STEARMAN ENTERPRISES LTD.
FILING TYPE: 10QSB
DESCRIPTION: QUARTERLY REPORT
FILING DATE: MAR 10, 2000
PERIOD END: OCT 31, 1999
PRIMARY EXCHANGE: N/A
TICKER: N/A
<PAGE>
STEARMAN ENTERPRISES LTD. 10QSB Quarterly Report Date Filed: 03/10/2000
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
To jump to a section, double-click on the section name.
10QSB
Part I 1
Item 1 2
Cash Flow Statement 4
ITEM 2 6
PART II 8
ITEM 2 9
ITEM 3 9
ITEM 4 9
ITEM 5 9
ITEM 6 9
<PAGE>
Page 1
STEARMAN ENTERPRISES LTD. 10QSB Quarterly Report Date Filed: 03/10/2000
- --------------------------------------------------------------------------------
10QSB
1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
October 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission file number 0-27759
Stearman Enterprises Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-4082816
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1501 Broadway, Suite 1807, New York, New York 10036
(Address of principal executive offices (zip code))
212 768-2383
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the last 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
Indicate the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.
Class Outstanding at October 31, 1999
Common Stock, par value $0.0001 1,623,000
PART I -- FINANCIAL INFORMATION
<PAGE>
Page 2
STEARMAN ENTERPRISES LTD. 10QSB Quarterly Report Date Filed: 03/10/2000
- --------------------------------------------------------------------------------
ITEM 1. FINANCIAL STATEMENTS
STEARMAN ENTERPRISES LTD.
(A DELAWARE CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
(U.S. DOLLARS)
3 MONTHS ENDED FISCAL YEAR
OCTOBER 31, ENDED JULY 31,
1999 1999
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash and bank $ 300 $ 300
- --------------------------------------------------------------------------------
INCORPORATION COSTS 403 403
- --------------------------------------------------------------------------------
TOTAL ASSETS $ 703 $ 703
================================================================================
LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 357 $ 357
Accrued interest 6 55
Convertible Debent - 500
- --------------------------------------------------------------------------------
TOTAL LIABILITIES 363 912
- --------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY (DEFICIT)
SHARE CAPITAL
AUTHORIZED:
100,000,000 common shares with a
par value of $.0001 each
ISSUED AND OUTSTANDING
1,623,000 common shares with a par
value of $0.0001 at October 31,
1999 and 515,000 at July 31, 1999 1,104 550
- --------------------------------------------------------------------------------
1,104 550
ACCUMULATED DEFICIT (764) (759)
- --------------------------------------------------------------------------------
(719) (209)
- --------------------------------------------------------------------------------
$ 703 $ 703
================================================================================
CONTINUING OPERATIONS (NOTE 1)
<PAGE>
Page 3
STEARMAN ENTERPRISES LTD. 10QSB Quarterly Report Date Filed: 03/10/2000
- --------------------------------------------------------------------------------
STEARMAN ENTERPRISES LTD.
(A DELAWARE CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF LOSS
(U.S. DOLLARS)
(UNAUDITED)
3 months ended 3 months ended
October 31, October 31,
1999 1998
EXPENSES
Legal $ - $ -
Interest and bank charges 5 6
Filing fees - -
- --------------------------------------------------------------------------------
NET EARNINGS (LOSS) FOR THE PERIOD $ (5) $ (6)
================================================================================
BASIC AND DILUTED LOSS PER SHARE $ (0.00001) $ (0.02400)
- --------------------------------------------------------------------------------
WEIGHTED AVERAGE SHARES OUTSTANDING 707,696 250
- --------------------------------------------------------------------------------
<PAGE>
Page 4
STEARMAN ENTERPRISES LTD. 10QSB Quarterly Report Date Filed: 03/10/2000
- --------------------------------------------------------------------------------
STEARMAN ENTERPRISES LTD.
(A DELAWARE CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOW
(U.S. DOLLARS)
(UNAUDITED)
3 months ended 3 months ended
October 31, October 31,
1999 1998
CASH PROVIDED BY (USED IN)
OPERATIONS
Net Loss for period $ (5) $ (6)
- --------------------------------------------------------------------------------
(5) (6)
Net change in non-cash working
capital balances
Accounts payable -
Accrued interest (49) 6
Convertible Debenture (500) -
- --------------------------------------------------------------------------------
Net cash used in operating activities (554) -
FINANCING
Issuance of capital stock 554 -
- --------------------------------------------------------------------------------
Net cash generated by financing activities - -
- --------------------------------------------------------------------------------
CHANGE IN CASH FOR PERIOD - -
CASH, BEGINNING OF PERIOD 300 -
- --------------------------------------------------------------------------------
CASH, END OF PERIOD $ 300 $ -
================================================================================
<PAGE>
Page 4
STEARMAN ENTERPRISES LTD. 10QSB Quarterly Report Date Filed: 03/10/2000
- --------------------------------------------------------------------------------
STEARMAN ENTERPRISES LTD.
