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 shareholders of the Registrant.
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As part of the Company's investigation of any potential acquisition, the
officers and directors of the Company will initially meet personally with
management and key personnel, visit and inspect material facilities, obtain
independent analysis or verification of certain information provided, check
references of management and key personnel and take other reasonable
investigative measures to the extent of the Company's limited financial
resources. Management of the Company will utilize the services of its present
attorney and accountants in the investigation of prospective acquisitions.
The Company has no present plans to hire a consultant to aid the Company in any
acquisition or merger. However, if the Company deems it necessary because of the
necessity for specific expertise regarding a particular acquisition, a
consultant with such expertise regarding the particular acquisition may be
hired. Such consultant would only be utilized for a particular circumstance and
not on a general basis.
The Articles of Incorporation of the Company provide that the Company may
indemnify officers and/or directors of the Company for liabilities, which can
include liabilities arising under the securities laws. Therefore, the assets of
the Company could be used or attached to satisfy any liabilities subject to such
indemnification.
General Business Plan.
The Company's purpose is to seek, investigate and, if such investigation
warrants, to acquire controlling interest in business opportunities presented to
it by persons or firms who or which desire to seek the perceived advantages of
an Exchange Act registered corporation. The Company will not restrict its search
to any specific business, industry, or geographical location. The Company may
participate in a business venture of virtually any kind or nature.
The Company will solicit prospective acquisitions based upon informal contacts
or relationships which management has or will develop in the future. There are
no plans to advertise for acquisitions or to hire third party consultants to
facilitate acquisitions. The Company has no way of knowing how many individuals
will be contacted before a potential acquisition may be finalized. The Company
has no plans to do any acquisition with any associates or affiliates of
management, or with management itself.
The Company may seek a business opportunity in the form of firms which have
recently commenced operations, are developing companies in need of expansion
into new products or markets, are seeking to develop a new product or service or
are established, mature businesses. The Company may also offer a controlling
interest to such business opportunity, if the situation warrants.
In seeking business opportunities, the management decision of the Company will
be based upon the objective of seeking long-term appreciation in the value of
the Company. Current income will only be a minor factor in such decisions.
It is not anticipated that the Company will be able to participate in more than
one business opportunity. However, Management may, in its sole discretion, elect
to enter into more than one acquisition if it believes these transactions can be
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effectuated on terms favorable to the Company. This lack of diversification will
not permit the Company to offset potential losses from one business opportunity
against profits from another and should be considered a substantial risk to
shareholders of the Company.
The analysis of new business opportunities will be undertaken by or under the
supervision of the officers and directors. The Company will have unrestricted
flexibility in seeking, analyzing and participating in business opportunities.
In its efforts, the Company will consider the following, among other, factors:
(a) potential for growth, as indicated by new technology, anticipated market
expansion or new products;
(b) competitive position compared to other firms of similar size and experience
within the industry segment, as well as within the industry as a whole;
(c) strength and diversity of management, either in place or scheduled for
recruitment;
(d) capital requirements and anticipated availability of required funds to be
provided by the target company from operations, through the sale of
additional securities, the formation of joint ventures or similar
arrangements, or from other sources;
(e) the cost of participation by the Company as compared to the perceived
tangible and intangible values and potential;
(f) the extent to which the business opportunity can be advanced;
(g) the accessibility of required management expertise, personnel, raw
materials, services, professional assistance and other required items; and
(h) such other relevant factors as may arise from time to time, including
investor and market maker, if any, interest.
In applying the foregoing criteria, no one of which is now known to be
controlling, Management will attempt to analyze all relevant factors and make a
determination based upon reasonable investigative measures and available data.
Potentially available business opportunities may occur in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
extremely difficult and complex. Because of the Company's lack of capital, the
Company may not discover or adequately evaluate adverse facts about the
opportunity to be acquired.
The Company is unable to predict when it may participate in a business
opportunity. It expects, however, that the analysis of specific proposals and
the selection of a business opportunity may take a substantial amount of time
and may not occur during the next 12 months.
