<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
2nd 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
-----------------------------
(TITLE OF CLASS)
1
<PAGE> 2
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 currently is in a development stage, and although it has formed its
business plan, it has conducted no operating activities and will not proceed
with its business plan until such time as it receives additional funding through
the sale of securities pursuant to a private placement. The Company intends to
implement its business plan to offer its pipe restoration services to commercial
and residential building owners in California in the first quarter or second
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 in year three and Washington in
year four. 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 compared to the normal thirty to
forty year life of replacement pipe. 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. According to pipe coating suppliers such
as Armour Coat Corporation, epoxy coatings for pipe
2
<PAGE> 3
restoration have been used for over twelve years in Europe, in commercial vessel
repair, and by the U.S. Navy. This process has only found applications in
commercial and residential construction in the United States during the last two
years. Because of the relative newness of this process, Management has only
found two plumbing contractors in the State of California who are currently
offering this type of pipe repair. Building owners have used traditional pipe
replacement methods because they are not aware of the advantages of using pipe
relining, or there are no plumbing contractors offering this service in their
area.
While Management has not conducted national or state-wide pipe restoration
industry studies, and is unaware of any such studies, Management's experience in
securing pipe restoration contracts throughout Southern California indicates
there are currently approximately 10,000 buildings suitable for pipe restoration
work in California and the market is growing at a rate of 1,000 to 2,000
buildings per year for this type of work as buildings continue to age.
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 pursuant to a private placement, 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 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. Management estimates there are approximately two hundred fifty
general plumbing contractors in the San Diego area, of which, approximately
twenty five offer traditional pipe removal and replacement services, and one, S.
Mori Plumbing which offers pipe relining. Management estimates that San
Francisco has a comparable number of general plumbing contractors and pipe
removal and replacement plumbing contractors, while Los Angeles has over one
thousand five hundred general plumbing contractors and over one hundred and
fifty pipe removal and replacement plumbing contractors. Through discussions
with pipe coating suppliers such as Armour Coat Corporation, Management is aware
that there are no pipe relining plumbing contractors in the San Francisco area,
and there is one plumbing contractor in Los Angeles, Dempsey Construction, which
does offer pipe relining. As Core Systems, Inc. is a development stage company,
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 President 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 of pipes as part of his
plumbing business, and two years in pipe relining methods. His experience in
twenty pipe relining jobs included: responsible as a subcontractor under the
control of another plumbing contractor on five commercial jobs with an average
bid price of $100,000, responsible as the plumbing contractor on twelve
commercial jobs with an average bid price of $75,000 and three residential jobs
with an average bid price of $10,000. All contracts
3
<PAGE> 4
involved conditions of supervising from one to five employees, fixed completion
dates and competitive bid prices. 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 solely from the
sale of its securities.
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 solely from the sale of securities through a private placement, 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 Web site. Management anticipates starting a Web
site during the second year of its business plan. The Company intends to use the
Web site to advertise its pipe relining process and educate potential building
owners about the features and advantages of pipe relining.
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.
The Company has incurred no research and development costs since inception and
has no research and development expenditure plans for the next year.
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, however, both officers currently work full time in their own businesses
and have performed no other services for the Company other than forming the
business plan for the Company, for which they were compensated in restricted
shares of stock 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. Investors in the Company
should be particularly aware of the inherent risks associated with the Company's
planned pipe relining services. These risks include a lack of a
4
<PAGE> 5
proven market for the Company's services, lack of assured acceptance by the
public of the relatively new pipe relining process offered by the Company, lack
of equity funding, and the size of the Company compared to the size of its
competitors. Although Management intends to implement its business plan through
the foreseeable future and will do its best to mitigate the risks associated
with its business plan, there can be no assurance that such efforts will be
successful. Currently, Management is concentrating on positioning itself to
advance its business plan. Management has no liquidation plans should the
Company be unable to receive funding. Should the Company be unable to implement
its business plan, Management would investigate all options available to retain
value for the shareholders. Among the options that would be considered are:
acquisition of another product or technology, or a merger or acquisition of
another business entity that has revenue and long-term growth potential. There
are no pending arrangements, understandings or agreements with outside parties
for acquisitions, mergers or any other material transactions.
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.
