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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1997
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________ to __________
Commission File Number 0-11225
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ENERGETICS, INC.
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(Exact name of registrant as specified in charter)
Delaware 84-0899587
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State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization
6337 South Highland Drive #130, Salt Lake City, Utah 84121
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (801) 269-9500
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Securities registered pursuant to section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None N/A
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Securities registered pursuant to section 12(g) of the Act:
Common Stock, $0.01 par value
-----------------------------
(Title of class)
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. (1) Yes [ ]
No [X] (2) Yes [X] No [ ]
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of 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. [X]
State issuer's revenues for its most recent fiscal year: $ -0-
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State the aggregate market value of the voting stock held by nonaffiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days:
At December 31, 1997 the aggregate market value of the voting stock held by
nonaffiliates is undeterminable and is considered to be $-0-.
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING DURING THE PAST FIVE YEARS)
Not Applicable
As of December 31, 1997, the Registrant had 56,573,601 shares of common
stock issued and outstanding and 2,317 shares of preferred stock issued and
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and
the part of the form 10-KSB (e.g., part I, part II, etc.) into which the
document is incorporated: (1) Any annual report to security holders; (2) Any
proxy or other information statement; and (3) Any prospectus filed pursuant to
rule 424(b) or (c) under the Securities Act of 1933:
NONE.
*This report is being filed on or about October 29, 1999. All information
contained herein is complete only through the end of the period for which the
report is being filed. Readers should read the information contained herein
in conjunction with the Issuer's most recent report.
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TABLE OF CONTENTS
PART I PAGE
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ITEM 1. DESCRIPTION OF BUSINESS....................................... 4
ITEM 2. DESCRIPTION OF PROPERTY....................................... 8
ITEM 3. LEGAL PROCEEDINGS............................................. 8
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........... 8
PART II
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ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS...... 9
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION..... 9
ITEM 7. FINANCIAL STATEMENTS.......................................... 11
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE........................... 11
PART III
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ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
ACT........................................................... 11
ITEM 10. EXECUTIVE COMPENSATION........................................ 13
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT................................................ 14
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................ 15
PART IV
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ITEM 13. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K........ 16
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
Organization and Corporate History
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Energetics, Inc. (the "Company" or "Issuer") was incorporated in the
state of Delaware on August 2, 1982. From inception to January 1, 1995, the
Company was engaged in the business of exploration, development and production
of oil and natural gas. The Company discontinued operations by the loss of its
remaining assets and its three subsidiaries leaving the Company with the debt
reflected in the Company's balance sheet and has since remained inactive. The
Company is considered to have been in the development stage since January 1,
1995.
Current Business Activities
- ----------------------------
The Company should be considered a "shell" company and its current
business purpose is to locate and consummate a merger or acquisition with a
private entity. The purposed business activities described herein classify
the Company as a "blank check" company. Therefore, the Company faces all the
risks interest in any new business, together with those risks specifically
inherent in the search for an acquisition of business opportunities. The
Company does not propose to restrict its search for a business opportunity to
any particular industry or geographical area and may, therefore, engage in
essentially any business in any industry. The Company has unrestricted
discretion in seeking and participating in a business opportunity, subject to
the availability of such opportunities, economic conditions, and other
factors.
The selection of a business opportunity in which to participate is
complex and risky. Additionally, as the Company has no resources, it may be
difficult to find good opportunities. There can be no assurance that the
Company will be able to identify and acquire any business opportunity which
will ultimately prove to be beneficial to the Company and its shareholders.
The Company will select any potential business opportunity based on
management's business judgment.
The activities of the Company are subject to several significant risks
which arise primarily as a result of the fact that the Company has no specific
business and may acquire or participate in a business opportunity based on the
decision of management which potentially could act without the consent, vote,
or approval of the Company's shareholders. The risks faced by the Registrant
are further increased as a result of its lack of resources and its inability
to provide a prospective business opportunity with significant capital.
Because of the Company's current status having no assets and no recent
operating history, in the event the Company does successfully acquire or merge
with an operating business opportunity, it is likely that the Company's
present shareholders will experience substantial dilution and there will be a
probable change in control of the Company.
Any target acquisition or merger candidate of the Company will become
subject to the same reporting requirements as the Registrant upon consummation
of any such business combination. Thus, in the event that the Company
successfully completes an acquisition or merger with another operating
business, the resulting combined business must provide audited financial
statements for at least the two most recent fiscal years or, in the event that
the combined operating business has been in business less than two years,
audited financial statements will be required from the period of inception of
the target acquisition or merger candidate.
