UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT
OF 1934
For the fiscal year ended OCTOBER 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT
OF 1934
For the transition period from to .
Commission File No. 0-011228
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.)
50 WEST BROADWAY SUITE 1130, SALT LAKE CITY, UTAH 84111
(Address and zip code of principal executive offices)
Registrant's telephone number, including area code: (801)531-0494
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: 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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not 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-K or any amendment to this Form 10-K. [ ]
As of March 6, 1998 the aggregate market value of the voting stock held by
non-affiliates of the Registrant was
approximately $112,000.
As of March 6, 1998 the number of shares outstanding of the Registrant's
Common Stock was 21,080,114.
Documents incorporated by reference: Not applicable.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Systems Assurance Corporation, ("the Company") was formed as a
corporation in the State of
Delaware in July, 1982. The Company has been inactive since October 1991 and
has had no operating revenues
since that time.
The Company is currently seeking a business opportunity to merge
with or acquire, but to date
has not located any such business opportunities. There is no assurance that
the Company will be successful in
finding any business opportunity to merge with or acquire. (See
"Management's Discussion and Analysis of
Financial Condition")
ITEM 2. DESCRIPTION OF PROPERTY
The Company currently operates from the office of its president Dean
Becker and pays no rent
or expenses.
ITEM 3. LEGAL PROCEEDINGS
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
On December 19, 1997 the Company held a Special Meeting of the
shareholders. At the meeting,
the shareholders voted in favor of changing the par value of the common stock
from $.01 to $.001; the creation
of three classed of preferred stock (50 million shares each class), par value
$.001, with other terms to be set by
the Board; a reverse split of the common stock on a 5 - 1 basis, with no
shareholder being reversed below 100
shares.
PART II
ITEM 5. MARKET PRICE FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
During the year ended October 31, 1997 there appeared to be little
or no trading in the stock of
the Company. As of February 23, 1998, the Company had 1435
shareholders of record.
The Company has not declared any cash dividends on its Common Stock
since inception and its
Board of Directors has no present intention of declaring any dividends. For
the foreseeable future, the Company
intends to retain all earnings, if any, for use in the development and
expansion of its business.
ITEM 6. SELECTED FINANCIAL DATA
Summary of Selected Financial Data
Year Ended October 31,
1997 1996 1995
Income Statement Data:
Revenues - 0- -0- -0-
Operating Profit (Loss) (11,244) (20,790) (77,428)
Extraordinary Income -0- -0- 42,184
Net (Loss) (11,244) (20,790) (33,801)
Income (Loss) Per Share:
Extraordinary Income - 0- -0- -0-
Net Income (Loss) - 0- -0- -0-
Cash Dividends on Common Stock - 0- -0- -0-
Balance Sheet Data:
Working Capital (deficiency) (9,374) (50,959) (81,136)
Total Assets 2,045 2,140 1,824
Shareholders' Deficit (9,374) (50,959) (81,136)
Weighted Average Number of Common
and Common Equivalent
Shares* 159,073 95,977
87,011
* All periods restated for a one-for-seventy (1:70) reverse common
stock split in January 1997 and
a one-for-five (1:5) reverse common stock split in December 1997.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
The Company had no material revenue during the year ended October
31, 1997. Total
stockholders' equity (deficit) was $(9,374), as compared to $(50,959) at
October 31, 1996. The decrease was
principally due to professional fees paid during the year with no income.
LIQUIDITY AND CAPITAL RESOURCES
The Company currently has no significant assets and is in the
process of looking for business
opportunities to merge with or acquire. At minimum, the Company will need to
raise additional capital through
private funding to meet the financial needs of being a reporting company.
There is no guarantee that the
Company will be successful in obtaining necessary funding to develop any
business opportunities.
RESULTS OF OPERATIONS
The Company sustained losses of $(11,244) and $(20,790) for the
years ended October 31,1997
and October 31, 1996 respectively. Expenses of $11,244 and $20,790 for the
periods consisted of professional
services, interest expense and other administrative expenses incurred while
the Company was seeking business
ventures to acquire or merge with.
ITEM 8. FINANCIAL STATEMENTS
The financial statements and notes thereto as listed in the
accompanying index to financial
statements (Item 14) are filed as part of this Annual Report.
(2) Schedules are omitted because of the absence of conditions under
which they are required or
because the required information is given in the financial
statements or notes thereto.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following information is furnished with respect to the Company's
Board of Directors and executive
officers. There are no family relationships between or among any of the
Company's directors or executive
officers.
