UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[xx] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE FISCAL YEAR ENDED MARCH 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _______
Commission file Number: 000-26931
SOLID MANAGEMENT CORP.
(Name of small business issuer in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
98-0204702
(I.R.S. Employer Identification Number)
2779 Lake City Way
Burnaby, British Columbia
V5A 2A6
(Address of principal executive offices)
(604)415-0444
(Issuer's telephone number)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
<TABLE>
<S> <C>
Title of Each Class Name of Each Exchange on which Registered
------------------- -----------------------------------------
Common Stock, $0.0001 par value Not yet listed or quoted
</TABLE>
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. [X] Yes [ ] No
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of Issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
<PAGE>
2
The Issuer's revenues for its most recent fiscal year were $0.00.
As of March 31, 2000, there were 500,000 shares of the Issuer's common stock
issued and outstanding and the aggregate market value of such common stock held
by non-affiliates (196,000 shares) was approximately $Nil as the Issuer's shares
are not yet traded on a public market.
Transitional Small Business Disclosure Format (Check one): Yes ____; No __X__
PART I
BUSINESS
Item 1 - Description of Business
Solid Management Corp. (referred to as "us," "we" or "our"), was incorporated on
July 18, 1997 under the laws of the State of Nevada to engage in any lawful
corporate purpose. Other than issuing shares to our shareholders, we never
commenced any other operational activities. We can be defined as a "blank check"
company, whose sole purpose at this time is to locate and consummate a merger or
acquisition with a private entity.
The proposed business activities classifies us as a "blank check" company. The
Securities and Exchange Commission defines these companies as "any development
stage company that is issuing a penny stock (within the meaning of section 3
(a)(51) of the Securities Exchange Act of 1934) and that has no specific
business plan or purpose, or has indicated that its business plan is to merge
with an unidentified company or companies." Many states have enacted statutes,
rules and regulations limiting the sale of securities of "blank check" companies
in their respective jurisdictions. Management does not intend to undertake any
efforts to cause a market to develop in our securities, either debt or equity,
until we have successfully implemented our business plan. We comply with the
periodic reporting requirements of the Securities Exchange Act of 1934.
Item 2 - Description of Property
The Issuer operates from its offices at 2779 Lake City Way, Burnaby, British
Columbia, V5A 2A6, Canada. Space is provided to the Issuer on a rent free basis
by Mrs. Andrea Carley, a director of the Issuer, and it is anticipated that this
arrangement will remain until we successfully consummate a merger or
acquisition. Management believes that this space will meet our needs for the
foreseeable future. The Issuer owns no real property.
Item 3 - Legal Proceedings
The Issuer is not a party to any pending or threatened legal proceedings.
Item 4 - Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year-ended March 31, 2000.
<PAGE>
3
PART II
Item 5 - Market for Common Equity and Related Stockholder Matters
(A) Market Information
No public market currently exists for the Issuer's shares.
(B) Stockholders
The Issuer has 10 holders of record of its common shares.
No dividends have been declared on the Issuer's common shares.
There are no restrictions that limit the ability to pay
dividends on the Issuer's common shares.
Item 6 - Plan of Operation
(A) PLAN OF OPERATION
We seek to acquire assets or shares of a business that generates revenues, in
exchange for its securities. We have not identified a particular acquisition
target and have not entered into any negotiations regarding an acquisition. 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 with us as of the date of
this filing.
Depending upon the nature of the relevant business opportunity and the
applicable state statutes governing how the transaction is structured, the
Issuer's Board of Directors expects that it will provide our shareholders with
complete disclosure documentation concerning a potential business opportunity
and the structure of the proposed business combination prior to consummation.
Disclosure is expected to be in the form of a proxy or information statement.
We will remain a shell corporation until a merger or acquisition candidate is
identified. It is anticipated that our cash requirements will be minimal, and
that all necessary capital, to the extent required, will be provided by the
directors or officers. We do not anticipate that we will have to raise capital
in the next twelve months. We also do not expect to acquire any plant or
significant equipment.
We have not, and do not intend to enter into, any arrangement, agreement or
understanding with non-management shareholders allowing non-management
shareholders to directly or indirectly participate in or influence our
management of the Issuer. Management currently holds 60.8% of our stock. As a
result, management is in a position to elect a majority of the directors and to
control our affairs.
