U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 10-QSB
(Mark One)
[X] Quarterly report pursuant section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended September 30, 1999
[ ] Transition report pursuant section 13 or 15(d) of the Securities Exchange
Act of 1934 For the transition period from________to_________
Commission file number 000-26931
(Exact name of small business issuer in its charter)
Nevada 98-0204702
- --------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
Incorporation or organization)
Suite 106, 1460 Pandosy Street, Kelowna, British Columbia, Canada V1Y IP3
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(250) 868-8445
-------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes _X_ No ___
Number of shares outstanding of the issuer's classes of common equity, as of
September 30, 1999:
500,000 Shares of Common Stock (One Class)
Transitional Small Business Disclosure Format: Yes ___ No _X_
This document consists of 15 pages, excluding exhibits. The Exhibit
Index is on page 14.
<PAGE>
SOLID MANAGEMENT CORPORATION
INDEX
Part I - Financial Information
Item 1. Financial Statements.......................................3
Item 2. Plan of Operations.........................................9
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K .........................14
Signatures................................................15
2
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SOLID MANAGEMENT CORPORATION
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Solid Management Corporation
(A Development Stage Company)
Unaudited Balance Sheet
Unaudited Audited
September 30, March 31,
1999 1999
ASSETS $ 0 $ 0
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Current Liabilities:
Accounts Payable $ 1,957 $ 0
Advances Due to Related Entity 7,410 0
Total Current Liabilities 9,367 0
TOTAL LIABILITIES 9,367 0
SHAREHOLDERS' EQUITY
Common Stock, $.0001 Par Value
Authorized 100,000,000 Shares;
Issued And Outstanding 500,000 Shares 50 50
Capital Paid In Excess Of
Par Value Of Common Stock 0 0
(Deficit Accumulated During the Development Stage (9,417) (50)
TOTAL SHAREHOLDERS' EQUITY (9,367) 0
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 0 $ 0
The Accompanying Notes Are An Integral Part Of These
Unaudited Financial Statements.
3
<PAGE>
Solid Management Corporation
(A Development Stage Company)
Unaudited Statement Of Operations
Unaudited
Unaudited Unaudited July 18,
Six Month Six Month 1997
Interim Period Interim Period (Inception)
Ended Ended Through
September 30, September 30, September 30,
1999 1998 1999
Revenue $ 0 $ 0 $ 0
Expenses:
Office 3,417 0 3,467
Legal and Accounting 5,950 0 5,950
Total Expenses 9,367 0 9,417
Net Income (Loss) $ (9,367) $ 0 $ 9,417
Basic Earnings (Loss) Per Share $ (0.02) $ 0.00
Weighted Average Common Shares
Outstanding 500,000 500,000
The Accompanying Notes Are An Integral Part Of These
Unaudited Financial Statements.
4
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Solid Management Corporation
(A Development Stage Company)
Unaudited Statement Of Operations
Unaudited Unaudited
Three Month Three Month
Interim Period Interim Period
Ended Ended
September 30, September 30,
1999 1998
Revenue $ 0 $ 0
Expenses:
Office 3,417 0
Legal and Accounting 2,387 0
Total Expenses 5,804 0
Net Income (Loss) $ 5,804 $ 0
Basic Earnings (Loss) Per Share $ 0.01 $ 0.00
Weighted Average Common Shares
Outstanding 500,000 500,000
The Accompanying Notes Are An Integral Part Of These
Unaudited Financial Statements.
5
<PAGE>
<TABLE>
Solid Management Corporation
(A Development Stage Company)
Unaudited Statement Of Cash Flows
<CAPTION>
Unaudited
Unaudited Unaudited July 18,
Six Month Six Month 1997
Interim Period Interim Period (Inception)
Ended Ended Through
September 30, September 30, September 30,
1999 1998 1999
<S> <C> <C> <C>
Net (Loss) $(9,367) $ 0 $(9,417)
Adjustments To Reconcile Net Loss To Net Cash
Used In Operating Activities:
Stock Issued For Services 0 0 50
Expenses Paid by Related Entity on Behalf of Company 7,410 0 7,410
Increase in Accounts Payable 1,957 1,957
Net Cash Flows Provided By Operations 0 0 0
Cash Flows From Investing Activities:
Net Cash Flows Provided By Investing Activities 0 0 0
Cash Flows From Financing Activities:
Issuanance of Common Stock 0 0 0
Net Cash Flows Provided By Financing Activities 0 0 0
Net Increase In Cash 0 0 0
Cash At Beginning Of Period 0 0 0
Cash At End Of Period $ 0 $ 0 $ 0
Summary of non-cash investing and financing activities:
Stock Issued for Services $ 0 $ 0 $ 50
Expenses Paid by Related Entity on Behalf of Company $ 7,410 $ 0 $ 7,410
<FN>
The Accompanying Notes Are An Integral Part Of These Unaudited Financial Statements.
