U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
[X] Annual report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year ended March
31, 2000, or
[ ] 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. 2-93231-NY
FASHION TECH INTERNATIONAL, INC.
(Name of Small Business Issuer as specified in its charter)
(Formerly Portofino Investment, Inc.)
Nevada 87-0395695
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
1340 East 130 North, Springville, Utah 84663
(Address of Principal Executive Offices and Zip Code)
Issuer's Telephone Number: (801) 364-9262
Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act: None
Check whether the issuer (1) filed all reports required to be
filed by sections 13 or 15(d) of the Exchange Act during the past
12 months (or such shorter period that the issuer was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ ] No [X]
Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B 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]
The Registrant's revenues for its most recent fiscal year: $0.
The aggregate market value of voting stock held by non-
affiliates: As of the date this report is filed there is no
public market for the common stock of the issuer, so the
aggregate market value of such stock is $0.
As of May 4, 2000, the Registrant had outstanding 3,591,143
shares of Common Stock, par value $0.001.
Documents incorporated by reference: None.
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TABLE OF CONTENTS
ITEM NUMBER AND CAPTION Page
Part I
1. Description of Business 3
2. Description of Properties 6
3. Legal Proceedings 6
4. Submission of Matters to a Vote of Security Holders 6
Part II
5. Market for Common Equity and Related Stockholder 7
Matters
6. Management's Discussion and Analysis of Financial 7
Condition and Results of Operations
7. Financial Statements 7
8. Changes in and Disagreements with Accountants 8
on Accounting and Financial Disclosure
Part III
9. Directors, Executive Officers, Promoters and Control 8
Persons; Compliance with Section 16(a) of the
Exchange Act
10. Executive Compensation 9
11. Security Ownership of Certain Beneficial Owners and 9
Management
12. Certain Relationships and Related Transactions 10
13. Exhibits and Reports on Form 8-K 10
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FORWARD-LOOKING STATEMENT NOTICE
When used in this report, the words "may," "will," "expect,"
"anticipate," "continue," "estimate," "project," "intend," and
similar expressions are intended to identify forward-looking
statements within the meaning of Section 27a of the Securities
Act of 1933 and Section 21e of the Securities Exchange Act of
1934 regarding events, conditions, and financial trends that may
affect the Company's future plans of operations, business
strategy, operating results, and financial position. Persons
reviewing this report are cautioned that any forward-looking
statements are not guarantees of future performance and are
subject to risks and uncertainties and that actual results may
differ materially from those included within the forward-looking
statements as a result of various factors. Such factors are
discussed under the headings "Item 1. Description of Business,"
and "Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations," and also include general
economic factors and conditions that may directly or indirectly
impact the Company's financial condition or results of
operations.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
General
For the past four years the Company has had no active business
operations, and has been seeking to acquire an interest in a
business with long-term growth potential. The Company was
originally formed as a Utah corporation in April 1983 under the
name Portofino Investments, Inc. In January 1984, the Company
changed its name to Fashion Tech International, Inc. It has been
an inactive shell corporation for at least the past 10 years. In
April 1999, the stockholders approved a merger with Fashion Tech
International, Inc., a Nevada corporation to change the domicile
of the Company from Utah to Nevada.
The Company currently has no commitment or arrangement to
participate in a business and cannot now predict what type of
business it may enter into or acquire. It is emphasized that the
business objectives discussed herein are extremely general and
are not intended to be restrictive on the discretion of the
Company's management.
In June of 1999 the Company converted its note payable in the
principal amount of $22,000, and accrued interest to common stock
at the rate of $0.0073 per share, or a total of 3,000,000 shares.
The holder of the note was Trinity American Corporation.
Selection of a Business
The Company anticipates that businesses for possible acquisition
will be referred by 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. The Company will
not engage in any general solicitation or advertising for a
business opportunity, and will rely on personal contacts of its
officers and directors and their affiliates, as well as indirect
associations between them and other business and professional
people. By relying on "word of mouth", the Company may be
limited in the number of potential acquisitions it can identify.
