SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[X] Annual Report Pursuant To Section 13 or 15(d) of the Securities
Exchange Act of 1934
[ ] Transition Report Pursuant to Section 13 or 15(d
of the Securities Exchange Act of 1934
For The Fiscal year Ended August 31, 1998
Commission File No. 2-65800
SUNBELT EXPLORATION, INC.
(Exact name of Registrant as specified in its Charter)
Nevada 75-1667097
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2612 Kentucky Ave.
Salt Lake City, Utah 84117
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number including Area Code:
(801) 278-8132
Former Name or Former Address, if changed since last report:
5020 Collinwood Avenue, #200
Fort Worth, Texas 76107
Securities Registered Pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on which Registered
------------------------------ -------------------------
None None
Securities Registered Pursuant to Section 12(g) of the Act:
None
-------
Check whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, during
the preceding 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 [ ] No [X]
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not obtained in this form, and no disclosure will be
contained, to the best of the registrant'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. [ ]
State issuer's revenues for its most recent fiscal year. $0.
The Company's stock is not traded and has not traded actively for several
years. Therefore, the aggregate market value of the Registrant's voting stock
held by non-affiliates computed with reference to the bid prices in the over-
the-counter market as of a recent practicable date, cannot be calculated with
any degree of precision.
As of the date of the filing of this report, the Registrant had outstanding a
total of 24,085,000 shares of its common stock, par value $ 0.001, after
giving effect to a 1-for-10 reverse split effectuated by the Registrant.
TABLE OF CONTENTS
Item Number and Caption Page No.
- ----------------------- --------
PART 1
- ------
Item 1. Business .....................................................3
Item 2. Properties....................................................9
Item 3. Legal Proceedings.............................................10
Item 4. Submission of Matters to a Vote of Security Holders...........10
PART II
- -------
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters........................................................10
Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................11
Item 7. Financial Statements and Supplementary Data.................... F-1
Item 8. Changes in and Disagreements on Accounting and Financial
Disclosure....................................................12
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PART III
- --------
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.......... 12
Item 10. Executive Compensation ........................................14
Item 11. Security Ownership of Certain Beneficial Owners and
Management.....................................................14
Item 12. Certain Relationships and Related Transactions ................15
PART IV
- -------
Item 13. Exhibits, Financial Statement Schedules and Reports on
Form 8-K.......................................................16
Signatures ............................................................ 17
PART I
ITEM 1. BUSINESS
HISTORY
Sunbelt Exploration, Inc. (the "Company"), was incorporated as a Nevada
corporation on April 23, 1979, primarily for the purpose of exploration,
development and production of oil and gas reserves. From the date of its
organization until approximately 1989 to 1990, the Company was involved in the
acquisition of producing oil and gas properties and the operation of a gas
liquification plant, which activities were financed primarily through a public
offering of $1,800,000 completed in 1980.
Since 1989, the Company has been inactive. In February 1990, the US
Bankruptcy Court (Court) approved an Amended Plan of Reorganization (Plan)
under Chapter 11 of the US Bankruptcy Code. The Plan was affirmed through a
Final Decree by the Court on May 11, 1993 (the "Final Decree"). Under the
Plan, all assets and liabilities of the company were liquidated and assigned
to unrelated third parties. Additionally, the Plan and the Court allowed the
Company to maintain its interest in a "take or pay" lawsuit against one of the
company's pre-bankruptcy customers. The Company was successful in the lawsuit
and received final proceeds of approximately $53,000 in December 1995.
Since the bankruptcy proceeding described above, the Company has had no
operations, and no material assets or liabilities. Over the past two years,
the Company has been engaged in
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efforts to reactivate its business, and to seek a suitable business
opportunity in which the Company may become engaged, discussed below.
GENERAL
The Company has had no operations, assets or liabilities since the Final
Decree in May 1993, other than the litigation settlement. Accordingly, the
Company is dependent upon management and/or significant shareholders to
provide sufficient working capital to preserve the integrity of the corporate
entity during this phase. It is the present intent of management and
significant shareholders to provide any working capital necessary to support
and preserve the integrity of the corporate entity until such time as
additional capital is raised, if ever.
The Company has no operations, assets or liabilities and, accordingly, is
fully dependent upon its controlling shareholder for operating capital.
During the period(s) presented herein, the Company was dormant, except for
certain monies paid to the Company by a principal shareholder to provide the
Company with funds to pay expenses. (See "Item 12. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS.")