</FN>
</TABLE>
6
<PAGE>
<TABLE>
Solid Management Corporation
Unaudited Statement Of Shareholders' Equity
<CAPTION>
(Deficit)
Accumulated
Number Of Additional During The
Common Common Paid-In Development
Shares Stock Capital Stage Total
<S> <C> <C> <C> <C> <C>
Balance At July 18, 1997 0 $ 0 $ 0 $ 0 $ 0
Issuance of Common Stock:
July 18, 1997 for Services Valued
at $.0001 Per Share 500,000 50 50
Net Loss (50) (50)
Balance At March 31, 1998 and 1999 500,000 50 0 (50) 0
Net Loss September 30, 1999 (9,367) (9,367)
Balance At September 30, 1999 500,000 $ 50 $ 0 $(9,417) $(9,367)
<FN>
The Accompanying Notes Are An Integral Part Of These Unaudited Financial Statements.
</FN>
</TABLE>
7
<PAGE>
Solid Management Corporation
Notes To Unaudited Financial Statements
For The Three Month Period Ended September 30, 1999
Note 1 - Unaudited Financial Information
The unaudited financial information included for the three and six month interim
period ended September 30, 1999 were taken from the books and records without
audit. However, such information reflects all adjustments (consisting only of
normal recurring adjustments, which are of the opinion of management, necessary
to reflect properly the results of interim period presented). The results of
operations for the six month period ended September 30, 1999 are not necessarily
indicative of the results expected for the fiscal year ended March 31, 2000.
Note 2 - Financial Statements
Management has elected to omit substantially all footnotes relating to the
condensed financial statements of the Company included in the report. For a
complete set of footnotes, reference is made to the Company's Report on Form 10
for the year ended March 31, 1999 as filed with the Securities and Exchange
Commission and the audited financial statements included therein.
8
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SOLID MANAGEMENT CORPORATION
PLAN OF OPERATIONS
The following discussion of the plan of operations of the Company
should be read in conjunction with the financial statements and the related
notes thereto included elsewhere in this quarterly report for the nine months
ended September 30, 1999. This quarterly report contains certain forward-looking
statements and the Company's future operation results could differ materially
from those discussed herein.
Introduction
The Company intends to seek to acquire assets or shares of an entity
actively engaged in a business that generates revenues, in exchange for its
securities. We have not identified a particular acquisition target and has not
entered into any negotiations regarding such an acquisition. As soon as this
registration statement becomes effective under Section 12 of the '34 Act, we
intend to contact investment bankers, corporate financial analysts, attorneys
and other investment industry professionals through various media. None of our
officers, directors, promoters or affiliates have engaged in any preliminary
contact or discussions with any representative of any other company regarding
the possibility of an acquisition or merger between the Company and such other
company as of the date of this registration statement.
Depending upon the nature of the relevant business opportunity and the
applicable state statutes governing the manner in which the transaction is
structured, the Company's Board of Directors expects that it will provide the
Company's shareholders with complete disclosure documentation concerning a
potential business opportunity and the structure of the proposed business
combination prior to consummation. Such disclosure is expected to be in the form
of a proxy or information statement.
While such disclosure may include audited financial statements of such
a target entity, there is no assurance that such audited financial statements
will be available. The Board of Directors does intend to obtain certain
assurances of value of the target entity assets prior to consummating such a
transaction, with further assurances that an audited statement would be provided
within sixty days after closing. Closing documents will include representations
that the value of the assets conveyed to or otherwise so transferred will not
materially differ from the representations included in such closing documents,
or the transaction will be voidable.
Due to the Company's intent to remain a shell corporation until a
merger or acquisition candidate is identified, it is anticipated that its cash
requirements shall be minimal, and that all necessary capital, to the extent
required, will be provided by the directors or officers. The Company does not
anticipate that it will have to raise capital in the next twelve months. The
Company also does not expect to acquire any plant or significant equipment.