We have no full time employees. Our President and Secretary has agreed to
allocate a portion of her time to our activities, without compensation. This
officer anticipates that our business plan can be implemented by her devoting
approximately five (5) hours each per month to our business
<PAGE>
4
affairs and, consequently, conflicts of interest may arise with respect to their
limited time commitment. We do not expect any significant changes in the number
of employees.
(B) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
We have been a blank check company since incorporation and have no revenue.
Our purpose is to acquire an interest in business opportunities presented by
persons or firms that seek the perceived advantages of an Exchange Act
registered corporation. We will not restrict our search to any specific
business, industry, or geographical location and we may participate in a
business venture of virtually any kind or nature. This discussion of the
proposed business is general and is not meant to restrict our 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 we have nominal assets and limited financial resources. This
lack of diversification should be considered a substantial risk to our
shareholders.
We may seek a business opportunity with companies 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 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. The perceived benefits may include
facilitating or improving the terms for additional equity financing that 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. 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 these
business opportunities extremely difficult and complex.
We have, and will continue to have, no capital to provide to the owners of
business opportunities. 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-K's or 10-KSBs, 10-Q's or 10-QSBs, 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 Issuer have not conducted market
research and are not aware of statistical data that would support the perceived
benefits of a merger or acquisition transaction for the owners of a business
opportunity.
<PAGE>
5
The analysis of new business opportunities will be undertaken by our officers
and directors, none of whom is a professional business analyst. Management
intends to concentrate on identifying preliminary prospective business
opportunities that may be brought to our attention through present associations
of our officers and directors, or by our shareholders. In analyzing prospective
business opportunities, management will consider:
* 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 that 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 could be
anticipated to impact our proposed activities;
* 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.
Our officers and directors 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 Issuer intends to utilize written
reports and personal investigations to evaluate businesses. 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.
Our management will rely upon their own efforts and, to a much lesser extent,
the efforts of our shareholders, in accomplishing our business purposes. We do
not anticipate that any outside consultants or advisors, except for our legal
counsel and accountants, will be utilized by us to accomplish our business
purposes. However, if we do retain an outside consultant or advisor, any cash
fee will be paid by the prospective merger/acquisition candidate, as we have no
cash assets. We have no contracts or agreements with any outside consultants and
none are contemplated.
<PAGE>
6
We will not restrict our search for any specific kind of firms, and may acquire
a venture that is in its preliminary or development stage or is already
operating. We cannot predict the status of any business in which we may become
engaged, because the business may need to seek additional capital, may desire to
have its shares publicly traded, or may seek other perceived advantages that we
may offer. Furthermore, we do not intend to seek capital to finance the
operation of any acquired business opportunity until we have successfully
consummated a merger or acquisition.
We anticipate that we will incur nominal expenses in the implementation of our
business plan. Because we have no capital to pay these anticipated expenses,
present management will pay these charges with their personal funds, as interest
free loans, 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 that management has to have these loans repaid
will be from a prospective merger or acquisition candidate. Management has no
agreements with us that would impede or prevent consummation of a proposed
transaction. We cannot assure, 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 our
dissolution.
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. We may also acquire stock or
assets of an existing business. On the consummation of a transaction, it is
probable that our present management and shareholders will no longer be in
control. 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 our
shareholders. Furthermore, management may negotiate or consent to the purchase
of all or a portion of our stock. Any terms of sale of the shares presently held
by officers and/or directors will be also afforded to all other shareholders on
similar terms and conditions. Any and all sales will only be made in compliance
with the securities laws of the United States and any applicable state.
While the actual terms of a future transaction cannot be predicted, it is
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 that event, the
shareholders of the Issuer 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 the shareholders.
As part of the "due diligence" investigation, our officers and directors will
meet personally with management and key personnel, may visit and inspect
material facilities, obtain independent verification of certain information
provided, check references of management and key personnel, and take other
reasonable investigative measures to the extent of our limited financial
resources and management expertise. How we will participate in an opportunity
will depend on the nature of the opportunity, the respective needs and desires
of the parties, the management of the target company and our relative
negotiation strength.