While it is not presently anticipated that the Company will
engage unaffiliated professional firms specializing in business
acquisitions or reorganizations, such firms may be retained if
management deems it in the best interest of the Company.
Compensation to a finder or business acquisition firm may take
various forms, including one-time cash payments, payments based
on a percentage of revenues or product sales volume, payments
involving issuance of securities (including those of the
Company), or any combination of these or other compensation
arrangements. Consequently, the Company is currently unable to
predict the cost of utilizing such services.
The Company will not restrict its search to any particular
business, industry, or geographical location, and management
reserves the right to evaluate and enter into any type of
business in any location. The Company may
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participate in a newly organized business venture or a more
established company entering a new phase of growth or in need of
additional capital to overcome existing financial problems.
Participation in a new business venture entails greater risks
since in many instances management of such a venture will not
have proved its ability, the eventual market of such venture's
product or services will likely not be established, and the
profitability of the venture will be unproved and cannot be
predicted accurately. If the Company participates in a more
established firm with existing financial problems, it may be
subjected to risk because the financial resources of the Company
may not be adequate to eliminate or reverse the circumstances
leading to such financial problems.
In seeking a business venture, the decision of management will
not be controlled by an attempt to take advantage of any
anticipated or perceived appeal of a specific industry,
management group, product, or industry, but will be based on the
business objective of seeking long-term capital appreciation in
the real value of the Company.
The analysis of new businesses will be undertaken by or under the
supervision of the officers and directors. In analyzing
prospective businesses, management will consider, to the extent
applicable, the available technical, financial, and managerial
resources; working capital and other 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; the potential for growth and
expansion; the potential for profit; the perceived public
recognition or acceptance of products, services, or trade or
service marks; name identification; and other relevant factors.
The decision to participate in a specific business may be based
on management's analysis of the quality of the other firm's
management and personnel, the anticipated acceptability of new
products or marketing concepts, the merit of technological
changes, and other factors which are difficult, if not
impossible, to analyze through any objective criteria. It is
anticipated that the results of operations of a specific firm may
not necessarily be indicative of the potential for the future
because of the requirement to substantially shift marketing
approaches, expand significantly, change product emphasis, change
or substantially augment management, and other factors.
The Company will analyze all available factors and make a
determination based on a composite of available facts, without
reliance on any single factor. The period within which the
Company may participate in a business cannot be predicted and
will depend on circumstances beyond the Company's control,
including the availability of businesses, the time required for
the Company to complete its investigation and analysis of
prospective businesses, the time required to prepare appropriate
documents and agreements providing for the Company's
participation, and other circumstances.
Acquisition of a Business
In implementing a structure for a particular business
acquisition, the Company may become a party to a merger,
consolidation, or other reorganization with another corporation
or entity; joint venture; license; purchase and sale of assets;
or purchase and sale of stock, the exact nature of which cannot
now be predicted. Notwithstanding the above, the Company does
not intend to participate in a business through the purchase of
minority stock positions. On the consummation of a transaction,
it is likely that the present management and shareholders of the
Company will not be in control of the Company. In addition, a
majority or all of the Company's directors may, as part of the
terms of the acquisition transaction, resign and be replaced by
new directors without a vote of the Company's shareholders.
In connection with the Company's acquisition of a business, the
present shareholders of the Company, including officers and
directors, may, as a negotiated element of the acquisition, sell
a portion or all of the Company's Common Stock held by them at a
significant premium over their original investment in the
Company. It is not unusual for affiliates of the entity
participating in the reorganization to negotiate to purchase
shares held by the present shareholders in order to reduce the
number of "restricted securities" held by persons no longer
affiliated with the Company and thereby reduce the potential
adverse impact on the public market in the Company's Common Stock
that could result from substantial sales of such shares after the
restrictions no longer apply. As a result of such sales,
affiliates of the entity participating in the business
reorganization with the Company would acquire a higher percentage
of equity ownership in the Company. Public investors will not
receive any portion of the
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premium that may be paid in the foregoing circumstances.