The Company has been under new management since the end of February,
1998, when Mr. Roger Lund became its sole director and officer (President).
Since that time, the Company has been undertaking efforts to update financials
statements over the preceding fiscal quarters, and to put the Company in a
position to begin evaluating a number of business ventures for possible
acquisition or participation by the Company. The Company has not entered into
any agreement, as of the date of this filing. The Company intends to
investigate, review, and evaluate business opportunities as they become
available and will seek to acquire or become engaged in business opportunities
at such time as specific opportunities warrant.
To a large extent, a decision to participate in a specific business
opportunity may be made upon management's analysis regarding the quality of
the other firm's management and personnel, the asset base of such firm or
enterprise, the anticipated acceptability of new products or marketing
concepts, the merit of the firms business plan, and numerous other factors
which are difficult, if not impossible, to analyze through the application of
any objective criteria.
Since the Final Decree, the Company has had no active business
operations. Now that the Company has completed necessary preparatory work to
update the Company's financial statements and bring the Company current, the
Company will begin efforts to seek to acquire an interest in a business with
long-term growth potential. It is emphasized that the business objectives
discussed herein are extremely general and are not intended to be restrictive
on the discretion of the Company's management.
Management anticipates that it may be able to participate in only one
potential business venture, due primarily to the Company's limited capital.
This lack of diversification should be considered a substantial risk, because
it will not permit the Company to offset potential losses from one venture
against gains from another.
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In connection with the Company's acquisition of a business, it is
possible that the present shareholders of the Company, may, as a negotiated
element of the acquisition, sell a portion or all of the Company's Common
Stock held by them at a premium over their original investment in the Company.
As a result of such sales, affiliates of the entity participating in the
business reorganization with the Company would acquire a higher percentage of
equity ownership in the Company. Management does not intend to actively
negotiate for or otherwise require the purchase of all or any portion of its
stock as a condition to or in connection with any proposed merger or
acquisition. Although the Company's present shareholders did not acquire
their shares of Common Stock with a view towards any subsequent sale in
connection with a business reorganization, it is not unusual for affiliates of
the entity participating in the reorganization to negotiate to purchase shares
held by the present shareholders in order to reduce the amount of shares held
by persons no longer affiliated with the Company and thereby reduce the
potential adverse impact on the public market in the Company's common stock
that could result from substantial sales of such shares after the business
reorganization. Public investors will not receive any portion of the premium
that may be paid in the foregoing circumstances. Furthermore, the Company's
shareholders may not be afforded an opportunity to approve or consent to any
particular stock buy-out transaction.
In the event sales of shares by present shareholders of the Company is a
negotiated element of a future acquisition, a conflict of interest may arise
because directors will be negotiating for the acquisition on behalf of the
Company and for sale of their shares for their own respective accounts. Where
a business opportunity is well suited for acquisition by the Company, but
affiliates of the business opportunity impose a condition that management sell
their shares at a price which is unacceptable to them, management may not
sacrifice their financial interest for the Company to complete the
transaction. Where the business opportunity is not well suited, but the price
offered management for their shares is high, Management will be tempted to
effect the acquisition to realize a substantial gain on their shares in the
Company. Management has not adopted any policy for resolving the foregoing
potential conflicts, should they arise, and does not intend to obtain an
independent appraisal to determine whether any price that may be offered for
their shares is fair. Stockholders must rely, instead, on the obligation of
management to fulfill its fiduciary duty under state law to act in the best
interests of the Company and its stockholders.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance on exemptions from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of the transaction, the Company may agree to register such
securities either at the time the transaction is consummated, under certain
conditions, or at specified times thereafter. Although the terms of such
registration rights and the number of securities, if any, which may be
registered cannot be predicted, it may be expected that registration of
securities by the Company in these circumstances would entail substantial
expense to the Company. 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 such market.
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Notwithstanding the fact that the Company is technically the acquiring
entity in the foregoing circumstances, generally accepted accounting
principles will ordinarily require that such transaction be accounted for as
if the Company had been acquired by the other entity owning the business and,
therefore, will not permit a write-up in the carrying value of the assets of
the other company.
The manner in which the Company participates in a business will depend on
the nature of the business, the respective needs and desires of the Company
and other parties, the management of the business, and the relative
negotiating strength of the Company and such other management.