<PAGE>
7
Negotiations with target company management are expected to focus on the
percentage of our company that the target company shareholders would acquire in
exchange for all of their shareholdings in the target company. Depending upon
the target company's assets and liabilities, our shareholders will probably hold
a substantially lesser percentage ownership interest following any merger or
acquisition. Percentage ownership may be subject to significant reduction in the
event we acquire a company with substantial assets. Any merger or acquisition
effected by us can be expected to have a significant dilutive effect on the
percentage of shares held by our remaining shareholders.
We will participate in a business opportunity only after the negotiation and
signing of appropriate written agreements. Although we cannot predict the terms
of the agreements, generally the 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 before and after the closing.
We will not acquire or merge with any entity that cannot provide independent
audited financial statements concurrent with the closing of the proposed
transaction. We are subject to the reporting requirements of the '34 Act.
Included in these requirements is our affirmative duty 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 our audited financial statements included in our annual report on
Form 10-K (or 10-KSB, as applicable) and quarterly reports on Form 10-Q (or
10-QSB, as applicable). If the audited financial statements are not available at
closing, 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 our present management. If the transaction is
voided, the agreement will also contain a provision providing for the
acquisition entity to reimburse us for all costs associated with the proposed
transaction.
Competition
We are an insignificant participant among the firms that engage in the
acquisition of business opportunities. There are many established venture
capital and financial concerns that have significantly greater financial and
personnel resources and technical expertise than we do. In view of our extremely
limited financial resources and limited management availability we will continue
to be at a significant competitive disadvantage compared to our competitors.
<PAGE>
8
Item 7 - Financial Statements
SOLID MANAGEMENT CORP.
(A Development Stage Company)
Financial Statements
MARCH 31, 2000
<PAGE>
A Partnership of Incorporated Professionals
DAVIDSON & COMPANY____Chartered Accountants_____________________________________
INDEPENDENT AUDITORS' REPORT
To the Directors and Stockholders of
Solid Management Corporation
(A Development Stage Company)
We have audited the accompanying balance sheet of Solid Management Corporation
(A Development Stage Company) as at March 31, 2000 and the related statements of
operations, changes in stockholders' equity and cash flows for the year then
ended and for the period from inception on July 18, 1997 to March 31, 2000.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform an audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying financial statements have been prepared assuming that Solid
Management Corporation (A Development Stage Company) will continue as a going
concern. The Company is in the development stage and does not have the necessary
working capital for its planned activity which raises substantial doubt about
its ability to continue as a going concern. Management's plans in regards to
these matters are discussed in Note 2. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
In our opinion, the financial statements present fairly, in all material
respects, the financial position of Solid Management Corporation (A Development
Stage Company) as at March 31, 2000 and the results of its operations and its
cash flows for the year then ended and for the period from inception on July 18,
1997 to March 31, 2000 in conformity with generally accepted accounting
principles in the United States of America.
The audited financial statements as at March 31, 1999 and for the year then
ended were examined by other auditors who expressed an opinion without
reservation on those statements in their report dated June 22, 1999.
"DAVIDSON & COMPANY"
Vancouver, Canada Chartered Accountants
June 23, 2000
A Member of SC INTERNATIONAL
----------------------------
Suite 1200, Stock Exchange Tower, 609 Granville Street, P.O. Box 10372,
Pacific Centre, Vancouver, BC, Canada, V7Y 1G6
TELEPHONE (604) 687-0947 FAX (604) 687-6172
<PAGE>
10
SOLID MANAGEMENT CORPORATION
(A Development Stage Company)
BALANCE SHEET
AS AT MARCH 31
<TABLE>
<CAPTION>
=============================================================================================================================
2000 1999
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS $ -- $ --
=============================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities $ -- $ --
-------------- --------------
STOCKHOLDERS' EQUITY
Capital stock (Note 4)
Authorized
100,000,000 common shares with a par value of $0.0001
Issued and outstanding
March 31, 2000 - 500,000 common shares
March 31, 1999 - 500,000 common shares $ 50 $ 50
Additional paid in capital 12,933 --
Deficit accumulated during the development stage (12,983) (50)
-------------- --------------
Total liabilities and stockholders' equity $ -- $ --
=============================================================================================================================
On Behalf of the Board of Directors:
/s/ Andrea Carley
------------------------------------
Andrea Carley, Sole Director
The accompanying notes are an integral part of these financial statements.