Furthermore, the Company's shareholders may not be afforded an
opportunity to approve or consent to any particular stock buy-out
transaction.
In the event sales of shares by present shareholders of the
Company, including officers and directors, is a negotiated
element of a future acquisition, a conflict of interest may arise
because directors will be negotiating for the acquisition on
behalf of the Company and for sale of their shares for their own
respective accounts. Where a business opportunity is well suited
for acquisition by the Company, but affiliates of the business
opportunity impose a condition that management sell their shares
at a price which is unacceptable to them, management may not
sacrifice their financial interest for the Company to complete
the transaction. Where the business opportunity is not well
suited, but the price offered management for their shares is
high, management will be tempted to effect the acquisition to
realize a substantial gain on their shares in the Company.
Management has not adopted any policy for resolving the foregoing
potential conflicts, should they arise, and does not intend to
obtain an independent appraisal to determine whether any price
that may be offered for their shares is fair. Stockholders must
rely, instead, on the obligation of management to fulfill its
fiduciary duty under state law to act in the best interests of
the Company and its stockholders.
It is anticipated that any securities issued in any such
reorganization would be issued in reliance on exemptions from
registration under applicable federal and state securities laws.
In some circumstances, however, as a negotiated element of the
transaction, the Company may agree to register such securities
either at the time the transaction is consummated, under certain
conditions, or at specified times thereafter. Although the terms
of such registration rights and the number of securities, if any,
which may be registered cannot be predicted, it may be expected
that registration of securities by the Company in these
circumstances would entail substantial expense to the Company.
The issuance of substantial additional securities and their
potential sale into any trading market that may develop in the
Company's securities may have a depressive effect on such market.
While the actual terms of a transaction to which the Company may
be a party cannot be predicted, it may be expected that the
parties to the business transaction will find it desirable to
structure the acquisition as a so-called "tax-free" event under
sections 351 or 368(a) of the Internal Revenue Code of 1986, (the
"Code"). In order to obtain tax-free treatment under section 351
of the Code, it would be necessary for the owners of the acquired
business to own 80% or more of the voting stock of the surviving
entity. In such event, the shareholders of the Company would
retain less than 20% of the issued and outstanding shares of the
surviving entity. Section 368(a)(1) of the Code provides for tax-
free treatment of certain business reorganizations between
corporate entities where one corporation is merged with or
acquires the securities or assets of another corporation.
Generally, the Company will be the acquiring corporation in such
a business reorganization, and the tax-free status of the
transaction will not depend on the issuance of any specific
amount of the Company's voting securities. It is not uncommon,
however, that as a negotiated element of a transaction completed
in reliance on section 368, the acquiring corporation issue
securities in such an amount that the shareholders of the
acquired corporation will hold 50% or more of the voting stock of
the surviving entity. Consequently, there is a substantial
possibility that the shareholders of the Company immediately
prior to the transaction would retain less than 50% of the issued
and outstanding shares of the surviving entity. Therefore,
regardless of the form of the business acquisition, it may be
anticipated that stockholders immediately prior to the
transaction will experience a significant reduction in their
percentage of ownership in the Company.
Notwithstanding the fact that the Company is technically the
acquiring entity in the foregoing circumstances, generally
accepted accounting principles will ordinarily require that such
transaction be accounted for as if the Company had been acquired
by the other entity owning the business and, therefore, will not
permit a write-up in the carrying value of the assets of the
other company.
The manner in which the Company participates in a business will
depend on the nature of the business, the respective needs and
desires of the Company and other parties, the management of the
business, and the relative negotiating strength of the Company
and such other management.
The Company will participate in a business only after the
negotiation and execution of appropriate written agreements.