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Prior to making a decision to participate in a business opportunity, the Company
will generally request that it be provided with written materials regarding the
business opportunity and containing such items as: (i) a description of product,
service and company history; (ii) management resumes; (iii) financial
information (including projections and audited financial statements, if
available); (iv) available projections with related assumptions upon which they
are based; (v) an explanation of proprietary products and services; (vi)
evidence of existing patents, trademarks or service marks or rights thereto;
(vii) present and proposed forms of compensation to management; (viii) a
description of transactions between the target and its affiliates during
relevant periods; (ix) a description of present and required facilities; (x) an
analysis of risks and competitive conditions; (xi) a financial plan of operation
and estimated capital requirements; and (xii) other information deemed relevant
under the circumstances, including investor and market makers, but only after
the release of public information on the target.
As part of the Company's investigation, officers and directors will meet
personally with management and key personnel, visit and inspect material
facilities, obtain independent analysis or verification of certain information
provided, check references of management and key personnel and take other
reasonable investigative measures to the extent of the Company's limited
financial resources.
The Company anticipates that the selection of a business opportunity in which to
participate will be complex and extremely risky. Because of general economic
conditions, rapid technological advances being made in some industries and
shortages of available capital, Management believes that there are numerous
firms seeking the perceived benefits of a publicly registered corporation. Such
perceived benefits may include facilitating or improving the terms on which
additional equity financing may be sought, providing liquidity for incentive
stock options or similar benefits to key employees, providing liquidity (subject
to restrictions of applicable statutes), for all shareholders and other factors.
Potentially available business opportunities may occur in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
extremely difficult and complex. The Company has no present plans to raise any
necessary capital through private placements or public offerings prior to the
location of an acquisition or merger candidate.
Markets.
The Company's initial marketing plan will be focused completely on finding an
acquisition candidate as discussed above. No efforts toward this marketing plan
have been made as of the date of this report.
Raw Materials.
The use of raw materials is not a material factor in the Company's operations.
Customers and Competition.
At the present time, the Company is expected to be an insignificant participant
among the firms which engage in the acquisition of business opportunities. There
are a number of established companies, such as venture capital and financial
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concerns, many of which are larger and better capitalized than the Company
and/or have greater personnel resources and technical expertise. In view of the
Company's combined extremely limited financial resources and limited management
availability, the Company will continue to be at a significant competitive
disadvantage compared to the Company's competitors.
Backlog.
At April 30, 1999, the Company had no backlogs.
Employees.
At as of this report, the Company has no employees. The Company does not plan to
hire employees in the near future.
Proprietary Information.
The Company has no proprietary information.
Government Regulation.
The Company is not subject to any material governmental regulation or approvals.
Research and Development.
The Company has never spent any amount in research and development activities.
Environmental Compliance.
The Company is not subject to any costs for compliance with any environmental
laws.
Item 2. Description of Property
See discussion above under "Description of Business - General Development of
Business."
Item 3. Legal Proceedings
No legal proceedings of a material nature to which the Company is a party were
pending during the reporting period, and the Company knows of no legal
proceedings of a material nature pending or threatened or judgments entered
against any director or officer of the Company in his capacity as such.
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Item 4. Submission of Matters to a Vote of Security Holders
The Company did not submit any matter to a vote of security holders through
solicitation of proxies or otherwise during the fiscal year covered by this
report.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
Principal Market or Markets. The Company's securities have never been listed for
trading on any market and are not quoted at the present time. At the present
time, the Company does not know where secondary trading will eventually be
conducted. The place of trading, to a large extent, will depend upon the size of
the Company's eventual acquisition. To the extent, however, that trading will be
conducted in the over-the-counter market in the so-called "pink sheets" or the
NASD's "Electronic Bulletin Board," a shareholder may find it more difficult to
dispose of or obtain accurate quotations as to price of the Company's
securities. In addition, The Securities Enforcement and Penny Stock Reform Act
of 1990 requires additional disclosure related to the market for penny stock and
for trades in any stock defined as a penny stock.
Holders. As of the date hereof, a total of 20,101,000 of shares of the Company's
Common Stock were outstanding and the number of holders of record of the
Company's common stock at that date was forty.