The Company has no full time employees. Our President and Secretary
have agreed to allocate a portion of their time to the activities of the
Company, without compensation. These officers anticipate that the business plan
of the Company can be implemented by their devoting approximately 5 hours per
month to the business affairs of the Company and, consequently, conflicts of
interest may arise with respect to the limited time commitment by such officers.
The Company does not expect any significant changes in the number of employees.
Our officers and directors may become involved with other companies who
have a business purpose similar to that of the Company. As a result, potential
conflicts of interest may arise in the future. If such a conflict does arise and
an officer or director of the Company is presented with business opportunities
under circumstances where there may be a doubt as to whether the opportunity
should
9
<PAGE>
belong to the Company or another "blank check" company they are affiliated with,
they will disclose the opportunity to all such companies. If a situation arises
in which more than one company desires to merge with or acquire that target
company and the principals of the proposed target company has no preference as
to which company will merge with or acquire such target company, the company
which first filed a registration statement with the Securities and Exchange
Commission will be entitled to proceed with the proposed transaction.
General Business Plan
The Company's purpose is to seek, investigate and, if such
investigation warrants, acquire an interest in business opportunities presented
to it by persons or firms who or which desire to seek the perceived advantages
of an Exchange Act registered corporation. The Company will not restrict its
search to any specific business, industry, or geographical location and the
Company may participate in a business venture of virtually any kind or nature.
This discussion of the proposed business is purposefully general and is not
meant to be restrictive of the Company's virtually unlimited discretion to
search for and enter into potential business opportunities. Management
anticipates that it may be able to participate in only one potential business
venture because the Company has nominal assets and limited financial resources.
See "Item 1, Financial Statements." This lack of diversification should be
considered a substantial risk to shareholders of the Company because it will not
permit the Company to offset potential losses from one venture against gains
from another.
The Company may seek a business opportunity with entities that have
recently commenced operations, or that wish to utilize the public marketplace in
order to raise additional capital in order to expand into new products or
markets, to develop a new product or service, or for other corporate purposes.
We may acquire assets and establish wholly owned subsidiaries in various
businesses or acquire existing businesses as subsidiaries.
We anticipate that the selection of a business opportunity in which to
participate will be complex and extremely risky. Due to general economic
conditions, rapid technological advances being made in some industries and
shortages of available capital, management believes that there are numerous
firms seeking the perceived benefits of a publicly registered corporation. Such
perceived benefits may include facilitating or improving the terms on which
additional equity financing may be sought, providing liquidity for incentive
stock options or similar benefits to key employees, providing liquidity (subject
to restrictions of applicable statutes) for all shareholders and other factors.
Potentially, available business opportunities may occur in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
extremely difficult and complex.
We have, and will continue to have, no capital with which to provide
the owners of business opportunities with any significant cash or other assets.
However, management believes we will be able to offer owners of acquisition
candidates the opportunity to acquire a controlling ownership interest in a
publicly registered company without incurring the cost and time required to
conduct an initial public offering. The owners of the business opportunities
will, however, incur significant legal and accounting costs in connection with
acquisition of a business opportunity, including the costs of preparing Form
8-K's, 10-Q's or 10-QSB's, agreements and related reports and documents. The '34
Act specifically requires that any merger or acquisition candidate comply with
all applicable reporting requirements, which include providing audited financial
statements to be included within the numerous filings relevant to complying with
the '34 Act. Nevertheless, the officers and directors of the Company have not
conducted market research and are not aware of statistical data which would
support the perceived benefits of a merger or acquisition transaction for the
owners of a business opportunity.
The analysis of new business opportunities will be undertaken by, or
under the supervision of, the officers and directors of the Company, none of
whom is a professional business analyst. Management
10
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intends to concentrate on identifying preliminary prospective business
opportunities which may be brought to its attention through present associations
of our officers and directors, or by our shareholders. In analyzing prospective
business opportunities, management will consider such matters as the available
technical, financial and managerial resources; working capital and other
financial requirements; history of operations, if any; prospects for the future;
nature of present and expected competition; the quality and experience of
management services which may be available and the depth of that management; the
potential for further research, development, or exploration; specific risk
factors not now foreseeable but which then may be anticipated to impact the
proposed activities of the Company; the potential for growth or expansion; the
potential for profit; the perceived public recognition of acceptance of
products, services, or trades; name identification; and other relevant factors.