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Sources of Business Opportunities
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The Company intends to use various sources in its search for potential
business opportunities including its officers and directors, consultants,
special advisors, securities broker-dealers, venture capitalists, members of
the financial community and others who may present management with unsolicited
proposals. Because of the Company's lack of capital, it may not be able to
retain on a fee basis professional firms specializing in business acquisitions
and reorganizations. Rather, the Company will most likely have to rely on
outside sources, not otherwise associated with the Company, that will accept
their compensation only after the Company has finalized a successful
acquisition or merger. To date, the Company has not engaged nor entered into
any discussions, negotiations, agreements nor understandings regarding
retention of any consultant to assist the Company in its search for business
opportunities, nor is management presently in a position to actively seek or
retain any prospective consultants for these purposes.
The Company does not intend to restrict its search to any specific kind
of industry or business. The Company may investigate and ultimately acquire a
venture that is in its preliminary or development stage, is already in
operation, or in various stages of its corporate existence and development.
Management cannot predict at this time the status or nature of any venture in
which the Company may participate. A potential venture might need additional
capital or merely desire to have its shares publicly traded. The most likely
scenario for a possible business arrangement would involve the acquisition of,
or merger with, an operating business that does not need additional capital,
but which merely desires to establish a public trading market for its shares.
Management believes that the Company could provide a potential public vehicle
for a private entity interested in becoming a publicly held corporation
without the time and expense typically associated with an initial public
offering.
Evaluation
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Once the Company has identified a particular entity as a potential
acquisition or merger candidate, management will seek to determine whether
acquisition or merger is warranted or whether further investigation is
necessary. Such determination will generally be based on management's
knowledge and experience, or with the assistance of outside advisors and
consultants evaluating the preliminary information available to them.
Management may elect to engage outside independent consultants to perform
preliminary analysis of potential business opportunities. However, because of
the Company's lack of capital it may not have the necessary funds for a
complete and exhaustive investigation of any particular opportunity.
In evaluating such potential business opportunities, the Company will
consider, to the extent relevant to the specific opportunity, several factors
including potential benefits to the Company and its shareholders; working
capital, financial requirements and availability of additional financing;
history of operation, if any; nature of present and expected competition;
quality and experience of management; need for further research, development
or exploration; potential for growth and expansion; potential for profits; and
other factors deemed relevant to the specific opportunity.
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Because the Company has not located or identified any specific business
opportunity as of the date hereof, there are certain unidentified risks that
cannot be adequately expressed prior to the identification of a specific
business opportunity. There can be no assurance following consummation of any
acquisition or merger that the business venture will develop into a going
concern or, if the business is already operating, that it will continue to
operate successfully. Many of the potential business opportunities available
to the Company may involve new and untested products, processes or market
strategies which may not ultimately prove successful.
Form of Potential Acquisition or Merger
- ---------------------------------------
Presently, the Company cannot predict the manner in which it might
participate in a prospective business opportunity. Each separate potential
opportunity will be reviewed and, upon the basis of that review, a suitable
legal structure or method of participation will be chosen. The particular
manner in which the Company participates in a specific business opportunity
will depend upon the nature of that opportunity, the respective needs and
desires of the Company, and the relative negotiating strength of the parties
involved. Actual participation in a business venture may take the form of an
asset purchase, lease, joint venture, license, partnership, stock purchase,
reorganization, merger or consolidation. The Company may act directly or
indirectly through an interest in a partnership, corporation, or other form of
organization, however, the Company does not intend to participate in
opportunities through the purchase of minority stock positions.
Because of the Company's inactive status and its concomitant lack of
assets or relevant operating history, it is likely that any potential merger
or acquisition with another operating business will require substantial
dilution of the Company's existing shareholders. There will probably be a
change in control of the Company, with the incoming owners of the targeted
merger or acquisition candidate taking over control of the Company. Management
has not established any guidelines as to the amount of control it will offer
to prospective business opportunity candidates, since this issue will depend
to a large degree on the economic strength and desirability of each candidate,
and corresponding relative bargaining power of the parties. However,
management will endeavor to negotiate the best possible terms for the benefit
of the Company's shareholders as the case arises.
Management does not have any plans to borrow funds to compensate any
persons, consultants, promoters, or affiliates in conjunction with its efforts
to find and acquire or merge with another business opportunity. Management
does not have any plans to borrow funds to pay compensation to any prospective
business opportunity, or shareholders, management, creditors, or other
potential parties to the acquisition or merger. In either case, it is
unlikely that the Company would be able to borrow significant funds for such
purposes from any conventional lending sources. In all probability, a public
sale of the Company's securities would also be unfeasible, and management does
not contemplate any form of new public offering at this time.