Dividends. Holders of common stock are entitled to receive such dividends as may
be declared by the Company's Board of Directors. No dividends on the common
stock were paid by the Company during the periods reported herein nor does the
Company anticipate paying dividends in the foreseeable future
The Securities Enforcement and Penny Stock Reform Act of 1990.
The Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure and documentation related to the market for penny stock
and for trades in any stock defined as a penny stock. Unless the Company can
acquire substantial assets and trade at over $5.00 per share on the bid, it is
more likely than not that the Company's securities, for some period of time,
would be defined under that Act as a "penny stock." As a result, those who trade
in the Company's securities may be required to provide additional information
related to their fitness to trade the Company's shares. These requirements
present a substantial burden on any person or brokerage firm who plans to trade
the Company's securities and would thereby make it unlikely that any liquid
trading market would ever result in the Company's securities while the
provisions of this Act might be applicable to those securities.
Blue Sky Compliance.
The trading of blank check companies may be restricted by the securities laws
("Blue Sky" laws) of the individual states. Management is aware that a number of
states currently prohibit the unrestricted trading of blank check companies
absent the availability of exemptions, which are in the discretion of the
states' securities administrators. The effect of these states' laws would be to
limit the trading market, if any, for the shares of the Company and to make
resale of shares acquired by investors more difficult.
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The impact of these Blue Sky laws is considered to be minimal since the Company
does not intend to qualify the Company's outstanding securities for secondary
trading in any state until such time as an acquisition or merger has been
consummated.
Investment Company Act of 1940.
The Company does not intend to engage in any activities which would cause it to
be classified as an "investment company" under the Investment Company Act of
1940, as amended. However, to the extent that the Company would inadvertently
become an investment company because of its activities, the Company would be
subjected to additional, costly and restrictive regulation.
Item 6. Management's Discussion and Analysis or Plan of Operation
Results of Operations.
The Company has generated no revenues from its operations since inception. Since
the Company has not generated revenues and has never been in a profitable
position, it operates with minimal overhead. The Company's primary activity will
be to seek an acquisition candidate. As of the end of the reporting period, the
Company has concluded no acquisitions and has spoken with no potential
candidates. The attempt to seek an acquisition candidate or candidates will be
the primary focus of the Company's activities in the coming fiscal year.
Liquidity and Capital Resources.
As of the end of the reporting period, the Company had cash of $12,842, a
decrease of $17,158 from April 30, 1998. The Company had working capital of
$12,244 at April 30, 1999.
Management feels that the Company has inadequate working capital to pursue any
business opportunities other than seeking an acquisition candidate. The Company
will have minimal capital requirements prior to the consummation of any
acquisition but can pursue an acquisition candidate. Until a suitable candidate
is identified, Howard C. Cadwell and Laurie L. Quam will personally provide the
necessary funds for the operation of the Company, which are expected to be
minimal. There are no plans to reimburse either Mr. Cadwell or Ms. Quam for any
advances. The Company does not intend to pay dividends in the foreseeable
future.
Item 7. Financial Statements
The complete financial statements are included at Item 13 herein.
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Item 8. Disagreements with Accountants on Accounting on Accounting and
Financial Disclosure
The Company did not have any disagreements on accounting and financial
disclosures with its present accounting firm during the reporting period.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
The Directors and Executive Officers of the Company, their ages and positions
held in the Company as of April 30, 1999 are as follows:
Name, Age and
Municipality Residence Office Principal Occupation
- ---------------------- ------ --------------------
Howard C. Cadwell President and Director Restaurant owner
Lakewood, Colorado since inception
Age: 57
Laurie L. Quam Secretary, Treasurer and Publishing
Lakewood, Colorado Director since inception
Age: 38
The Company's Directors will serve in such capacity until the next annual
meeting of the Company's shareholders and until their successors have been
elected and qualified. The officers serve at the discretion of the Company's
Directors. There are no family relationships among the Company's officers and
directors, nor are there any arrangements or understandings between any of the
directors or officers of the Company or any other person pursuant to which any
officer or director was or is to be selected as an officer or director.
HOWARD C. CADWELL. Mr. Cadwell has been the President and a Director of the
Company since inception in 1997. He is the founder and owner of Big City
Burrito, a Mexican restaurant in Fort Collins, Colorado. He has been involved
with the Mexican restaurant from 1994 to the present. From 1982 until 1993, he
was the owner of Pottery World, a retail pottery store in San Jose, California.
