SECURITIES EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended 12-31-97
Commission file number 33-28188
THE OHIO & SOUTHWESTERN ENERGY COMPANY
(Exact name of registrant as specified in its charter)
Colorado 84-1116458
(State of incorporation) (I.R.S. Employer
Identification No.)
10200 W. 44th Ave., #400, Wheat Ridge, CO 80033
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: None
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: None
Name of each exchange on which registered: N/A
Securities registered pursuant to Section 12(g) of the Act:
Title of each class: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to the filing
requirements for at least the past 90 days.
Yes X No
Check if disclosure of delinquent filers pursuant 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
Transitional Small Business Disclosure Format:
______ Yes ___x____ No
<PAGE>
Aggregate market value of the voting stock held by
non-affiliates of the registrant as of December 31,
1997: $0
Number of outstanding shares of the registrant's no
par value common stock, as of December 31, 1997:
2,116,695.
<PAGE>
PART 1
Item 1. Business
Jefferson Capital Corporation (the Company), a
development stage company, was organized under
the laws of the State of Colorado on February
28, 1989. The Company is in the development
stage as defined in Financial Standards Board
Statement No. 7.
On January 4, 1990, the Company sold 10,000,000 units of
no par value common stock in a "Blind Pool" public
offering. The offering price for each unit was $.01.
Each unit consisted of one share of the Company's no par
value common stock and 25 Class A Common Stock
Redeemable Purchase Warrants (Class A Warrants). The
Class A Warrants are exercisable for 24 months from the
effective date of the regitration statement (October 30,
1989) and entitled the holder thereof to purchase 25 shares
of common stock at a price of $.014 per share. The Company
received $72,730, net of offering costs, from the sale of
common stock in the public offering.
Effective June 13, 1990, the Company entered into a merger
agreement with Ohio & Southwestern Energy Company (OSEC).
The Company issued 80,000,000 shares of its common stock in
exchange for all of the outstanding shares of OSEC. After
the exchange of shares, OSEC's sole shareholder, Members
Service Corporation (MSC), owned 80% of the Company's issued
and outstanding common stock. The name of the corporation
was changed to Ohio & Southwestern Energy Company (OSEC).
No significant business activity was conducted by the
Company during the fiscal year. As a result, no income was
realized by the Company in its last fiscal year.
While the company commenced 1990 with a successful public
offering, the subsequent merger agreement with Ohio &
Southwestern Energy Corp. (OSEC) became an abortive
transaction. The new management of OSEC never completed the
merger with assets represented, and without authorization
distributed the corporate funds to unauthorized parties or
uses which resulted in a total write off of the capital of
the Company.
The majority stockholder, MSC, failed to disclose to the
minority stockholders the distribution of corporate funds
during the year ended 1990. The Company recorded an
extraordinary loss in the amount of $69,116 as a result of
the unauthorized distribution of corporate funds in 1990.
The minority shareholders filed a complaint in Arapahoe
County Colorado District Court, Civil Division, during
April, 1991 alleging among other things that the majority
shareholder, MSC, failed to disclose the distribution of
corporate funds, failed to account for the operations of the
<PAGE>
corporation and transferred assets of the corporation
without stockholder or board meetings. The supposed assets
of OSEC did not exist and the Company (OSEC) was a sham.
On August 28, 1991, a Receiver was appointed and the court
ordered the 80,000,000 shares of common stock issued to MSC
to be canceled. On January 12, 1995, the minority
shareholders filed a motion for supplemental orders
requesting that the merger between Jefferson Capital
Corporation and Ohio and Southwestern Energy Company be
declared null and void and a bar date of April 15, 1995, be
set within which any and all creditors must file a claim.
On May 23, 1995, the Receiver issued his final report
stating that no claims of creditors had been filed by the
bar date. The Receiver incurred $36,395 in costs during
receivership. Certain of the costs had been advanced by the
Receiver in the anticipation of issuance of shares of common
stock by the Board of Directors after the dismissal of the
Receivership.
