SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of
1934.
January 31, 1997 0-011228
For the Quarter Ended Commission File Number
SYSTEMS ASSURANCE CORPORATION (Exact name of
registrant as specified in its charter.)
DELAWARE 02-0337028
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
10 Exchange Place, Suite 309
Salt Lake City, Utah 84111
(Address of principal executive offices) (Zip Code)
18 West King Street, Malvern, PA 19355
(Former Address and Zip Code)
(801) 364-3500
(Registrant's telephone number including area code)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 Par Value
(Title of Class)
Name of each exchange on which registered: 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 such filing
requirements for the past 90 days. [X] Yes [ ] No
Number of shares of the Registrant's Common Stock, $.01 par value, outstanding
at March 21, 1997: 798,835.
DOCUMENTS INCORPORATED REFERENCE: None
1
<PAGE>
SYSTEMS ASSURANCE CORPORATION
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
January 31, October 31,
1997 1996
----------------- -----------------
ASSETS
Current Assets
<S> <C> <C>
Cash $ 698 $ 698
Income taxes refundable 1,442 1,442
----------------- -----------------
TOTAL CURRENT ASSETS 2,140 2,140
----------------- -----------------
$ 2,140 $ 2,140
================= =================
LIABILITIES AND CAPITAL DEFICIT
Current Liabilities
Notes payable $ 50,000 $ 50,000
Accrued expenses 3,099 3,099
----------------- -----------------
TOTAL CURRENT LIABILITIES 53,099 53,099
----------------- -----------------
Capital Deficit
Common stock, par value $.01 per share;
authorized 30,000,000 shares; outstanding
398,835 shares 3,988 3,988
Additional paid-in capital 10,077,397 10,077,397
Deficit (10,132,344) (10,132,344)
----------------- -----------------
TOTAL CAPITAL DEFICIT (50,959) (50,959)
----------------- -----------------
$ 2,140 $ 2,140
================= =================
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
SYSTEMS ASSURANCE CORPORATION
STATEMENTS OF OPERATION
Three month periods ended January 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
----------------- -----------------
<S> <C> <C>
Revenue $ 0 $ 0
General and administrative expenses 0 250
----------------- -----------------
Income (loss) before provision for income taxes 0 (250)
Provision (credit) for income taxes 0 0
----------------- -----------------
NET INCOME (LOSS) $ 0 $ (250)
================= =================
Income (loss) per common share $ .00 $ .00
================= =================
Weighted average number of common shares 348,835 348,835
================= =================
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
SYSTEMS ASSURANCE CORPORATION
STATEMENT OF CAPITAL DEFICIT
Twelve month period ended October 31, 1996
and
Three month period ended January 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Additional Total
Number Par Paid-in Capital
of Shares Value Capital Deficit Deficit
--------------- ------------- ----------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
Balance, October 31, 1995 348,835 $ 3,488 $ 10,026,930 $ (10,111,554) $ (81,136)
Issuance of common stock 50,000 500 50,467 50,967
Net Loss (20,790) (20,790)
--------------- ------------- ----------------- ---------------- ---------------
Balance, October 31, 1996 398,835 3,988 10,077,397 (10,132,344) (50,959)
Net Loss 0
--------------- ------------- ----------------- ---------------- ---------------
Balance, January 31, 1997 398,835 $ 3,988 $ 10,077,397 $ (10,132,344) $ (50,959)
=============== ============= ================= ================ ===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
SYSTEM ASSURANCE CORPORATION
STATEMENTS OF CASH FLOWS
Three month periods ended January 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
----------------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 0 $ (250)
----------------- -----------------
Net Cash provided (used) by operating activities 0 (250)
----------------- -----------------
Net increase (decrease) in cash 0 (250)
Cash at beginning of year 698 382
----------------- -----------------
CASH AT END OF PERIOD $ 698 $ 132
================= =================
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
SYSTEMS ASSURANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying financial statements include herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information normally included
in footnote disclosures in financial statements prepared in accordance with
generally accepted accounting principles has been condensed or omitted
pursuant to such rules and regulations, although the Company believes that
the disclosures are adequate to make the information presented not
misleading. It is suggested that these condensed financial statements be
read in conjunction with the financial statements and the notes thereto
included in the Company's latest annual report on Form 10-K for the year
ended October 31, 1996.
2. Net Income (Loss) Per Share
Net income (loss) per share of Common Stock is computed by dividing net
income (loss) by the weighted average number of shares of Common Stock and
Common Stock Equivalents, if dilutive, outstanding during the period.
3. Reverse Stock Split
On January 24, 1997, shareholders approved a one-for-seventy reverse split.
Prior financial statements have been restated to reflect the split.
4. Subsequent Events
Subsequent to January 31, 1997, the Company issued 400,000 shares of its
restricted common stock to Exchange Place Capital Partners, LLC
("Exchange") to cancel notes payable in the amount of $50,000. Exchange is
not the majority shareholder of the Company.
6
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
During the three months ended January 31, 1997, the Company had no principal
business activity. The Company had no revenue and had no operating expenses. The
Company is presently seeking investment opportunities but has not yet entered
into any substantive negotiations.
Financial Condition and Liquidity
The Company has suffered recurring losses, has no current expectations of
revenue and has a capital deficit. Although management intends to seek funding
for normal operating expenses and is presently seeking investment opportunities,
it is not certain that such opportunities or funding will become available, or
if available, that it will be on acceptable terms.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company is the defendant in an action brought in Massachusetts Superior
Court, County of Suffolk, by McDevitt Recruitment Advertisement, Inc. The
complaint was served in December 1986 and alleges a breach of an oral warranty
of fitness for a particular purpose of a computer system sold to plaintiff in
1982, which allegedly never performed properly. Plaintiff seeks damages of
$30,000. The Company believes that it is not liable for any damages; however, in
order to save the cost of potential litigation, has offered a settlement in the
amount of $1,000 to the attorney for the plaintiff which it believes is
sufficient to settle this case. At this date, the attorney has not been able to
locate the plaintiff.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYSTEMS ASSURANCE CORPORATION
(Registrant)
Date: March 24, 1997 By: /s/ Dean Becker
Dean Becker
President and Chairman
7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Systems
Assurance Corporation January 31, 1997 financial statements and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000705581
<NAME> SYSTEMS ASSURANCE CORPORATION
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> JAN-31-1997
<CASH> 698
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,140
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,140
<CURRENT-LIABILITIES> 53,099
<BONDS> 0
0
0
<COMMON> 3,988
<OTHER-SE> (54,947)
<TOTAL-LIABILITY-AND-EQUITY> 2,140
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