Mr. Cadwell attended the University of Wyoming and majored in Electrical
Engineering.
LAURIE L. QUAM. Ms. Quam has been Secretary-Treasurer and a Director of the
Company since inception in 1997. She is also the Secretary and a Director of New
World Publishing, Inc., a public company. From 1990 to 1994, she was the owner
of Budget Framer, a private business. She attended Miami Dade Community College
in Miami, Florida.
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Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16 (a) of the Securities Exchange Act of 1934 (the "34 Act") requires
the Company's officers and directors and persons owning more than ten percent of
the Company's Common Stock, to file initial reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC"). Additionally,
Item 405 of Regulation S-B under the 34 Act requires the Company to identify in
its Form 10-KSB and proxy statement those individuals for whom one of the above
referenced reports was not filed on a timely basis during the most recent fiscal
year or prior fiscal years. Given these requirements, the Company has the
following report to make under this section. None of the Officers or Directors
of the Company made timely filings of their Forms 3 and 5 in the last fiscal
year.
Item 10. Executive Compensation
None of the Company's officers and/or directors receive any compensation for
their respective services rendered to 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. Any compensation will be
dependent upon a combination of factors, including the percentage of time a
person devotes to the business of the Company, experience, ability of the
Company to pay, and other items. The Company has no retirement, pension, profit
sharing, stock option, insurance or other similar programs.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following sets forth the number of shares of the Registrant's $0.0001 par
value common stock beneficially owned by (i) each person who, as of March 31,
1999, was known by the Company to own beneficially more than five percent (5%)
of its common stock; (ii) the individual Directors of the Registrant and (iii)
the Officers and Directors of the Registrant as a group.
Name of
Beneficial Owner/ Shares Percent
Officer or Director/ Beneficially Of
Identity of Group Owned Class
- ------------------- ------------ -------
Howard C. Cadwell 8,002,000(1) 39.8%
President and Director
Laurie L. Quam 8,000,000 39.8%
Secretary, Treasurer and
Director
All Officers and Directors 16,002,000(1) 79.6%
as a Group
(two persons)
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(1) Includes 1,000 shares owned by Laurie Q. Cadwell, wife of Howard C. Cadwell
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All of the shareholders of the Company have signed lock up agreements which will
prevent all of the common shares from being sold or transferred, either in the
open market or in a private transaction, until the Company has consummated a
merger or acquisition and is no longer classified as a shell corporation under
applicable federal or state law. The share certificates will be held by the
Company's counsel until such merger or acquisition has been consummated. Any
liquidation of the current shareholders after the release of the shares from the
lock up may have a depressive effect upon the trading prices of the Company's
securities in any future market which may develop.
Item 12. Certain Relationships and Related Transactions
During the fiscal year ended April 30, 1999 the Company's business office was
located at 1977 S. Vivian Street, Lakewood, Colorado 80228. The Company paid a
nominal amount for rent for this office space, which is occupied by Ms. Laurie
L. Quam, plus paid certain costs for business services such as a phone and fax
machine.
Item 13. Exhibits and Reports on Form 8-K
(a) The following is filed as part of this report:
(1) FINANCIAL STATEMENTS - April 30, 1999 and the fiscal year ended
April 30, 1999 and 1998.
(2) SCHEDULES - Schedules are omitted as the information is not
required or not applicable, or the required information is shown in the
financial statements or notes thereto.
(3) EXHIBITS - The following exhibits are filed as part of this Annual
Report:
Exhibit No. Description
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3.1 Articles of Incorporation, as Amended (1)
3.2 Bylaws (1)
10.1 Form of Subscription Agreement with Lock Up Provisions(1)
---------------------
(1) Previously filed.
(b) Reports on Form 8-K. The Company filed no reports on Form 8-K during the
fourth quarter of the fiscal year ended April 30, 1999.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
National Venture Capital Fund, Inc. has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
NATIONAL VENTURE CAPITAL FUND, INC.
