UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE YEAR ENDED APRIL 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) FOR THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the Transition Period From
____________________ to _________________.
Commission File Number: 0-13628
TRIDON ENTERPRISES INCORPORATED
(Exact name of registrant as specified in its charter)
Colorado 13-3183646
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
11601 Wilshire Blvd., Suite 2040, Los Angeles, CA 90025
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code:
(310) 726-3559
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON SHARES, PAR VALUE $.001 PER SHARE
Indicate by a check mark whether the Registrant (1) has filed all reports
required to be filed by section 12 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) 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. [x]
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of September 12, 2000 was approximately $1,292,237. The average of
the bid and asked price of Registrant's common stock on September 12, 2000 was
$0.03.
At April 30, 2000, there were 79,594,734 shares outstanding of the Registrant's
common stock, $.001 par value.
<PAGE>
TABLE OF CONTENTS
Item Page
PART I
Item 1. Business.................................................. 2
Item 2. Properties................................................ 5
Item 3. Legal Proceedings......................................... 5
Item 4. Submission of Matters to a Vote of Security Holders....... 6
PART II
Item 5. Market for the Registrant's Common Stock and Related
Securities Matters....................................... 7
Item 6. Selected Financial Data................................... 7
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................... 8
Item 8. Financial Statements (sub pages F-1 - F-26)............... 10
Item 9. Disagreements on Accounting and Financial Disclosure...... 11
PART III
Item 10. Directors and Officers of the Registrant.................. 11
Item 11. Executive Compensation.................................... 12
Item 12. Security Ownership of Certain Beneficial Owners
and Management........................................... 12
Item 13. Certain Relationships and Related Transactions............ 13
PART IV
Item 14. Exhibits, Financial Statement, Schedules, and Reports
on Form 8-K.............................................. 14
1
<PAGE>
PART I
ITEM 1. BUSINESS
General Development of Business
On October 10, 1989, a special meeting of the shareholders of Hammer Computer
Systems, Inc. (HCSI), a Colorado Corporation incorporated in 1983, was held to
consider and vote to ratify an Agreement and Plan of Merger, signed on February
22, 1989, to merge HCSI with Tridon Development Corporation, a Missouri
Corporation, organized in 1988. Under the Agreement and Plan of Merger, Tridon
Development Corporation was merged into HCSI, HCSI being the surviving
Corporation. HCSI amended the Articles of Incorporation, changed the name of
HCSI to Tridon Corporation. These propositions were passed by the shareholders
on October 10, 1989.
Pursuant to the Plan of Merger, HCSI exchanged 600 shares of common stock in
HCSI for each of 30,000 shares of common stock of Tridon Development Corporation
outstanding. This increased the outstanding shares of common stock in Tridon
Corporation from 17,270,433 to 35,270,433. Authorized shares of common stock
remained at 100,000,000.
Hammer Computer Systems, Inc. a Colorado Corporation had been inoperative since
August, 1986, at which time it suspended all operations and ceased doing
business due to low sales levels and continuing losses, the Company was unable
to remain in business.
In 1991 Paul Ebeling, the Company's CEO, identified a market for a non-surgical
hair replacement prosthesis to be used by medical doctors to correct
unsuccessful scalp reduction surgery, unsuccessful hair transplant surgery and
the unsuccessful application of prescription drugs. The Company embarked on
developing a process for manufacturing the prosthesis. The management of the
Company estimates that it will require approximately $500,000 in working capital
to successfully start the manufacturing process.
Toward this end, the Board Of Directors on February 10, 1992, authorized the
issuance of convertible promissory notes. The proceeds of the notes were used to
develop suitable reliable marketable product and for operating capital to fund
development and various corporate expenses. The interest is 6% per annum to be
paid only if called by the Company or redeemed by the holder three years
subsequent to issue. Accrued interest on any portion of the loan converted to a
new issue of preferred stock shall be forfeited at the time of conversion.
The principle of the notes is convertible into preferred stock at the rate of
one share of preferred for each $1.00 note purchased. Notes totaling $48,000 in
principle have been issued as of April 30, 1994.
2
<PAGE>
The Company announced on September 21, 1993, the appointment of Harold A.
Lancer, M.D. as Medical Director of its Vertex Hair System. Dr Lancer is a
Fellow of the American Academy of Dermatology. A native of Montreal, Quebec,
Canada, he was educated at Brandeis University, the University of California at
San Diego Medical School, Harvard University Medical School, Tel Hashomen
Hospital, Israel and St. Johns Hospital for Diseases of the Skin, London,
England. Dr. Lancer has international experience in the specialties of
dermatology and cosmetic surgery. Dr. Lancer authored and presented a paper on
the Vertex Hair System to the Pacific Dermatology Society in Monterey,
California on September 10, 1993. Dr. Lancer is a member of the medical and
scientific team developing Vertex(R) products.
The Company formalized its relationship with California Cybernetics Corporation
for the implementation of its design, engineering, manufacturing and software
applications for its computer-aided flexible manufacturing processes. All
patentable aspects, including software and programming, of California
Cybernetics' work for the Company's Vertex(R) system are the sole property of
Tridon Enterprises Incorporated.
