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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
1st Amendment
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES ACT OF 1934
CORE SYSTEMS, INC.
------------------
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
NEVADA 88-0390251
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
12618 BIRCHBROOK COURT, POWAY CA 92064
-------------------------------- -----
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(619)699-1750
- -------------
(ISSUER'S TELEPHONE NUMBER)
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
-------------------------------- --------------------------------------
-------------------------------- --------------------------------------
SECURITIES TO BE REGISTERED UNDER SECTION 12(g) OF THE ACT:
Common Stock - .001 Par Value
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(TITLE OF CLASS)
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PART 1
ITEM 1
DESCRIPTION OF THE BUSINESS
General
Core Systems, Inc. is filing this Form 10-SB on a voluntary basis in order to
make Core Systems' financial information available to any interested parties or
investors and meet registration requirements for publicly traded securities on
the OTC Electronic Bulletin Board. The Company will file an information
statement with a sponsoring NASD Broker-Dealer for listing of its securities on
the OTC Bulletin Board upon completion of the comment period for the Company's
Form 10-SB.
Business Development
Core Systems, Inc. was incorporated in Nevada on February 19, 1997 for the
purpose of developing cost efficient methods of pipe restoration in commercial
and residential buildings. Management participated in advanced methods of pipe
restoration projects through twenty commercial construction jobs in Southern
California in 1997 and 1998. After consideration of competitive methods, the
board of directors voted in March 1999 to seek capital and began development of
the Company's business plan. During March and April 1999, the Company raised
capital through the sale of common stock to investors.
There have been no bankruptcy, receivership or similar proceedings.
In the ordinary course of business there have been no material
reclassifications, mergers, consolidations, or purchase or sale of a significant
amount of assets.
Business of the Issuer
The Company intends to implement its business plan to offer its pipe restoration
services to commercial and residential building owners in California in the
fourth quarter of 1999 or the first quarter of 2000. Management has identified
older buildings and residences in large cities such as Los Angeles and San
Francisco which are areas with a large number of multi-unit residential and
commercial buildings which were constructed prior to 1980. After the first two
years, the Company intends to market its pipe restoration services in the states
of Oregon and Washington. Its services specifically involve a process of
cleaning aged pipes in buildings that carry fresh and waste water, and then
applying commercially available epoxy coatings under high pressure to coat and
seal the pipes in order to double or triple the life of these pipes. The
Company's Management has been responsible for commercial and residential pipe
restoration projects for nine years in Southern California, seven years in
traditional renovation through removal and replacement, and two years in
coatings methods. Management has determined this type of pipe restoration is
between forty and fifty percent less costly than traditional construction
processes of removing existing pipes and installing new pipes in older building
frames and foundations. While Management has not conducted national or
state-wide pipe
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restoration industry studies, and is unaware of any such studies, Management's
experience in securing pipe restoration contracts throughout Southern California
indicates the market is growing for this type of work as buildings continue to
age. The pipe restoration business competition consists primarily of small
plumbing contractors who advertise directly through construction trade
newspapers and trade journals. In addition, these plumbing contractors examine
county and city property tax records to identify owners of older buildings for
direct mailing campaigns.
Over the next twelve months the Company intends to take the following steps in
order to make its pipe restoration services available in California: during the
first six months raise capital of $800,000 to $1,000,000 through the sale of
securities, during the second six months open one office in Los Angeles with a
budget of $500,000. Management will use its knowledge and experience to hire six
plumbers and one manager, train all employees, and provide all required
equipment, office furnishings, and marketing.
The Company has no new product or service planned or announced to the public.
The size and financial strengths of the Company's competitors are substantially
greater than those of the Company. Although Management has limited access to
in-depth information regarding the operations of the Company's competitors,
Management believes that the Company can effectively compete because of
Management's extensive knowledge of plumbing and pipe restoration services and
the cost efficiency of its technology. The Company's Management has been
responsible for commercial and residential pipe restoration projects for nine
years in Southern California, seven years in traditional renovation through
removal and replacement, and two years in coatings methods. This is the basis of
Management's extensive knowledge and experience in these plumbing areas.
Management is not aware of any significant barriers to the Company's entry into
the pipe restoration market, however, the Company at this time has no market
share of this market.
Pipe restoration systems are available through a limited number of pipe coating
suppliers such as Armour Coat Corporation. While Management has already had
several meetings with suppliers, the Company currently has no contracts with
suppliers and will not complete contracts with potential suppliers until such
time as the Company has sufficient funding of $800,000 to $1,000,000. At this
time the Company has no formal contracts with any suppliers or
developers/manufacturers and will not initiate negotiations with any potential
suppliers until such time as the Company has sufficient funding per its business
plan.
The Company intends to sell its services to a broad base of multi-unit and
commercial property owners and will not depend on any one or a few major
customers. When the Company has secured sufficient funding of $800,000 to
$1,000,000 it will begin marketing after the first six months of its business
plan to these potential customers through trade publications, newspapers,
focused mailings and the Internet on its own proposed Website.
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The Company has no current or future business plans involving patents,
trademarks, franchises, concessions, royalty agreements, or labor contracts. The
Company will only use coating products in its contracts that are certified by
the manufacturer to be in full compliance with federal, state, and local
government clean water and health mandates.
The Company's business is not subject to material regulation by federal
governmental agencies. The Company will be required to meet all state and local
governmental building codes and standards. Management personnel are familiar
with all California state and local building codes, plumbing and health
department regulations, and contractor licensing requirements.
All research and development costs since inception have been immaterial in cost
and will not be passed on to customers.
The Company's only employees are its two officers who will devote as much time
as the board of directors determines is necessary to manage the affairs of the
Company. The officers intend to work on a full time basis when the Company is
able to provide proper remuneration as discussed in Item 6, "Executive
Compensation".
While Management believes its estimates of projected occurrences and events are
within the timetable of its business plan, there can be no guarantees or
assurances that the results anticipated will occur.
Year 2000 Disclosure
Computer programs that have time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruption of normal business activities.