On June 21, 1995, the Court ordered the merger null and
void, approved the Receiver's final report and authorized
the restoration of the name of the Company to Jefferson
Capital Corporation. The Board has elected to retain the
existing name for consistency. The Company engaged in no
foreign operations or export sales to date, has no product
and has no full-time employees at year end.
On August 30, 1995 the shareholders of the company voted to
approve a reverse split of up to one new share for 300
shares outstanding. On September 25, 1995, the directors
effectuated a reverse split on a one for 300 shares basis.
The Company was inactive in 1997 and presently does not
participate in any industry segment. The Company had no
revenues, or operating profits or identifiable assets
in 1997 other than nominal cash.
The Company is currently seeking acquisition or merger
candidates with which it would seek to enter into a share
exchange reorganization.
Item 2. Property
The Company does not have any formal offices at year
end. Records are maintained and mail received at 10200
W. 44th Ave., #400, Wheat Ridge, CO 80033. The
company owns no property.
<PAGE>
Item 3. Legal Proceedings
The Company is a party to no pending legal proceedings,
nor is its property subject to such proceedings, at
year end 1997.
Item 4. Submission of Matters to a Vote of Security
Holders
No matters were submitted during the fiscal year covered by
this report to a vote of security holders of the Company,
through the solicitation of proxies or otherwise.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
As of the date of this report, management knows of no
trading or quotation of the Company's common stock. The range
of high and low bid quotations for each fiscal quarter
since the last report, as reported by the National
Quotation Bureau Incorporated, was as follows:
1997 High Low
First quarter * *
Second quarter * *
Third quarter * *
Fourth quarter * *
1996 High Low
First quarter * *
Second quarter * *
Third quarter * *
Fourth quarter * *
* No quotations reported
The above quotations reflect inter-dealer prices,
without retail mark-up, mark-down, or commission and
may not necessarily represent actual transactions.
As of December 31, 1997 there were 46 record holders of
the Company's common Stock.
The Company has not declared or paid any cash dividends
on its common stock and does not anticipate paying
dividends for the foreseeable future.
<PAGE>
Item 6. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Financial Condition and Changes in Financial
Condition
No operations were conducted and no revenues were generated
in the fiscal year. The Company at year end had no capital
and only minimal cash, and no other assets whatsoever. The
Company at year end was totally illiquid and would have
needed cash infusions from shareholders to provide capital.
Liquidity
The Company had cash in the amount of $212 at December 31,
1997.
The Company ceased active operations in 1991 and has no
business at the present time. It anticipates seeking
acquisition or merger candidates in the future.
During the course of the fiscal year ended December 31,
1997, the Company's outstanding debt level increased to
$11,069 from $10,496 in fiscal year ended December 31, 1996.
This increase was due to costs relating to company's public
status, and legal and accounting.
Stockholders deficit decreased to ($10,857) at December 31,
1997 compared to ($10,496) at December 31, 1996.
Capital Resources
None. The Company currently has no capital resources.
The Company has no other known material commitments for
capital expenditures. The Company has no additional plans,
agreements, or commitments concerning any transaction which
would require the Company to use a significant amount of
capital.
Results of Operations
During the fiscal year ended December 31, 1997, the
Company incurred general and administrative expenses
and consulting fees. At present, the Company has no
business income or operations. Accordingly, the
reported financial information herein may not be
indicative of future operating results.
Comparison of year Ended December 31, 1997 to year Ended
December 31, 1996. The Company ceased operations in June
1991, and has had no revenues or sales of any type since
then.
<PAGE>
General and administrative expenses for the years ended
December 31, 1997 and 1996 were $22,261 and $9,068
respectively.
The operating losses for years ended December 31, 1997 and
1996 were ($22,261) and ($9,068), respectively. The net
loss for year ended December 31, 1997 was ($22,261). For
year ended December 31, 1996, the net loss was ($9,068).
Loss per share for year ended December 31, 1997 was ($.01)
per share, compared to approximately ($.08) per share for
year ended December 31, 1996.
The management of the Company does not believe that
inflation has had any material effect on the Company during
the year ended December 31, 1997.
Item 7. Financial Statements and Supplementary Data
Please refer to pages F-1 through F-10.