DIRECTORS AND EXECUTIVE OFFICERS
Director
Name Age Since Position with
the Company
Dean Becker 45 1997 President, CEO and Director
50 W. Broadway Suite 1130
Salt Lake City, Utah 84101
Paul Adams 36 1997 Vice President, Director
1340 East Harrison Avenue
Salt Lake City, Utah 8105
Chris Turner 39 1997 Secretary, Director
DEAN BECKER, President and a Director since 1997. Practiced law in Salt
Lake City, Utah since 1979.
He graduated from Brigham Young University in 1976 with a Bachelors of Arts in
English with University
Scholar designation. He then attended law school at the J. Reuben Clark
School of Law at Brigham Young
University where he served as associate editor on the law review staff. He
has a general law practice with
emphasis on corporate and business law, and is involved in a number of
community activities.
PAUL ADAMS, Vice President since March 1997. Since 1994 he has been the
President of Big Water
Tackle. He currently is the President of Tubes and Tails, since 1997.
CHRIS TURNER, Secretary since March 1994. Currently he is a Customer
Service Representative for United
Health Care. From 1995 to 1996, he was the Manager for Master Tech. From
1994 to 1995 he was the
Manager for Summer Breeze. From 1993 to 1994 he was a Customer Service
representative for San Segal.
ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
No executives officers received any compensation from the Company during
the fiscal year ended
October 31,1997.
EMPLOYMENT AGREEMENTS AND OTHER COMPENSATION ARRANGEMENTS
There are currently no agreements with members of management as to
employment or compensation.
COMPENSATION OF NON-EMPLOYEE DIRECTORS
There is currently no compensation paid to non-employment directors.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 25, 1998, the number of
shares of the Company's common
stock owned by persons who owned of record, or was known to own beneficially,
more than 5% of the
outstanding shares of the Company's common stock, sets forth the number of
shares of the Company's current
directors and officers, and sets forth the number of shares owned by all of
the Company's directors and officers
as a group:
The beneficial owners listed have sole voting and investment power with
respect to the shares unless
otherwise indicated.
Amount and Nature
Name and Address of Beneficial
Percent of
of Beneficial Owner Ownership
Class
Dean Becker (1) 20,000,000 94.9
Paul Adams 0
Chris Turner 0
Officers and Directors
as a Group (three) 20,000,000 94.9
(1) These shares were issued subsequent to the fiscal year-end.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the past year the Registrant has not entered into any transactions
with management which are to
be reported under this Item.
Dean Becker is both an officer of Exchange Place Capital Partners, LLC
and an officer of the Company.
ITEM 14. EXHIBITS, AND REPORTS ON FORM 8-K
(A) Exhibits
EXHIBIT
NO. DESCRIPTION
3.01 Certificate of Incorporation (Incorporated by reference
to Registration Statement
No. 2-78947 on Form S-1 and Exhibits 4.1 and 4.2 to the
Company's report on
Form 10Q for the Quarter ended April 30, 1984.)
3.02 Certificate of Incorporation, as amended, August 29,
1986. (Incorporated by
reference to Exhibit 3.3 to the Company's annual report
on Form 10K for fiscal
1986)
3.03 By-laws (Incorporated by reference to Registration
Statement No. 33-2474-
LA.)
23.01 Consent of BDO Seidman, LLP
27.01 Financial Data Schedule
(b) The Registrant filed no current reports on Form 8-K during the last
quarter of the fiscal year ended
October 31, 1997.
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.
Systems Assurance Corporation
By: /s/ Dean Becker
Dated: March 30, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the
following persons of behalf of the Registrant and in the capacities and on the
dates indicated.
SIGNATURE TITLE DATE
/s/ Dean Becker President and Director March 30, 1998
(Principal Executive and
Financial Officer)
/s/ Paul Adams Director March 30, 1998
/s/ Chris Turner Secretary, Treasurer and Director March 30, 1998
INDEX TO FINANCIAL STATEMENTS
Report of Independent Certified Public Accountant. . . . . .F-1
Financial Statements:
Balance Sheets - October 31, 1997 and October 31, 1996 . .F-2
Statements of Operations - For the years ended October 31, 1997, 1996
and 1995 . . . . . . . . . . . . . . . . . . . . . . . . .F-3
Statement of Stockholders' Equity - For the period from
October 31, 1994 and October 31, 1997 . . . . . . . . . .F-4
Statement of Cash Flows - For the years ended October 31, 1997, 1996
and 1995 . . . . . . . . . . . . . . . . . . . . . . . . .F-5
Notes to Financial Statements. . . . . . . . . . . . . . .F-6
SYSTEMS ASSURANCE
CORPORATION
REPORT ON FINANCIAL STATEMENTS
YEARS ENDED OCTOBER 31, 1997 AND 1996
SYSTEMS ASSURANCE CORPORATION
CONTENTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 3
FINANCIAL STATEMENTS
Balance sheets 4
Statements of operations 5
Statements of stockholders' (deficiency) 6
Statements of cash flows 7
NOTES TO FINANCIAL STATEMENTS 8-14
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Systems Assurance Corporation
Malvern, Pennsylvania
We have audited the accompanying balance sheets of Systems Assurance
Corporation as of
October 31, 1997 and 1996 and the related statements of operations,
stockholders' (deficiency)
and cash flows for each of the three years in the period ended October 31,
1997. These
financial statements are the responsibility of the management of Systems
Assurance
Corporation. Our responsibility is to express an opinion on these financial
statements based
upon our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those
standards require that we plan and perform the audits 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 Systems Assurance Corporation as of October 31, 1997
and 1996 and
the results of its operations and its cash flows for each of the three years
in the period ended
October 31, 1997 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 7 to the financial
statements, the Company
has suffered recurring losses from operations and has a capital deficit.