<PAGE>
11
SOLID MANAGEMENT CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS
============================================================================================================================
Cumulative
Amounts
From Inception
on
July 18,
1997
to Year Ended Year Ended
March 31, March 31, March 31,
2000 2000 1999
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
EXPENSES
Office and miscellaneous $ 4,542 $ 4,492 $ --
Professional fees 8,441 8,441 --
--------------- --------------- --------------
LOSS FOR THE YEAR $ 12,983 $ 12,933 $ --
============================================================================================================================
BASIC AND DILUTED LOSS PER SHARE $ (0.01) $ (0.00)
============================================================================================================================
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 500,000 500,000
============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
12
SOLID MANAGEMENT CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
============================================================================================================================
Cumulative
Amounts
From Inception
on
July 18,
1997
to Year Ended Year Ended
March 31, March 31, March 31,
2000 2000 1999
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the year $ (12,983) $ (12,933) $ --
Stock issued for services 50 -- --
--------------- --------------- --------------
Net cash used in operating activities (12,933) (12,933) --
--------------- --------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used in investing activities -- -- --
--------------- --------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Shareholder capital contribution 12,933 12,933 --
--------------- --------------- --------------
Net cash provided by financing activities 12,933 12,933 --
--------------- --------------- --------------
CHANGE IN CASH POSITION DURING THE YEAR -- -- --
CASH POSITION, BEGINNING OF THE YEAR -- -- --
--------------- --------------- --------------
CASH POSITION, END OF THE YEAR $ -- $ -- $ --
============================================================================================================================
SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS:
Cash paid for income taxes $ -- $ -- $ --
Cash paid for interest $ -- $ -- $ --
============================================================================================================================
SUPPLEMENTAL DISCLOSURE OF NON-CASH OPERATING, INVESTING,
AND FINANCING ACTIVITIES:
Common shares issued for services $ 50 $ -- $ --
============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
13
SOLID MANAGEMENT CORPORATION
(A Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
=============================================================================================================================
Deficit
Accumulated
Additional During
Common Stock Paid in the Total
------------------------------------------------ Development Stockholders'
Shares Amount Capital Stage Equity
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE, JULY 18, 1997 -- $ -- $ -- $ -- $ --
Capital stock issued for services 500,000 50 -- -- 50
Loss for the period -- -- -- (50) (50)
-------------- -------------- -------------- -------------- ----------------
BALANCE, MARCH 31, 1998 500,000 50 -- (50) --
Loss for the year -- -- -- -- --
-------------- -------------- -------------- -------------- ----------------
BALANCE, MARCH 31, 1999 500,000 50 -- (50) --
Shareholder capital contribution -- -- 12,933 -- 12,933
Loss for the year -- -- -- (12,933) (12,933)
-------------- -------------- -------------- -------------- ----------------
BALANCE, MARCH 31, 2000 500,000 $ 50 $ 12,933 $ (12,983) $ --
=============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
14
SOLID MANAGEMENT CORPORATION
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2000
================================================================================
1. ORGANIZATION OF THE COMPANY
Solid Management Corporation ("the Company") was incorporated on July 18,
1997 under the laws of Nevada to engage in any lawful business or activity
for which corporations may be organized under the laws of the State of
Nevada.
The Company entered the development stage in accordance with Statement of
Financial Accounting Standards No. 7 on July 18, 1997. Its purpose is to
evaluate, structure and complete a merger with, or acquire a privately owned
corporation.
2. GOING CONCERN
The Company's financial statements are prepared using the 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 has no current source of revenue. Without
realization of additional capital, it would be unlikely for the Company to
continue as a going concern. The Company's management plans on advancing
funds on an as needed basis and in the longer term, revenues from the
operations of the merger or acquisition candidate, if found. The Company's
ability to continue as a going concern is dependent on these additional
management advances, and, ultimately, upon achieving profitable operations
through a merger or acquisition candidate.
<TABLE>
<CAPTION>
========================================================================================================
2000 1999
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deficit accumulated during the development stage $ (12,983) $ (50)
========================================================================================================
</TABLE>
3. SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amount of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amount of revenues and expenses during the year. Actual results
could differ from these estimates.