ITEM 2
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
Plan of Operation
As of June 30, 1999, the Company had a cash balance of $5,644, which Management
believes is sufficient to sustain corporate operations until such time as the
Company can raise funding necessary to advance its business plan. Sales of the
Company's equity securities have allowed
5
<PAGE> 6
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 for plumbers, $40,000 in management
salary, $20,000 in indirect office 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. The Company will utilize
its own employees for all job contracts. 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 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,
6
<PAGE> 7
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 $3,656 for the nine months ended June 30, 1999,
and a net loss $3,656 since inception. The losses were primarily due to
operational expenses of management fees paid to the Company's officers in the
form of restricted stock for their services developing the Company's business
plan - $2,000, professional fees for accounting services - $1,500, and annual
state filing fees of $85. The Company will incur future professional fees and
filing fees in order to remain current in it's required SEC filings.
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
Company is a development stage company which will have no operating activities
requiring significant outlays of capital until it is able to raise additional
capital of $800,000 to $1,000,000 solely through the sale of its securities
through a private placement during the first six months of its business plan.
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. As the Company currently is in a development stage and
conducts no operating activities, the total costs since inception associated
with the use of the telephone and mailing address were estimated by management
to be less than one dollar as the telephone and mailing address were almost
exclusively used by the officer for other business and personal purposes. 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 during the
first six months of the Company's business plan.
7
<PAGE> 8
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 - June 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 10,000 shares of the Company's common stock on March
11, 1999 for his services developing the Company's business plan. 320,000
shares of the Company's common stock were issued to him per a 32 for 1
stock split on April 30, 1999.
(b) Mr. Tsalamandris received 10,000 shares of the Company's common stock on
March 11, 1999 for his services developing the Company's business plan.
320,000 shares of the Company's common stock were issued to him per a 32
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>
8
<PAGE> 9
<TABLE>
<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.
9
<PAGE> 10
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- 1,000 -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- 1,000 -0- -0- -0-
</TABLE>
Restricted stock awards to Mr. Barger consisted of 10,000 shares of common stock
with a value of $1,000 in consideration for his services developing the
Company's business plan as approved by a Board of Directors meeting of March 11,
1999. Restricted stock awards to Mr. Tsalamandris consisted of 10,000 shares of
common stock with a value of $1,000 in consideration for his services developing
the Company's business plan as approved by a Board of Directors meeting of March
11, 1999.
When the Board of Directors met to determine the value of the officer's
services, there was a meeting of the minds based upon individual judgement
rather than quantifiable methods that 10,000 shares of restricted common stock
for each officer were fair consideration for the development of the Company's
business plan for a development stage company with no guaranteed customer
market. The stock was valued at $.10 per share, which was the price that
non-affiliated private investors paid for shares sold by the Company in April
1999.
There are no current employment agreements between the Company and its executive
officers.
The Directors, who are also the Principal Officers, developed a business plan
for the Company for which they each were paid 10,000 restricted shares of the
Company's stock valued at $1,000. The Company has conducted no operating
activities, and, as a consequence, the Directors and Principal Officers will
receive no further 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
10
<PAGE> 11
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.
ITEM 7
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On March 11, 1999 the Board acknowledged that Mr. Barger had provided services
developing the Company's business plan and agreed to compensate Mr. Barger for
the business plan work in the form of 10,000 shares of the Company's common
stock. The stock was valued at $.10 per share, which was the price that
non-affiliated private investors paid for shares sold by the Company in April
1999. On April 30, 1999, 320,000 shares of the Company's common stock were
issued to him per a thirty two shares for every one share outstanding stock
split.
On March 11, 1999 the Board acknowledged that Mr. Tsalamandris had provided
services developing the Company's business plan and agreed to compensate Mr.
Tsalamandris for the business plan work in the form of 10,000 shares of the
Company's common stock. The stock was valued at $.10 per share, which was the
price that non-affiliated private investors paid for shares sold by the Company
in April 1999. On April 30, 1999, 320,000 shares of the Company's common stock
were issued to him per a thirty two shares for every one share outstanding stock
split.
The Company's President currently owns and manages a plumbing business, CVB
Plumbing, Heating & Air, Inc., 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, however, as the Company is in a development stage
with no current operating activities, there is no formal resolution or other
written requirement directing the Company's President to spend any time working
on the Company's business. The Board has adopted a resolution authorizing the
participation by the President in his competing business until such time as the
Company secures funding per the timetable set out in its business plan necessary
to compensate the President per the terms disclosed in this filing's Executive
Compensation section.
While the Company and its President have not formally adopted a plan to resolve
any potential or actual conflicts of interest that exist or that may arise, the
President has verbally agreed to limit his role in the competing plumbing
business to a role of passive investor and devote full time services to the
Company after the Company raises capital of $800,000 to $1,000,000 through the
sale of securities through a private placement and is able to provide officers'
salaries per its business plan.
11
<PAGE> 12
The Company's officers and directors have no formal commitments or arrangements
to rent office space or advance or loan funds to the Company.