In the event of a successful acquisition or merger, a finder's fee, in
the form of cash or securities of the Company, may be paid to persons
instrumental in facilitating the transaction. The Company has not
established any criteria or limits for the determination of a finder's fee,
although most likely an appropriate finder's fee will be negotiated between
the parties, including the potential business opportunity candidate, based
upon economic considerations and reasonable value as estimated and mutually
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agreed at that time. A finder's fee would only be payable upon completion of
the proposed acquisition or merger in the normal case, and management does not
contemplate any other arrangement at this time. Management has not actively
undertaken a search for, nor retention of, any finder's fee arrangement with
any person. It is possible that a potential merger or acquisition candidate
would have its own finder's fee arrangement, or other similar business
brokerage or investment banking arrangement, whereupon the terms may be
governed by a preexisting contract; in such case, the Company may be
limited in its ability to affect the terms of compensation, but most likely
the terms would be disclosed and subject to approval pursuant to submission of
the proposed transaction to a vote of the Company's shareholders.
Management cannot predict any other terms of a finder's fee arrangement
at this time. It would be unlikely that a finder's fee payable to an
affiliate of the Registrant would be proposed because of the potential
conflict of interest issues. If such a fee arrangement was proposed,
independent management and directors would negotiate the best terms available
to the Company so as not to compromise the fiduciary duties of the affiliate
in the proposed transaction, and the Company would require that the proposed
arrangement would be submitted to the shareholders for prior ratification in
an appropriate manner.
Management does not contemplate that the Registrant would acquire or
merge with a business entity in which any affiliates of the Company have an
interest and no present potential for such a merger or acquisition exists.
Any such related party transaction, however remote, would be submitted for
approval by an independent quorum of the Board of Directors and the proposed
transaction would be submitted to the shareholders for prior ratification in
an appropriate manner. If such an opportunity arose, however, the Company
would not seek to obtain an independent appraisal of the value of the business
or company with which the related party transaction was contemplated. In that
circumstance, management's ability to effectively evaluate such a non-arms
length transaction might be compromised, and any remedy available to
dissenting shareholders in such a transaction would most likely be
prohibitively expensive and time consuming. None of the Company's managers,
directors, or other affiliated parties have had any contact, discussions, or
other understandings regarding any particular business opportunity at this
time, regardless of any potential conflict of interest issues. Accordingly,
the potential conflict of interest is merely a remote theoretical possibility
at this time.
Rights of Shareholders
- ----------------------
It is presently anticipated by management that prior to consummating a
possible acquisition or merger, the Company will seek to have the transaction
ratified by shareholders in the appropriate manner. Most likely, this would
require a general or special shareholder's meeting called for such purpose.
Competition
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Because the Company has not identified any potential acquisition or
merger candidate, it is unable to evaluate the type and extent of its likely
competition. The Company is aware that there are several other public
companies with only nominal assets that are also searching for operating
businesses and other business opportunities as potential acquisition or merger
candidates. The Company will be in direct competition with these other public
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companies in its search for business opportunities and, due to the
Registrant's lack of funds, it may be difficult to successfully compete with
these other companies.
Employees
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As of the date hereof, the Company does not have any employees and has no
plans for retaining employees until such time as the Company's business
warrants the expense, or until the Company successfully acquires or merges
with an operating business. The Company may find it necessary to hire
part-time clerical help on an as-needed basis.
Facilities
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The Registrant is currently using as its principal place of business the
business office its President and Director located in Salt Lake City, Utah.
The cost of the utilization of the office space is provided free of charge to
the Company and the value of such use is considered nominal. Although the
Company has no written agreement and pays no rent for the use of this
facility, it is contemplated that at such future time as an acquisition or
merger transaction may be completed, the Company will secure commercial office
space from which it will conduct its business. Until such an acquisition or
merger, the Company lacks any basis for determining the kinds of office space
or other facilities necessary for its future business. The Company has no
current plans to secure such commercial office space. It is also possible
that a merger or acquisition candidate would have adequate existing facilities
upon completion of such a transaction, and the Company's principal offices may
be transferred to such existing facilities.
Year 2000 Computer Problem
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The Year 2000, or Y2K problem concerns potential failure of certain
computer software to correctly process information because of the software's
inability to calculate dates. The Company has no operations or current
equipment which might be affected by the Year 2000 computer glitch. The
Registrant will make every effort to determine the Y2K preparedness of any
potential merger or acquisition candidate.
ITEM 2. DESCRIPTION OF PROPERTY
The Company does not own any property (See "ITEM 1. DESCRIPTION OF
BUSINESS.")