BASIC LOSS PER SHARE
Earnings per share are provided in accordance with Statement of Financial
Accounting Standards No. 128, "Earnings Per Share". Due to the Company's
simple capital structure, with only common stock outstanding, only basic loss
per share is presented. Basic loss per share is computed by dividing losses
available to common shareholders by the weighted average number of common
shares outstanding during the year.
INCOME TAXES
Income taxes are provided 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 and net operating loss carryforwards.
Deferred tax expenses (benefit) result from the net change during the year of
deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion
of management, it is more likely than not that some portion or all of the
deferred tax assets will not be realized. Deferred tax assets and liabilities
are adjusted for the effects of changes in tax laws and rates on the date of
enactment.
<PAGE>
15
SOLID MANAGEMENT CORPORATION
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2000
================================================================================
3. SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
COMPREHENSIVE INCOME
The Company has adopted Statement of Financial Accounting Standards No. 130
("SFAS 130"), "Reporting Comprehensive Income". This statement establishes
rules for the reporting of comprehensive income and its components. The
adoption of SFAS 130 had no impact on total stockholders' equity as of March
31, 2000.
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting
for Derivative Instruments and Hedging Activities" which establishes
accounting and reporting standards for derivative instruments and for hedging
activities. SFAS 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. In June 1999, the FASB issued SFAS 137 to
defer the effective date of SFAS 133 to fiscal quarters of fiscal years
beginning after June 15, 2000. The Company does not anticipate that the
adoption of the statement will have a significant impact on its financial
statements.
STOCK-BASED COMPENSATION
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," encourages, but does not require, companies to
record compensation cost for stock-based employee compensation plans at fair
value. The Company has chosen to account for stock-based compensation using
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees." Accordingly compensation cost for stock options is measured as
the excess, if any, of the quoted market price of the Company's stock at the
date of the grant over the amount an employee is required to pay for the
stock.
4. CAPITAL STOCK
The Company's authorized capital stock consists of 100,000,000 shares of
common stock, with a par value of $0.0001 per share. All shares of common
stock have equal voting rights and, when validly issued and outstanding, are
entitled to one vote per share in all matters to be voted upon by
shareholders. The shares of common stock have no pre-emptive, subscription,
conversion or redemption rights and may be issued only as fully paid and
non-assessable shares. Holders of the common stock are entitled to share
pro-rata in dividends and distributions with respect to the common stock, as
may be declared by the Board of Directors out of funds legally available.
On July 18, 1997, the Company issued 500,000 shares of common stock for
services at a deemed value of $50.
5. INCOME TAXES
The Company's total deferred tax asset at March 31 is as follows:
<TABLE>
<CAPTION>
========================================================================================================
2000 1999
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
Tax benefit of net operating loss carryforward $ 1,947 $ --
Valuation allowance (1,947) --
------------- ------------
$ -- $ --
========================================================================================================
</TABLE>
The Company has a net operating loss carryforward of approximately $12,983,
which if not used, will expire between the years 2019 and 2020. The Company
has provided a full valuation allowance on the deferred tax asset because of
the uncertainty regarding realizability.
<PAGE>
16
SOLID MANAGEMENT CORPORATION
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2000
================================================================================
6. RELATED PARTY TRANSACTIONS
The Company does not maintain a checking account and all expenses incurred by
the Company are paid by an affiliate. For the year ended March 31, 2000, the
Company incurred professional fees of $8,441 and office and miscellaneous
expense of $4,492. The affiliate does not expect to be repaid for the
expenses it pays on behalf of the Company. Accordingly, as the expenses are
paid, they are classified as additional paid-in capital.
<PAGE>
17
Item 8 - Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure
On June 19, 2000, the Issuer appointed Davidson & Company, Chartered Accountants
to replace Cordovano & Harvey, P.C. as our principal accountants. The report of
Cordovano & Harvey, P.C. on our financial statements did not contain an adverse
opinion or a disclaimer of opinion, and was not qualified or modified as to
uncertainty, audit scope or accounting principles. We had no disagreements with
them on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure. We did not consult with Davidson &
Company on any accounting or financial reporting matters in the periods prior to
their appointment. The change in accountants was approved by the Board of
Directors. We filed a Form 8-K with the Commission (File No. 000-26931) on June
21, 2000.