The Company will participate in a business only after the negotiation and
execution of appropriate written agreements. Although the terms of such
agreements cannot be predicted, generally such agreements will require
specific representations and warranties by all of the parties thereto, will
specify certain events of default, will detail the terms of closing and the
conditions which must be satisfied by each of the parties prior to such
closing, will outline the manner of bearing costs if the transaction is not
closed, will set forth remedies on default, and will include miscellaneous
other terms.
Operation of Business After Acquisition
The Company's operation following its acquisition of a business will be
dependent on the nature of the business and the interest acquired. The
Company is unable to predict whether the Company will be in control of the
business or whether present management will be in control of the Company
following the acquisition. It may be expected that the business will present
various risks, which cannot be predicted at the present time.
Governmental Regulation
It is impossible to predict the government regulation, if any, to which
the Company may be subject until it has acquired an interest in a business.
The use of assets and/or conduct of businesses which the Company may acquire
could subject it to environmental, public health and safety, land use, trade,
or other governmental regulations and state or local taxation. In selecting a
business in which to acquire an interest, management will endeavor to
ascertain, to the extent of the limited resources of the Company, the effects
of such government regulation on the prospective business of the Company. In
certain circumstances, however, such as the acquisition of an interest in a
new or start-up business activity, it may not be possible to predict with any
degree of accuracy the impact of government regulation. The inability to
ascertain the effect of government regulation on a prospective business
activity will make the acquisition of an interest in such business a higher
risk.
BUSINESS
The Registrant has not been actively engaged in business since the end of
1990, and has only recently undertaken necessary activities to enable it to
become engaged in business
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operations. The Company plans to seek out, investigate and acquire, or become
engaged in, any business opportunity management believes has good business
potential. No specific business or industry is presently contemplated.
Management anticipates that it will only acquire businesses which have,
or can generate or provide, audited financial statements. However, management
reserves the right to become engaged in a new business venture or a venture in
its infancy, if management determines such venture holds good business
potential.
The Registrant recognizes that because of its extremely limited
financial, management and other resources, the number of quality of suitable
potential business ventures available to it may be extremely limited.
The Company's principal business objective will be to seek long-term
growth potential in the business venture in which it participates, rather than
to seek immediate, short-term earnings. In seeking to attain the Company's
business objective, it will not restrict its search to any particular business
or industry, but may participate in business ventures of essentially any kind
or nature, including, but not limited to, finance, high technology,
manufacturing, natural resources, service, research and development,
communications, insurance, transportation and others. Management's discretion
will be unrestricted and it may participate in any business venture
whatsoever, which meets the business objectives discussed herein. It is
emphasized that the business objectives of the Company are extremely general
and are not intended to be restrictive upon the discretion of management.
The Company plans to seek one or more potential business ventures from
its known sources, but will rely heavily on personal contacts of its officers
and directors, as well as indirect associations or contacts between them and
other business and professional people. It is not presently anticipated that
the Company will engage professional firms or individuals specializing in
business acquisitions or reorganizations. However, any individual or firm,
exclusive of the officers, directors and principals of the Company who find a
venture in which the Company becomes engaged, may be properly compensated for
their efforts.
The Company will not restrict its search to a venture in any particular
stage of development, but may acquire or become engaged in a venture in its
preliminary or development stage, may participate in a business which is
already in operation, or in a business in various stages of it corporate
existence. It is impossible to predict at this stage the status of any
venture in which the Company may participate, in that the venture may need
additional capital, may desire to have its shares publicly traded, or may seek
other perceived advantages which the Company, as a public company, may offer.
In some instances, the business endeavors may involve the acquisition of or
merger or reorganization with a corporation which does not need substantial
additional capital but which desires to establish a public trading market for
it securities.
Firms which seek the Company's participation in their operations through
a reorganization, asset acquisition, or some other means may desire to do so
to avoid what such firms may deem
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to be adverse factors related to undertaking a public offering. Such factors
include substantial time requirements and legal and other costs, along with
other conditions or requirements imposed by various state and federal
regulatory agencies.
To a large extent, a decision to participate in a specific business
endeavor may be made upon management's analysis of the quality of the other
firm's management and personnel, the anticipated acceptability of new
products, marketing concepts or services, the merit of technological changes,
and numerous factors which may not be reflected on a balance sheet or
operating statement and are difficult, if not impossible, to analyze through
the application of objective criteria. In many instances, it anticipated that
the results of operation of a specific venture may not be indicative of the
potential for the future because of the requirement to substantially shift
marketing approaches, expand significantly, change product emphasis, change or
augment management, and other factors. Because the Company may participate in
business endeavors with newly organized firms or with firms which are entering
a new phase of growth, it should be emphasized that the Company will incur
further risks since management in may instances will not have proved its
abilities or effectiveness, the eventual market of such firm's product or
services will likely not be established, and the profitability of the firm
will be unproved and cannot be accurately predicted.