Officers and directors of the Company expect to meet personally with management
and key personnel of the business opportunity as part of their "due diligence"
investigation. To the extent possible, the Company intends to utilize written
reports and personal investigations to evaluate the above factors. We will not
acquire or merge with any company that cannot provide audited financial
statements within a reasonable period of time after closing of the proposed
transaction.
Management of the Company, while not especially experienced in matters
relating to the new business of the Company, shall rely upon their own efforts
and, to a much lesser extent, the efforts of our shareholders, in accomplishing
the business purposes of the Company. It is not anticipated that any outside
consultants or advisors, except for our legal counsel and accountants, will be
utilized by the Company to effectuate its business purposes. However, if we do
retain such an outside consultant or advisor, any cash fee earned by such party
will be paid by the prospective merger/acquisition candidate, as the Company has
no cash assets with which to pay such obligation. We have no contracts or
agreements with any outside consultants and none are contemplated.
We will not restrict our search for any specific kind of firms, but may
acquire a venture that is in its preliminary or development stage or is already
operating. It is impossible to predict at this time the status of any business
in which the Company may become engaged, in that such business may need to seek
additional capital, may desire to have its shares publicly traded, or may seek
other perceived advantages which the Company may offer. Furthermore, we do not
intend to seek capital to finance the operation of any acquired business
opportunity until such time as the Company has successfully consummated a merger
or acquisition.
It is anticipated that the Company will incur nominal expenses in the
implementation of its business plan. Because the Company has no capital with
which to pay these anticipated expenses, present management of the Company will
pay these charges with their personal funds, as interest free loans to the
Company, for a minimum of twelve months from the date of this registration
statement. If additional funding is necessary, management and or shareholders
will continue to provide capital or arrange for additional outside funding.
However, the only opportunity which management has to have these loans repaid
will be from a prospective merger or acquisition candidate. Management's
agreements with the Company contain no negative covenants that would impede or
prevent consummation of a proposed transaction. There is no assurance, however,
that management will continue to provide capital indefinitely if a merger
candidate cannot be found. If a merger candidate cannot be found in a reasonable
period of time, management may be required reconsider its business strategy,
which could result in the dissolution of the Company.
Acquisition of Opportunities
In implementing a structure for a particular business acquisition, we
may become a party to a merger, consolidation, reorganization, joint venture, or
licensing agreement with another corporation or entity. It may also acquire
stock or assets of an existing business. On the consummation of a transaction,
it is probable that the present management and shareholders of the Company will
no longer be in control
11
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of the Company. In addition, our directors may, as part of the terms of the
acquisition transaction, resign and be replaced by new directors without a vote
of the Company's shareholders or may sell their stock in the Company. Any terms
of sale of the shares presently held by officers and/or directors of the Company
will be also afforded to all other shareholders of the Company on similar terms
and conditions. Any and all such sales will only be made in compliance with the
securities laws of the United States and any applicable state.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of its transaction, we may agree to register all or a part of
such securities immediately after the transaction is consummated or at specified
times thereafter. If such registration occurs, of which there can be no
assurance, it will be undertaken by the surviving entity after the Company has
successfully consummated a merger or acquisition and the Company is no longer
considered a "shell" company. Until a merger or acquisition is consummated, the
Company will not attempt to register any additional securities. The issuance of
substantial additional securities and their potential sale into any trading
market which may develop in the Company's securities may have a depressive
effect on the value of the Company's securities in the future, if such a market
develops, of which there is no assurance.
While the actual terms of a transaction to which the Company may be a
party cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition in a so-called "tax-free" reorganization under
Sections 368(a)(1) or 351 of the Internal Revenue Code (the "Code"). In order to
obtain tax-free treatment under the Code, it may be necessary for the owners of
the acquired business to own 80% or more of the voting stock of the surviving
entity. In such event, the shareholders of the Company would retain 20% or less
of the issued and outstanding shares of the surviving entity, which would result
in significant dilution in the equity of such shareholders.
As part of the Company's "due diligence" investigation, officers and
directors of the Company will meet personally with management and key personnel,
may visit and inspect material facilities, obtain independent analysis of
verification of certain information provided, check references of management and
key personnel, and take other reasonable investigative measures to the extent of
the Company's limited financial resources and management expertise. The manner
in which the Company participates in an opportunity will depend on the nature of
the opportunity, the respective needs and desires of the Company and other
parties, the management of the opportunity and the relative negotiation strength
of the Company and such other management.