Item 8. Changes in and Disagreements on Accounting and
Financial Disclosure
NONE
PART III
Item 9. Directors and Executive Officers of the
Registrant and Compliance with Section 16(a)
The directors and executive officers of the Company as
of December 31, 1997 are as follows:
Name Age Position
Robert Kropf 37 President, Director
Paul Adams 36 Secretary, Treasurer, Director
Kevin D. Geiss 35 Director
The term of office of each director and executive officer
ends at, or immediately after, the next annual meeting of
shareholders of the Company. Except as otherwise indicated, no
organization by which any director or officer has been previously
employed is an affiliate, parent or subsidiary of the Company.
Robert Kropf, President and Director of The Ohio &
Southwestern Energy Company since 1996. Mr. Kropf was owner and
operator of the Dinner and Bingo Club in Salt Lake City, Utah
from 1995 until 1998.
<PAGE>
Paul Adams, is Secretary, Treasurer and Director of The Ohio
& Southwestern Energy Company and was appointed in summer of
1997. He has served as President of Big Water Tackle of Salt
Lake City, Utah since 1993. Currently he is President of Tubes
and Tails and has been since fall 1997.
Kevin D. Geiss, received his BA in Business Administration
from the University of Northern Colorado in December of 1985.
Upon graduation, Mr. Geiss spent two years as a regional
marketing director with Dynavex, Inc. a manufacturer of oxygen
related equipment. Currently Mr. Geiss owns and operates an
insurance agency affiliated with the Farmers Insurance Group of
Companies in Denver. Mr. Geiss also served as a Vice President,
Treasurer and Director of ANCR, Inc., a public "Blank Check"
company formed in Colorado in 1985. Mr. Geiss resigned from that
company as part of a reverse acquisition transaction in October
of 1987. Mr. Geiss was a founding Director of Registrant, who
resigned in 1990, but was re-elected by shareholders in 1995.
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), requires the Company's officers and
directors, and persons who own more than 10% of a registered
class of the Company's equity securities, to file reports of
ownership and changes in ownership of equity securities of the
Company with the Securities and Exchange Commission and NASDAQ.
Officers, directors and greater-than 10% shareholders are
required by the Securities and Exchange Commission regulation to
furnish the Company with copies of all Section 16(a) that they
file. No officers, directors or 10% shareholders have filed any
Reports pursuant to Section 16(a) at year end.
Item 10. Executive Compensation
The Company accrued a total of $0 in compensation to the
executive officers as a group for services rendered to the
Company in all capacities during the 1997 fiscal year. No one
executive officer received, or has accrued for his benefit, in
excess of $60,000. No cash bonuses were or are to be paid to such
persons. No compensation was deferred.
The Company does not have any employee incentive stock
option plans.
There are no plans pursuant to which cash or non-cash
compensation was paid or distributed during the last fiscal year,
or is proposed to be paid or distributed in the future, to the
executive officers of the Company. No other compensation not
described above was paid or distributed during the last fiscal
year to the executive officers of the Company. There are no
compensatory plans or arrangements, with respect to any executive
office of the Company, which result or will result from the
resignation, retire-ment or any other termination of such
individual's employment with the Company or from a change in
control of the Company or a change in the individual's
responsibilities following a change in control.
<PAGE>
Item 11. Security Ownership of Certain Beneficial
Owners and Management
The following table sets forth information, as of December
31, 1997, with respect to the beneficial ownership of the
Company's no par value common stock by each person known by the
Company to be the beneficial owner of more than five percent of
the outstanding common stock, and by the Company's management.
Stock Names and Address Beneficial Percent
Title of Class of Beneficial Owner Ownership of Class
Common Robert Kropf 0 0%
President & Director
c/o 4505 S. Wasatch Blvd.
Suite #330
Salt Lake City, UT 84124
Common Paul Adams 200,000 9.4%
Secretary, Treasurer & Dir.
(through beneficial
ownership of Big Water Tackle)
124 W. Burton Ave.
Salt Lake City, UT
Common Kevin D. Geiss 5,833 .2%
Director
999 18th, #212
Denver, CO 80202
Common GeoTech Management Services 1,300,000 61.4%
c/o 4505 S. Wasatch Blvd.