The Company's Management has hands-on familiarity with all of the software that
will be utilized in its business plan and has confirmation from third party
suppliers that its current software is certified Year 2000 compatible for all of
its computing requirements. In addition, proposed suppliers of office equipment
for the Company's business plan have confirmed that embedded technology systems
such as micro processors in telephone systems and other non- computer devices
that will be purchased per the Company's business plan are already Year 2000
compatible. While the Company has made what it believes to be adequate inquiries
of the its software suppliers as to Year 2000 compliance, there can be no
guarantee that the software suppliers will be adequately prepared for every
possible contingent Year 2000 software problem, which could have, in
Management's opinion, immaterial adverse effects on the Company's results of
operations. In a reasonably likely worst case scenario, the Company may
experience immaterial adverse cash flow effects due to handling Company
accounting and scheduling needs on a manual basis instead of utilizing computer
systems.
The Company currently anticipates purchasing new off-the-shelf Year 2000
compatible software by December 31, 1999, which is prior to any anticipated
impact on its operating systems. The total cost of this new software is not
anticipated to be a material expense to the Company at this time.
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ITEM 2
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
Plan of Operation
The Company maintains a cash balance sufficient to sustain corporate operations
until such time as Management can raise the funding necessary to advance its
business plan. The losses through June 30, 1999 were primarily due to
operational expenses of professional fees and filing fees. Sales of the
Company's equity securities have allowed the Company to maintain a positive cash
flow balance.
During the next twelve months, Management's business plan is for the Company to
take the following steps to offer its pipe restoration services in California:
raise capital of $800,000 to $1,000,000 through the sale of securities pursuant
to a private placement during the first six months, open one office in Los
Angeles County during the second six months with a budget of $120,000 in
equipment, $30,000 in office equipment, $20,000 in furniture & fixtures, $5,000
in supplies, $150,000 in direct labor, $40,000 in management salary, $20,000 in
indirect salaries, $24,000 in rent, $50,000 in advertising, $10,000 in
insurance, and $25,000 in other operating expenses. The Company will begin
bidding pipe restoration jobs in month seven, with anticipated job starts in
months nine through twelve. Management anticipates cash flow from job
completions to begin near the end of month twelve. The Company intends to use
the capital raised from the private placement to fund the Company's business
plan as cash flow from sales is estimated to begin near the end of the twelve
month period. Management has experience with bank loans for new corporations in
Southern California and has found banks and similar lending institutions require
the borrowing company to have two years of successful financial results before
any lending is feasible. Management believes raising capital through equity
sales for a new company requiring substantive capital needs is more expedient
and less costly than utilizing non-traditional lenders or venture capitalist
funding. Management believes it has determined the best method of pipe
renovation for its business plan and desires to implement its business plan at
this time due to the overall good construction economy in Southern California
and the number of aging buildings in Southern California that require the use of
the Company's services. The primary determining factor for the Company to
implement its business plan now instead of two years ago was the experience
Management needed and gained through working with different pipe restoration
methods in order to choose the best pipe restoration method for the Company.
Other than that experience and the continued overall good construction economy
in Southern California during the last two years, there have been no other
material developments or acquisitions that have encouraged Management to
implement its business plan now. The Company will face considerable risk in each
of its business plan steps, such as difficulty of renting adequate office
facilities within its budget, difficulty of hiring competent personnel within
its budget, difficulty in completing necessary personnel training within time
limits, and a shortfall of funding due to the Company's inability to raise
capital in the equity securities market. If no funding is received during the
next twelve months, the Company may be forced to reduce its business plan
activities to focus on one or a few local construction contracts, seek jobs that
pay advance deposits and make progress payments, reduce its planned employee
hiring, and delay cash expenditures for goods and services. If the Company could
not resolve a possible lack of funding through these steps, it would be forced
to rely on its existing cash in the bank and funds loaned by the directors and
officers. The Company's officers and directors have no formal commitments or
arrangements to advance or loan funds to the Company and no
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restrictions, limits, or interest rates have been discussed or considered.
In such a restricted cash flow scenario, the Company would be unable to complete
its business plan steps, and would, instead, suspend all cash intensive
activities. Without necessary cash flow, the Company would have to reduce its
activities until such time as necessary funds could be raised in the equity
securities market or seek a merger or acquisition (as a parent or target) of
another business entity that has revenue and/or long-term growth potential.
There are no current plans for additional product research and development.
There are no current plans to purchase or sell any significant amount of fixed
assets. The Company's business plan provides for an increase of seven employees
during the next twelve months.
Results of Operations
There were no revenues from sales for the period ended June 30, 1999. The
Company sustained a net loss of $1,676 for the nine months ended June 30, 1999.
The Company's auditors have included a statement and footnotes in their audit of
the Company's financial statements that assume the Company will continue as a
going concern even though there is substantial doubt about the Company's ability
to do so because of recurring losses from operations and a lack of revenues.
However, the Company's current financial condition is due to its current reduced
level of operations as a development stage company. Management intends to
implement its business plan which is predicated on its ability to raise
sufficient capital through the sale of equity securities. Management assumes the
Company will be able to reach its business plan goals and continue as a going
concern through the steps listed in its "Plan of Operations" above.
Liquidity and Capital Resources
As of June 30, 1999, the Company had $5,644 cash on hand and in the bank. The
primary costs and operating expenses for the period ended June 30, 1999 were
attributable to accounting fees of $1,500.
ITEM 3
DESCRIPTION OF PROPERTY
The Company's principal executive office address is 12618 Birchbrook Court,
Poway, CA 92064. The principal executive office and telephone number are located
within the home of Mr. Vic Barger, President and Director of the Company, and
provided at no cost. There is no formal lease agreement between Mr. Barger and
the Company for the use of the premises. Management considers the Company's
current principal office space arrangement adequate for current and short-term
estimated growth.