Dated: July 9, 1999 By: /s/ Howard C. Cadwell
-----------------------------------------
Howard C. Cadwell, President and Director
Dated: July 9, 1999 By: /s/ Laurie L. Quam
-----------------------------------------
Laurie L. Quam, Chief Financial Officer,
Secretary, Treasurer and Director
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NATIONAL VENTURE CAPITAL FUND, INC.
(A Development Stage Company)
AUDIT REPORT
For Year Ended April 30, 1999 and For the
Period From June 12, 1997 (Inception)
Through April 30, 1998
Janet Loss, C.P.A., P.C.
Certified Public Accountant
3525 South Tamarac Drive, Suite 120
Denver, Colorado 80237
(303) 220-0227
<PAGE>
INDEX TO FINANCIAL STATEMENTS
NATIONAL VENTURE CAPITAL FUND, INC.
(A Development Stage Company)
TABLE OF CONTENTS
ITEM PAGE
Independent Auditor's Report................................................ F-1
Balance Sheets.............................................................. F-2
Statements of Operations ................................................... F-3
Statements of Stockholders' Equity (Deficit)................................ F-4
Statements of Cash Flows.................................................... F-5
Notes to Financial Statements............................................... F-6
Janet Loss, C.P.A., P.C.
Certified Public Accountant
3525 South Tamarac Drive, Suite 120
Denver, Colorado 80237
(303) 220-0227
<PAGE>
Board of Directors
National Venture Capital Fund, Inc.
(A Development Stage Company)
2121 South Oneida Street
Suite 332
Denver, Colorado 80224
I have audited the accompanying Balance Sheet of National Venture Capital Fund,
Inc. (A Development Stage Company) as of April 30, 1999 and 1998, and the
related Statements of Operations, Stockholders' Equity and Cash Flows for the
year ended April 30, 1999 and for the period from June 12, 1997 (Inception)
through April 30, 1998. 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.
These standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. 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 National Venture Capital Fund, Inc.
(A Development Stage Company) as of April 30, 1999 and 1998, and the results of
its operations and their cash flow for the year ended April 30, 1999 and for the
period from June 12, 1997 (Inception) through April 30, 1998.
/s/ Janet Loss, C.P.A., P.C.
Janet Loss, C.P.A., P.C.
June 3, 1999
F-1
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NATIONAL VENTURE CAPITAL FUND, INC.
(A Development Stage Company)
BALANCE SHEETS
April 30, 1999 and 1998
ASSETS
1999 1998
---- ----
CURRENT ASSETS:
Cash in checking .............................. $ 12,842 $ 30,000
Prepaid Rent .................................. 540 0
-------- --------
Total Current Assets .......................... 13,382 30,000
-------- --------
OTHER ASSETS:
Organization Costs, net of amortization ....... 317 417
-------- --------
TOTAL ASSETS ....................................... $ 13,699 $ 30,417
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable .............................. $ 1,138 $ 0
-------- --------
STOCKHOLDERS' EQUITY:
Preferred stock, 10,000,000
Shares authorized $.0001
Par value per share,
None issued
Common stock, 100,000,000
Shares authorized $.0001
Par value per share,
20,101,000 shares issued and outstanding ......... 2,010 2,010
Additional Paid-In Capital .................... 30,490 30,490
(Deficit) ..................................... (19,939) (2,083)
-------- --------
Total Stockholders' Equity ................ 12,561 30,417
-------- --------
Total Liabilities and
Stockholders' Equity ...................... $ 13,699 $ 30,417
======== ========
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
NATIONAL VENTURE CAPITAL FUND, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
For the Year Ended April 30, 1999 and For
the Period from June 12, 1997 (Inception)
Through April 30, 1998
April 30, April 30,
1999 1998
-------- ---------
REVENUES: .................................... $ 0 $ 0
---------- ----------
OPERATING EXPENSES:
Accounting and legal fees ............... $ 8,600 0
Advertising ............................. 547 0
Amortization ............................ 100 83
Consulting Services ..................... 1,000 2,000
Entertainment ........................... 1,248 0
Filing and Transfer fees ................ 1,310 0
Office Expenses ......................... 1,701 0
Postage ................................. 1,002 0
Rent Expense ............................ 540 0
Telephone Expenses ...................... 1,808 0
---------- ----------
TOTAL OPERATING EXPENSES ................ 17,856 2,083
---------- ----------
NET (LOSS) .............................. $ (17,856) $ (2,083)
========== ==========
NET (LOSS)
PER COMMON SHARE ........................ N/A N/A
========== ==========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING ........................ 20,101,000 20,101,000
========== ==========
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
NATIONAL VENTURE CAPITAL FUND, INC.
