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.
April 30, 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 April 30, 1997: 798,835.
DOCUMENTS INCORPORATED REFERENCE: None
1
<PAGE>
SYSTEMS ASSURANCE CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
April 30, October 31,
1997 1996
----------------- -----------------
(Unaudited)
ASSETS
Current Assets
<S> <C> <C>
Cash $ 0 $ 698
Income taxes refundable 1,442 1,442
----------------- -----------------
TOTAL CURRENT ASSETS 1,442 2,140
----------------- -----------------
$ 1,442 $ 2,140
================= =================
LIABILITIES AND CAPITAL DEFICIT
Current Liabilities
Notes payable $ 0 $ 50,000
Accrued expenses 12,571 3,099
----------------- -----------------
TOTAL CURRENT LIABILITIES 12,571 53,099
----------------- -----------------
Capital Deficit
Common stock, par value $.01 per share;
authorized 30,000,000 shares; outstanding
798,835 shares (398,835 at 10-31-96) 7,988 3,988
Additional paid-in capital 10,123,397 10,077,397
Deficit (10,142,514) (10,132,344)
----------------- -----------------
TOTAL CAPITAL DEFICIT (11,129) (50,959)
----------------- -----------------
$ 1,442 $ 2,140
================= =================
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
SYSTEMS ASSURANCE CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months ended Six Months ended
April 30, April 30,
------------------------------ -------------------------------
1997 1996 1997 1996
-------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Revenue $ 0 $ 0 $ 0 $ 0
General and administrative expenses 10,170 17,554 10,170 17,804
Interest expense 0 146 0 146
-------------- -------------- --------------- --------------
Income (loss) before provision for income taxes (10,170) (17,700) (10,170) (17,950)
Provision (credit) for income taxes 0 0 0 0
-------------- -------------- --------------- --------------
NET INCOME (LOSS) $ (10,170) $ (17,700) $ (10,170) $ (17,950)
============== ============== =============== ==============
Income (loss) per common share $ (.01) $ (.05) $ (.02) $ (.05)
============== ============== =============== ==============
Weighted average number of common shares 798,835 365,502 598,835 357,168
============== ============== =============== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
SYSTEMS ASSURANCE CORPORATION
STATEMENTS OF CAPITAL DEFICIT
Twelve month period ended October 31, 1996
and
Six month period ended April 30, 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)
Issuance of common stock
(restricted) to cancel debt
at $.125 per share 400,000 4,000 46,000 50,000
Net Loss (10,170) (10,170)
--------------- ------------- ----------------- ---------------- ---------------
Balance, April 30, 1997 798,835 $ 7,988 $ 10,123,397 $ (10,142,514) $ (11,129)
=============== ============= ================= ================ ===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
SYSTEM ASSURANCE CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended April 30,
1997 1996
----------------- -----------------
Cash flows from operating activities:
<S> <C> <C>
Net (loss) $ (10,170) $ (17,950)
Changes in assets and liabilities:
Accrued expenses 9,472 (7,054)
----------------- -----------------
NET CASH (USED) BY OPERATING ACTIVITIES (698) (25,004)
FINANCING ACTIVITIES
Proceeds from issuance of note 0 50,000
Shareholder advances, net 0 (23,793)
----------------- -----------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 0 26,207
INCREASE (DECREASE) IN CASH (698) 1,203
Cash at beginning of year 698 382
----------------- -----------------
CASH AT END OF PERIOD $ 0 $ 1,585
================= =================
SUPPLEMENTAL INFORMATION
Issuance of stock to pay shareholder debt:
Common stock, at par value 4,000 35,000
Additional paid-in capital 46,000 15,967
</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 included 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. Stock Issued To Cancel Debt
During the quarter ended April 30, 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 now 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 and six months ended April 30, 1997, the Company had no
principal business activity. The Company had no revenue and had no operating
expenses. The Company had $10,170 of general and administrative expenses mainly
for accounting and transfer agent fees. 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: June 10, 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 April 30, 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> 6-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> APR-30-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,442
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,442
<CURRENT-LIABILITIES> 12,571
<BONDS> 0
0
0
<COMMON> 7,988
<OTHER-SE> (19,117)
<TOTAL-LIABILITY-AND-EQUITY> 1,442
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 10,170
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (10,170)
<INCOME-TAX> 0
<INCOME-CONTINUING> (10,170)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,170)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
