<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended NOVEMBER 30, 1996
/ / 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:
SSI CAPITAL CORP.
(Exact name of registrant as specified in its charter)
NEW YORK 14-1623047
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
SUITE 311
150 VANDERBILT MOTOR PARKWAY
HAUPPAUGE, NEW YORK 11788
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (516) 273-0059
Securities registered pursuant to Section 12(b): NONE
Securities registered pursuant to Section 12(g):
COMMON SHARES, PAR VALUE $.001 PER SHARE
Indicate by check mark whether the registrant (l) 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 X NO
--- ---
As of November 30, 1996, the issuer had outstanding a total of
1,749,541 common shares. The aggregate market value of the voting common shares
of the Company held by non-affiliates as of November 30, 1996 is indeterminable,
there having been no active trading market for the Company's common shares at
that time or at any time thereafter.
<PAGE> 2
PART I
On December 5, 1988, the Company filed a Voluntary Petition for
Reorganization under Chapter 11 of the Bankruptcy Code in the United States
Bankruptcy Court for the Northern District of New York (the "Bankruptcy Court").
An order confirming the Company's Amended Plan of Reorganization (the "Plan")
was made by the Bankruptcy Court on October 9, 1990 and the Plan was consummated
on or about July 15, 1991.
The Company is no longer engaged in its prior business and its
condition at the consummation of the Plan, as well as its present condition and
activities, have no relationship to its prior business. Accordingly, the Company
is considered to have been a development stage company since July 15, 1991.
ITEM 1. BUSINESS
The Company is presently engaged in seeking out a suitable business for
acquisition or merger. The Company has no formal business plan or any
particular area of business in which it intends to engage. The Company will
attempt to acquire a business which it believes has potential for successful
development. The Company has not adopted any formal business plan or conducted
any market studies with respect to any business or industry. No representation
is made that management of the Company has any particular expertise in
connection with the proposed activities of the Company and management may rely
on independent experts or consultants in any business field in connection with
their examination and investigation of a potential acquisition.
It is not expected that shareholders of the Company will be consulted
with respect to any acquisition engaged in by the Company.
The Company's officers have other commitments and only such time is
being devoted to the Company as is necessary to seek out a suitable opportunity.
In addition, it may be necessary to employ outside help at substantial expense.
Such help may not be available to the Company when and if required.
In the acquisition of any given business, it may be expected that the
Company will require additional financing to expand and fund any business which
it acquires. The Company may incur substantial indebtedness which will
substantially change the capital structure of the Company and would most likely
expose the Company's shareholders to a greater risk of loss in the event of
financial difficulty. If additional funds are required, there can be no
assurance given that additional financing will be available on commercially
reasonable terms or otherwise.
The search is not being restricted to any specific kind of activity,
business or industry or geographical location. The
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Company may acquire a business in any stage of its development including its
preliminary or development stage, as well as one which is already in operation.
It is impossible to predict the status of any venture in which the Company may
participate.
A potential venture may involve the acquisition of or merger with a
company which is not seeking immediate substantial amounts of cash but one which
desires to establish a public trading market for its shares. A company which
seeks the Company's participation in attempting to consolidate its operations
through a merger, reorganization, acquisition, or some other form of combination
may desire to do so to avoid what it may deem to be adverse consequences of
itself undertaking a public offering. Factors considered may include time
delays, significant expense, loss of voting control and the inability or
unwillingness to meet the requirements of various federal and state laws enacted
for the protection of investors.
The analysis of new business ventures is being undertaken by or under
the supervision of the officers, none of whom is a professional business
analyst. In analyzing prospective business ventures, management will consider
such matters as it deems appropriate which may include the available technical,
financial and managerial resources; working capital and other financial
requirements; the history of the operations, if any; prospects for the future;
the nature of present and expected competition; the quality and experience of
management services which may be available and the depth of that management; the
potential for further research, development or exploration; risk factors; the
potential for growth and expansion; the potential for profit; the perceived
public recognition or acceptance of products, services, trade or service marks;
and name identification.