PART III
Item 9 - Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
The following table sets forth the names and ages of the current directors,
executive officers and key employees of the Issuer and the principal offices and
positions with the Issuer held by each person. The Board of Directors currently
consists of one director.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Andrea Carley 30 President, Secretary and Director
</TABLE>
The above listed officers and directors will serve until the next annual meeting
of the shareholders or until their death, resignation, retirement, removal or
disqualification or until their successors have been duly elected and qualified.
Vacancies in the existing Board of Director are filled by majority vote of the
remaining directors. Officers of the Issuer serve at the will of the Board of
Directors. There are no family relationships between any execute officer or
director of the Issuer.
Mrs. Andrea Carley was appointed to her positions on March 30, 2000. She devotes
her time as necessary to our business, which time is expected to be nominal.
Prior to joining the Issuer, Mrs. Carley was a private investor. Mrs. Carley
does not hold any other management positions.
SIGNIFICANT EMPLOYEES
The Issuer has one employee. Mrs. Andrea Carley is the President, Secretary and
Treasurer of the Issuer. Mrs. Carley devotes her time as necessary to our
business, which time is expected to be nominal.
There are no family relationships among the directors, executive officer or
persons nominated or chosen by the Issuer to become directors or executive
officers.
<PAGE>
18
No bankruptcy petition has been filed by or against any business of which Andrea
Carley is a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time.
Andrea Carley has never been convicted in a criminal proceeding and is not
subject to a pending criminal proceeding.
Andrea Carley has never been subject to any order, judgment or decree, not
subsequently reversed, suspended or vacated of any court of competent
jurisdiction, permanently or temporarily enjoining, barring, suspending or
otherwise limiting their involvement in any type of business, securities or
banking activities.
Andrea Carley has never been found by a court of competent jurisdiction (in a
civil action), the Commission or the Commodity Futures Trading Commission to
have violated a federal or state securities or commodities law.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based on the Issuer's review of copies of forms filed with the Securities and
Exchange Commission or written representations from certain reporting persons,
in compliance with Section 16(a) of the Securities Exchange Act of 1934, the
Issuer believes that during fiscal year 2000, all officers, directors and
greater than ten percent beneficial owners complied with the applicable filing
requirements.
Item 10 - Executive Compensation
None of our officers and/or directors have received any compensation. They all
have agreed to act without compensation until authorized by the Board of
Directors, which is not expected to occur until we have generated revenues from
operations. As of the date of this registration statement, we have no funds
available to pay directors. Further, none of the directors are accruing any
compensation pursuant to any agreement with us.
It is possible that, after we successfully complete a merger or acquisition,
that company may employ or retain one or more members of our management for the
purposes of providing services to the surviving entity. Each member of
management has agreed to disclose to the Board of Directors any discussions
concerning possible employment by any entity that proposes to undertake a
transaction with us and further, to abstain from voting on the transaction.
Therefore, as a practical matter, if each member of the Board of Directors is
offered employment in any form from any prospective merger or acquisition
candidate, the proposed transaction will not be approved by the Board of
Directors as a result of the inability of the Board to affirmatively approve the
transaction. The transaction would then be presented to our shareholders for
approval.
It is possible that persons associated with management may refer a prospective
merger or acquisition candidate to us. In the event we complete a transaction
with any entity referred by associates of management, it is possible that the
associate will be compensated for their referral in the form of a finder's fee.
It is anticipated that this fee will be either in the form of restricted common
stock issued by us as part of the terms of the proposed transaction, or will be
<PAGE>
19
in the form of cash consideration. If compensation is in the form of cash,
payment will be tendered by the acquisition or merger candidate, because we have
insufficient cash available. The amount of any finder's fee cannot be determined
as of the date of this registration statement, but is expected to be comparable
to consideration normally paid in like transactions, which range up to ten (10%)
percent of the transaction price. No member of management will receive any
finders fee, either directly or indirectly, as a result of their efforts to
implement our business plan.
No retirement, pension, profit sharing, stock option or insurance programs have
been adopted by the Issuer's for the benefit of its employees.