Although the terms of such agreements cannot be predicted,
generally such agreements will require
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specific representations and warranties by all of the parties
thereto, will specify certain events of default, will detail the
terms of closing and the conditions which must be satisfied by
each of the parties prior to such closing, will outline the
manner of bearing costs if the transaction is not closed, will
set forth remedies on default, and will include miscellaneous
other terms.
Operation of Business After Acquisition
The Company's operation following its acquisition of a business
will be dependent on the nature of the business and the interest
acquired. The Company is unable to predict whether the Company
will be in control of the business or whether present management
will be in control of the Company following the acquisition. It
may be expected that the business will present various risks,
which cannot be predicted at the present time.
Governmental Regulation
It is impossible to predict the government regulation, if any, to
which the Company may be subject until it has acquired an
interest in a business. The use of assets and/or conduct of
businesses that the Company may acquire could subject it to
environmental, public health and safety, land use, trade, or
other governmental regulations and state or local taxation. In
selecting a business in which to acquire an interest, management
will endeavor to ascertain, to the extent of the limited
resources of the Company, the effects of such government
regulation on the prospective business of the Company. In
certain circumstances, however, such as the acquisition of an
interest in a new or start-up business activity, it may not be
possible to predict with any degree of accuracy the impact of
government regulation. The inability to ascertain the effect of
government regulation on a prospective business activity will
make the acquisition of an interest in such business a higher
risk.
Competition
The Company will be involved in intense competition with other
business entities, many of which will have a competitive edge
over the Company by virtue of their stronger financial resources
and prior experience in business. There is no assurance that the
Company will be successful in obtaining suitable investments.
Employees
The Company is a development stage company and currently has no
employees. Executive officers, who are not compensated for their
time contributed to the Company, will devote only such time to
the affairs of the Company as they deem appropriate, which is
estimated to be approximately 20 hours per month per person.
Management of the Company expects to use consultants, attorneys,
and accountants as necessary, and does not anticipate a need to
engage any full-time employees so long as it is seeking and
evaluating businesses. The need for employees and their
availability will be addressed in connection with a decision
whether or not to acquire or participate in a specific business
industry.
ITEM 2. DESCRIPTION OF PROPERTIES
The Company utilizes office space at 1340 East 130 North,
Springville, Utah 84663, provided by George Horton, a officer and
director. The Company does not pay rent for this office space.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings, and to the
best of its knowledge, no such proceedings by or
against the Company have been threatened.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders in the
fourth quarter of fiscal year 2000.
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PART III
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There has been no public trading market for the Company's common
stock for at least the past ten years. Following the filing of
this report, the Company will seek out one or more stock
brokerage firms to make a market in the Company's common stock
and submit an application for quotation of the Company's common
stock on the OTC Bulletin Board operated by the National
Association of Securities Dealers, Inc., or the "Pink Sheets"
operated by the National Quotation Bureau. There is no assurance
that a trading market in the common stock will be established in
the future.
Since its inception, no dividends have been paid on the Company's
common stock. The Company intends to retain any earnings for use
in its business activities, so it is not expected that any
dividends on the common stock will be declared and paid in the
foreseeable future.
On May 4, 2000, there were 493 holders of record of the Company's
Common Stock.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Years Ended March 31, 2000 and 1999
The Company had no revenue during the last two years. The
Company had general and administrative expenses of $9,390 and
$8,555 in the fiscal years ended March 31, 2000 and 1999,
respectively. General and administrative expenses during 2000
and 1999, consisted of fees and related expenses associated with
reviving the Company and filing periodic reports under the
Securities Exchange Act of 1934. In fiscal years 2000 and 1999,
the Company recognized interest expense of $323 and $111
respectively, which represents interest on one obligation in the
principal amount of $22,000 owed to Sonos Management Corporation.
The Company realized a net loss of $9,713 in 2000 and $8,666 in
1999. The Company does not expect to generate any revenue unless
and until it acquires an interest in an operating company.