As part of the Company's investigation, its officers may meet
personally with the management and other key personnel of the company considered
to be acquired. They may visit and inspect facilities, obtain independent
analyses or verification of certain information provided, check references of
management and key personnel, and conduct other reasonable measures, to the
extent of the Company's limited financial resources.
Generally, the Company will analyze all available factors in the
circumstances and make a determination without reliance upon any single factor
as controlling. The Company is unable to predict when, if at all, it may
participate in a venture.
It is anticipated that opportunities may be sought by or presented to
the Company from various sources, including its officers and directors,
professional advisors, securities broker-dealers, venture capitalists, members
of the financial community, and others who may present unsolicited proposals. In
certain circumstances, the Company may agree to pay a finder's fee or to
3
<PAGE> 4
otherwise compensate persons, including officers and directors of the Company,
for services rendered in bringing about a transaction. The form and amount of
any such finder's fee or other compensation which may be paid for services
rendered in bringing about a transaction is subject to future negotiation
between the Company, the entity to be acquired and the finder.
The Company may acquire a business by conducting an acquisition,
merger, consolidation or reorganization. It may be expected that any such
transaction will involve the issuance of additional securities in the Company.
The percentage of shares held by all shareholders of the Company prior to such
transaction or reorganization, are likely to be substantially decreased by such
transaction.
Depending upon the form of business combination, the transaction may be
accomplished upon the sole determination of management without any vote or
approval by shareholders. If a shareholder vote is required, or is deemed
appropriate by management, the obtaining of such shareholder approval may result
in delay and additional expense in the consummation of any proposed transaction.
In addition, the transaction may give rise to certain appraisal rights to
dissenting shareholders. Most likely, management will seek to structure any such
transaction so as not to require shareholder approval.
In the event the Company finds an opportunity for an acquisition, of
which there can be no assurance, which requires the issuance of significant
additional shares, it may be anticipated that control over the Company's affairs
will be transferred to others and that the present shareholders' interest in the
Company will be diluted. No assurance can be given as to the experience or
qualification of such persons either in the operation of the activities of the
Company or in the operation of the business being acquired.
The issuance of substantial additional securities in any acquisition,
merger or reorganization, may have an adverse effect on any trading market in
the Company's securities.
It is anticipated that the investigation of specific business
opportunities 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, the costs theretofore incurred in related investigation would not
be recoverable. Furthermore, 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.
4
<PAGE> 5
The Company presently intends to principally acquire only a majority
interest in a business. However, management reserves the right to acquire
minority investments in other concerns provided by doing so the Company will not
be classified as an "investment company" under the Investment Company Act of
1940 (the "1940 Act"). Being deemed an "investment company" under the 1940 Act,
without registration as such can result in civil liability and criminal
penalties to controlling persons in certain instances, as well as civil
liabilities and the unenforceability of contracts with regard to the Company.
The Company does not intend to nor have authority to pursue any business
opportunity or transaction which would render the Company an "investment
company" as the term is defined in the 1940 Act.
The Company has not engaged and does not intend nor have authority to
engage in the business of advising others, either directly or through
publications or writings, as to the value of securities or as to the
advisability of investing in, purchasing, or selling securities for compensation
nor as a part of regular business to issue or promulgate analyses or reports
concerning securities. The Company does not intend nor have any authority to
pursue any course of business which would render it an investment adviser as
that term is defined in the Investment Advisers Act of 1940.
DISCUSSIONS WITH ORALABS, INC.
Commencing in the Spring of 1996, and continuing through the date of
filing of this Annual Report, the Registrant was engaged in merger discussions
with OraLabs, Inc. ("OraLabs"), a privately held Colorado corporation engaged in
the manufacture and sale of breath freshener and lip balm products for the
general consumer market. There is no assurance that a merger will actually be
consummated.