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ITEM 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth information on the ownership of the Company's
voting securities by Officers, Directors and major shareholders as well as those
who own beneficially more than five percent of the Company's common stock
through the most current date - April 30,1999:
<TABLE>
<CAPTION>
Title Of Name & Amount & Percent
Class Address Nature of owner Owned
- -------- ------- --------------- -------
<S> <C> <C> <C>
Common Vic Barger 330,000(a) 10.8%
12618 Birchbrook Court
Poway, CA 92064
Common A. Tasso Tsalamandris 330,000(b) 10.8%
1906 West King Edward Avenue
Vancouver, BC V6J 2W6
Total Shares Owned by Officer &
Directors as a Group 660,000 21.6%
</TABLE>
(a) Mr. Barger received for services 10,000 shares of the Company's common
stock on March 11, 1999. 320,000 shares of the Company's common stock
were issued to him per a 33 for 1 stock split on April 30, 1999.
(b) Mr. Tsalamandris received for services 10,000 shares of the Company's
common stock on March 11, 1999. 320,000 shares of the Company's common
stock were issued to him per a 33 for 1 stock split on April 30, 1999.
ITEM 5
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS,
AND CONTROL PERSONS
The Directors and Officers of the Company, all of those whose terms will expire
in March 2000, or at such a time as their successors shall be elected and
qualified are as follows:
<TABLE>
<CAPTION>
Name & Address Age Position Date First Elected
- -------------- --- -------- ------------------
<S> <C> <C> <C>
Vic Barger 41 President, 3/11/99
12618 Birchbrook Court Secretary,
Poway, CA 92064 Director
</TABLE>
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<TABLE>
<CAPTION>
Name & Address Age Position Date First Elected
- -------------- --- -------- ------------------
<S> <C> <C> <C>
A. Tasso Tsalamandris 34 Treasurer, 4/3/98
1906 King Edward Avenue Director
Vancouver BC V6J 2W6
</TABLE>
Each of the foregoing persons may be deemed a "promoter" of the Company, as that
term is defined in the rules and regulations promulgated under the securities
and Exchange Act of 1933.
Directors are elected to serve until the next annual meeting of stockholders and
until their successors have been elected and qualified. Officers are appointed
to serve until the meeting of the Board of Directors following the next annual
meeting of stockholders and until their successors have been elected and
qualified.
No Executive Officer or Director of the Corporation has been the subject of any
Order, Judgement, or Decree of any Court of competent jurisdiction, of any
regulatory agency enjoining him from acting as an investment advisor,
underwriter, broker or dealer in the securities industry, or as an affiliated
person, director or employee of an investment company, bank, savings and loan
association, or insurance company or from engaging in or continuing any conduct
or practice in connection with any such activity or in connection with the
purchase or sale of any securities nor has any such person been the subject of
any Order of a State authority barring or suspending for more than sixty (60)
days, the right of such a person to be engaged in such activities or to be
associated with such activities.
No Executive Officer or Director of the Corporation has been convicted in any
criminal proceeding (excluding traffic violations) or is the subject of a
criminal proceeding which is currently pending.
No Executive Officer or Director of the Corporation is the subject of any
pending legal proceedings.
Resumes
Vic Barger, President, Secretary & Director
1990 - Current President, CVB Plumbing, Heating & Air, Inc. Company provides
services and repair, replacement and new installation. Developer
of new services and technology for plumbing, heating and air
conditioning trades. Serves all of San Diego County.
A. Tasso Tsalamandris, Treasurer & Director
1996 - Current Independent Consultant providing business process design and
integrated systems implementation to mechanical & plumbing
business clients.
1989 - 1996 Senior Regulatory Analyst for BC Gas Utility. Conducted
specialized financial analysis for various gas industry
projects.
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ITEM 6
EXECUTIVE COMPENSATION
The company's current officers receive no compensation.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Other
Name & annual Restricted LTIP All other
principle Salary Bonus compen- stock Options Payouts compen-
position Year ($) ($) sation($) awards($) SARs ($) sation($)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
V Barger 1997 -0- -0- -0- -0- -0- -0- -0-
President 1998 -0- -0- -0- -0- -0- -0- -0-
1999 -0- -0- -0- 330 -0- -0- -0-
Tsalamandris 1997 -0- -0- -0- -0- -0- -0- -0-
Director 1998 -0- -0- -0- -0- -0- -0- -0-
1999 -0- -0- -0- 330 -0- -0- -0-
</TABLE>
There are no current employment agreements between the Company and its executive
officers.
The Directors and Principal Officers have worked with no remuneration until such
time as the Company receives sufficient funding necessary to provide proper
salaries to all Officers and compensation for Directors' participation. The
Officers and the Board of Directors have the responsibility to determine the
timing of remuneration for key personnel based upon such factors as positive
cash flow to include stock sales, product sales, estimated cash expenditures,
accounts receivable, accounts payable, notes payable, and a cash balance of not
less than $15,000 at each month end. When positive cash flows result in a cash
balance $15,000 at each month end and appears sustainable the board of directors
will readdress compensation for key personnel and enact a plan at that time
which will that benefits the Company as a whole. At this time, management cannot
accurately estimate when sufficient cash flows will generate the required cash
balances necessary to implement this compensation, or the exact amount of
compensation.
There are no annuity, pension or retirement benefits proposed to be paid to
officers, directors or employees of the Corporation in the event of retirement
at normal retirement date pursuant to any presently existing plan provided or
contributed to by the Corporation or any of its subsidiaries, if any.
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ITEM 7
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On March 11, 1999 the Board determined that while Mr. Barger had provided some
services to advance the Company's business plan, his services were of an
immaterial nature. Mr. Barger and the Company therefore agreed the consideration
from the Company for those immaterial services would be in the form of 10,000
shares of the Company's common stock with a par value of $20.00. On April 30,
1999, 320,000 shares of the Company's common stock were issued to him per a 33
for 1 stock split.
On March 11, 1999 the Board determined that while Mr. Tsalamandris had provided
some services to advance the Company's business plan, his services were of an
immaterial nature. Mr. Tsalamandris and the Company therefore agreed the
consideration from the Company for those immaterial services would be in the
form of 10,000 shares of the Company's common stock with a par value of $20.00.
On April 30, 1999, 320,000 shares of the Company's common stock were issued to
him per a 33 for 1 stock split.