The analysis and review of new business ventures will be undertaken by or
under the supervision of the officers and directors. It cannot be stated at
this time as to whether management will have any significant business
experience or expertise in any type of business which is likely to be
investigated by the Company. Therefore, management will have to rely on its
common sense and business judgment as well as upon the advice of consultants
to analyze the factors described above. In reviewing prospective business
opportunities, management will consider such matters as the available
technical, financial and managerial resources, the working capital and other
financial requirements, the history of operations, if any; prospects for the
future; the nature of present and expected competition; the quality and
experience of management services available and the depth of management; the
potential for growth and expansion; risk factors; the perceived public
recognition or acceptance of products, services; and other factors.
Generally, management will attempt to analyze all available factors in
the circumstances and make a determination based upon a composite of available
facts, without reliance upon any single factor as controlling.
The Company is unable to predict the timing as to when it may participate
in any specific business endeavor. It expects, however, that the review of
business opportunities will commence immediately, and that the analysis and
selection of any given venture may take several months or more.
It is anticipated that business opportunities will be available to the
Company from various sources, including its officers and directors and
shareholders and their business associates, professional advisors, securities
broker-dealers, venture capitalists, members of the financial community, and
others who may present unsolicited proposals. In certain circumstances, the
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Company may agree to pay a finder's fee or to otherwise compensate investment
banking or other services provided by persons who are unaffiliated with the
Company but who submit a potential business opportunity in which the Company
elects to participate. No such finder's fee or other fees will be paid to any
person who is an officer, director or principal of the Registrant.
The Company may acquire a business venture by conducting a reorganization
or merger involving the issuance of securities of the Company. Due to the
requirements of certain provisions of the Internal Revenue Code, as amended,
in order to obtain certain beneficial tax consequences in such transactions,
the number of shares held by all of the present shareholders of the Company
prior to such transaction, may be substantially less than the total
outstanding shares held by such shareholders in any reorganized entity. The
result of any such reorganization or merger transaction could be additional
substantial dilution to the shareholders of the Company prior to the
transaction.
It is anticipated that the investigation of specific business endeavors
and the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and
attention and substantial costs for accountants, attorneys, and others. If a
decision is made not to participate in a specific business opportunity under
review, the costs theretofore incurred would not be recoverable. Further,
even if an agreement is reached for the participation in a specific business
venture, the failure to consummate that transaction may result in the loss to
the Company of the related costs incurred.
The Company presently has essentially no assets, and does not currently
have any specific assets, properties or businesses in mind for potential
acquisition or involvement by the Company. Further, the Company does not
presently have any particular areas of business or industry in which it
intends to look for business opportunities.
In connection with a business acquisition or transaction, the Company may
need to raise equity or debt to fund such transaction, or to provide the
business opportunity with necessary operating capital. There is no assurance
the Company will be able to raise capital when needed, or on terms which are
favorable to the Company.
Offices and Employees
The Company presently uses the home and office of its President, at no
charge. At such time as business operations actively commence, the Company
will be required to seek office space and may be charged a reasonable market
rate for its office facilities; however, the Company may be able to utilize
the offices of an entity with which it merges, or by which it is acquired or
which it acquires. The Company has no employees.
ITEM 2. PROPERTIES
The Company does not hold any properties.
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ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings, and
no such proceedings by or, to the best of its knowledge, against the Company
have been threatened.
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS
No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year covered by this report. In February, 1998, the board of directors and
holders of a majority of the then issued and outstanding voting stock of the
Company approved a 1-for-ten reverse in the issued and outstanding common
stock of the Company, which action was again ratified by the board of
directors in 1999.
PART II
ITEM 5.
MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
There is currently no trading market for the Company's shares of common
stock; however, the Company's shares of common stock are eligible for
quotation on the Electronic Board Bulletin Board under the symbol "SUNVD." To
the best knowledge of the Company, there have been no trading in the Company's
securities during the past two years, or any active trading in the Company's
securities since the bankruptcy filing in 1990.
Since inception, no dividends have been paid on the Company's common
stock, and the Company does not anticipate paying dividends in the foreseeable
future.