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The table on the following page sets forth, for the respective periods
indicated, the prices for the Company's common stock in the over-the-counter
market as reported by the NASD's OTC Bulletin Board. Beginning January 1,
1995, the Company entered the development stage and has had little if any
trading activity in its securities. The bid prices represent inter-dealer
quotations, without adjustments for retail mark-ups, mark-downs or commissions
and may not necessarily represent actual transactions.
High Bid Low Bid
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Fiscal Year Ended December 31, 1997
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First, Second, Third and Fourth Quarters 0.00 0.00
Fiscal Year Ended December 31, 1996
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First, Second, Third and Fourth Quarters 0.00 0.00
Fiscal Year Ended December 31, 1995
- -----------------------------------
First, Second, Third and Fourth Quarters 0.00 0.00
Since its inception, the Registrant has not paid any dividends on its
Common Stock, and the Registrant does not anticipate that it will pay
dividends in the foreseeable future. The Company's preferred stock carries a
cumulative dividend rate of 8%. No dividends can be declared on the common
stock until the cumulative dividends are paid on the shares of outstanding
preferred stock.
The Company's common stock has not traded in any markets during the past
three years. As of December 31, 1997 there were 56,573,601 shares of common
stock outstanding held by approximately 694 stockholders of record, as
reported by the Registrant's transfer agent.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Overview
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The Company is considered a development stage company with no assets
or capital and with no operations or income since January 1, 1995. The
It is anticipated that the Company will require only nominal capital to
maintain the corporate viability and necessary funds will most likely
be provided by the Company's existing shareholders or its management in the
immediate future.
The Company has no other financing means in place and unless the Company
is able to facilitate an acquisition of or merger with an operating business
or is able to obtain significant outside financing, there is substantial doubt
about the Company's ability to continue as a going concern.
In the opinion of management, inflation has not and will not have a
material effect on the operations of the Company until such time as the
Company successfully completes an acquisition or merger. At that time,
management will evaluate the possible effects of inflation on the Company
as it relates to its business and operations following a successful
acquisition or merger.
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Forward-Looking Statements
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This Form 10-KSB includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 321E of
the Securities Exchange Act of 1934, as amended. All statements, other than
statements of historical facts, included or incorporated by reference in this
Form 10-KSB which address activities, events or developments which the Company
expects or anticipates will or may occur in the future, including such things
as future capital expenditures (including the amount and nature thereof),
business strategy, expansion and growth of the Company's business and
operations, and other such matters are forward-looking statements. These
statements are based on certain assumptions and analyses made by the Company
in light of its experience and its perception of historical trends, current
conditions and expected future developments as well as other factors it
believes are appropriate in the circumstances. However, whether actual
results or developments will conform with the Company's expectations and
predictions is subject to a number of risks and uncertainties, general
economic market and business conditions; the business opportunities (or lack
thereof) that may be presented to and pursued by the Company; changes in laws
or regulation; and other factors, most of which are beyond the control of the
Company. Consequently, all of the forward-looking statements made in this
Form 10-KSB are qualified by these cautionary statements and there can be no
assurance that the actual results or developments anticipated by the Company
will be realized or, even if substantially realized, that they will have the
expected consequence to or effects on the Company or its business or
operations.
Plan of Operation
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During the next twelve months, the Company's officers and directors
will contact business brokers, consultants, and other business professionals
in an effort to actively seek out and investigate possible business
opportunities with the intent to acquire or merge with one or more business
ventures. In its search for business opportunities, management will follow the
procedures outlined in Item 1 above. Because the Company lacks funds, it
may be necessary for the shareholders and/or management to either advance
funds to the Company or to accrue expenses until such time as a successful
business consolidation can be made. Management intends to hold expenses to a
minimum and to obtain services on a contingency basis when possible. The
Company's directors may receive compensation for services provided to the
Company until such time as an acquisition or merger can be accomplished.
However, if the Company engages outside advisors or consultants in its search
for business opportunities, it may be necessary for the Company to attempt to
raise additional funds. As of the date hereof, the Company has not made any
arrangements or definitive agreements to use outside advisors or consultants
or to raise any capital.
In the event the Company does need to raise capital most likely the only
method available to the Company would be the private sale of its securities.
It is unlikely that it could make a public sale of securities or be able to
borrow any significant sum from either a commercial or private lender. There
can be no assurance that the Company will be able to obtain additional funding
when and if needed, or that such funding, if available, can be obtained on
terms acceptable to the Company.
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The Company does not intend to use any employees, with the possible
exception of part-time clerical assistance on an as-needed basis. Outside
advisors or consultants will be used only if they can be obtained for minimal
cost or on a deferred payment basis. Management is confident that it will be
able to operate in this manner and to continue its search for business
opportunities during the next twelve months.