Liquidity and Capital Resources
At March 31, 2000, the Company had working capital of $4,055.
The Company's current plan is to handle the administrative and
reporting requirements of a public company, and search for
potential businesses, products, technologies and companies for
acquisition. At present, the Company has no understandings,
commitments or agreements with respect to the acquisition of any
business, product, technology or company and there can be no
assurance that the Company will identify any such business,
product, technology or company suitable for acquisition in the
future. Further, there can be no assurance that the Company
would be successful in consummating any acquisition on favorable
terms or that it will be able to profitably manage the business,
product, technology or company it acquires. The Company's
ability to pursue its plan is dependent on the continued
forbearance of its affiliated creditors and their willingness to
advance additional funds to the Company as needed.
ITEM 7. FINANCIAL STATEMENTS
The financial statements of the Company appear at the end of this
report beginning with the Index to Financial Statements on page F-1.
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ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no changes in or disagreements with accountants
in the past four years.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Directors and Officers
The following table sets forth the names, ages, and positions
with the Company for each of the directors and officers of the
Company.
Name Age Positions Since
Pam Jowett 46 President and Director 1999
Paul W. Nielsen 78 Vice President and Director 1999
George P. Horton 66 Secretary/Treasurer and 1999
Director
All directors hold office until the next annual meeting of
stockholders and until their successors are elected and qualify.
Officers serve at the discretion of the Board of Directors.
The following is information on the business experience of each
director and officer.
Pam Jowett has been self-employed for over the past five years as
a nail technician.
Paul W. Nielsen has been retired since 1984. Mr. Nielsen is
currently serving as an officer of Prestige Capital Corporation
and Fashion Tech International, Inc.
George R. Horton is a graduate of Brigham Young University in
animal husbandry and the University of Utah in secondary
education. Currently, Mr. Horton is serving as the chief
executive officer of two corporations and the secretary and
treasurer of two corporations, including Prestige Capital
Corporation. Mr. Horton is also serving as an officer and
director of numerous public companies.
Other Shell Company Activities
Ms. Jowett, Mr. Nielsen and Mr. Horton are currently officers and
directors of Prestige Capital Corporation. Ms. Jowett is an
officer and director of Business Valet Services, Inc., First
Growth Investors, Inc., and Digital Home Theater Systems, Inc.
Mr. Horton is an officer and director of MG Inc. All of the
aforementioned companies are shell corporations seeking a
business acquisition and are non-reporting, publicly held
corporations, except for Prestige Capital Corporation, which is a
reporting company. The possibility exists that one or more of
the officers and directors of the Company could become officers
and/or directors of other shell companies in the future, although
they have no intention of doing so at the present time. Certain
conflicts of interest are inherent in the participation of the
Company's officers and directors as management in other shell
companies, which may be difficult, if not impossible, to resolve
in all cases in the best interests of the Company. Failure by
management to conduct the Company's business in its best
interests may result in liability of management of the Company to
the shareholders.
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ITEM 10. EXECUTIVE COMPENSATION
The Company has no agreement or understanding, express or
implied, with any officer, director, or principal stockholder, or
their affiliates or associates, regarding employment with the
Company or compensation for services. There is no understanding
between the Company and any of its present stockholders regarding
the sale of a portion or all of the common stock currently held
by them in connection with any future participation by the
Company in a business. There are no other plans, understandings,
or arrangements whereby any of the Company's officers, directors,
or principal stockholders, or any of their affiliates or
associates, would receive funds, stock, or other assets in
connection with the Company's participation in a business. No
advances have been made or contemplated by the Company to any of
its officers, directors, or principal stockholders, or any of
their affiliates or associates.
There is no policy that prevents management from adopting a plan
or agreement in the future that would provide for cash or stock
based compensation for services rendered to the Company.