Suite #330
Salt Lake City, UT 84124
(Beneficially owned by Ken Carol
10 Donald Street
Winnipeg, MB R3C 1L5)
Common Big Water Tackle 200,000 9.4%
(Beneficially Paul Adams,
an officer and director)
124 W. Burton Avenue
Salt Lake City, UT
Common Dora Mower 200,000 9.4%
1883 S. 900 East
Salt Lake City, UT
Common Wayne Mower 150,000 7%
2700 W. 7461 S.
Salt Lake City, UT
Common Edward B. Wilson 150,000 7%
8th S. 350 Palamino
Naperville, IL
Officers and Directors as a group 205,833 9.6%
<PAGE>
Item 12. Certain Relationships and Related Transactions
During March 1989, the Company sold 10,000,000 units of
no par value common stock to its officers, directors and private
investors. The offering price for each unit was $.001. Each
unit consisted of one share of the Company's no par value common
stock and 25 common stock purchase warrants. Each warrant
enables its holder to purchase one share of restricted common
stock at $.014 per share for a period of 24 months commencing
with the effective date of the prospectus (October 30, 1989).
The Company received $10,000 in proceeds from the sale of common
stock to its officers, directors and private investors.
On January 4, 1990, the Company sold 10,000,000 units
of no par value common stock in a "Blind Pool" public offering.
The offering price for each unit was $.01. Each unit consisted
of one sharer of the Company's no par value common stock and 25
Class A Common Stock Redeemable Purchase Warrants (Class A
Warrants). The Company received $72,730, net of offering costs,
from the sale of common stock in the public offering. All
Warrants expired in October 1991.
Effective June 13, 1990, the Company entered into a merger
agreement with Ohio & Southwestern Energy Company (OSEC). The
Company issued 80,000,000 shares of its common stock in exchange
for all of the outstanding shares of OSEC. After the exchange of
shares, OSEC's sole shareholder, Members Service Corporation
(MSC), owned 80% of the Company's issued and outstanding common
stock. The name of the corporation was changed to Ohio &
Southwestern Energy Company (OSEC).
The minority shareholders filed a complaint in Arapahoe
County District Court, Colorado, Civil Division, during April,
1991 alleging among other things that the majority shareholder,
MSC, failed to disclose the distribution of corporate funds,
failed to account for the operations of the corporation and
transferred assets of the corporation without stockholder or
board meetings.
On August 28, 1991, a Receiver was appointed and the court
ordered the 80,000,000 shares of common stock issued to MSC to be
canceled. On January 12, 1995, the minority shareholders filed a
motion for supplemental orders requesting that the merger between
Jefferson Capital Corporation and Ohio and Southwestern Energy
Company be declared null and void and a bar date of April 15,
1995, be set within which any and all creditors must file a
claim.
On May 23, 1995, the Receiver issued his final report
stating that no claims of creditors had been filed by the bar
date. The Receiver incurred $36,395 in costs during
receivership. Certain of the costs had been advanced by the
Receiver in the exception of issuance of shares of common stock
by the Board of Directors after the dismissal of the
Receivership.
<PAGE>
On June 21, 1995, the Court ordered the merger null and
void, approved the Receiver's final report and authorized the
restoration of the name of the Company to Jefferson Capital
Corporation. The Board elected not to do so for consistency.
On July 25, 1995, the Company issued 50,000 shares (adjusted
for a one for 300 reverse split of common stock) for $.03 per
share to seven unrelated parties for legal and consulting
services rendered.
In April 1997, the Company paid Robert Beaton, a
shareholder, $10,000 for consulting services rendered, and paid
M.A. Littman, a shareholder, $5,000 for legal services rendered.
In 1997, the Company issued 2 million common shares to
certain persons and entities for cash consideration of $21,900.
Such shares constitute 94.4% of the total outstanding stock of
the Company. Big Water Tackle (Beneficially Paul Adams) received
200,000 shares. GeoTech Management Services received 1,300,000
shares (61.4% of the company).