ITEM 7. FINANCIAL STATEMENTS
The financial statements of the Company are set forth immediately
following the signature page to this Form 10-KSB.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
The Company has had no disagreements with its certified public
accountants with respect to accounting practices or procedures or
financial disclosure.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The following table sets forth as of December 31, 1997, the name, age,
and position of each executive officer and director and the term of office of
each director of the Company and similar information for the Company current
executive officer and director:
Name Age Position Director or Officer Since
---- --- -------- -------------------------
Jordan R. Smith 63 Chairman of Board 1982 through June 1999
Robert L. Mehl 66 President, Treasurer
and Director 1985 through June 1999
A.J. Seastone 46 Vice President and
Director 1989 through June 1999
John Chymboryk 45 President, Secretary
and Director From June 1999
Biographical Information
Set forth below is certain biographical information for each of the
Company's Officers and Directors:
Mr. Jordan R. "Digger" Smith is a geologist. During 1972, Mr. Smith was
Executive Vice-President and director of Basic Earth Science Systems, Inc.,
and President and director of Basic International Industries, Inc. Before his
tenure with the Basic Entities, he was Vice-President and director of Inexco
Oil Company, where he was employed in various positions from 1965 through
1971. Mr. Smith has held various management positions with the Company and
its predecessor, EOC, from 1972 to the present.
Mr. Robert L. Mehl is a geologist. Mr. Mehl held various management
positions Standard Oil of California from 1967 to 1971 (including the position
of Vice-President). From 1971 to 1980, Mr. Mehl was President and director of
the Company's predecessor, EOC.
<PAGE> 12
Mr. A.J. Seastone has served as Vice-President and Director of Energetics
Satellite Corporation, a wholly-owned subsidiary, since January 1989. He has
a diversified financial background, with experience in project development,
oil and gas, and mining. Mr. Seastone has held various management positions
with the Company and its affiliates since 1976, including Vice-President and
Treasurer of Resources International Partners and Moritz Mining Co., Inc. Mr.
Seastone has served as SAT/TRAC's Project Manager since its inception in
December 1988.
Mr. John Chymboryk has a financial and marketing background. He received
a bachelor's degree with emphasis in accounting and economics in 1982. After
graduation he worked for a large international accounting firm until 1984. He
then taught courses in finance, marketing and management in the business
department of a Community College from 1984 to 1992. Concurrent with his
teaching experience he operated an accounting business that specialized in
preparing financial statements, tax returns and business plans for small
business. Mr. Chymboryk co-founded a company that specialized in marketing,
customer retention and management training. Mr. Chymboryk served as Vice
President and was responsible for the financial operations and in developing
and delivering management training. Mr. Chymboryk was instrumental in
designing and presenting the sales management workshop that was contracted
with Lexus, the Toyota Motor Corporation luxury car line, for over a 5-year
period. In 1997, Mr. Chymboryk played a major role in designing, developing
and helping implement a new application that assists companies in following up
and retaining their existing customer base. This application is currently
being used throughout the market place with special emphasis in the automotive
industry.
Except as indicated below, to the knowledge of management, during the
past five years, no present or former director, executive officer or person
nominated to become a director or an executive officer of the Company:
(1) filed a petition under the federal bankruptcy laws or any state
insolvency law, nor had a receiver, fiscal agent or similar officer appointed
by a court for the business or property of such person, or any partnership in
which he was a general partner at or within two years before the time of such
filing;
(2) was convicted in a criminal proceeding or named subject of a pending
criminal proceeding (excluding traffic violations and other minor offenses);
(3) was the subject of any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining him from or otherwise limiting, the
following activities:
(i) acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, associated person of any of the foregoing, or as an
investment advisor, underwriter, broker or dealer in securities, or as an
affiliate person, director or employee of any investment company, or engaging
in or continuing any conduct or practice in connection with such activity;
(ii) engaging in any type of business practice; or
(iii) engaging in any activity in connection with the purchase or sale of
any security or commodity or in connection with any violation of federal or
state securities laws or federal commodities laws;
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(4) was the subject of any order, judgment, or decree, not subsequently
reversed, suspended, or vacated, of any federal or state authority barring,
suspending or otherwise limiting for more than 60 days the right of such
person to engage in any activity described above under this Item, or to be
associated with persons engaged in any such activity;
(5) was found by a court of competent jurisdiction in a civil action or by
the Securities and Exchange Commission to have violated any federal or state
securities law, and the judgment in such civil action or finding by the
Securities and Exchange Commission has not been subsequently reversed,
suspended, or vacated.