The Company's President currently owns and manages a plumbing business which
competes directly with the Company. The Company's bylaws allow directors and
officers to participate in contracts and other transactions with other entities
in which the directors and officers may have an interest so long as these
relationships are fully disclosed to the Company's Board of Directors and the
Board authorizes, approves, or ratifies the contracts and other transactions by
a majority of a quorum of the Board. The Board is aware of this conflict of
interest by the President's participation in a competing plumbing business and
has adopted a resolution authorizing this participation by the President until
such time as the Company secures funding necessary to compensate the President
per the terms disclosed in this filing's Executive Compensation section.
The Company's officers and directors have no formal commitments or arrangements
to rent office space or advance or loan funds to the Company. To date, the
President has provided no material amount of office services as the physical
address and telephone number are at the President's home.
ITEM 8
DESCRIPTION OF SECURITIES
The Company's Certificate of Incorporation authorizes the issuance of 50,000,000
Shares of Common Stock, .001 par value per share. There is no preferred stock
authorized. Holders of shares of Common Stock are entitled to one vote for each
share on all matters to be voted on by the stockholders. Holders of Common Stock
have cumulative voting rights. Holders of shares of Common Stock are entitled to
share ratably in dividends, if any, as may be declared, from time to time by the
Board of Directors in its discretion, from funds legally available therefor. In
the event of a liquidation, dissolution, or winding up of the Company, the
holders of shares of Common Stock are entitled to share pro rata all assets
remaining after payment in full of all liabilities. Holders of Common Stock have
no preemptive or other subscription rights, and there are no conversion rights
or redemption or sinking fund provisions with respect to such shares. All of the
outstanding Common Stock is, and the shares offered by the Company pursuant to
this offering will be, when issued and
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delivered, fully paid and non-assessable.
The Securities and Exchange Commission has adopted Rule 15g-9 which established
the definition of a "penny stock", for the purposes relevant to the Company, as
any equity security that has a market price of less than $5.00 per share or with
an exercise price of less than $5.00 per share, subject to certain exceptions.
For any transaction involving a penny stock, unless exempt, the rules require:
(I) that a broker or dealer approve a person's account for transactions in penny
stocks; and (ii) the broker or dealer receive from the investor a written
agreement to the transaction, setting forth the identity and quantity of the
penny stock to be purchased. In order to approve a person's account for
transactions in penny stocks, the broker or dealer must (I) obtain financial
information and investment experience objectives of the person; and (ii) make a
reasonable determination that the transactions in penny stocks are suitable for
that person and the person has sufficient knowledge and experience in financial
matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prepared by the Commission relating to the penny
stock market, which, in highlight form, (I) sets forth the basis on which the
broker or dealer made the suitability determination; and (ii) that the broker or
dealer received a signed, written agreement from the investor prior to the
transaction. Disclosure also has to be made about the risks of investing in
penny stocks in both public offerings and in secondary trading and about the
commissions payable to both the broker-dealer and the registered representative,
current quotations for the securities and the rights and remedies available to
an investor in cases of fraud in penny stock transactions. Finally, monthly
statements have to be sent disclosing recent price information for the penny
stock held in the account and information on the limited market in penny stocks.
If the Company's stock is listed at a price of less that $5.00 the stock will be
a penny stock. As a penny stock the shares could be less liquid than if the
stock was not so classified.
PART II
ITEM 1
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND OTHER SHAREHOLDER MATTERS
The Company plans to file for trading on the OTC Electronic Bulletin Board which
is sponsored by the National Association of Securities Dealers (NASD). The OTC
Electronic Bulletin Board is a network of security dealers who buy and sell
stock. The dealers are connected by a computer network which provides
information on current "bids" and "asks" as well as volume information.
As of the date of this filing, there is no public market for the Company's
securities. As of April 30, 1999, the Company had 70 shareholders of record. The
Company has paid no cash dividends. The Company has no outstanding options. The
Company has no plans to register any of its securities under the Securities Act
for sale by security holders. There is no public offering of equity and there is
no proposed public offering of equity.
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ITEM 2
LEGAL PROCEEDINGS
The Company is not currently involved in any legal proceedings and is not aware
of any pending or potential legal actions.
ITEM 3
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
CONTROL AND FINANCIAL DISCLOSURE
None.
ITEM 4
RECENT SALES OF UNREGISTERED SECURITIES
On March 11, 1999, the shareholders authorized the issuance of 10,000 shares of
common stock pursuant to Securities Act Rule 144 for services to each of the
officers and directors of the Company for a total of 20,000 Rule 144 shares.
Rule 144 provides an objective safe harbor for the resale of these "restricted
shares" acquired directly from the issuer in a non-public offering. The Company
relied upon Section 4(2) of Securities Act of 1993, as amended (the "Act"). The
Company issued the shares in satisfaction of management services rendered to
officers and directors, which does not constitute a public offering.
From the period of approximately April 1, 1999 until April 30, 1999, the Company
offered and sold 73,000 shares at $0.10 per share to non-affiliated private
investors. The Company relied upon Regulation D under the Securities Act of
1993, as amended (the "Act"). Each prospective investor was given a private
placement memorandum designed to disclose all material aspects of an investment
in the Company, including the business, management, offering details, risk
factors and financial statements. Each investor also completed a subscription
confirmation letter and private placement subscription agreement whereby the
investors certified that they were purchasing the shares for their own accounts,
with investment intent. Each investor was either accredited as defined, or were
"sophisticated" purchasers, having prior investment experience or education, and
having adequate and reasonable opportunity and access to corporate information.
This offering was not accompanied by general advertisement or general
solicitation. The Company relied on Rule 504 of Regulation D as the basis of
exemption from registration, as identified on Form D as filed with Commission on
March 25, 1999. Blue Sky filings were made (where required) in each state that
the shares were offered and sold.
On April 30, 1999, the Board of Directors authorized a forward stock split of 33
for 1 (33:1) resulting in a total of 3,069,000 shares of common stock issued and
outstanding.