(A DELAWARE CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
PERIOD ENDED OCTOBER 31, 1999
(U.S. DOLLARS)
1. CONTINUING OPERATIONS
Stearman Enterprises Ltd. was incorporated on March 13, 1992 in the state
of Delaware, U.S.A.
The Company has negative working capital and a deficit. The ability for
the Company to continue as a going concern is dependent upon its ability to
obtain adequate financing to reach profitable levels of operations. It is
not possible to predict whether financing efforts will be successful or if
the Company will attain profitable levels of operations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared in accordance with generally
accepted accounting principles in the United States and reflect the
following significant accounting principles:
a. ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make 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 amount of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
b. EARNINGS (LOSS) PER COMMON SHARE
In February, 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings Per Share (SFAS 128), which established new
standards for computing and presenting earnings per share effective for
fiscal years ending after December 15, 1997. With SFAS 128, primary
earnings per share is replaced by basic earnings per share, which is
computed by dividing income available to common shareholders by the
weighted average number of shares outstanding for the period. In
addition, SFAS 128 requires the presentation of diluted earnings per
share, which includes the potential dilution that could occur if
dilutive securities were exercised or converted into common stock.
The computation of diluted EPS does not assume the conversion or
exercise of securities if their effect is anti-dilutive. Common
equivalent shares consist of the common shares issuable upon the
conversion of the convertible loan notes and special warrants
(using the if-converted method) and incremental shares issuable
upon the exercise of stock options and share purchase warrants
(using the treasury stock method).
<PAGE>
Page 6
c. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand, deposits in banks
and highly liquid investments with an original maturity of three
months or less.
3. CONVERTIBLE DEBENTURE
On April 17, 1997 the Company issued a 5% Convertible Debenture in the
amount of $500 U.S. due April 17, 2002 in partial settlement of
outstanding legal fees. The debenture principle bears interest at 5% per
annum and the accrued interest and the principle shall be convertible, in
part or in whole on the basis of 1 share for every $1.00 U.S. ($0.0005
U.S. post forward split shares) of debt. The debenture conversion may be
exercised at the holder's option by giving the Company 10 days notice. The
Convertible debenture was converted on October 15, 1999.
4. SHARE CAPITAL
a. On May 4, 1999, the Company amended its certificate of incorporation by
subdividing the authorized capital stock of the corporation so that
each share was subdivided into two thousand shares. The certificate of
incorporation was further amended by increasing the authorized capital
stock of the company to 20,000,000 shares with a par value of $0.01
each.
b. On October 20, 1999, the Company amended its certificate of
incorporation by increasing its authorized capital stock to 100,000,000
shares of common stock and changing the par value of its common shares
to $.0001 par value per share.
c. On October 15, 1999, the Company issued 1,108,000 common shares on the
conversion of the debt and accrued interest of $54 at 1 share for every
$0.0005 U.S. debt.
5. RELATED PARTY TRANSACTIONS
a. At October 31, 1999, members of Maitland & Company, the Company's
Canadian legal counsel owned 125,000 shares of the Company's common
stock.
b. At October 31, 1999, members of the Company's U.S. legal counsel owned
1,108,000 shares of the Company's common stock
6. INCOME TAXES
The Company has net operating losses which may give rise to future tax
benefits of approximately $229, $25 and $505 as of July 31, 1999, July 31,
1998 and July 31, 1997 respectively. To the extent not used, net operating
loss carryforwards expire in varying amounts beginning in the year 2012.
Income taxes are accounted for in accordance with Statement of Financial
Accounting Standards No.109 (SFAS 109). Under this method, deferred income
taxes are determined based on differences between the tax basis of assets
and liabilities and their financial reporting amounts at each year end, and
are measured based on enacted tax rates and laws that will be in effect
when the differences are expected to reverse. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized. No provision for income taxes is included in the
statement due to its immaterial amount.
<PAGE>
Page 7
STEARMAN ENTERPRISES LTD. 10QSB Quarterly Report Date Filed: 03/10/2000
- --------------------------------------------------------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company has registered its common stock on a Form 10-SB registration
statement filed pursuant to the Securities Exchange Act of 1934 (the "Exchange
Act") and Rule 12(g) thereof. The Company files with the Securities and
Exchange Commission periodic and episodic reports under Rule 13(a) of the
Exchange Act, including quarterly reports on Form 10-QSB and annual reports
Form 10-KSB. As a reporting company under the Exchange Act, the Company may
register additional securities on Form S-8 (provided that it is then in
compliance with the reporting requirements of the Exchange Act) and on Form S-3
(provided that is has during the prior 12 month period timely filed all reports
required under the Exchange Act).
The Company was formed to engage in a merger with or acquisition of an
unidentified foreign or domestic private company which desires to become a
reporting company whose securities have been registered under the Exchange Act.