As part of the proposed transaction, the Registrant intends to offer
for sale (pursuant to a private transaction exempt from the registration
requirements of applicable securities laws), certain restricted shares of its
Common Stock in an effort to provide additional financing to the business
ventures of the surviving corporation. Under the transaction being discussed,
immediately prior to the closing of the offering, a subsidiary of the Registrant
would merge with OraLabs. In connection therewith, the Registrant would acquire
all of the outstanding capital stock of OraLabs from its shareholders and retain
the name SSI Capital Corp. It is also possible at this point that the Registrant
may decide to change its name to OraLabs, Inc. In return for completing a merger
of OraLabs and a subsidiary of the Registrant, OraLabs' shareholders would
receive shares of Common Stock in the Registrant. As a result of the
acquisition, which would be treated as a reverse triangular merger into the
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<PAGE> 6
Registrant, OraLabs would become a wholly-owned subsidiary of the Registrant,
which would remain a publicly held company.
DAILY OPERATIONS
Until an active business is commenced or acquired, the Company will
have no employees or day to day operations. Management is unable to make any
estimate as to the future number of employees which may be necessary, if any, to
work for the Company. If an existing business is acquired, it is likely that its
existing staff would be hired by the Company. At the present time it is the
intention of management to meet or be in telephone contact as often as necessary
to review business opportunities, evaluate potential acquisitions and otherwise
operate the affairs of the Company. Management may receive reimbursement for
their reasonable and necessary expenses incurred in these activities.
L.P.G. STANDARDBRED ASSOCIATES, INC.
Under the Plan, the Company was permitted to retain its 25% interest in
LPG Standardbred Associates, Inc. ("LPG Inc."). LPG Inc. is the general partner
of LPG Standardbred Associates, L.P., a limited partnership engaged in the
racing of Standardbred horses. The Company's interest in LPG Inc. was held
however subject to an agreement under which the first $225,000 realized
therefrom would be paid over to Norstar Bank. The Company commenced an action
against the owner of the remaining 75% of LPG Inc. to recover on behalf of LPG
Inc. approximately $2,000,000. A settlement was reached in the sum of $225,000.
Under the terms of the settlement, the Company disposed of its 25% interest in
LPG Inc. and all proceeds were paid over to Norstar Bank. The Company has no
further interest in LPG Inc.
NIAVEST, L.P.
The Company, since prior to the filing of its petition, was the General
Partner of Niavest, L.P., a limited partnership ("Niavest") engaged in the
breeding of Standardbred horses. The Company was also the owner of 307 Units of
limited partnership interests in Niavest. Under the Plan, the Units were
transferred to Norstar Bank, the Company's secured lender. The Company remained
as the General Partner of Niavest and, as such, could be contingently liable for
the debts of Niavest. There is no known claim with respect to any such
liability. In December, 1995, Niavest was terminated and all of its assets were
distributed to the limited partners. Thereafter, Niavest was formally dissolved
with the filing of a Certificate of Dissolution.
6
<PAGE> 7
ITEM 2. PROPERTIES
The Company maintains its business office at the office of its
President, 150 Vanderbilt Motor Parkway, Suite 311, Hauppauge, New York 11788.
The Company is using these offices on a rent free basis until such time as it is
required to find its own space. The Company has the benefit of a receptionist
and clerical help without cost to it until Management finds it necessary to move
into separate space.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
7
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON SHARES AND RELATED SHAREHOLDER MATTERS
As of November 30, 1996, the Registrant had 1,749,541 shares
outstanding, held of record by approximately 950 persons. There is no quoted
market for the Company's shares nor, to the knowledge of the Company, has there
been any for at least the past two years. There is no assurance as to when, if
at all, a market will develop.
ITEM 6. SELECTED FINANCIAL DATA
The following table is a summary of the Company's financial statements
appearing elsewhere in this report.