ITEM 5
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 78.751 of the Nevada Business Corporation Act provides that each
corporation shall have the
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following powers:
"1. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of any fact
that he is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys fees, judgements, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he acted in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgement, order, settlement,
conviction, or upon a pleas of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal action or
proceeding, he had a reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by or
in the right of the corporation to procure a judgement in its favor by reason of
the fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses, including amounts paid in
settlement and attorneys fees actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit if he acted in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the corporation. Indemnification may not be made for
any claim, issue or matter as to which such a person has been adjudged by a
court of competent jurisdiction, after exhaustion of all appeals therefrom, to
be liable to the corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction, determines upon
application that in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.
3. To the extent that a director, officer, employee or agent of a corporation
has been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in sections 1 and 2, or in defense of any claim, issue or
matter therein, he must be indemnified by the corporation against expenses,
including attorneys fees, actually and reasonably incurred by him in connection
with the defense.
4. Any indemnification under sections 1 and 2, unless ordered by a court or
advanced pursuant to section 5, must be made by the corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances. The
determination must be made:
a. By the stockholders;
b. By the board of directors by majority vote of a quorum
consisting of directors who were not parties to the act, suit or
proceeding;
13
<PAGE> 14
c. If a majority vote of a quorum consisting of directors who were
not parties to the act, suit or proceeding so orders, by
independent legal counsel, in a written opinion; or
d. If a quorum consisting of directors who were not parties to the
act, suit or proceeding cannot be obtained, by independent legal
counsel in a written opinion.
5. The certificate of articles of incorporation, the bylaws or an agreement made
by the corporation may provide that the expenses of officers and directors
incurred in defending a civil or criminal action, suit or proceeding must be
paid by the corporation as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt of an undertaking by
or on behalf of the director or officer to repay the amount if it is ultimately
determined by a court of competent jurisdiction that he is not entitled to be
indemnified by the corporation. The provisions of this section do not affect any
rights to advancement of expenses to which corporate personnel other than
director or officers may be entitled under any contract or otherwise by law.
6. The indemnification and advancement of expenses authorized in or ordered by a
court pursuant to this section:
a. Does not include any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under
the certificate or articles of incorporation or any bylaw,
agreement, vote of stockholders or disinterested directors or
otherwise, for either an action in his official capacity or an
action in another capacity while holding his office, except that
indemnification, unless ordered by a court pursuant to section 2
or for the advancement of expenses made pursuant to section 5,
may not be made to or on behalf of any director or officer if a
final adjudication establishes that his acts or omission
involved intentional misconduct, fraud or a knowing violation of
the law and was material to the cause of action.
b. Continues for a person who has ceased to be a director, officer,
employee or agent and inures to the benefit of the heirs,
executors and administrators of such a person.
c. The Company's Articles of Incorporation provides that "the
Corporation shall indemnify its officers, directors, employees
and agents to the fullest extent permitted by the General
Corporation Law of Nevada, as amended from time to time."
The Company's By-Laws allow for the indemnification of Company Officers and
Directors in regard to their carrying out the duties of their offices. The
By-Laws also allow for reimbursement of certain legal defenses.
As to indemnification for liabilities arising under the Securities Act of 1933
for directors, officers or persons controlling the Company, the Company has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy and unenforceable.
PART F/S
The audited financial statements of the Company and related notes which are
included in this offering have been examined by Barry L. Friedman, PC, and have
been so included in reliance upon the opinion of such accountants given upon
their authority as an expert in auditing and accounting.
14
<PAGE> 15
CORE SYSTEMS, INC.
(Formerly Creative Systems, Inc.)
(A Development Stage Company)
FINANCIAL STATEMENTS
APRIL 30, 1999
SEPTEMBER 30, 1998
SEPTEMBER 30, 1997
<PAGE> 16
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE #
------
<S> <C>
INDEPENDENT AUDITORS REPORT F1
ASSETS F2
LIABILITIES AND STOCKHOLDERS' EQUITY F3
STATEMENT OF OPERATIONS F4
STATEMENT OF STOCKHOLDERS' EQUITY F5
STATEMENT OF CASH FLOWS F6
NOTES TO FINANCIAL STATEMENTS F7-F11
</TABLE>
<PAGE> 17
BARRY L. FRIEDMAN, P.C.
Certified Public Accountant
1582 TULITA DR. LAS VEGAS, NEVADA 89123
PHONE(702) 361-8414 FAX(702) 896-0278
INDEPENDENT AUDITORS' REPORT
Board of Directors May 27, 1999
Core Systems, Inc.
San Diego, California
I have audited the accompanying Balance Sheets of Core Systems, Inc.,
(formerly Creative Systems, Inc.), (A Development Stage Company), as of April
30, 1999, September 30, 1998, and September 30, 1997, and the related statements
of operations, stockholders' equity and cash flows for the period October 1,
1998 to April 30th, 1999, and the year ended September 30, 1998, and the period
February 19, 1997 (inception) to September 30, 1997. These financial statements
are the responsibility of the Company's management. My responsibility is to
express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Core Systems, Inc.,
(formerly Creative Systems, Inc.), (A Development Stage Company), as of April
30, 1999, September 30, 1998, and September 30, 1997, and the results of its
operations and cash flows for the period October 1, 1998 to April 30th, 1999,
and the year ended September 30, 1998, and the period February 19, 1997
(inception) to September 30, 1997, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note #5 to the
financial statements, the Company has suffered recurring losses from operations
and has no established source of revenue. This raises substantial doubt about
its ability to continue as a going concern. Management's plan in regard to these
matters is described in Note #5. These financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
- ----------------------------------
Barry L. Friedman
Certified Public Accountant
F-1
<PAGE> 18
CORE SYSTEMS, INC.
(Formerly Creative Systems, Inc.)
(A Development Stage Company)
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
APRIL SEPTEMBER SEPTEMBER
30, 1999 30, 1998 30, 1997
-------- --------- ---------
<S> <C> <C> <C>
CURRENT ASSETS:
CASH $ 7,274 $ 0 $ 0
-------- -------- --------
TOTAL CURRENT ASSETS: $ 7,274 $ 0 $ 0
-------- -------- --------
OTHER ASSETS: $ 0 $ 0 $ 0
-------- -------- --------
TOTAL OTHER ASSETS: $ 0 $ 0 $ 0
-------- -------- --------
TOTAL ASSETS $ 7,274 $ 0 $ 0
-------- -------- --------
</TABLE>
See accompanying notes to financial statements
F-2
<PAGE> 19
CORE SYSTEMS, INC.