As of the date of filing this report, there were approximately 2,975
holders of record of the Company's common stock.
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ITEM 6.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
As of August 30, 1998, the Company had very limited cash ($3,846), no
material liabilities ($2,641), and no other liquid assets or resources.
At present, the Company does not have adequate capital to conduct any
significant operations. The Company is engaged in the search for potential
business opportunities for acquisition or involvement with the Company, which
activities are severely limited by the Company's lack of resources.
Management believes that any business venture in which the Company becomes
involved will be made by issuing shares of the Company's authorized but
unissued common stock. It is anticipated that the Company's liquidity,
capital resources and financial statements will be significantly different
subsequent to the consummation of any such transaction.
The Company is dependent upon management and/or its principal
shareholders to provide sufficient working capital to preserve the integrity
of the corporate entity during this phase, and until the Company is in a
position to enter into a business transaction, of which there can be no
assurance. It is the intent of management and its principal shareholders to
provide sufficient working capital necessary to support and preserve the
integrity of the corporate entity. However, if the Company is in need of
additional capital to enter into a business opportunity, the Company may not
have sufficient capital, or be able to obtain sufficient capital from
management or its principal shareholders for such purpose.
RESULTS OF OPERATIONS
The Company had essentially no operations during the fiscal year ended
August 31, 1998. The Company incurred expenses during the year ended of
$8,795 in accounting, legal and other general and administrative expenses in
connection with the Company's continuing efforts to file necessary periodic
reports and to reactivate its business operations, and in reviewing a number
of possible business opportunities during the fiscal year.
As indicated, the Company will be dependent on management and its
principal shareholders to provide sufficient capital to preserve the integrity
of the corporate entity until the Company enters into a business enterprise.
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ITEM 7.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements are included beginning at page F-1.
ITEM 8.
CHANGES IN AND DISAGREEMENTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
In approximately April, 1998, following a change in management, the
Company engaged the firm of Jones, Jensen & Company, a Salt Lake City, Utah
certified public accounting firm, to act as the accounting firm to audit the
Company's financial statements for the two years ended August 31, 1998. The
decision to engage the firm was based on convenience, and not on any
disagreement regarding accounting principles or practices, financial statement
disclosure or auditing scope or procedure.
The previous reports of the former accounting firm, S. W. Hatfield &
Associates, did not contain an adverse opinion or disclaimer of opinion, nor
was it qualified or modified as to uncertainty, audit scope or accounting
principles. There were not any disagreements with the former accounting firm
on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure.
In addition, the Registrant has not experienced any other events
pertaining to the change of accountants, which require disclosure under this
Item 304 of Regulation S-B.
PART III
ITEM 9.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
NAMES AND TERMS OF OFFICE
The table below sets forth the name, age, and position of each executive
officer and director of the Company.
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Name Age Position Since*
- ------ ------------ -------
Roger L. Lund 44 President, Secretary February, 1998
and Director
- ---------------------------
* Mr. Lund was elected as the sole director and as President in the end
of February, 1998, when Dan Denton, President and sole director, resigned in
all capacities.
The term of office of any executive officer and director is one year and
until his successor is elected and qualified.
Set forth below is biographical information for the Company's sole
officer/director:
Roger Lund, is, and has been since 1998, chief operating officer and a
director of a private investment fund. From approximately 1981 through 1993,
he served as a registered representative of Olsen, Payne & Company, a
registered broker-dealer and member of the National Association of Securities
Dealers, located in Salt Lake City. While at Olsen, Payne, Mr. Lund served as
lead broker, options principal and manager of mergers and acquisitions for the
firm. In approximately 1993, Mr. Lund terminated his association with Olsen,
Payne to pursue other investment banking opportunities through his own
company, Jupiter Capital Corporation, which has focused, since 1993, on
company valuation, merger and acquisition and venture consulting and advice.
CONTROL PERSONS
In the end of February, 1998, York Chandler acquired, through purchase, a
total of 18,000,00 shares of restricted common stock of the Company, or
approximately 75% of the 24,085,000 post-split shares of common stock issued
and outstanding. Accordingly, Mr. Chandler may be considered a "control
person" of the Company. (See "Item 11. Security Ownership of Certain
Beneficial Owners and Management").