The Company may be deemed to meet the definition of a "blank check" company
contained in Section (7)(b)(3) of the Securities Act of 1933, as amended.
Management believes that there are perceived benefits to being a reporting
company which may be attractive to foreign and domestic private companies.
These benefits are commonly thought to include
(1) the ability to use securities to make acquisition of assets or
businesses;
(2) increased visibility in the financial community;
(3) the facilitation of borrowing from financial institutions;
(4) improved trading efficiency;
(5) the potential for shareholder liquidity;
(6) greater ease in subsequently raising capital;
(7) compensation of key employees through options for stock
for which there may be a public market;
(8) enhanced corporate image; and,
(9) a presence in the United States capital market.
A private company which may be interested in a business combination
with the Company may include
(1) a company for which a primary purpose of becoming a reporting
company is the use of its securities for the acquisition of
assets or businesses;
(2) a company which is unable to find an underwriter of its securities
or is unable to find an underwriter of securities on terms
acceptable to it;
(3) a company which wishes to become a reporting company with less
dilution of its common stock than would occur normally upon an
underwriting;
(4) a company which believes that it will be able obtain
investment capital on more favorable terms after it has become
a reporting company;
<PAGE>
Page 8
STEARMAN ENTERPRISES LTD. 10QSB Quarterly Report Date Filed: 03/10/2000
- --------------------------------------------------------------------------------
(5) a foreign company which may wish an initial entry into the
United States securities market;
(6) a special situation company, such as a company seeking to satisfy
redemption requirements under a qualified Employee Stock Option
Plan; and,
(7) a company seeking one or more of the other benefits believed to
attach to a reporting company.
Management is actively engaged in seeking a qualified private company
as a candidate for a business combination. The Company is authorized to enter
into a definitive agreement with a wide variety of private businesses without
limitation as to their industry or revenues. It is not possible at this time to
predict with which private company, if any, the Company will enter into a
definitive agreement or what will be the industry, operating history, revenues,
future prospects or other characteristics of that company.
As of the date hereof, management has not made any final decision concerning
or entered into any agreements for a business combination. When any such
agreement is reached or other material fact occurs, the Company will file notice
of such agreement or fact with the Securities and Exchange Commission on Form
8-K. Persons reading this Form 10-QSB are advised to see if the Company has
subsequently filed a Form 8-K.
The Company does not intend to trade its securities in the secondary market
until completion of a business combination. It is anticipated that following
such occurrence the Company will take the steps required to cause its common
stock to be admitted to quotation on the NASD OTC Bulletin Board or, if it
then meets the financial and other requirements thereof, on the Nasdaq SmallCap
Market, National Market System or regional or national exchange.
COMPUTER SYSTEMS REDESIGNED FOR YEAR 2000
Many existing computer programs use only two digits to identify a year in
such program's date field. These programs were designed and developed
without consideration of the impact of the change in the century for which four
digits will be required to accurately report the date. If not corrected, many
computer applications could fail or create erroneous results by or following
the year 2000 ("Year 2000 Problem"). Many of the computer programs containing
such date language problems have not been corrected by the companies or
governments operating such programs. The Company does not have operations and
does not maintain computer systems. However, it is impossible to predict what
computer programs will be effected, the impact any such computer disruption will
have on other industries or commerce or the severity or duration of a computer
disruption.
Before the company enters into any business combination, it will inquire as
to the status of any target company's Year 2000 Problem, the steps such target
company has taken to correct any such problem and the probable impact on such
target company of any computer disruption. However, there can be no assurance
that the Company will not combine with a target company that has an uncorrected
Year 2000 Problem or that any such Year 2000 Problem corrections are sufficient.
The extent of the Year 2000 Problem of a target company may be impossible to
ascertain and its impact on the Company is impossible to predict.
<PAGE>
Page 9
STEARMAN ENTERPRISES LTD. 10QSB Quarterly Report Date Filed: 03/10/2000
- --------------------------------------------------------------------------------
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no legal proceedings against the Company and the Company is
unaware of such proceedings contemplated against it.
ITEM 2. CHANGES IN SECURITIES
On October 15, 1999, the Company issued 1,108,000 common shares on the
conversion of the 5% Convertible Debenture in the amount of $500 and accrued
interest of $54 at the rate of 1 share for every $0.0005 of debt. The debenture
was in settlement of outstanding legal fees.
On October 20, 1999, the company amended it certificate of incorporation by
increasing its authorized capital stock to 100,000,000 shares of common stock
and changing its authorized capital to $0.0001 par value per share.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Not applicable.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed by the Company during the
quarter.
_ SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STEARMAN ENTERPRISES LTD.
By: /s/ Herbert Maxwell
Herbert Maxwell, President
Dated: March 10, 2000
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-END> OCT-31-1999
<CASH> 300
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 703
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1,623,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> (703)
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> 0.0
<EPS-DILUTED> 0.0
</TABLE>