(Formerly Creative Systems, Inc.)
(A Development Stage Company)
BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
APRIL SEPTEMBER SEPTEMBER
30, 1999 30, 1998 30, 1997
-------- --------- ---------
<S> <C> <C> <C>
CURRENT LIABILITIES: $ 0 $ 0 $ 0
-------- -------- --------
TOTAL CURRENT LIABILITIES: $ 0 $ 0 $ 0
-------- -------- --------
STOCKHOLDERS' EQUITY: (Note #4)
Common stock
NO PAR VALUE
Authorized 25,000 shares
Issued and outstanding at
September 30, 1997 -
None $ 0
September 30, 1998 -
None $ 0
Common stock
Par value $0.001
Authorized 50,000,000 shares
Issued and outstanding at
April 30, 1999 -
3,069,000 shares: $ 3,069
Additional Paid-In Capital +4,251 0 0
Deficit accumulated during
Development stage: -46 0 0
-------- -------- --------
TOTAL STOCKHOLDERS' EQUITY: $ 7,274 $ 0 $ 0
-------- -------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY: $ 7,274 $ 0 $ 0
-------- -------- --------
</TABLE>
See accompanying notes to financial statements
F-3
<PAGE> 20
CORE SYSTEMS, INC.
(Formerly Creative Systems, Inc.)
(A Development Stage Company)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Oct. 1, Year Feb 19 Feb 19,1997
1998 to Ended 1997 to (Inception)
Apr. 30, Sep. 30, Sep. 30, to Apr. 30,
1999 1998 1997 1999
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
INCOME:
Revenue $ 0 $ 0 $ 0 $ 0
---------- ---------- ---------- ----------
EXPENSES:
General, Selling and
Administrative $ 46 $ 0 $ 0 $ 46
---------- ---------- ---------- ----------
TOTAL EXPENSES: $ 46 $ 0 $ 0 $ 46
---------- ---------- ---------- ----------
NET PROFIT/LOSS (-): $ -46 $ 0 $ 0 $ -46
---------- ---------- ---------- ----------
Net Profit/Loss(-)
per weighted share
(Note 1): $ NIL $ NIL $ NIL $ NIL
---------- ---------- ---------- ----------
Weighted average
Number of common
shares outstanding: 3,069,000 3,069,000 3,069,000 3,069,000
---------- ---------- ---------- ----------
</TABLE>
See accompanying notes to financial statements
F-4
<PAGE> 21
CORE SYSTEMS, INC.
(Formerly Creative Systems, Inc.)
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional Accumu-
Common Stock paid-in lated
Shares Amount Capital Deficit
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Balance,
September 30, 1997 0 $ 0 $ 0 $ 0
Net loss year ended
September 30, 1997 0
--------- --------- --------- ---------
Balance,
September 30, 1998 0 $ 0 $ 0 $ 0
March 11, 1999
Stock issued for
Services 20,000 20
March 25, 1999
Changed Par Value
From no par value to
$0.001 0 0
April 30, 1999
Issued for Cash 73,000 73 7,227
April 30, 1999
Forward Stock Split
33:1 2,976,000 +2,976 -2,976
Net Loss
October 1, 1998 to
April 30, 1999 -46
--------- --------- --------- ---------
Balance,
April 30, 1999 3,069,000 $ 3,069 $ +4,251 $ -46
--------- --------- --------- ---------
</TABLE>
See accompanying notes to financial statements
F-5
<PAGE> 22
CORE SYSTEMS, INC.
(Formerly Creative Systems, Inc.)
(A Development Stage Company)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Oct. 1, Year Feb. 19 Feb. 19,1997
1998 to Ended 1997 to (Inception)
Apr. 30, Sep. 30, Sep. 30, to Apr. 30,
1999 1998 1997 1999
-------- -------- -------- -----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net Loss $ -46 $ 0 $ 0 $ -46
Adjustment to
Reconcile net loss
To net cash provided
by operating
Activities:
Issue Common Stock
For Services +20 0 0 +20
Changes in assets and
Liabilities: 0 0 0 0
-------- -------- -------- -----------
NET CASH USED IN
OPERATING ACTIVITIES: $ -26 $ 0 $ 0 $ -26
CASH FLOWS FROM
INVESTING ACTIVITIES: 0 0 0 0
CASH FLOWS FROM
FINANCING ACTIVITIES:
Issuance of Common
Stock for Cash 7,300 0 0 +7,300
-------- -------- -------- -----------
Net Increase (decrease) $ +7,274 $ 0 $ 0 $ +7,274
Cash,
Beginning of period: 0 0 0 0
-------- -------- -------- -----------
Cash, End of Period: $ 7,274 $ 0 $ 0 $ 7,274
-------- -------- -------- -----------
</TABLE>
See accompanying notes to financial statements
F-6
<PAGE> 23
CORE SYSTEMS, INC.
(Formerly Creative Systems, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999, SEPTEMBER 30, 1998, and SEPTEMBER 30, 1997
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized FEBRUARY 19, 1997, under the laws of the State
of Nevada as Creative Systems, Inc. The Company currently has no
operations and in accordance with SFAS #7, is considered a development
company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Method
The Company records income and expenses on the accrual method.
Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Cash and equivalents
The Company maintains a cash balance in a non-interest-bearing
bank that currently does not exceed federally insured limits.
For the purpose of the statements of cash flows, all highly
liquid investments with the maturity of three months or less are
considered to be cash equivalents. There are no cash equivalents
as of April 30, 1999.
F-7
<PAGE> 24
CORE SYSTEMS, INC.
(Formerly Creative Systems, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
APRIL 30, 1999, SEPTEMBER 30, 1998, and SEPTEMBER 30, 1997
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
Income taxes are provided for using the liability method of
accounting in accordance with Statement of Financial Accounting
Standards No. 109 (SFAS #109) "Accounting for Income Taxes". A
deferred tax asset or liability is recorded for all temporary
difference between financial and tax reporting. Deferred tax
expense (benefit) results from the net change during the year of
deferred tax assets and liabilities.