BALANCE SHEET:
<TABLE>
<CAPTION>
AS OF NOVEMBER 30, As of November 30,
1996 1995
----------------- -----------------
<S> <C> <C>
Total assets $ 193,002 $ 193,779
Total liabilities $ 27,584 $ 25,503
Shareholders equity $ 165,418 $ 168,296
Net tangible book value .10 .10
per common share (1)
Total shares outstanding 1,749,541 1,749,541
</TABLE>
INCOME STATEMENT:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE
ENDED ENDED ENDED PERIOD JULY
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, 15, 1991
1996 1995 1994 (INCEPTION)
TO NOVEMBER
30, 1996
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Revenue $ 7,105 $22,610 5,719 63,871
Net income $(2,878) $ 7,773 (31,118) (58,837)
(loss)
Net income nil nil (.02) (.03)
(loss) per
share (1)
</TABLE>
(1) To the nearest whole cent.
8
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Company is deemed to be a development stage company since July 15,
1991, the date of the consummation of the Plan. The Company's former business
has been terminated completely and its ongoing activities consist of finding a
suitable business for acquisition or merger.
During the development stage period (July 15, 1991 through November 30,
1996), the Company's revenue amounted to $63,871. Its expenses, including New
York State income taxes, amounted to $122,708 resulting in a net loss of
$(58,837) for such period.
LIQUIDITY AND CAPITAL RESOURCES
The Company, not having completed an acquisition or merger, believes
that its working capital position is sufficient for its current needs. The
significant amount of capital necessary to acquire and develop a successful
business in today's economy will limit the Company's ability to locate one
suitable for acquisition or merger. Any such business will likely be one having
modest cash requirements, minimal activities and limited resources. It is
possible that the Company will require additional financing to expand and fund
any business which it acquires or establishes. If additional funds are required,
there can be no assurance given that additional financing will be available on
commercially reasonable terms or otherwise.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no changes in or disagreements with the Company's
accountants relating to accounting or financial disclosure.
9
<PAGE> 10
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE (1) POSITION
<S> <C> <C>
Edmond O'Donnell 58 President and Director
Lawrence Kaplan 53 Secretary, Treasurer and Director
</TABLE>
(1) As of November 30, 1996
Prior to the filing of the petition, the directors of the Company were
elected annually by the shareholders and the officers were appointed annually by
the Board of Directors. The Company has held only one shareholder meeting since
the filing of its petition and in accordance with the Plan, all officers and
directors, with the exception of Mr. O'Donnell and Mr. Kaplan, resigned upon
confirmation of the Plan. At the same time, Mr. O'Donnell and Mr. Kaplan became
officers of the Company. Vacancies on the Board of Directors may be filled by
the remaining directors. Although New York State law requires three directors,
the vacancy has not been filled.
Edmond O'Donnell was elected President of the Company in October, 1990.
He has been a director since January, 1981. Mr. O'Donnell is a self employed
management consultant and is also a private investor. As of July 15, 1991, he
was an officer, director and principal shareholder of Gro-Vest, Inc., a
management consulting firm, and was also a registered principal and an officer,
director and principal shareholder of G-V Capital Corp., a member of the
National Association of Securities Dealers. His relationship with G-V Capital
Corp. and Gro-Vest, Inc. terminated as of December 31, 1992.
Lawrence Kaplan was elected Secretary and Treasurer of the Company in
October, 1990. He has been a director since July, 1981. Mr. Kaplan is a director
of American United Global, Inc. and, since January 1987, has been an officer,
director and principal stockholder of Gro-Vest Management Consultants, Inc.
("GVMCI"), a consulting firm located on Long Island, New York. GVMCI has
permanently ceased all business activity. Mr. Kaplan also is a registered
representative, officer, director and sole stockholder of G-V Capital Corp., a
brokerage firm registered with the NASD. He also is a director of PARK Group and
Andover Equities Inc., both of which are public shell companies, and of Jenna
Lane, Inc., an apparel manufacturing company.