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 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.
12
<PAGE> 13
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.
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
13
<PAGE> 14
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.
Under the Securities Act of 1933 , all sales of an issuers's securities or by a
shareholder, must either be made (i) pursuant to an effective registration
statement filed with the SEC, or (ii) pursuant to an exemption from the
registration requirements under the 1933 Act.
Rule 144 under the 1933 Act sets forth conditions which if satisfied, permit
persons holding control securities (affiliated shareholders, i.e., officers,
directors or holders of at least ten percent of the outstanding shares) or
restricted securities (non-affiliated shareholders) to sell such securities
publicly without registration. Rule 144 sets forth a holding period for
restricted securities to establish that the holder did not purchase such
securities with a view to distribute. Under Rule 144, several provisions must be
met with respect to the sales of control securities at any time and sales of
restricted securities held between one and two years. The following is a summary
of the provisions of Rule 144: (a) Rule 144 is available only if the issuer is
current in its filings under the Securities an Exchange Act of 1934. Such
filings include, but are not limited to, the issuer's quarterly reports and
annual reports; (b) Rule 144 allows resales of restricted and control securities
after a one year hold period, subjected to certain volume limitations, and
resales by non-affiliates holders without limitations after two years; ( c ) The
sales of securities made under Rule 144 during any three-month period are
limited to the greater of: (i) 1% of the outstanding common stock of the issuer;
or (ii) the average weekly reported trading volume in the outstanding common
stock reported on all securities exchanges during the four calendar weeks
preceding the filing of the required notice of the sale under Rule 144 with the
SEC.
On April 30, 1999, the Board of Directors authorized a forward stock split
issuing thirty two new shares for every existing outstanding share, 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 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
14
<PAGE> 15
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;
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.
15
<PAGE> 16
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.
16
<PAGE> 17
CORE SYSTEMS, INC.
(Formerly Creative Systems, Inc.)
(A Development Stage Company)
FINANCIAL STATEMENTS
APRIL 30, 1999
SEPTEMBER 30, 1998
SEPTEMBER 30, 1997
<PAGE> 18
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE#
-----
<S> <C>
INDEPENDENT AUDITORS REPORT F-1
ASSETS F-2
LIABILITIES AND STOCKHOLDERS' EQUITY F-3
STATEMENT OF OPERATIONS F-4
STATEMENT OF STOCKHOLDERS' EQUITY F-5
STATEMENT OF CASH FLOWS F-6
NOTES TO FINANCIAL STATEMENTS F-7
</TABLE>
<PAGE> 19
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. (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 30, 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.
(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 30, 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.
s/s/ Barry L. Friedman
- ---------------------------
Barry L. Friedman
Certified Public Accountant
1582 Tulita Drive
Las Vegas, NV 89123
(702) 361-8414
F-1
<PAGE> 20
CORE 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> 21
CORE 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 +6,231 0 0
------ -- --
Deficit accumulated during
Development stage: -2,026 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> 22
CORE SYSTEMS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Oct. 1, Year Year Feb 19,1997
1998 to Ended Ended (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: $ 2,026 $ 0 $ 0 $ 2,026
--------- --------- --------- ---------
TOTAL EXPENSES: $ 2,026 $ 0 $ 0 $ 2,026
--------- --------- --------- ---------
NET PROFIT/LOSS (-): $ -2,026 $ 0 $ 0 $ -2,026
--------- --------- --------- ---------
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> 23
CORE 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, 1998 0
--------- ------- ------- -------
Balance,
September 30, 1998 0 $ 0 $ 0 $ 0
March 11, 1999
Issued for services 20,000 20 1,980
March 25, 1999
Changed par value
From none to
$.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,
1999, to
April 30, 1999 -2,026
--------- ------- ------- -------
Balance,
April 30, 1999 3,069,000 $ 3,069 $+6,231 $-2,026
--------- ------- ------- -------
</TABLE>
See accompanying notes to financial statements
F-5
<PAGE> 24
CORE SYSTEMS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Oct 1, Year Year Feb 17,1997
1998, to Ended Ended (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 $-2,026 $0 $0 $-2,026
Adjustment to
Reconcile net loss
To net cash provided
by operating
Activities:
Issue Common Stock
For Services 2,000 0 0 +2,000
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> 25
CORE 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 17, 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> 26
CORE 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 30, 1999, the Company had no dilative common
stock equivalents such as stock options.