Loss Per Share
Net loss per share is provided in accordance with Statement of
Financial Accounting Standards No. 128 (SFAS #128) "Earnings Per
Share". Basic loss per share is computed by dividing losses
available to common stockholders by the weighted average number
of common shares outstanding during the period. Diluted loss per
share reflects per share amounts that would have resulted if
dilative common stock equivalents had been converted to common
stock. As of April 30th, 1999, the Company had no dilative
common stock equivalents such as stock options.
Year End
The Company has selected September 30th as its year-end.
Policy in Regards to Issuance of Common Stock in a Non-Cash Transaction
The Company's accounting policy for issuing shares in a non-cash
transaction is to issue the equivalent amount of stock equal to
the fair market value of the assets or services received.
F-8
<PAGE> 25
CORE SYSTEMS, INC.
(Formerly Creative Systems, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
APRIL 30, 1999, SEPTEMBER 30, 1998, and SEPTEMBER 30, 1997
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Year 2000 Disclosure
Computer programs that have time sensitive software may
recognize a date using "00" as the year 1900 rather than the
year 2000. This could result in a system failure or
miscalculations causing disruption of normal business
activities.
The company's potential software suppliers have verified that
they will provide only certified "Year 2000" compatible software
for all of the company's computing requirements. Because the
company's products and services are sold to the general public
with no major customers, the company believes that the "Year
2000" issue will not pose significant operational problems and
will not materially affect future financial results.
NOTE 3 - INCOME TAXES
There is no provision for income taxes for the period ended April 30,
1999, due to the net loss and no state income tax in Nevada, the state
of the Company's domicile and operations. The Company's total deferred
tax asset as of September 30, 1998 is as follows:
<TABLE>
<S> <C>
Net operation loss carry forward $ 0
Valuation allowance $ 0
Net deferred tax asset $ 0
</TABLE>
The federal net operating loss carry forward is not applicable.
F-9
<PAGE> 26
CORE SYSTEMS, INC.
(Formerly Creative Systems, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
APRIL 30, 1999, SEPTEMBER 30, 1998, and SEPTEMBER 30, 1997
NOTE 4 - STOCKHOLDERS' EQUITY
Common Stock
The authorized common stock of the corporation consists of 50,000,000
shares with a par value $.001 per share.
Preferred Stock
Core Systems, Inc. has no preferred stock.
On March 11, 1999, the Company issued 20,000 shares of its $0.001 par
value common stock in consideration of $20.00 to its two directors,
10,000 common shares to each.
On March 25, 1999, the State of Nevada approved the Company's restated
Articles of Incorporation, which changed the par value from no par value
to $0.001, and increased its Authorized Common Stock from 25,000 shares
to 50,000,000 shares.
On April 30, 1999, the Company issued 73,000 shares of its $0.001 par
value common stock for cash of $7,300.00.
On April 30, 1999, the Company approved a forward stock split on the
basis of 33:1, thus increasing the common stock from 93,000 Common
Shares to 3,069,000 Common shares.
NOTE 5 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates
the realization of assets and liquidation of liabilities in the normal
course of business. However, the Company does not have significant cash
or other material assets, nor does it have an established source of
revenues sufficient to cover its operating costs and to allow it to
continue as a going concern. The stockholders/officers and or directors
have committed to advancing the operating costs of the Company interest
free.
F-10
<PAGE> 27
CORE SYSTEMS, INC.
(Formerly Creative Systems, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
APRIL 30, 1999, SEPTEMBER 30, 1998, and SEPTEMBER 30, 1997
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property. An
officer of the corporation provides office services without charge. Such
costs are immaterial to the financial statements and accordingly, have
not been reflected therein. The officers and directors of the Company
are involved in other business activities and may in the future, become
involved in other business opportunities. If a specific business
opportunity becomes available, such persons may face a conflict in
selecting between the Company and their other business interests. The
Company has not formulated a policy for the resolution of such
conflicts.
NOTE 7 - WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional
share of common stock.
F-11
<PAGE> 28
CORE SYSTEMS, INC.
(A Development Stage Company)
INTERIM FINANCIAL STATEMENTS
JUNE 30, 1999
JUNE 30, 1998
<PAGE> 29
CORE SYSTEMS, INC.
(A Development Stage Company)
BALANCE SHEETS
UNAUDITED
ASSETS
<TABLE>
<CAPTION>
JUNE 30 JUNE 30
1999 1998
--------- ---------
<S> <C> <C>
CURRENT ASSETS
CASH 5643.85 0.00
--------- ---------
TOTAL CURRENT ASSETS 5643.85 0.00
FIXED ASSETS
--------- ---------
NET FIXED ASSETS 0.00 0.00
OTHER ASSETS
--------- ---------
TOTAL OTHER ASSETS 0.00 0.00
--------- ---------
TOTAL ASSETS 5643.85 0.00
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
--------- ---------
TOTAL CURRENT LIABILITIES 0.00 0.00
LONG TERM LIABILITIES
--------- ---------
TOTAL LONG TERM LIABILITIES 0.00 0.00
--------- ---------
TOTAL LIABILITIES 0.00 0.00
STOCKHOLDERS' EQUITY
COMMON STOCK 2,749.00 0.00
PAID IN CAPITAL 4,571.00 0.00
BEGINNING RETAINED DEFICIT 0.00 0.00
NET LOSS -1,676.15 0.00
--------- ---------
ENDING RETAINED DEFICIT -1,676.15 0.00
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 5,643.85 0.00
--------- ---------
TOTAL LIAB & STOCKHOLDERS' EQUITY 5,643.85 0.00
========= =========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
F-13
<PAGE> 30
CORE SYSTEMS, INC.