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ITEM 10. EXECUTIVE COMPENSATION
REMUNERATION DURING FISCAL YEAR
During the fiscal year ended August 31, 1998, no officer or director
received any cash compensation. Set forth below is a summary of all
compensation received by officers and directors during the fiscal year:
CASH COMPENSATION TABLE
_____________________________________________________________________________
NAME OF INDIVIDUAL CAPACITY IN WHICH CASH
OR NUMBER IN GROUP SERVED COMPENSATION
_____________________________________________________________________________
Roger Lund President, Director $0 in cash
Dan Denton (1) President, Director $0 in cash (1)
1) Mr. Denton was an officer and director of the Company until February
26, 1998, when he resigned. During that fiscal year, Mr. Denton was issued a
total of 2,000,000 post-split shares in consideration for his efforts on
behalf of the Company maintaining records, and for other activities on behalf
of the Company. (See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS: Sales,
Issuances and Transfers of Restricted Common Stock").
ITEM 11.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth the name and address, as of the date of
the filing of this report, the approximate number of shares of common stock
owned of record or beneficially by each person who owned of record, or was
known by the Company to own beneficially, more than 5% of the common stock,
and the name and shareholdings of each officer and director, and all officers
and directors as a group:
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Amount and Nature of Ownership
------------------------------
Sole Voting Shared Voting
Name of Person and Investment and Investment Percent of
or Group Power Power Class
-------------- -------------- -------------- ----------
Principal Shareholders:
- ----------------------
York Chandler 18,000,000 -0- 74.7 (1)
Lindana Corp. 2,408,183 -0- 9.7(2)
Officers and Directors
- -----------------------
Roger Lund - 0 - -0- 0.0
(1) See "ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."
(2) Lindana Corporation is controlled by the family of Dan Denton, who as
President and a director of the Company until February 26, 1998, when he
resigned.
ITEM 12.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SALES, ISSUANCES AND TRANSFERS OF RESTRICTED STOCK
In February of 1998, the Company sold a total of 18,000,000 post split
shares of its restricted common stock in private transactions to a total of
one (1) individual, Mr. York Chandler for consideration of $18,000. This
stock was sold to provide the Company with necessary operating capital to
perform administrative tasks and continue business.
In February of 1998, the Company issued a total of 2,000,000 post-split
shares, to Dan Denton, as payment for time and efforts he contributed to the
Company over the past few years in maintaining the Company's records, updating
financial data and records, and other activities. In March, 1998, Mr. Denton
sold 1,000,000 shares each to Kirby Cochran and Mesa, Inc., for the sum of
$28,750. Mr. Denton subsequently resigned as an officer and director of the
Company.
None of the transactions described above can be considered to be the
result of arms' length negotiations. All of the share figures described above
give effect to a 1-for-10 reverse split and completed by the Company in
August, 1998.
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PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
The following financial statements and schedules are included immediately
following the signature page to this report.
(A) Documents Filed as Part of this Report:
(1) Financial Statements
---------------------
The following financial statements of Registrant are included in Part II,
Item I:
TITLE PAGE NO.
- ----- --------
Independent Accountants' Report of Jones, Jensen
& Company F-3
Balance Sheets as of August 31, 1997 and 1998 F-4
Statement of Operations for the four years ended August 31, 1998,
1997, and 1996 F-5
Statement of Stockholders' Equity for the year ended August 31, 1998 F-6
Statement of Cash Flows for the year ended August 31, 1998 F-7
Notes to Financial Statement F-8
(2) Financial Statement Schedules
--------------------------------
None.
(3) Exhibits
--------
3.1 Copies of the Articles of Incorporation of the Company -
incorporated herein by reference to Form S-2 Registration
Statement filed on April 16, 1980.
3.2 Bylaws of the Company - incorporated herein by reference to Form
S-2 Registration Statement filed on April 16, 1980.
(d) Reports on Form 8-K
-------------------
During the fiscal year ended August 31, 1998, the Company filed no
reports on Form 8-K.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has caused this report to be
signed on its behalf by the undersigned, hereunto duly authorized.
REGISTRANT:
SUNBELT EXPLORATION, INC.
Dated: June 1, 1999 By /s/Roger Lund
-------------------------------
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
Dated: June 1, 1999 By /s/Roger Lund
---------------------------
(Principal Executive and Financial Officer)
17
<PAGE>
<Letterhead of
Jones, Jensen & Company LLC
Certified Public Accountants and Consultants
50 South Main Street
Suite 1450
Salt Lake City, Utah 84144
Telephone (801) 328-4408
Facsimile (801) 328-4461>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Sunbelt Exploration, Inc.