Management of the Company will devote only such time as they deem
necessary to the activities of the Company.
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<PAGE> 11
Edmond O'Donnell is primarily responsible for the financial and record
keeping affairs of the Company and is responsible for evaluating acquisitions
for the Company. Both he and Lawrence Kaplan are devoting a portion of their
time to looking for and investigating prospects for the Company.
In certain circumstances, the Company may agree to pay a finder's fee
to one or more of its officers and directors or their affiliates or associates,
for services rendered in bringing about an acquisition or merger.
ITEM 11. EXECUTIVE COMPENSATION
No present officer or director of the Company has received remuneration
from the Company since the time of the filing of the petition and it is not
anticipated that remuneration will be paid in the foreseeable future.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of November 30, 1996 the number of
shares owned of record or beneficially by the company's officers and directors
and its shareholders owning at least 5% of the Company's issued and outstanding
shares and by all officers and directors as a group and the percentage of the
total outstanding shares represented by such shares as of such date.
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES PERCENT OWNED
<S> <C> <C>
Edmond O'Donnell 307,519(1) 17.5%
150 Vanderbilt
Motor Parkway
Suite 311
Hauppauge, NY 11788
Lawrence Kaplan 305,319(1) 17.5%
150 Vanderbilt
Motor Parkway
Suite 311
Hauppauge, NY 11788
Officers and Directors 570,977(1) 32.6%
as a Group (2 persons)
</TABLE>
(1) Includes 41,862 shares owned by O.K. Associates, a partnership
consisting of Mr. O'Donnell and Mr. Kaplan.
There are no stock option, bonus, profit-sharing or similar plans
presently in effect or contemplated by the Company.
11
<PAGE> 12
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
12
<PAGE> 13
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS
Opinion of independent certified public accountants.
Balance sheets as at November 30, 1996 and 1995.
Statements of Stockholders' Equity for the period July 15, 1991
(inception of development stage) through November 30, 1996.
Statements of Income for the Fiscal Years Ended November 30, 1996, 1995
and 1994, and for the period July 15, 1991 (inception of development
stage) through November 30, 1996.
Notes to financial statements.
2. FINANCIAL STATEMENT SCHEDULES
None.
3. EXHIBITS
27.1 Financial Data Schedule
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
February 25, 1997
SSI CAPITAL CORP.
By:/s/Edmond O'Donnell
---------------------------
Edmond O'Donnell, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/Edmond O'Donnell President and February 25 1997
- -------------------- director
Edmond O'Donnell (Principal executive
officer)
/s/Lawrence Kaplan Treasurer and February 25 1997
- -------------------- Director
Lawrence Kaplan (Principal financial
and accounting officer)
</TABLE>
14
<PAGE> 15
[SCOTT & GUILFOYLE LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
SSI Capital Corp.
We have audited the accompanying balance sheets of SSI Capital Corp. (a
development stage company) as of November 30, 1996 and 1995 and the related
statements of income (loss), stockholders' equity and cash flows for the years
ended November 30, 1996, 1995 and 1994 and from July 15, 1991 (inception) to
November 30, 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 audits.
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 balance sheet presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the balance sheets referred to above present fairly, in all
material respects, the financial position of SSI Capital Corp. (a development
stage company) as of November 30, 1996 and 1995, and the results of its
operations and its cash flows for the years ended November 30, 1996, 1995 and
1994 and from July 15, 1991 (inception) to November 30, 1996 in conformity with
generally accepted accounting principles.