(A Development Stage Company)
INCOME STATEMENTS
UNAUDITED
<TABLE>
<CAPTION>
PERIOD ENDED PERIOD ENDED
6/30/99 6/30/98
------------ ------------
<S> <C> <C>
REVENUE
------------ ------------
TOTAL REVENUE 0.00 0.00
DIRECT COSTS
------------ ------------
TOTAL COST OF GOODS SOLD 0.00 0.00
------------ ------------
GROSS PROFIT 0.00 0.00
OPERATING EXPENSES
MANAGEMENT FEES 20.00 0.00
BANK FEES 71.15
ACCOUNTING FEES 1,500.00
LICENSES & FEES 85.00
------------ ------------
TOTAL OPERATING EXPENSES 1,676.15 0.00
------------ ------------
LOSS FROM OPERATIONS -1,676.15 0.00
OTHER INCOME & EXPENSE
------------ ------------
TOTAL OTHER INCOME & EXPENSE 0.00 0.00
------------ ------------
LOSS BEFORE TAXES -1,676.15 0.00
PROVISION FOR TAXES
------------ ------------
NET LOSS -1,676.15 0.00
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
F-14
<PAGE> 31
CORE SYSTEMS, INC.
(a Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
UNAUDITED
<TABLE>
<CAPTION>
JUNE 30 JUNE 30
1999 1998
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET LOSS -1,676 0
ADJ TO RECONCILE NET INCOME (LOSS) TO NET
CASH USED IN OPERATING ACTIVITIES:
AMORTIZATION 0 0
CHANGES IN ASSETS AND LIABILITIES 0 0
------- -------
NET CASH FLOWS FROM OPERATING ACTIVITIES -1,676 0
CASH FLOWS FROM INVESTING ACTIVITIES:
ORGANIZATION COSTS 0 0
------- -------
NET CASH FLOWS FROM INVESTING ACTIVITIES 0 0
CASH FLOWS FROM FINANCING ACTIVITIES:
COMMON STOCK 2,749
PAID IN CAPITAL 4,571 0
------- -------
NET CASH FLOWS FROM FINANCING ACTIVITIES 7,320 0
NET INCREASE (DECREASE) IN CASH 5,644 0
CASH AT BEGINNING OF PERIOD 0 0
------- -------
CASH AT END OF PERIOD 5,644 0
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
F-15
<PAGE> 32
CORE SYSTEMS, INC..
NOTES TO FINANCIAL STATEMENTS
1. MANAGEMENT'S OPINION
In the opinion of management, the accompanying financial statements contain all
adjustments necessary to present fairly the financial position of the company as
of June 30, 1999 and 1998 and the results of operations for the nine months
ended June 30, 1999 and 1998 and changes in cash for the nine months ended June
30, 1999 and 1998.
2. INTERIM REPORTING
The results of operations for the nine months ended June 30, 1999 and 1998 are
not necessarily indicative of the results to be expected for the remainder of
the year.
3. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Operations
The Company was incorporated in Nevada on February 19, 1997. The Company was
organized for the purpose of developing cost efficient methods of pipe
restoration in commercial and residential buildings. The Company is a
development stage company and has not conducted any business activities to date.
Basis of Accounting
The Company's policy is to use the accrual method of accounting and to prepare
and present financial statements which conform to generally accepted accounting
principles. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
periods. Actual results could differ from those estimates.
Cash and equivalents
For purpose of the statements of cash flows, all highly liquid investments with
a maturity of three months or less are considered to be cash equivalents. There
were no cash equivalents as of June 30, 1999 and 1998.
F-16
<PAGE> 33
NOTES TO FINANCIAL STATEMENTS (continued)
Income Taxes
Income taxes are provided for using the liability method of accounting in
accordance with Statement of Financial Accounting Standards No. 109 (SFAS 109),
"Accounting for Income Taxes." A deferred tax asset or liability is recorded for
all temporary differences between financial and tax reporting. Deferred tax
expense (benefit) results from the net change during the year of deferred tax
assets and liabilities.
4. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
OPERATIONS
Material changes in financial condition
As of June 30, 1999 the Company had $5643.85 of cash in the bank compared to no
cash in the bank as of June 30, 1998. The Company had cash receipts from the
sale of equities of $7320 for the nine months ended June 30, 1999. The primary
uses of cash during the nine months ended June 30, 1999 were $1520 for
professional fees, and $156.15 for operating expenses.
Material changes in the results of operations
Expenses of $1676.15 for the nine months ended June 30, 1999 were primarily for
preparing the Company's audit in anticipation of securing private placement
capital in 1999. Management believes it makes economic sense for the Company to
complete its business plan to raise capital through the sale of private
placement securities in order to develop its pipe restoration methods.
F-17
<PAGE> 34
PART III
EXHIBITS
<TABLE>
<S> <C> <C>
Exhibit 2 Plan of acquisition, reorganization or liquidation None
Exhibit 3(i) Articles of Incorporation Included in Previous Filing
Exhibit 3(ii) Bylaws Included in Previous Filing
Exhibit 4 Instruments defining the rights of holders None
Exhibit 7 Opinion re: liquidation preference None
Exhibit 9 Voting Trust Agreement None
Exhibit 10 Material contracts None
Exhibit 11 Statement re: computation of per share earnings See Financial Stmts.
Exhibit 14 Material foreign patents None
Exhibit 16 Letter on change of certifying accountant None
Exhibit 21 Subsidiaries of the registrant None
Exhibit 23 Consent of experts and counsel Included in Previous Filing
Exhibit 24 Power of Attorney None
Exhibit 27 Financial Data Schedule Included
Exhibit 28 Reports furnished to State insurance agencies None
</TABLE>
SIGNATURES
In accordance with Section 12 of the Securities and Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Core Systems, Inc.
Date September 9, 1999 By /s/ VIC BARGER
------------------------------- -------------------------------------
Vic Barger, President,
Sec. & Director
Date 9-9-99 By /S/ A.T. TSALAMANDRIS
------------------------------- -------------------------------------
A.T. Tsalamandris, Treas. & Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTERIM
FINANCIAL STATEMENTS FOR THIRD QUARTER 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH CORE SYSTEMS, INC. 1ST AMENDMENT 10-SB.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> JUN-30-1999
<CASH> 5,644
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,644
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,644
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 2,749
<OTHER-SE> 4,571
<TOTAL-LIABILITY-AND-EQUITY> 5,644
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,676
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,676)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,676)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,676)
<EPS-BASIC> .00
<EPS-DILUTED> .00
</TABLE>