With respect to any merger or acquisition, negotiations with target
company management is expected to focus on the percentage of the Company which
the target company shareholders would acquire in exchange for all of their
shareholdings in the target company. Depending upon, among other things, the
target company's assets and liabilities, the Company's shareholders will in all
likelihood hold a substantially lesser percentage ownership interest in the
Company following any merger or acquisition. The percentage ownership may be
subject to significant reduction in the event the Company acquires a target
company with substantial assets. Any merger or acquisition effected by the
Company can be expected to have a significant dilutive effect on the percentage
of shares held by the Company's then shareholders.
We will participate in a business opportunity only after the
negotiation and execution of appropriate written agreements. Although the terms
of such agreements cannot be predicted, generally such agreements will require
some specific representations and warranties by all of the parties, will specify
certain events of default, will detail the terms of closing and the conditions
that must be satisfied by each of the parties prior to and after such closing,
will outline the manner of bearing costs, including
12
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costs associated with the Company's attorneys and accountants, will set forth
remedies on default and will include miscellaneous other terms.
As stated previously, we will not acquire or merge with any entity that
cannot provide independent audited financial statements within a reasonable
period of time after closing of the proposed transaction. The Company is subject
to the reporting requirements of the '34 Act. Included in these requirements is
the affirmative duty of the Company to file independent audited financial
statements as part of its Form 8-K to be filed with the Securities and Exchange
Commission upon consummation of a merger or acquisition, as well as the
Company's audited financial statements included in its annual report on Form
10-Q (or 10-QSB, as applicable). If such audited financial statements are not
available at closing, or within time parameters necessary to insure the
Company's compliance with the requirements of the '34 Act, or if the audited
financial statements provided do not conform to the representations made by the
candidate to be acquired in the closing documents, the closing documents will
provide that the proposed transaction will be voidable at the discretion of the
present management of the Company. If such transaction is voided, the agreement
will also contain a provision providing for the acquisition entity to reimburse
the Company for all costs associated with the proposed transaction.
Year 2000 Disclosure
Many existing computer programs use only two digits to identify a year
in the date field. These programs were designed and developed without
considering the impact of the upcoming change in the century. If not corrected,
many computer applications could fail or create erroneous results by or at the
year 2000. As a result, many companies will be required to undertake major
projects to address the Year 2000 issue. Because the Company has no assets,
including any personal property such as computers, it is not anticipated that we
will incur any negative impact as a result of this potential problem. However,
it is possible that this issue may have an impact on us after we successfully
consummate a merger or acquisition. Management intends to address this potential
problem with any prospective merger or acquisition candidate. There can be no
assurances that new management of the Company will be able to avoid a problem in
this regard after a merger or acquisition is consummated.
Competition
The Company will remain an insignificant participant among the firms
which engage in the acquisition of business opportunities. There are many
established venture capital and financial concerns which have significantly
greater financial and personnel resources and technical expertise than the
Company. In view of the Company's combined extremely limited financial resources
and limited management availability, the Company will continue to be at a
significant competitive disadvantage compared to the Company's competitors.
LEGAL PROCEEDINGS
There is no litigation pending or threatened by or against the Company.
13
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SOLID MANAGEMENT CORPORATION
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Exhibits
Exhibit No. Description
3.1* Articles of Incorporation
3.2* Amendment to Articles of Incorporation
3.3* Bylaws
4.1* Specimen Informational Statement
4.1.1* Form of Lock-up Agreement Executed by the
Company's Shareholders
27.1 Financial Data Schedule
*Filed as an Exhibit to the Company's Registration Statement on Form 10-SB,
dated July 23, 1999, and incorporated herein by this reference.
Reports on Form 8-K
None
14
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SOLID MANAGEMENT CORPORATION
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SOLID MANAGEMENT CORPORATION
Date: November 17,1999 By: /s/ Devinder Randhawa
----------------------------------
Devinder Randhawa, President
By: /s/ Bob Hemmerling
----------------------------------
Bob Hemmerling, Secretary
15
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 9367
<BONDS> 0
0
0
<COMMON> 50
<OTHER-SE> (9417)
<TOTAL-LIABILITY-AND-EQUITY> 0
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<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 5804
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (5804)
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