On acquisition of a business, it is possible that current
management will resign and be replaced by persons associated with
the business acquired, particularly if the Company participates
in a business by effecting a stock exchange, merger, or
consolidation. In the event that any member of current
management remains after effecting a business acquisition, that
member's time commitment and compensation will likely be adjusted
based on the nature and location of such business and the
services required, which cannot now be foreseen.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
In April 1999, the stockholders approved a 100 to 1 reverse split
of the Company's outstanding common stock. The following table
sets forth as of December 31, 1999, the number and percentage of
the outstanding shares of common stock which, according to the
information supplied to the Company, were beneficially owned by
(i) each person who is currently a director of the Company, (ii)
each executive officer, (iii) all current directors and executive
officers of the Company as a group and (iv) each person who, to
the knowledge of the Company, is the beneficial owner of more
than 5% of the outstanding common stock. Except as otherwise
indicated, the persons named in the table have sole voting and
dispositive power with respect to all shares beneficially owned,
subject to community property laws where applicable.
Common Shares Percent of Class
Principal
Shareholders
Lynn Dixon 1,150,000 32.0%
311 S. State Street, Suite 460
Salt Lake City, UT 84111
Scott Bills 900,000 25.1
1476 East 3045 South
Salt Lake City, UT 84106
Paul McAlister 900,000 25.1
485 West 40 South
Lindon, UT 84042
Clair Olsen 900,000 25.1
768 Gull Avenue
Foster City, CA 94404
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Officers and Directors
Pam Jowett -0- -0-
2508 South 1300 East
Salt Lake City, 84106
Paul W. Nielsen -0- -0-
11188 South Woodfield Road
South Jordan, Utah 84095
George P. Horton -0- -0-
1340 East 130 North
Springville, Utah 84663
All officers and directors (3 persons) -0- -0-
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Sonos Management Corporation made a loan to the Company in 1999
in the amount of $22,000. The loan bears interest at the rate of
eight percent per annum and is payable on demand. Mr. Horton is
the President and sole Director of Sonos Management Corporation.
The proceeds of the loans were and will be used to revive the
Company and cover the costs associated with bringing its
reporting obligations under the Securities Exchange Act of 1934
current.
In June 1999 Trinity American Corporation acquired the Note from
Sonos Management Corporation. The Company converted the
principal amount of the note and accrued interest to common stock
at a conversion rate of $0.0073 per share, or a total of
3,000,000. As a result of the transaction, Trinity American
Corporation acquired approximately 83.5% of the issued and
outstanding common stock of the Company. Trinity American
subsequently conveyed 2,850,000 of the shares to the persons
listed as principal shareholders under Item 11, above.
ITEM 13.
EXHIBITS AND REPORTS ON FORM 8-K
Exhibits. Copies of the following documents are included as
exhibits to this report pursuant to Item 601 of Regulation S-B.
Exhibit No. SEC Ref. No. Title of Document*
1 (3)(i) Articles of Incorporation
2 (3)(ii) By-Laws
3 (2) Articles of Merger
4 (10) Promissory Note
5 (27) Financial Data Schedules
Each of the exhibits listed is incorporated herein by this
reference to the Company's Annual report on Form 10-KSB for the
fiscal year ended March 31, 1999, except the Financial Data
Schedule, which is included in the filing.
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Form 8-K Filings. No reports on Form 8-K were filed in the last
fiscal year of 2000.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act,
the registrant caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
FASHION TECH INTERNATIONAL, INC.
Date: June 9, 2000 By: /s/ Pam Jowett, President
In accordance with the Exchange Act, this report has been
signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Dated: June 9, 2000 /s/ Pam Jowett, Director
Dated: June 9, 2000 /s/ Paul W. Nielsen, Director
Dated: June 9, 2000 /s/ George R. Horton, Director
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C O N T E N T S
Independent Auditors' Report F-2
Balance Sheet F-3
Statements of Operations F-4
Statements of Stockholders' Equity F-5
Statements of Cash Flows F-6
Notes to the Financial Statements F-7
F-1
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INDEPENDENT AUDITOR' REPORT
The Board of Directors
Fashion Tech International, Inc.