These conditions raise
substantial doubt about the Company's ability to continue
as a going concern. Management's
plans, regarding these matters, are discussed in Note 7. The financial
statements do not include
any adjustments that might result from the outcome of this uncertainty.
January 26, 1998
SYSTEMS ASSURANCE CORPORATION
BALANCE SHEETS
<TABLE>
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October 31, 1997 1996
Assets
Current assets
Cash $ 603 $ 698
Income taxes refundable 1,442 1,442
$ 2,045 $ 2,140
Liabilities and Stockholders' (Deficiency)
Current liabilities
Notes payable (Note 6) $ $ 50,000
Accounts payable and accrued expenses 11,419 3,099
Total current liabilities 11,419 53,099
Contingency (Note 5)
STOCKHOLDERS' (DEFICIENCY) (NOTES 3,
6, 8 AND 9)
Preferred stock, par value $.001 per
share; authorized
50,000,000 shares, none issued and outstanding
Common stock, par value $.001 per share;
Authorized 30,000,000 shares
Issued and outstanding 180,114 and
100,114, respectively 180 100
Additional paid-in capital 10,134,034 10,081,285
Deficit (10,143,588) (10,132,344)
Total stockholders' (deficiency) (9,374) (50,959)
$ 2,045 $ 2,140
</TABLE>
See accompanying report of independent certified public accountants and notes
to financial statements.
SYSTEMS ASSURANCE CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
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Year ended October 31, 1997 1996 1995
Revenues $ $ $
General and administrative expenses 10,323 18,882 77,428
Interest expense 921 1,908
(Loss) before credit for
income taxes (11,244 ) (20,790 ) (77,428)
and extraordinary income
(Credit) for income taxes (1,443)
(Loss) before extraordinary income (11,244) (20,790) (75,985)
Extraordinary income
Gain on settlement of debt 42,184
(Note 2)
Net (loss) $ (11,244) (20,790) (33,801)
$ $
(LOSS) PER COMMON SHARE
</TABLE>
<TABLE>
<S> <C><C> <C><C><C> <C><C><C> <C>
(Loss) before extraordinary income $ (.07) $ (.22)$ (.87)
Extraordinary income $ $ $ .48
Net (loss) $ (.07) $ (.22) $ (.39)
</TABLE>
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</TABLE>
<TABLE>
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Weighted average number of
common shares 159,073 95,977 87,011
</TABLE>
See accompanying report of independent certified public accountants and notes
to financial statements.
SYSTEMS ASSURANCE CORPORATION
STATEMENTS OF STOCKHOLDERS' (DEFICIENCY)
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Common Stock Additional Total
</TABLE>
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No. of Paid-In Stockholders'
Shares Amount Capital (Deficit) (Deficiency)
Balance, October 31, 1994 * 86,400$
86 $10,030,082 $(10,077,753) (47,585)
$
Issuance of common shares 3,714 4 246 250
Net (loss) (33,801) (33,801)
Balance, October 31, 1995 90,114 90 10,030,328 (10,111,554) (81,136)
Issuance of common shares 10,000 10 50,957 50,967
(Note 3)
Net (loss) (20,790) (20,790)
Balance, October 31, 1996
100,114 100 10,081,285 (10,132,344) (50,959)
Issuance of common shares 80,000 80 52,749 52,829
(Notes 3 and 6)
Net (loss) (11,244) (11,244)
Balance, October 31, 1997
180,114$ 180 $10,134,034 $(10,143,588) (9,374)
$
</TABLE>
* Restated to reflect reverse common stock splits and change in par value as
described in Note 8 to the financial statements.