/S/SCOTT & GUILFOYLE
Lake Success, New York
February 5, 1997
<PAGE> 16
SSI CAPITAL CORP.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
NOVEMBER 30
ASSETS
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
CURRENT ASSETS
Cash $ 193,002 $ 193,799
--------- ---------
TOTAL CURRENT ASSETS 193,002 193,799
OTHER ASSETS
Investments 0 0
--------- ---------
TOTAL ASSETS $ 193,002 $ 193,799
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses $ 27,584 $ 25,503
--------- ---------
TOTAL CURRENT LIABILITIES 27,584 25,503
--------- ---------
STOCKHOLDERS' EQUITY
Preferred stock $.01 par value 1,000,000
shares authorized, none issued and outstanding
Common stock $.001 par value 100,000,000
shares authorized; 1,749,541 issued
and outstanding 1,749 1,749
Additional paid in capital 182,066 182,066
Retained earnings (deficit) (18,397) (15,519)
--------- ---------
TOTAL 165,418 168,296
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 193,002 $ 193,799
========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 17
SSI CAPITAL CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Deficit
Accumulated
Capital In Prior During Total
Common Stock Excess of Retained Development Stockholders'
Shares Amount Par Value Earnings Stage Equity
<S> <C> <C> <C> <C> <C> <C>
Balance, July 15, 1991
(Emergence of Chapter 11) 7,422,243 $ 7,422 $ 75,193 $40,440 $ 0 $ 123,055
Private Placement July 15, 1991 8,372,318 8,373 91,627 0 0 100,000
Issuance of shares to creditors,
July 15, 1991 1,200,068 1,200 0 0 0 1,200
Income for the period July 15, 1991
to November 30, 1991 0 0 0 0 7,704 7,704
Loss for the year ended November 30, 1992 0 0 0 0 (23,301) (23,301)
Issuance of stock re: bankruptcy plan 500,000 500 (500) 0 0 0
Loss for the year ended November 30, 1993 0 0 0 0 (17,017) (17,017)
----------- -------- --------- ------- -------- ---------
Balance, November 30, 1993 17,494,629 17,495 166,320 40,440 (32,614) 191,641
Reverse split, one for ten (15,745,088) (15,746) 15,746 0 0 0
Loss for the year ended November 30, 1994 0 0 0 0 (31,118) (31,118)
----------- -------- --------- ------- -------- ---------
Balance, November 30, 1994 1,749,541 1,749 182,066 40,440 (63,732) 160,523
Income for the year ended
November 30, 1995 0 0 0 0 7,773 7,773
----------- -------- --------- ------- -------- ---------
Balance, November 30, 1995 1,749,541 1,749 182,066 40,440 (55,959) 168,296
Loss for the year ended November 30, 1996 0 0 0 0 (2,878) (2,878)
----------- -------- --------- ------- -------- ---------
Balance, November 30, 1996 1,749,541 $ 1,749 $ 182,066 $40,440 $(58,837) $ 165,418
=========== ======== ========= ======= ======== =========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 18
SSI CAPITAL CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 15, 1991
FOR THE YEARS ENDED (INCEPTION) TO
NOVEMBER 30, NOVEMBER 30,
1996 1995 1994 1996
<S> <C> <C> <C> <C>
REVENUE
Interest income $ 7,105 $ 7,565 $ 5,719 $ 40,465
Other income 0 15,045 0 21,566
Insurance reimbursement 0 0 0 1,840
----------- ----------- ----------- -----------
TOTAL 7,105 22,610 5,719 63,871
----------- ----------- ----------- -----------
EXPENSES
Legal and professional 6,040 10,113 26,986 75,722
Transfer fees 1,108 3,270 4,839 15,217
Storage 920 928 178 3,929
Miscellaneous 162 105 301 1,587
Travel 1,345 0 0 2,112
Interest 0 0 5,666 8,842
----------- ----------- ----------- -----------
TOTAL 9,575 14,416 37,970 107,409
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE
INCOME TAXES (2,470) 8,194 (32,251) (43,538)
INCOME TAXES 408 421 (1,133) 15,299
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ ( 2,878) $ 7,773 $ (31,118) $ (58,837)
=========== =========== =========== ===========
INCOME (LOSS) PER SHARE NIL NIL $ (.02) $ (.03)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 1,749,541 1,749,541 1,749,541 1,736,628
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 19
SSI CAPITAL CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 15, 1991
FOR THE YEARS ENDED (INCEPTION) TO
NOVEMBER 30, NOVEMBER 30,
1996 1995 1994 1996
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income (loss) $ (2,878) $ 7,773 $ (31,118) $ (58,837)