(A Development Stage Company)
Salt Lake City, Utah
We have audited the accompanying balance sheets of Sunbelt Exploration, Inc.
(a development stage company) as of August 31, 1998 and 1997, and the related
statements of operations, stockholders' equity, and cash flows for the years
ended August 31, 1998, 1997 and 1996. 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 audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects the financial position of Sunbelt Exploration, Inc. (a
development stage company) as if August 31, 1998 and 1997 and the results of
its operations and its cash flows for the years ended August 31, 1998, 1997
and 1996, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has no operations and limited capital which
together raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to this matter are also described in
Note 2. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
March 22, 1999
F-3
SUNBELT EXPLORATION, INC.
(A Development Stage Company)
Balance Sheets
ASSETS
------
August 31,
1998 1997
----------------- -----------------
CURRENT ASSETS
Cash and cash equivalents $ 3,846 $ -
----------------- -----------------
Total Current Assets 3,846 -
----------------- -----------------
TOTAL ASSETS $ 3,846 $ -
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 2,641 $ -
----------------- -----------------
Total Current Liabilities 2,641 -
----------------- -----------------
STOCKHOLDERS' EQUITY
Common stock; 100,000,000 shares
authorized of $0.001 par value,
24,805,000 and 4,805,000 shares
issued and outstanding respectively 24,805 4,805
Additional paid-in capital 43,245 43,245
Stock subscription receivable (10,000) -
Deficit accumulated during the
development stage (56,845) (48,050)
----------------- -----------------
Total Stockholders' Equity 1,205 -
----------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 3,846 $ -
================= =================
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
SUNBELT EXPLORATION, INC.
(A Development Stage Company)
Statements of Operations
<TABLE>
<CAPTION>
From
Inception On
For the April 23, 1979
Years Ended Through
August 31 August 31
1998 1997 1996 1998
------------ ------------ ------------ --------------
(Unaudited)
<S> <C> <C> <C> <C>
SALES $ - $ - $ - $ -
COST OF SALES - - - -
------------ ------------ ------------ --------------
GROSS MARGIN - - - -
------------ ------------ ------------ --------------
OPERATING EXPENSES
General and administrative 8,795 - - 56,845
------------ ------------ ------------ --------------
Total Operating Expenses 8,795 - - 56,845
------------ ------------ ------------ --------------
Loss from Operations (8,795) - - (56,845)
------------ ------------ ------------ --------------
OTHER INCOME (EXPENSE) - - - -
------------ ------------ ------------ --------------
NET LOSS $ (8,795) $ - $ - $ (56,845)
============ ============ ============ ==============
BASIC LOSS PER SHARE $ (0.00) $ (0.00) $ (0.00)
============ ============ ============
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 15,128,266 4,805,000 4,805,000
============ ============ ============
The accompanying notes are an integral part of these financial statements
F-5
</TABLE>
<PAGE>
SUNBELT EXPLORATION, INC.
(A Development Stage Company)
Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional Stock During the
------------------------ Paid-In Subscription Development
Shares Amount Capital Receivable Stage
-------------- --------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Balance at inception, April 23, 1979 - $ - $ - $ - $ -
Common stock issued for
cash at $0.001 per share 4,805,000 4,805 43,245 - -
Net loss from inception on April 23, 1979
through August 31, 1995 (unaudited) - - - - (48,050)
-------------- --------- ----------- ------------- -----------
Balance, August 31, 1995 4,805,000 4,805 43,245 - (48,050)
Net loss for the year ended
August 31, 1996 - - - - -
-------------- --------- ----------- ------------- -----------
Balance, August 31, 1996 4,805,000 4,805 43,245 - (48,050)
Net loss for the year ended
August 31, 1997 - - - - -
-------------- --------- ----------- ------------- -----------
Balance, August 31, 1997 4,805,000 4,805 - - (48,050)
Common stock issued for services
at $0.001 per share 2,000,000 2,000 - - -
Common stock issued for cash
at $0.001 per share 8,000,000 8,000 - - -
Common stock issued for subscription
receivable at $0.001 per share 10,000,000 10,000 - (10,000) -
Net loss for the year ended
August 31, 1998 - - - - (8,795)
-------------- --------- ----------- ------------- -----------
Balance, August 31, 1998 24,805,000 $ 24,805 $ 43,245 $ (10,000) $ (56,845)
============== ========= =========== ============= ===========
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
</TABLE>
SUNBELT EXPLORATION, INC.