Item 13. Disagreements with Accountants on Accounting and
Financial Disclosure
There has been no change of Accountants since the 1989 Audit.
In connection with audits of two most recent fiscal years
and any interim period preceding resignation, no disagreements
exist with any former accountant on any matter of accounting
principles or practices, financial statement disclosure, or
auditing scope of procedure, which disagreements if not resolved
to the satisfaction of the former accountant would have caused
him to make reference in connection with his report to the
subject matter of the disagreement(s).
The principal accountant's report on the financial
statements for any of the past two years contained no adverse
opinion or a disclaimer of opinion nor was qualified as to
uncertainty, audit scope, or accounting principles except for the
"going concern" qualification.
PART IV
Item 14. Exhibits and Reports on Form 8-K
The following documents are filed as
part of this report:
1. Reports on Form 8-K: None
2. Exhibits:
<PAGE>
Form 10-K
Regulation Consecutive
S-K Number Exhibit Page Number
3.1 Articles of Incorporation *
3.3 Bylaws *
24.2 Court Order dated August 23, 1991 **
24.3 Court Order dated June 21, 1995 **
*Incorporated by reference to SEC filing #33-28188.
**Incorporated by reference to 10-KS B Report for 12/31/94 period.
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.
THE OHIO & SOUTHWESTERN ENERGY CO.
(Registrant)
Date: June 1, 1998
/s/Robert Kropf
Robert Kropf, President
Pursuant to the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
THE OHIO & SOUTHWESTERN ENERGY COMPANY
(Registrant)
Date: June 1, 1998
/s/Robert Kropf
Robert Kropf, Director
/s/Paul Adams
Paul Adams, Director
/s/Kevin D. Geiss
Kevin D. Geiss, Director
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Page
Independent Auditors' Report F-2
Financial Statements:
Balance Sheet F-3
Statements of Operations F-4
Statements of Changes in Stockholders' Equity (Deficit) F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of The Ohio & Southwestern Energy Company
Denver, Colorado
We have audited the accompanying balance sheet of
The Ohio & Southwestern Energy Company (a development
stage company) as of December 31, 1997, and the related
statements of operations, changes in stockholders'
equity (deficit), and cash flows for each of the two
years in the period ended December 31, 1997 and
cumulative from February 28, 1989 (inception). 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 financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of The Ohio & Southwestern Energy Company as of December 31,
1997, and the results of its operations and its cash flows for
each of the two years in the period ended December 31, 1997 and
cumulative from February 28, 1989 (inception), in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed
in Note 1 to the financial statements, the Company is in the
development stage and has not earned any revenues from operations.
Its ability to continue as a going concern is dependent upon its
ability to develop additional sources of capital, locate a merger
candidate and ultimately achieve profitable operations. These
conditions raise substantial doubt about its ability to continue as a
going concern. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Denver, Colorado
April 16, 1998
F-2
<PAGE>
THE OHIO & SOUTHWESTERN ENERGY COMPANY
(A Development Stage Company)
BALANCE SHEET
DECEMBER 31, 1997
ASSETS
CURRENT ASSETS, Cash $ 212
$ 212
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES, Accounts payable, shareholder $ 11,069
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $.01 par value, 100,000 shares
authorized, none issued and outstanding
Common stock, no par value, 10,000,000 shares
authorized, 2,116,695 shares issued and
outstanding 105,530
Contributed capital 25,442
(Deficit accumulated during the development stage (141,829)
Total Stockholders' Equity (Deficit) (10,857)
$ 212
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-3
<PAGE>
[CAPTION]