See accompanying report of independent certified public accountants and notes
to financial statements.
SYSTEMS ASSURANCE CORPORATION
STATEMENTS OF CASH FLOWS
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Years ended October 31, 1997 1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $(11,244) (20,790) (33,801)
$ $
Adjustment to reconcile net (loss) to
net cash
(used in) operating activities
Gain on settlement of debt (42,184)
Changes in operating assets and liabilities
(Increase) in income taxes refundable (1,442)
Increase (decrease) in accounts payableand accrued expenses
11,149 (5,101) 16,599
Net cash (used in) operating activities (95) (25,891)(60,828)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable 50,000
Stockholder advances 16,207 60,960
Proceeds from sale of common stock 250
Repayment of stockholders' advances (40,000)
Net cash provided by financing activities 26,207 61,210
Net (decrease) increase in cash (95) 316 382
Cash, beginning of year 698 382
Cash, end of year $ 603 $ 698 $ 382
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Issuance of common stock to satisfy stockholder
advances and assumption of liabilities
Common stock, at par value $ 80 $ 10 $
Additional paid-in capital $52,749 $50,957 $
</TABLE>
See accompanying report of independent certified public accountants and notes
to financial statements.
SYSTEMS ASSURANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
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1. SUMMARY OF OPERATIONS OF THE COMPANY
SIGNIFICANT
ACCOUNTING Systems Assurance Corporation (the
POLICIES "Company") has been inactive
since October 31, 1991 and consequently has
had no operating
revenues since that time. The Company is
presently seeking a
business opportunity to merge with or acquire.
INCOME TAXES
The Company records income taxes under the
provisions of Statement
of Financial Accounting Standards No. 109
("SFAS 109"),
"Accounting for Income Taxes". SFAS 109
requires the asset and
liability method of accounting for income
taxes. Under the asset and
liability method, deferred income taxes are
recognized for the tax
consequences of temporary differences by
applying enacted statutory
tax rates applicable to future years to
differences between the financial
statement carrying amounts and the tax
bases of existing assets and
liabilities. Under SFAS 109, the effect on
deferred taxes of a change
in tax rates is recognized in income in the
period that includes the
enactment date. A valuation allowance is
recorded based on a
determination of the ultimate realizability
of future deferred tax assets.
NET INCOME (LOSS) PER SHARE
Net income (loss) per share of Common Stock
is computed by
dividing net income by the weighted average
number of shares of
Common Stock and Common Stock Equivalents,
if dilutive,
outstanding during the year.
</TABLE>
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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 of assets
and liabilities and disclosure of
contingent assets and liabilities at the
date of the financial statements and the
reported amounts of revenues
and expenses during the reporting period.
Actual results could differ
from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts reported in the
balance sheets, if any, for cash,
accounts receivable, miscellaneous
receivables, accounts payable,
accrued liabilities and short-term debt
approximate fair value because
of the immediate or short-term maturity of
these financial instruments.
RECENT ACCOUNTING PRONOUNCEMENTS
On March 3, 1997, the FASB issued Statement
of Financial
Accounting Standards No. 128, "Earnings per
Share" ("SFAS 128").
This pronouncement is effective for
financial statements issued for
periods ending after December 15, 1997 and
provides a different
method of calculating earnings per share
than is currently used in
accordance with APB Opinion No. 15,
"Earnings per Share" ("APB
15") SFAS 128 provides for the calculation
of "Basic" and "Diluted"
earnings per share. Basic earnings per
share includes no dilution and
is calculated by dividing net income by the
weighted average number
of common shares outstanding for the
period. Diluted earnings per
share reflects the potential dilution of
securities that could share in the
earnings of an entity, similar to fully
diluted earnings per share under
APB 15. The Company feels that the
adoption of SFAS 128 will have
a material effect in 1998.
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Statement of Financial Accounting Standards
No. 129, "Disclosure of
Information about Capital Structure" ("SFAS
129"), effective for
periods ending after December 15, 1997,
establishes standards for
disclosing information about an entity's
capital structure. SFAS 129
requires disclosure of the pertinent rights
and privileges of various
securities outstanding (stock, options,
warrants, preferred stock, debt
and participation rights) including
dividend and liquidation
preferences, participant rights, call
prices and dates, conversion or
exercise prices and redemption
requirements. Adoption of SFAS 129
will have no effect on the Company because
it currently discloses the
information specified, if applicable.
In June 1997, the Financial Accounting
Standards Board issued two
new reporting disclosure standards. The
Company's results of
operations and financial position will be
unaffected by implementation
of these new standards. SFAS 130 and 131
are effective for periods
beginning after December 15, 1997.