(6) was found by a court of competent jurisdiction in a civil action or by
the Commodity Futures Trading Commission to have violated any federal
commodities law, and the judgement in such civil action or finding by the
Commodity Futures Trading Commission has not been subsequently reversed,
suspended or vacated.
Compliance with Section 16(a) of the Exchange Act
Since the Company ceased operations, the Company knows of no person, who
at any time during the subsequent fiscal years, was a director, officer,
beneficial owner of more than ten percent of any class of equity securities of
the registrant registered pursuant to Section 12 ("Reporting Person"), that
failed to file on a timely basis any reports required to be furnished pursuant
to Section 16 (a). Based upon a review of Forms 3 and 4 furnished to the
registrant under Rule 16a-3(d) during its most recent fiscal year, other than
disclosed below, the registrant knows of no Reporting Person that failed to
file the required reports during the most recent fiscal year or prior years.
The following table sets forth as of December 31, 1997, the name and
position of each Reporting Person that failed to file on a timely basis any
reports required pursuant to Section 16(a) during the most recent fiscal year
or prior years.
Name Position Report to be Filed
- ---- -------- ------------------
None.
Each director of the Company serves for a term of one year and until his
successor is elected at the Company's annual shareholders' meeting and is
qualified, subject to removal by the Company's shareholders. Each officer
serves, at the pleasure of the board of directors, for a term of one year and
until his successor is elected at the annual meeting of the board of directors
and is qualified.
ITEM 9. EXECUTIVE COMPENSATION
The following tables set forth certain summary information concerning the
compensation paid or accrued for each of the Company's last three completed
fiscal years to the Company's or its principal subsidiaries chief executive
officer and each of its other executive officers that received compensation in
excess of $100,000 during such period (as determined at December 31, 1997, the
end of the Company's last completed fiscal year):
<PAGE> 14
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
Other Restricted
Name and Annual Stock Options LTIP All other
Principal Position Year Salary Bonus($) Compensation Awards /SARs Payout Compensation
- ------------------ ---- ------ -------- ------------ ------ ------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert L. Mehl 1997 $ -0- -0- -0- -0- -0- -0- -0-
President 1996 $ -0- -0- -0- -0- -0- -0- -0-
1995 $ -0- -0- -0- -0- -0- -0- -0-
</TABLE>
Employment Contracts and Termination of Employment and Changes in Control
Arrangements
There are no compensatory plans or arrangements, including payments to be
received from the Company, with respect to any person named as a director,
executive officer, promoter or control person above which would in any way
result in payments to any such person because of his resignation, retirement,
or other termination of such person's employment with the Company or its
subsidiaries, or any change in control of the Company, or a change in the
person's responsibilities following a changing in control of the Company.
Board Compensation
- ------------------
The Company's directors receive no compensation or cost reimbursement for
attendance at board meetings.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of December 31, 1997 the name and the
number of shares of the Company's Common Stock held of record or beneficially
by each person who held of record, or was known by the Company to own
beneficially, more than 5% of the issued and outstanding shares of the
Company's Common Stock, and the name and shareholdings of each director and of
all officers and directors as a group.
Security Ownership of Certain Beneficial Owners
- -----------------------------------------------
Title
of Name and Address Amount and Nature of Percentage
Class Beneficial Owner Beneficial Ownership(1) of Class
- ----- ---------------- -------------------- ----------
Common Jordan R. Smith D 13,392,512 34.07
13111 E. Briarwood Ave, #300 I 6,877,453 (2) 12.16
Englewood, CO 80112
Common Robert L. Mehl (3) D 19,277,971 24.37
13111 E. Briarwood Ave, #300 I 2,557,989 (3) 4.52
Englewood, CO 80112
Common A.J. Seastone D 215,980 .38
13111 E. Briarwood Ave, #300
Englewood, CO 80112
<PAGE>
<PAGE> 15
Security Ownership of Management of the Company
- -----------------------------------------------
Title
of Name and Position of Amount and Nature of Percentage
Class Officer and/or Director Beneficial Ownership(1) of Class
- ----- ----------------------- -------------------- ----------
Common Jordan R. Smith, Chairman ---See Table Above---
Common Robert L. Mehl, President ---See Table Above---
Common A.J. Seastone, Vice-President ---See Table Above---
All Officers and Directors
as a Group (3 person) D 32,886,463 58.13
I 9,435,442 16.68
---------- -----
Total Beneficial Ownership 42,321,905 74.80
========== =====
(1) Indirect and Direct ownership are referenced by an "I" or "D",
respectively. All shares owned directly are owned beneficially and of record
and such shareholder has sole voting, investment, and dispositive power,
unless otherwise noted.