<TABLE>
THE OHIO & SOUTHWESTERN ENERGY COMPANY
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Cumulative
from
February 28,
1989
(Inception)
For the Years Ended to
December 31, December 31,
1997 1996 1997
<S> <C> <C> <C>
REVENUE $ - $ - $ -
COSTS AND EXPENSES:
Amortization - - 750
General and administrative 22,261 9,068 71,963
Total Costs and Expenses 22,261 9,068 72,713
(LOSS) BEFORE EXTRAORDINARY ITEM (22,261) (9,068) (72,713)
EXTRAORDINARY ITEM, UNAUTHORIZED
DISTRIBUTION - - 69,116
NET (LOSS) $ (22,261) $ (9,068) $(141,829)
NET (LOSS) PER COMMON SHARE - BASIC $ (.01) $ (.08)
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 1,683,818 116,695
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-4
<PAGE>
[CAPTION]
<TABLE>
THE OHIO & SOUTHWESTERN ENERGY COMPANY
(A Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM FEBRUARY 28, 1989 (INCEPTION)
TO DECEMBER 31, 1997
(Deficit)
Accumulated
During the
Common Stock Contributed Development
Shares Amount Capital Stage Total
<S> <C> <C> <C> <C> <C>
Balances, February - $ - $ - $ - $ -
28, 1989
Issuance of stock
to insiders on
March 7, 1989 at
$.30 per share 33,347 10,000 - - 10,000
Net (loss) - - - - -
Balances, December
31, 1989 33,347 10,000 - - 10,000
Issuance of stock
during public
offering for $3.00
per share, net of
offering costs of
$27,270 33,348 72,730 - - 72,730
Net (loss) - - - (84,159) (84,159)
Balances, December
31, 1990 66,695 82,730 - (84,159) (1,429)
Net (loss) - - - (3,416) (3,416)
Balances, December
31, 1991 66,695 82,730 - (87,575) (4,845)
Net (loss) - - - (2,713) (2,713)
Balances, December
31, 1992 66,695 82,730 - (90,288) (7,558)
Net (loss) - - - (1,614) (1,614)
Balances, December
31, 1993 66,695 82,730 - (91,902) (9,172)
Net (loss) - - - (1,863) (1,863)
Balances, December
31, 1994 66,695 82,730 - (93,765) (11,035)
Issuance of stock
for services
rendered at $.03
per share 50,000 1,500 - - 1,500
Contributed capital - - 24,842 - 24,842
Net (loss) - - - (16,735) (16,735)
Balances, December
31, 1995 116,695 84,230 24,842 (110,500) (1,428)
Net (loss) - - - (9,068) (9,068)
Balances, December
31, 1996 116,695 84,230 24,842 (119,568) (10,496)
Issuance of shares
for cash 2,000,000 21,300 - - 21,300
Contributed capital - - 600 - 600
Net (loss) - - - (22,261) (22,261)
Balances, December
31, 1997 2,116,695 $105,530 $25,442 $(141,829) $(10,857)
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-5
<PAGE>
[CAPTION]
<TABLE>
THE OHIO & SOUTHWESTERN ENERGY COMPANY
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Cumulative
from
February 28,
1989
For the Years Ended (Inception to)
December 31, December 31,
1997 1996 1997
<S> <C> <C> <C>
CASH FLOWS FROM (TO) OPERATING
ACTIVITIES:
Net (loss) from operations $(22,261) $(9,068) $(141,829)
Adjustments to reconcile net (loss)
to net cash used by operating
activities:
Amortization - - 750
Changes in:
Accounts payable 573 9,068 12,569
Net Cash (Used) by Operating
Activities (21,688) - (128,510)
CASH FLOWS FROM (TO) INVESTING
ACTIVITIES:
(Increase) in organization costs - - (750)
Net Cash (Used) by Investing
Activities - - (750)
CASH FLOWS FROM (TO) FINANCING
ACTIVITIES:
Proceeds from issuance of common
stock to insiders 21,300 - 31,300
Proceeds from issuance of common
stock to the public - - 100,000
Payment of offering costs from
issuance of common stock to
the public - - (27,270)
Contributed capital 600 - 25,442
Net Cash Provided by Financing
Activities 21,900 - 129,472
NET INCREASE IN CASH 212 - 212
CASH, beginning of period - - -
CASH, end of period $ 212 $ - $ 212
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-6
<PAGE>
THE OHIO & SOUTHWESTERN ENERGY COMPANY
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
History
The Ohio & Southwestern Energy Company (OSEC) (the Company)
(formerly known as Jefferson Capital Corporation or JEFFCO), a
development stage company, was organized under the laws of the
State of Colorado on February 28, 1989. The Company is in the
development stage as defined in Financial Accounting Standards Board
Statement No. 7.