Salt Lake City, Utah
We have audited the accompanying balance sheet of Fashion Tech
International, Inc. (a development stage company) as of March 31,
2000, and the related statements of operations, stockholders'
equity and cash flows for the years ended March 31, 2000 and
1999. 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 resent
fairly, in all material respects, the financial position of
Fashion Tech International, Inc. (a development stage company) as
of March 31, 2000, and the results of its operations and its cash
flows for the years ended March 31, 2000 and 1999 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 2 to the financial statements, the Company is a
development stage company with no significant operating results
to date, which raises substantial doubt about its ability to
continue as a going concern. Management's plans with regard to
these matters are also described in Note 2. The financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
HJ & Associates, LLC
Salt Lake City, Utah
May 18, 2000
F-2
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FASHION TECH INTERNATIONAL, INC.
(A Development Stage Company)
Balance sheet
ASSETS
March 31,
2000
CURRENT ASSETS
Cash $ 4,218
Total Current Assets 4,218
TOTAL ASSETS $ 4,218
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 163
Total Current Liabilities 163
STOCKHOLDERS' EQUITY
Preferred stock authorized; 5,000,000 preferred
shares at $0.001 par value; -0- shares issued and
outstanding -
Common stock authorized; 120,000,000 common
shares at $0.001 par value; 3,591,143 shares
issued and outstanding 3,591
Capital in excess of par value 550,448
Accumulated deficit prior to April 1, 1985 (413,549)
Deficit accumulated during the development stage (136,435)
Total Stockholders' Equity 4,055
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$ 4,218
The accompanying notes are an integral part of these financial
statements.
F-3
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FASHION TECH INTERNATIONAL, INC.
(A Development Stage Company)
Statements of Operations
From the
Beginning of
Development
Stage on
For the April 1, 1985
Years Ended Through
March 31, March 31,
2000 1999 2000
(Unaudited)
REVENUES $ - $ - $ -
EXPENSES 9,390 8,555 137,945
NET LOSS (9,390) (8,555) (137,945)
OTHER (EXPENSE) INCOME
Interest expense (323) (111) (434)
Gain on disposal of assets - - 1,944
Total Other (Expense) (323) (111) 1,510
NET LOSS $ (9,713) $ (8,666) $ (136,435)
BASIC LOSS PER SHARE $ (0.00) $ (0.01)
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 3,361,635 591,143
The accompanying notes are an integral part of these financial
statements.
F-4
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FASHION TECH INTERNATIONAL, INC.
(A Development Stage Company)
Statements of Stockholders' Equity
Deficit
Accumulated
Capital in During the
Common Stock Excess of Development
Shares Amount Par Value Stage
Balance, March 31, 1985 183,063 $ 183 $ 327,382 $ (413,549)
November 5, 1985 shares issued
at $0.50 per share in
exchange for cash 108,000 108 53,892 -
November 5, 1985 shares
returned to Company treasury
and canceled (20,000) (2) (9,998) -
November 26, 1985 shares issued
at $0.50 per share in exchange
for cash 80 - 40 -
March 19, 1986 shares issued at
$0.50 per share for assets 80,000 80 39,920 -
June 13, 1986 shares issued
at par for services 20,000 2 9,998 -
October 7, 1986 shares issued
at $0.50 per share in exchange
for cash 220,000 220 109,780 -
Net loss from inception of
development stage on April 1,
1985 through March 31, 1998 - - - (118,056)
Balance, March 31, 1998 591,143 591 531,014 (531,605)
Net loss for the year ended
March 31, 1999 - - - (8,666)
Balance, March 31, 1999 591,143 591 531,014 (540,271)
April 28, 1999, shares issued
to retire notes payable and
accrued interest at $0.01
per share 3,000,000 3,000 19,434 -
Net loss for the year ended
March 31, 2000 - - - (9,713)
Balance, March 31, 2000 3,591,143 $ 3,591 $ 550,448 $ (549,984)
The accompanying notes are an integral part of these financial
statements.