(2) Represents shares beneficially held of record by Marsha S. Smith, the
spouse of Jordan R. Smith.
(3) Represents 2,319,262 shares beneficially held of record by the spouse of
Mr. Mehl and 238,727 shares held in trust for his children.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others
- ---------------------------------------
Except as indicated below, and for the periods indicated, there were no
material transactions, or series of similar transactions, since the beginning
of the Company's last fiscal year, or any currently proposed transactions, or
series of similar transactions, to which the Company was or is to be party, in
which the amount involved exceeds $60,000, and in which any director or
executive officer, or any security holder who is known by the Company to own
of record or beneficially more than 5% of any class of the Company's common
stock, or any member of the immediate family of any of the foregoing persons,
has an interest.
Indebtedness of Management
- --------------------------
There were no material transactions, or series of similar transactions,
since the beginning of the Company's last fiscal year, or any currently
proposed transactions, or series of similar transactions, to which the Company
was or is to be a party, in which the amount involved exceeds $60,000 and in
which any director or executive officer, or any security holder who is known
to the Company to own of record or beneficially more than 5% of any class of
the Company's common stock, or any member of the immediate family of any of
the foregoing persons, has an interest.
Transactions with Promoters
- ---------------------------
The Company was organized more than five years ago; hence transactions
between the Company and its promoters or founders are not deemed to be
material.
<PAGE> 16
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a)(1)FINANCIAL STATEMENTS. The following financial statements are included
in this report:
Title of Document Page
- ----------------- ----
Balance Sheet as of December 31, 1997 .................................. 17
Statements of Operations for the years ended
December 31, 1997 and 1996 and for the Period
January 1, 1995 (Date of Inception of Development Stage)
to December 31, 1997 ................................................. 18
Statements of Stockholders' Equity for the Period
from January 1, 1995 (Date of Inception of Development Stage)
to December 31, 1997 ................................................. 19
Statements of Cash Flows for the years ended
December 31, 1997 and 1996 and for the Period
January 1, 1995 (Date of Inception of Development Stage)
to December 31, 1997 ................................................. 20
Notes to Financial Statements .......................................... 21
(a)(2)FINANCIAL STATEMENT SCHEDULES. The following financial statement
schedules are included as part of this report:
None.
(a)(3)EXHIBITS. The following exhibits are included as part of this report:
SEC
Exhibit Reference
Number Number Title of Document Location
- ------- --------- ----------------- ------------
27 27 Financial Data Schedule This Filing
(b) Reports on Form 8-K. There were no reports on Form 8-K filed with the
Commission during the quarter ended December 31, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated:
ENERGETICS, INC.
Dated: October 29, 1999
By /S/ John Chymboryk , President
<PAGE>
<PAGE> 17
ENERGETICS, INC.
(Development Stage Company)
BALANCE SHEET
December 31, 1997
December 31,
1997
------------
ASSETS
CURRENT ASSETS
Cash $ -
------------
Total Current Assets $ -
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,469,990
------------
Total Current Liabilities 2,469,990
------------
STOCKHOLDERS' EQUITY
Preferred stock
10,000,000 shares authorized, at
$1.00 par value; 2,317 shares
issued and outstanding 2,317
Common stock
100,000,000 shares authorized, at
$0.001 par value; 56,573,601
shares issued and outstanding 565,736
Capital in excess of par value 5,998,594
Accumulated deficit (9,036,637)
------------
Total Stockholders' Equity (2,469,990)
------------
$ -
============
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 18
ENERGETICS, INC.
(Development Stage Company)
Statement of Operations
For the Years Ended December 31, 1997 and 1996
and the Period from January 1, 1995 (Date of Inception of
Development Stage) to December 31, 1997
January 1, 1995
December 31, December 31, (Note 1) to
1997 1996 December 31, 1997
------------ ------------ ------------
REVENUES $ - $ - $ -
EXPENSES 98,672 98,672 1,252,819
------------ ------------ ------------
NET LOSS $ (98,672) $ (98,672) $ (1,252,819)
============ ============ ============
GAIN (LOSS) PER COMMON SHARE
Basic $ - $ -
============ ============
Diluted $ - $ -
============ ============
AVERAGE OUTSTANDING SHARES
Basic 56,573,601 56,573,601
============ ============
Diluted 68,160,701 68,160,701
============ ============
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 19
ENERGETICS, INC.
(Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Period from January 1, 1995 (date of inception
of development stage) to December 31, 1997
<TABLE>
<CAPTION>
Capital in
Preferred Stock Common Stock Excess of Accumulated
Shares Amount Shares Amount Par Value Deficit
------- --------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance January 1, 1995
(note 1) 2,317 $ 2,317 56,573,601 $ 565,736 $5,998,594 $ (7,783,818)
Net loss for the year ended - - - - - (1,055,475)
December 31, 1995
Net loss for the year ended
December 31, 1996 - - - - - (98,672)
Net loss for the year ended
December 31, 1997 - - - - - (98,672)
------- --------- --------- --------- ---------- -----------
Balance December 31, 1997 2,317 $ 2,317 56,573,601 $ 565,736 $5,998,594 $(9,036,637)
======= ========== ========== ========= ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 20
ENERGETICS, INC.
(Development Stage Company)
STATEMENT OF CASH FLOWS
For the Years Ended December 31, 1997 and 1998
and the Period January 1, 1995 (Date of Inception
of Development Stage) to December 31, 1997
January 1, 1995
December 31, December 31, (Note 1) to
1997 1996 December 31, 1997
------------ ------------ ------------
CASH FLOWS FROM
OPERATING ACTIVITIES
Net profit (loss) $ (98,672) $ (98,672) $ (1,252,819)
Adjustments to reconcile net
loss to net cash provided by
operating activities
Loss of assets - - 956,803
Changes in accounts payable 98,672 98,672 296,016
------------ ------------ ------------
Net Cash Used by Operations - - -
------------ ------------ ------------
CASH FLOWS FROM INVESTING
ACTIVITIES
- - -
------------ ------------ ------------
CASH FLOWS FROM FINANCING
ACTIVITIES
- - -
------------ ------------ ------------
Net Increase (Decrease) in Cash - - -
Cash at Beginning of Period - - -
------------ ------------ ------------
Cash at End of Period $ - $ - $ -
============ ============ ============
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 21
ENERGETICS, INC.
(Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
The Company was incorporated under the laws of the state of Delaware on August
2, 1982 with authorized common stock of 10,000,000 shares at a par value of
$.01 and 10,000,000 preferred stock at a par value of $1.00. Since inception
the Company has been engaged in the business of the exploration, development,
and production of oil and natural gas through three wholly owned subsidiaries.
During 1995 the Company ceased operations resulting from the loss of its
remaining assets leaving the Company with the debt shown in the balance sheet
.and has since remained inactive.
The company is considered to have been in the development stage since January
1, 1995.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
- ------------------
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
- ---------------
The Company has not yet adopted a policy regarding payment of dividends.
Income Taxes
- ------------
On December 31, 1997, the Company had a net operating loss carry forward of
$9,036,637. The tax benefit from the loss carry forward has been fully
offset by a valuation reserve because the use of the future tax benefit is
doubtful since the Company has no operations. The loss carryover will expire
beginning in years 1998 though 2018.
Estimates and Assumptions
- -------------------------
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
Financial instruments
- ---------------------
The carrying amounts of financial instruments, including accounts payable, are
considered by management to be their estimated fair values. These values are
not necessarily indicative of the amounts that the Company could realize in a
current market exchange.
<PAGE>
<PAGE> 8
ENERGETICS, INC.
(Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Earnings (Loss) Per Share
- -------------------------
Earnings (loss) per share amounts are computed based on the weighted average
number of shares actually outstanding using the treasury stock method in
accordance with FASB No. 128.
3. ACCOUNTS PAYABLE
The Company issued various notes payable for advances to the Company by
related parties and the notes were not timely paid which resulted in default
and are now considered as current accounts payable and including the accrued
interest payable.
4. PREFERRED STOCK
The preferred stock is convertible into common stock at the rate of one share
of preferred stock for 5,000 shares of common stock at the option of the
stockholder. The preferred shares carry a cumulative dividend rate of 8%. No
dividends can be declared on the common stock until the cumulative dividends
are paid on the preferred.
5. RELATED PARTY TRANSACTIONS
Related parties own 82% of the outstanding common stock.
6. GOING CONCERN
The Company does not have the necessary working capital to service its
liabilities for the coming year and may be forced into bankruptcy.
The Company intends to acquire interests in various business opportunities
which, in the opinion of management, will provide a profit to the Company but
it does not have the working capital to be successful in this effort.
Continuation of the Company as a going concern is dependent upon obtaining the
working capital to service its debt and to provide working capital for its
planned activity. All of the debt shown in the balance sheet is due to related
parties and they have agreed to withheld any collection action during the
coming year and the management of the Company has developed a strategy, which
they believe can obtain the needed working capital through additional equity
funding and long term debt which will enable the Company to continue
operations for the coming year.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 2,469,990
<BONDS> 0
0
2,317
<COMMON> 6,564,330
<OTHER-SE> (9,036,637)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 98,672
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (98,672)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (98,672)
<EPS-BASIC> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