Effective June 13, 1990, JEFFCO entered into a merger agreement with
OSEC. JEFFCO issued 80,000,000 (pre-split) shares of its common
stock in exchange for all of the outstanding shares of OSEC.
After the exchange of shares, OSEC's sole shareholder,Members
Service Corporation (MSC), owned 80% of the Company's issued
and outstanding common stock. The name of the surviving
corporation became The Ohio & Southwestern Energy Company.
The minority shareholders filed a complaint during April, 1991
alleging among other things that the majority shareholder, MSC,
failed to disclose the distribution of corporate funds, failed to
account for the operations of the corporation and transferred
assets of the corporation without stockholder or board meetings.
On August 28, 1991, a Receiver was appointed and the court
ordered that the 80,000,000 (pre- split) shares of common stock
issued to MSC be cancelled. On January 12, 1995, the minority
shareholders filed a motion for supplemental orders requesting
that the merger between JEFFCO and OSEC be declared null and void and
a bar date of April 15, 1995 be set within which any and all
creditors must file a claim.
On May 23, 1995, the Receiver issued his final report stating
that no claims of creditors had been filed by the bar date. The
Receiver incurred $36,395 in costs during receivership. Certain
of the costs had been advanced by the Receiver in the expectation of
issuance of shares of common stock by the Board of Directors
after the dismissal of the Receivership. On June 21, 1995, the
court ordered the merger agreement null and void and approved the
Receiver's final report.
Going Concern
The Company's financial statements have been presented on the
basis that it is a going concern, which contemplates the
realization of assets and the satisfaction of liabilities in the
normal course of business. The Company is in the development
stage and has not earned any revenues from operations.
F-7
<PAGE>
THE OHIO & SOUTHWESTERN ENERGY COMPANY
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The Company is currently devoting its efforts to locating merger
candidates. The Company's ability to continue as a going concern
is dependent upon its ability to develop additional sources of
capital, locate a merger candidate, and ultimately, achieve profitable
operations. The accompanying financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
Income Taxes
The Company uses the liability method of accounting for income
taxes pursuant to Statement of Financial Accounting Standards No. 109.
Under this method, deferred income taxes are recorded to reflect
the tax consequences in future years of temporary differences between the
tax basis of the assets and liabilities and their financial amounts at
year end.
For federal income tax purposes, substantially all expenses must
be deferred until the Company commences business and then they
may be written off over a 60-month period. The Company is not in
business at this date. Therefore, $141,829 of net losses incurred
to date have not been deducted for tax purposes and represent a
deferred tax asset. The Company is providing a valuation allowance
in the full amount of the deferred tax asset since there is no
assurance of future taxable income.
Earnings (Loss) Per Common Share
During 1997 the Financial Accounting Standard Board (FASB) issued
Statement of Financial Accounting Standards No. 128, "Earnings
per Share" (SFAS 128). SFAS 128 replaced the calculation of
primary and fully diluted earnings per share with basic and
diluted earnings per share. Basic earnings (loss) per common
share is computed based upon the weighted average number of
common shares outstanding during the period. Diluted earnings
per share consists of the weighted average number of common
shares outstanding plus the dilutive effects of options and
warrants calculated using the treasury stock method. In loss
periods, dilutive common equivalent shares are excluded as the
effect would be anti-dilutive. All prior period per share data
has been restated to reflect the requirements of SFAS 128.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
periods. Actual results could differ from those estimates and
assumptions.
Cash Equivalents
For purposes of reporting cash flows, the Company considers all
funds with original maturities of three months or less to be cash
equivalents.
F-8
<PAGE>
THE OHIO & SOUTHWESTERN ENERGY COMPANY
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recently Issued Accounting Pronouncements
In June 1997, the FASB issued Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" (SFAS 130),
which establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive income
is defined to include all changes in equity except those resulting
from investments by owners and distributions to owners. Among
other disclosures, SFAS 130 requires that all items that are required
to be recognized under current accounting standards as components
of comprehensive income be reported in a financial statement that
is displayed with the same prominence as other financial statements.