(A Development Stage Company)
Statements of Operations
<TABLE>
<CAPTION>
From
Inception On
For the April 23, 1979
Years Ended Through
August 31 August 31
1998 1997 1996 1998
------------ ------------ ------------ --------------
(Unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss $ (8,795) $ - $ - $ (56,845)
Adjustments to reconcile net
(loss) to net cash used by
operating activities:
Common stock issued for
services 2,000 - - 2,000
Changes in assets and
liabilities:
Increase (decrease)
in accounts payable 2,641 - - 2,641
------------ ------------ ------------ --------------
Net Cash Used by
Operating Activities (4,154) - - (52,204)
------------ ------------ ------------ --------------
CASH FLOWS FROM INVESTING
ACTIVITIES - - - -
------------ ------------ ------------ --------------
CASH FLOWS FROM FINANCING
ACTIVITIES
Common stock issued for cash 8,000 - - 56,050
------------ ------------ ------------ --------------
Net Cash Provided by
Financing Activities 8,000 - - 56,050
------------ ------------ ------------ --------------
NET INCREASE IN CASH 3,846 - - 3,846
CASH AT BEGINNING OF PERIOD - - - -
------------ ------------ ------------ --------------
CASH AT END OF PERIOD $ 3,846 $ - $ - $ 3,846
============ ============ ============ ==============
SUPPLEMENTAL CASH FLOW
INFORMATION
CASH PAID FOR:
Interest $ - $ - $ - $ -
Income taxes $ - $ - $ - $ -
NON-CASH FINANCING ACTIVITIES:
Common stock issued for
services $ 2,000 $ - $ - $ 2,000
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
</TABLE>
SUNBELT EXPLORATION, INC.
(A Development Stage Company)
Notes to the Financial Statements
August 31, 1998 and 1997
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
Sunbelt Exploration, Inc. (Company) was incorporated on April 23, 1979 under
the laws of the State of Nevada, primarily for the purpose of exploration,
development and production of oil and gas reserves.
The Company has no operations, assets or liabilities. Accordingly, the
Company is dependent upon management and/or significant shareholders to
provide sufficient working capital to preserve the integrity of the corporate
entity during this phase. It is the intent of management and significant
shareholders to provide sufficient working capital necessary to support and
preserve the integrity of the corporate entity.
b. Accounting Method
The Company's financial statements are prepared using the accrual method of
accounting.
c. Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments with maturities
of three months or less at the time of acquisition.
d. Basic Loss Per Share
The computations of basic loss per share of common stock are based on the
weighted average number of shares outstanding at the date of the financial
statements.
e. Provision for Taxes
At August 31, 1998, the Company had net operating loss carryforwards of
approximately $56,000 that may be offset against future taxable income through
2014. No tax benefit has been reported in the financial statements, because
the Company believes there is a 50% or greater chance the carryforward will
expire unused. Accordingly, the potential tax benefits of the loss
carryforward are offset by a valuation amount of the same amount.
f. Additional Accounting Policies
Additional accounting policies will be established once planned principal
operations commence.
8
<PAGE>
SUNBELT EXPLORATION, INC.
(A Development Stage Company)
Notes to the Financial Statements
August 31, 1998 and 1997
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
g. Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company does not have significant cash or other
material assets, nor does it have an established source of revenues sufficient
to cover its operating costs and to allow it to continue as a going concern.
It is the intent of the Company to be acquired by an existing, operating
company. Until an acquisition or merger occurs, shareholders of the Company
have committed to meeting the Company's operating expenses
NOTE 3 - RELATED PARTY TRANSACTIONS
In December 1995, the Company paid an entity controlled by a Company
shareholder approximately $35,927 for reimbursement of legal fees paid on the
Company's behalf and management fees related to the monitoring, management and
settlement of the Company's bankruptcy action.
NOTE 4 - REVERSE STOCK SPLIT
In 1998, the Company reverse split shares of its common stock on a 1-for-10
basis. All references to shares outstanding and earnings per share have been
adjusted to reflect the effect of the reverse split on a retroactive basis.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> AUG-31-1998
<CASH> 3,846
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,846
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,846
<CURRENT-LIABILITIES> 2,641
<BONDS> 0
0
0
<COMMON> 24,805
<OTHER-SE> 33,245
<TOTAL-LIABILITY-AND-EQUITY> 3,846
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 8,795
<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> (8,795)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