Changes in operating assets
and liabilities:
(Increase) decrease in:
Accounts receivable 0 0 0 50,379
Due from Norstar Bank 0 0 0 50,000
Increase (decrease) in:
Accrued expenses 2,081 (1,200) 742 20,948
Accounts payable 0 0 0 (95,419)
--------- --------- --------- ---------
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES (797) 6,573 (30,376) (32,929)
BEGINNING CASH BALANCE 193,799 187,226 217,602 225,931
--------- --------- --------- ---------
ENDING CASH BALANCE $ 193,002 $ 193,799 $ 187,226 $ 193,002
========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements
<PAGE> 20
SSI CAPITAL CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENT
NOVEMBER 30, 1996
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The Company filed an amended Certificate of Incorporation on June 16, 1994
whereby they changed the name of the corporation from Saratoga Standardbreds,
Inc. to SSI Capital Corp. In addition, the issued and outstanding common shares
were reverse split on a one for ten basis. All information in these financial
statements have been adjusted to reflect this amendment.
The Company was incorporated in the State of New York on January 30, 1981. On
December 5, 1988, the Company filed a Voluntary Petition for Reorganization
under Chapter 11 of the Bankruptcy Code. At the time of the filing of its
petition, the Debtor was engaged in the business of serving the Standardbred
horse industry. The Plan of Reorganization was confirmed by the United States
Bankruptcy Court, Northern District of New York on October 9, 1990. Although the
Plan of Reorganization was confirmed on October 9, 1990 by the Bankruptcy Court,
the Company has deemed the plan consummated on July 14, 1991 with the conveyance
of its primary asset of real estate to Norstar Bank on such date pursuant to the
plan. As a condition to the confirmation of the Plan, the Company effected a
concurrent private placement of 8,372,318 common shares, $.001 par value, for
gross proceeds of $100,000 which are not subject to any claims of creditors
under the plan.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates and assumptions.
INCOME TAXES
No provision has been made in the accompanying financial statements for income
taxes payable because of the Company's operating loss. At November 30, 1996 the
Company has approximately $44,000 of net operation loss carryforwards for
financial reporting and income tax purposes that expire through the year 2007.
BUSINESS ACTIVITY
The Company is presently engaged in seeking out a suitable business for
acquisition or merger. The Company has no formal business plan or any particular
area of business which it intends to engage. The Company will attempt to acquire
a business which it believes has potential for successful development.
<PAGE> 21
SSI CAPITAL CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENT
NOVEMBER 30, 1996
RELATED PARTY TRANSACTIONS
The Company maintains its business office at the office of its President, 150
Vanderbilt Motor Parkway, Suite 311, Hauppauge, NY 11788. The Company is using
these offices on a rent free basis until such time as it is required to find its
own space. The Company has the benefit of a receptionist and clerical help
without cost to it until management finds it necessary to move into separate
space.
Edmond O'Donnell was elected President of the Company in October, 1990. He has
been a director since January, 1981. Mr. O'Donnell is a self employed management
consultant and is also a private investor.
Lawrence Kaplan was elected Secretary and Treasurer of the Company in October,
1990. He has been a director since July, 1981. He is also a registered
representative, officer, director and principal shareholder of G-V Capital
Corp., a brokerage firm registered with the NASD. Mr. Kaplan is a director of
American United Global, Inc., a distributor of JI Case construction equipment in
the Pacific Northwest and a manufacturer of specialty and commodity O-rings. He
is also an officer and director of Park Group and Andover Equities Inc.; both of
which are public shell companies, and of Jenna Lane, Inc., an apparel
manufacturing company.