(A Development Stage Company)
For the Year Ended April 30, 1999 and for
The period from June 12, 1997 (Inception) through
April 30, 1998
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
Accumulated
Common (Deficit)
Stock Additional During the
Number of Common Stock Paid-In Development Stockholders'
Shares Amount Capital Stage Equity
--------- ------------ ---------- ------------ -------------
<S> <C> <C> <C> <C> <C>
June 12, 1997
Shares issued for
services ..................... 20,001,000 $ 2,000 $ 500 $ 0 $ 2,500
April 30, 1998
100,000,000
shares issued for
cash ......................... 100,000 10 29,990 0 30,000
Net (Loss) for
period from
June 12, 1997
(Inception)
through
April 30, 1998 ............... 0 0 0 (2,083) (2,083)
Balance,
April 30, 1998 ............... 20,101,000 2,010 30,490 $ (2,083) 30,417
Net (Loss) for
the year ended
April 30, 1999 ............... (17,856) (17,856)
------------- ------------- ------------- ------------- -------------
Balance,
April 30, 1999 ............... 20,101,000 $ 2,010 $ 30,490 $ (19,939) $ 12,561
============= ============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
NATIONAL VENTURE CAPITAL FUND, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the Year Ended April 30, 1999 and for the
Period From June 12, 1997 (Inception)
through April 30, 1998
April 30, April 30,
1999 1998
--------- ---------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net (Loss) .................................... $(17,856) $ (2,083)
Adjustments to Reconcile
Net (Loss) to Cash Flow From
Operating Activities:
Amortization .............................. 100 83
Increase in Prepaid Rent .................. (540) 0
Increase in Accounts Payable .............. 1138 0
Stock issued for services ................. 0 2,000
Stock issued for organization costs ....... 0 500
-------- --------
NET CASH PROVIDED BY
FINANCING ACTIVITIES ............................... (17,158) 500
CASH FLOWS FROM
INVESTING ACTIVITIES:
Organization Costs ............................ 0 (500)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance
of Capital stock .............................. 0 30,000
-------- --------
CASH, BEGINNING OF PERIOD .......................... 30,000 0
-------- --------
CASH, END OF PERIOD ................................ $ 12,842 $ 30,000
======== ========
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
NATIONAL VENTURE CAPITAL FUND, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - HISTORY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
National Venture Capital Fund, Inc. (A Development Stage Company), a Colorado
Corporation, was incorporated June 12, 1997, for the purpose of seeking
potential business acquisitions or mergers.
Accounting Method
The company records income and expenses on the accrual method.
Organization Costs
Costs incurred in organizing the company are being amortized over a
sixty-month period.
Year End
The Company has elected a fiscal year-end of April 30th.
Loss Per Share
Net loss is calculated by dividing the net loss by the weighted average
number of common shares outstanding.
NOTE II - RELATED PARTY TRANSACTIONS
The Company maintains its principal place of business in space provided by an
officer of the Company pursuant to an oral agreement for a nominal amount with
reimbursement for out of pocket expenses, such as telephone.
F-6
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> APR-30-1999 APR-30-1999
<PERIOD-START> MAY-01-1998 JUN-12-1997
<PERIOD-END> APR-30-1999 APR-30-1998
<CASH> 12,842 30,000
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 540 0
<PP&E> 317 417
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 13,699 30,417
<CURRENT-LIABILITIES> 1,138 0
<BONDS> 0 0
0 0
0 0
<COMMON> 2,010 2,010
<OTHER-SE> 10,551 28,407
<TOTAL-LIABILITY-AND-EQUITY> 13,699 30,417
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 17,856 2,083
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 0 0
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (17,856) (2,083)
<EPS-BASIC> 0 0
<EPS-DILUTED> 0 0
</TABLE>