F-5
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FASHION TECH INTERNATIONAL, INC.
(A Development Stage Company)
Statements of Cash Flows
From the
Beginning of
Development
Stage on
For the April 1, 1985
Years Ended Through
March 31, March 31,
2000 1999 2000
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (9,713) $ (8,666) $ (136,435)
Adjustments to reconcile net loss
to net cash used by operating
activities:
Issuance of stock for services - - 10,000
Changes in operating asset and liability
accounts:
Increase (decrease) in accounts
payable (6,238) 6,401 (1,781)
Increase (decrease) in accrued interest 323 111 434
Net Cash (Used) by Operating
Activities (15,628) (2,154) (127,782)
CASH FLOWS FROM INVESTING ACTIVITIES - - -
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of stock for assets - - 40,000
Issuance of stock for cash - - 70,000
Increase in loans payable - 22,000 22,000
Net Cash Provided by Financing Activities - 22,000 132,000
NET INCREASE (DECREASE) IN CASH (15,628) 19,846 4,218
CASH AT BEGINNING OF PERIOD 19,846 - -
CASH AT END OF PERIOD $ 4,218 $ 19,846 $ 4,218
Cash Payments for:
Income taxes $ - $ - $ -
Interest $ - $ - $ -
Non-Cash Transactions
Interest converted to common stock $ 434 $ - $ 434
Common stock issued for notes payable $ 22,000 $ - $ 22,000
The accompanying notes are an integral part of these financial
statements.
F-6
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FASHION TECH INTERNATIONAL, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2000 and 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
Fashion Tech International, Inc. (the "Company") was
organized as a Utah corporation on April 22, 1983 under
the name Portofino Investment, Inc. The name of the
Company was changed to Fashion Tech International, Inc.
on January 31, 1984. The Company was reclassified as a
development stage company as of March 31, 1985.
On April 28, 1999, the Company amended its Articles of
Incorporation changing the par value from $0.005 to
$0.001. The Company also authorized 5,000,000 shares of
preferred stock with a par value of $0.001. The Company
also changed its domicile from Utah to Nevada.
On April 28, 1999, the Company authorized a reverse stock
split on the basis of 100:1, decreasing the outstanding
shares of common stock from 59,114,300 to 591,143. They
also issued 3,000,000 shares of common stock for
conversion of debt. All references to common stock have
been retroactively restated.
b. Account Method
The Company's financial statements are prepared using the
accrual method of accounting. The Company has adopted a
March 31 year end.
c. Basic Loss Per Share
The computations of basic loss per share of common stock
are based on the weighted average number of shares issued
and outstanding at the date of the financial statements.
d. 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 statement and the reported amounts
of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
e. Cash Equivalents
The Company considers all highly liquid investments with
a maturity of three months or less when purchased to be
cash equivalents.
F-7
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FASHION TECH INTERNATIONAL, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2000 and 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
f. Provision for Taxes
At March 31, 2000, the Company had net operating loss
carryforwards of approximately $136,000 that may be
offset against future taxable income through 2020. No
tax benefit has been reported in the financial
statements, because the potential tax benefits of the net
operating loss carryforwards are offset by a valuation
allowance of the same amount.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using
generally accepted accounting principles applicable to a
going concern which contemplates the realization of
assets and liquidation of liabilities in the normal
course of business. However, the Company does not have
significant cash or other material assets, nor does it
have an established source of revenues sufficient to
cover its operating costs and to allow it to continue as
a going concern. It is the intent of the Company to seek
a merger with an existing, operating company. In the
interim, shareholders of the Company have committed to
meeting its minimal operating expenses.
F-8
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