Item 11 - Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the number of shares of the Issuer's Common Stock
beneficially owned by (i) each director and nominee for election to the Board of
Directors of the Issuer; (ii) each of the named executive officers in the
Summary Compensation Table; (iii) all directors and executive officers as a
group; and (iv) to the best of the Issuer's knowledge, all beneficial owners of
more than 5% of the outstanding shares of the Issuer's Common Stock as of March
31, 2000. Unless otherwise indicated, the shareholders listed in the table have
sole voting and investment power with respect to the shares indicated. The
Issuer has been provided such information by its directors, nominees for
directors and executive officers.
<TABLE>
<CAPTION>
NAME (AND ADDRESS OF 5% HOLDER) OR COMMON SHARES BENEFICIALLY PERCENT
IDENTITY OF GROUP OWNED (1) OF CLASS (2)
<S> <C> <C>
Devinder Randhawa
Suite 104 152,000 30.4%
1456 St. Paul Street,
Kelowna, B.C.
V1Y 2E6
Bob Hemmerling
1908 Horizon Drive 152,000 30.4%
Kelowna, B.C.
V1Z 3L3
</TABLE>
(1) Under the rules of the Securities and Exchange Commission, shares not
actually outstanding are nevertheless deemed to be beneficially owned by a
person if such person has the right to acquire the shares within 60 days.
Pursuant to such SEC rules, shares deemed beneficially owned by virtue of a
person's right to acquire them are also treated as outstanding when
calculating the percent of class owned by such person and when determining
the percentage owned by a group.
(2) Based on 500,000 shares of Common Stock issued and outstanding as of March
31, 2000.
There are no arrangements in place which may result in a change of control of
the Issuer.
Item 12 - Certain Relationships and Related Transactions
There have been no related party transactions, or any other transactions or
relationships required to be disclosed pursuant to Item 404 of Regulation S-B.
<PAGE>
20
Item 13 - Exhibits and Reports on Form 8-K
(A) Exhibits
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
EXHIBIT
NUMBER DESCRIPTION
---------------------------------------------------------------------------------------------------------------------
<S> <C>
3.1 Articles of Incorporation filed July 18, 1997, and amendments thereto filed June 14, 1999, as filed
with the Issuer's Form 10-SB (file no. 000-26931) filed on August 4, 1999 incorporated herein by
reference.
---------------------------------------------------------------------------------------------------------------------
3.3 Bylaws as filed with the Issuer's Form 10-SB (file no. 000-26931) on August 4, 1999 incorporated
herein by reference.
---------------------------------------------------------------------------------------------------------------------
4.1 Form of Lock Up Agreement Executed by the Issuer's Shareholders as filed with the Issuer's Form 10-SB
(file no. 000-26931) filed on August 4, 1999, incorporated herein by reference.
---------------------------------------------------------------------------------------------------------------------
4.1.1 Specimen Informational Statement as filed with the Issuer's Form 10-SB (file no.000-26931) filed on
August 4, 1999, incorporated herein by reference.
---------------------------------------------------------------------------------------------------------------------
13.1 Form 10QSB for the Period ended June 30, 1999, filed on August 13, 1999, incorporated herein by
reference.
---------------------------------------------------------------------------------------------------------------------
13.2 Form 10QSB for the Period ended September 30, 1999, filed on November 19, 1999, incorporated herein
by reference.
---------------------------------------------------------------------------------------------------------------------
13.3 Form 10QSB for the Period ended December 31, 1999, filed on February 15, 2000, incorporated herein
by reference.
---------------------------------------------------------------------------------------------------------------------
16 Letter from Cordovano & Harvey, P.C. as filed with the Issuer's Form 8-K on June 21, 2000,
incorporated herein by reference.
---------------------------------------------------------------------------------------------------------------------
27 Financial Data Schedule
---------------------------------------------------------------------------------------------------------------------
</TABLE>
(B) Reports on Form 8-K
The Issuer filed a Form 8-K on January 24, 2000 and on June 21, 2000.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Issuer caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
SOLID MANAGEMENT CORP.
Dated: July 13, 2000 Per: /s/ Andrea Carley
-------------------------------------
Andrea Carley, President and Director
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