Also, in June 1997, the FASB issued Statement of Financial
Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" (SFAS 131), which supersedes
Statement of Financial Accounts Standards No. 14, "Financial Reporting
for Segments of a Business Enterprise." SFAS 131 establishes standards
for the way that public companies report information about operating
segments in annual financial statements and requires reporting
of selected information about operating segments in interim
financial statements issued to the public. It also establishes
standards for disclosures regarding products and services, geographic
areas and major customers. SFAS 131 defines operating segments
as components of a company about which separate financial
information is available, that is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and in
assessing performance.
SFAS 130 and 131 are effective for financial statements for periods
beginning after December 15, 1997 and requires comparative information
for earlier years to be restated. Management believes the adoption
of these statements will not have a material impact on the Company's
financial statements.
In February 1998, the FASB issued Statement of Financial Accounting
Standards No. 132, "Employer's Disclosures about Pensions and Other
Postretirements Benefits" (SFAS 132) which standardizes the disclosure
requirements for pensions and postretirement benefits and requires
additional information on changes in the benefit obligations
and fair values of plan assets that will facilitate financial
analysis. SFAS 132 is effective for years beginning after
December 15, 1997 and requires comparative information for earlier
years to be restated, unless such information is not readily
available. Management believes the adoption of this statement will
have no material impact on the Company's financial statements.
Reclassifications
Certain balances in the December 31, 1996 financial statements
have been reclassified to conform to the December 31, 1997 presentation.
The reclassifications had no effect on the financial condition, results
of operations or cash flows for December 31, 1996.
F-9
<PAGE>
THE OHIO & SOUTHWESTERN ENERGY COMPANY
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - STOCKHOLDERS' EQUITY (DEFICIT)
During March 1989, the Company sold 33,347 units of no par value
common stock to its officers, directors and private investors.
The offering price for each unit was $.30. Each unit consisted
of one share of the Company's no par value common stock and 25
common stock purchase warrants. Each warrant enabled its holder to
purchase one share of restricted common stock at $4.20 per share
for a period of 24 months commencing with the effective date of
the prospectus (October 30, 1989). The Company received $10,000 in
proceeds from the sale of common stock to its officers, directors
and private investors.
On January 4, 1990, the Company sold 33,348 units of no par value
common stock in a public offering. The offering price for each unit
was $3.00. Each unit consisted of one share of the Company's no
par value common stock and 25 Class A Common Stock Redeemable
Purchase Warrants (Class A Warrants). The Class A Warrants were exercisable
for 24 months from the effective date of the registration statement
(October 30, 1989) and entitled the holder thereof to purchase 25
shares of common stock at a price of $4.20 per share. The Company
received $72,730, net of offering costs, from the sale of common stock
in the public offering. All warrants have expired unexercised.
On July 25, 1995, the Company issued 50,000 shares of common
stock for $.03 per share to seven unrelated parties for legal and
consulting services rendered.
On September 26, 1995, the Board of Directors approved a one for
300 share reverse split. All financial information and per share
data have been restated to reflect this event.
On March 20, 1997, the Company received $21,300 for 2,000,000
subscribed shares of common stock. The proceeds were designated
to pay outstanding transfer agent, legal, accounting and miscellaneous
bills.
NOTE 3 - RELATED PARTY TRANSACTIONS
The Company paid $10,000 to a shareholder for consultin services
and $5,000 to a shareholder for legal fees during 1997.
NOTE 4 - EXTRAORDINARY ITEM
The former majority stockholder, MSC, failed to disclose to the
minority stockholders the distribution of corporate funds during
the year ended 1990. The Company recorded an extraordinary loss
in the amount of $69,116 as a result of the unauthorized
distribution of corporate funds (see Note 1).
F-10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 212
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 212
<CURRENT-LIABILITIES> 11,069
<BONDS> 0
0
0
<COMMON> 105,530
<OTHER-SE> (116,387)
<TOTAL-LIABILITY-AND-EQUITY> (10,857)
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 22,261
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (22,261)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (22,261)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