Management of the Company will devote only such time as they deem necessary to
the activities of the Company.
Edmond O'Donnell is primarily responsible for the financial and recordkeeping
affairs of the Company and is responsible for evaluating acquisitions for the
Company. Both he and Lawrence Kaplan are devoting a portion of their time to
looking for and investigating prospects for the Company.
Of the 8,172,318 common shares issued on July 15, 1991 in the private placement,
fifty percent (50%) were purchased by Edmond O'Donnell and Lawrence Kaplan.
NOTE 2: INVESTMENTS
The Company, since prior to the filing of its petition, was the General Partner
of Niavest, L.P., a limited partnership engaged in the breeding of Standardbred
Horses. The Company was also the owner of 307 Units of Limited Partnership
interests in Niavest. Under the Plan, the Units were transferred to Norstar
Bank, the Company's secured lender. The Company remained as the general partner
of Niavest and, as such, could be contingently liable for the debts of the
Limited Partnership. There is no known claim with respect to any such liability.
Following the close of the Company's fiscal year ending November 30, 1995,
Niavest was terminated and all of its assets were distributed to the limited
partners. Thereafter, Niavest was formally dissolved with the filing of a
Certificate of Dissolution.
<PAGE> 22
SSI CAPITAL CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENT
NOVEMBER 30, 1996
NOTE 3: COMMON STOCK
As authorized in the Plan of Reorganization, the Certificate of Incorporation
was amended to change the authorized common shares from 8,500,000 shares to
100,000,000 shares. The par value of the common shares was changed from $.01 to
$.001. The par value of the preferred stock was changed from $.10 to $.01.
Pursuant to the Plan, the Company issued 1,000,043 new common shares to the
general unsecured creditors and 200,025 new common shares to the subordinated
creditors effective July 15, 1991. At the same time the private placement of
8,172,318 new common shares were issued for proceeds of $100,000. On December 4,
1993 the Company issued 500,000 shares to Norstar Bank to be held for investment
purposes only, pursuant to an agreement entered into as part of the bankruptcy
proceedings. On June 16, 1995 the Company filed an amended Certificate of
Incorporation whereby the issued and outstanding common shares were reverse
split on a one for ten basis. The information in these financial statements have
been adjusted to reflect this amendment.
NOTE 4: MERGER DISCUSSIONS
The Company is in the midst of merger talks with OraLabs, Inc. a privately held
corporation engaged in the business of licensing for manufacture, selling and
distributing breath freshener products for the general consumer market.
As part of the proposed transaction, the Company intends to offer for sale
certain shares of its Common Stock in an effort to provide additional financing
to the business ventures of the surviving corporation. Under the transaction
being discussed, immediately prior to the closing of the offering, a subsidiary
of the Company would merge with OraLabs. In connection therewith, the Company
would acquire all of the outstanding capital stock of OraLabs from its
shareholders and retain the name SSI Capital Corp. In return for merging OraLabs
into a subsidiary of the Company, OraLabs' shareholders would receive shares of
Common Stock in the Company. As a result of the acquisition, which would be
treated as a reverse triangular merger into the Company, OraLabs would become a
wholly-owned subsidiary of the Company, which would remain a publicly held
company.
<PAGE> 23
EXHIBIT INDEX
27.1 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SSI Capital
Corp. financial statements for the year ended November 30, 1996 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1996
<CASH> 193,002
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 193,002
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 193,002
<CURRENT-LIABILITIES> 27,584
<BONDS> 0
0
0
<COMMON> 1,749
<OTHER-SE> 163,669
<TOTAL-LIABILITY-AND-EQUITY> 193,002
<SALES> 0
<TOTAL-REVENUES> 7,105
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,575
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,470)
<INCOME-TAX> 408
<INCOME-CONTINUING> (2,878)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,878)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