Statement of Financial Accounting Standards
No. 130, "Reporting
Comprehensive Income" ("SFAS 130"),
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.
Statement of Financial Accounting Standards
No. 131, "Disclosure
about Segments of a Business Enterprise"
("SFAS 131"), establishes
standards for the way that public
enterprises 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 an enterprise about which
separate financial
information is available and that is
evaluated regularly by the chief
operating decision maker in deciding how to
allocate resources and in
assessing performance.
2. GAIN ON The Company settled a note payable balance
SETTLEMENT of $45,184 during the
OF DEBT year ended October 31, 1995. In complete
settlement of the note,
certain stockholders of the Company paid
$3,000 to the noteholder on
behalf of the Company and the noteholder
released the Company from
all further obligations under the note.
Gain on settlement of debt
amounting to $42,184 is included in the
statement of operations for
1995.
3. RELATED PARTY Certain stockholders have advanced funds to
TRANSACTIONS the Company to cover
various operating expenses. On April 1,
1996, the Company issued
10,000 shares of its common stock to those
stockholders to satisfy a
portion of the accumulated stockholder
advance balance. The
remaining stockholder advance balance of
$40,000 was repaid using
proceeds of the note payable described in
Note 6.
On February 4, 1997, the Company issued
80,000 shares of its
common stock to an investment firm to
satisfy the note payable
described in Note 6.
4. INCOME TAXES The Company had no deferred tax liabilities
at either October 31,
1997 and 1996. Significant components of
the Company's deferred
tax assets at October 31, 1997 and 1996 are
as follows:
</TABLE>
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October 31, 1997 1996
DEFERRED TAX ASSETS
Net operating loss carryforwards$10,062 $8,375
Valuation allowance (10,062) (8,375)
$ $
</TABLE>
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Due to the purchase of shares by certain
individuals during the year
ended October 31, 1995, the Company
exceeded the limits allowable
under the Tax Reform Act of 1986 related to
changes in ownership
percentage governing future utilization of
net operating and tax loss
carryforwards, effectively eliminating the
utilization of any
carryforwards existing at the date of
purchase. The tax losses for the
years ended October 31, 1997 and 1996 are
not subject to any such
limitation.
The credit for income taxes for the year
ended October 31, 1995
consists of a request for refund of
alternative minimum taxes paid
during the year ended October 31, 1991.
5. LITIGATION 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 attorneys for
the plaintiff which it believes
is sufficient to settle this case. At this
date, the attorneys have not
been able to locate plaintiff.
6. NOTE PAYABLE During the year ended October 31, 1996, the
Company engaged an
investment firm to actively seek a merger
candidate. The investment
firm was given irrevocable proxies from
certain of the Company's
stockholders to vote their shares in
connection with any
recapitalization of common stock, election
of members of the Board
of Directors or any proposed merger
agreement. As an incentive to
enter into the above agreement, the
investment firm lent the Company
$50,000 evidenced by a 7% Promissory Note
and agreed to assume
responsibility for certain operating
expenses of the Company. On
February 4, 1997, 80,000 shares of the
Company's common stock
were issued to the investment firm in full
satisfaction of the note.
7. GOING CONCERN The Company has suffered recurring losses,
has no current
expectations of revenue and has a capital
deficit. Although
management is actively seeking a merger or
acquisition candidate, it
is not certain if an agreement will be
consummated or, if
consummated, what effect it will have on
the financial condition of the
Company.
8. STOCKHOLDERS' On January 24, 1997, the Company's
EQUITY stockholders approved a
one-for-seventy (1:70) reverse common stock
split. On December 19,
1997, the Company's stockholders approved a
one-for-five (1:5)
reverse common stock split, and changed the
par value of the
common shares from $.01 to $.001.
Accordingly, all historical per
share amounts, references to number of
shares and the Statements of
Stockholders' Equity have been restated to
reflect these reverse splits.
9. SUBSEQUENT On December 19, 1997, the Company's
EVENTS stockholders approved a
one-for-five (1:5) reverse common stock
split, changed the par value
of the common shares from $.01 to $.001,
and created three classes
of preferred stock, par value $.001, with
other terms and preferences
to be set by the Board of Directors.
On January 5, 1998, the Company issued
20,000,000 shares of its
common stock to its sole officer and
director in exchange for services
rendered subsequent to October 31, 1997,
which were valued at
$90,000.
On January 9, 1998, the Company issued
900,000 shares of its
common stock in exchange for $9,000 cash consideration.
</TABLE>
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<PERIOD-END> OCT-31-1997
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180
10,134,034
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