Year End
The Company has selected September 30th as its fiscal 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> 27
CORE 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, 1999 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> 28
CORE 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 $2000.00 to its two directors,
10,000 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 shares to
3,069,000 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> 29
CORE 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 the Company use of a telephone and
mailing address without charge as the telephone and mailing address are
used almost exclusively by a different corporation owned by the officer.
The Company estimates such costs are less than one dollar since
inception, 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> 30
CORE SYSTEMS, INC.
(A Development Stage Company)
INTERIM FINANCIAL STATEMENTS
JUNE 30, 1999
JUNE 30, 1998
F-12
<PAGE> 31
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 5,644 0
------ -
TOTAL CURRENT ASSETS 5,644 0
FIXED ASSETS
------ -
NET FIXED ASSETS 0 0
OTHER ASSETS
------ -
TOTAL OTHER ASSETS 0 0
------ -
TOTAL ASSETS 5,644 0
====== =
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
------ -
TOTAL CURRENT LIABILITIES 0 0
LONG TERM LIABILITIES
------ -
TOTAL LONG TERM LIABILITIES 0 0
------ -
TOTAL LIABILITIES 0 0
STOCKHOLDERS' EQUITY
COMMON STOCK - 50,000,000 authorized, 3,069 0
3,069,000 issued
PAID IN CAPITAL 6,231 0
BEGINNING RETAINED DEFICIT 0 0
NET LOSS -3,656 0
------ -
ENDING RETAINED DEFICIT -3,656 0
------ -
TOTAL STOCKHOLDERS' EQUITY 5,644 0
------ -
TOTAL LIAB & STOCKHOLDERS' EQUITY 5,644 0
====== =
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
F-13
<PAGE> 32
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 0
DIRECT COSTS
------ -
TOTAL COST OF GOODS SOLD 0 0
------ -
GROSS PROFIT 0 0
OPERATING EXPENSES
MANAGEMENT FEES 2,000 0
BANK FEES 71
ACCOUNTING FEES 1,500
LICENSES & FEES 85
------ -
TOTAL OPERATING EXPENSES 3,656 0
------ -
LOSS FROM OPERATIONS -3,656 0
OTHER INCOME & EXPENSE
------ -
TOTAL OTHER INCOME & EXPENSE 0 0
------ -
LOSS BEFORE TAXES -3,656 0
PROVISION FOR TAXES
------ -
NET LOSS -3,656 0
====== =
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
F-14
<PAGE> 33
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 -3,656 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 -3,656 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 3,069
PAID IN CAPITAL 6,231 0
------ -
NET CASH FLOWS FROM FINANCING ACTIVITIES 9,300 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> 34
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> 35
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. 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
Company's officers have verbally committed to advancing the operating costs of
the Company interest free, however, there is no formal agreement to advance such
funds to the Company. The Company is currently a development stage company which
will have no operating activities until such time as Management is able to raise
additional capital of $800,000 to $1,000,000 solely through the sale of its
securities through a private placement during the first six months of its
business plan. Management intends to implement its business plan by beginning
operations after raising this additional capital.
F-17
<PAGE> 36
PART III
EXHIBITS
<TABLE>
<S> <C> <C>
Exhibit 2 Plan of acquisition, reorganization or liquidation None
Exhibit 3(i) Articles of Incorporation Included in Original Filing
Exhibit 3(ii) Bylaws Included in Original 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 Original 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 10/26/99 By /s/ Vic Barger
--------------------------- --------------------------------
Vic Barger, President, Sec. & Director
Date 10/26/99 By /s/ A.T. Tsalamadris
--------------------------- --------------------------------
A.T. Tsalamandris, Treas. & Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTERIM
FINANCIAL STATEMENTS FOR NINE MONTHS ENDING JUNE 30, 1999, AUDITED FINANCIAL
STATEMENTS FOR SEVEN MONTHS ENDING APRIL 30, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH CORE SYSTEMS, INC. 10-SB 2ND AMENDMENT.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 7-MOS
<FISCAL-YEAR-END> SEP-30-1999 SEP-30-1999
<PERIOD-START> OCT-01-1998 OCT-01-1998
<PERIOD-END> JUN-30-1999 APR-30-1999
<CASH> 5,644 7,274
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 5,644 7,274
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 5,644 7,274
<CURRENT-LIABILITIES> 0 0
<BONDS> 0 0
0 0
0 0
<COMMON> 3,069 3,069
<OTHER-SE> 6,231 6,231
<TOTAL-LIABILITY-AND-EQUITY> 5,644 7,724
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 3,656 2,026
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (3,656) (2,026)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (3,656) (2,026)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (3,656) (2,026)
<EPS-BASIC> .00 .00
<EPS-DILUTED> .00 .00
</TABLE>