Management, Dr. Lancer and California Cybernetics Corporation are confident that
they can successfully develop Vertex(R).
On January 20, 1994 the stockholders of the Company in a special meeting
approved a $1,000,000 offering of 7% cumulative convertible preferred stock. On
June 7,1994, the Company issued a private placement memorandum for the offering.
Subsequent to July 31, 1995 the Company received $188,000 for the purchase of
the preferred stock. The Company plans to use the proceeds of this placement for
the development of the first flexible manufacturing devise for Vertex(R).
The Vertex does not have a base as used in normal hairpieces, but the hair
appears to be growing directly from the scalp and there is no feeling of an
object on one's head. Vertex(R) has 100% adhesion and can remain on for
approximately one month with no special maintenance, after which it is replaced.
Through Vertex's(R) unique locking system, human hair fibers are attached
directly to synthetic skin. The substrate is virtually invisible. The synthetic
skin is also moisture vapor permeable. It also may reduce the effect of the
sun's damaging ultraviolet rays. Using advancements in computer-aided flexible
manufacturing, Vertex(R) can be made consistently and less expensively than
competitive products. With programmed information about a person's skin, natural
hair, age and body chemistry, robotics manufacturing allows an individual to
obtain the Vertex(R) on short notice, from anywhere in the world.
Prototypes were completed in the summer of 1994. Initial clinical tests were
completed and the professional paper written by Dr. Lancer later in the year.
Development is continuing. In February 1997 the Company began an 18-month
testing project in preparation for a market roll out of Vertex Hair for Men. On
February 25, 1997 the company incorporated Vertex Corporation, a Nevada
corporation, as a wholly-owned subsidiary.
3
<PAGE>
On June 6, 1993, Tridon issued 2,000,000 shares of its common stock in exchange
for 100% of the common shares (10,000,000) of Polaris Pictures Corporation
(Polaris), a California Corporation, pursuant to a Memorandum of Agreement dated
June 1, 1992. The assets of Polaris included six screen plays which suitable for
television or motion pictures and an interest in a pleasure yacht. On April 29,
1995 Tridon irrevocably transferred to a trust 100% of its shares of Polaris.
In February 1997 the Company began a 18 month testing project in preparation for
a market roll out of Vertex Hair for Men. On February 25, 1997 the company
incorporated Vertex Corporation, a Nevada corporation, as a wholly owned
subsidiary.
In September 1997 management recognized the need for a separate hair enhancement
prosthesis for women and began development of the products and a marketing plan
around the direct response method. During the year the product was designed,
prototyped and tested samples . Manufacturing arrangements are being negotiated
with suppliers in Asia. A trademark was applied for Hollywood Hair and it's
various products. A thirty-minute infomercial show was produced. Test marketing
is being planned in selected markets in the 4th quarter of 1998 for a Spring
1999 roll-out.
From June 1998 through January 31, 1999, the Company engaged in discussions with
various telecommunications firms in efforts to reorganize itself as a provider
of long distance telecommunications voice and data services. The change in the
focus of business development was believed by management to be the best strategy
to enhance shareholder value. To that end, the Company incorporated a new wholly
owned subsidiary known as Tridon Communications Corporation and announced the
spin-off of Vertex Corporation, another wholly owned subsidiary, to its
shareholders. The spin-off will only occur if the Company is able to transact a
merger or consolidation with another entity that can further the interests of
the Company and its shareholders.
On April 21, 1999, Mr. Paul Ebeling, the Chief Executive Officer and Chairman of
the Board of Directors of the Company tendered his resignation from all
positions with the Company. The resignations were accepted by the remaining
Board of Directors when tendered and the resignations became effective
immediately. Kevin Welch was nominated as interim Chief Executive Officer and
Chairman of the Board pending the election of directors at the next annual
meeting of shareholders. The resignation of Mr. Ebeling stems from personal
matters involving Mr. Ebeling that are unrelated to the Company. However, in
light of the nature of the personal issues confronting Mr. Ebeling, the
remaining Board of Directors believed it to be in the best interests of the
Company that Mr. Ebeling forthwith resign. As of April 21, 1999, Mr. Ebeling
will have no further involvement with the Company.
4
<PAGE>
On August 2, 1999, Tridon Enterprises, Inc. (the "Company") entered into an
agreement of reorganization with Satellite Link Communications, Inc., a
California Corporation. On May 30, 2000, prior to the effective date of the
agreement, management of Satellite Link Communications, Inc. requested a release
from the agreement due internal management disputes interfering with the
Satellite Link Communications' ability to execute its business plan. On June 1,
2000, the Board of Directors of Tridon Enterprises, Inc. accepted Satellite Link
Communications, Inc. request and granted a release from the agreement of
reorganization dated August 2, 1999.
On June 6, 2000, Tridon Enterprises, Inc. (the "Company") entered into an
agreement of reorganization with BzAds, Inc. ("BzAds"), a Delaware Corporation.
To accomplish the acquisition, the Company intends to issue shares of its voting
common stock to the shareholders of BzAds in exchange of all of the issued and
outstanding shares of common stock of BzAds. BzAds shall receive that number of
shares of common stock of the Company following the merger that will result in
BzAds owning ninety five percent (95%) of the issued and outstanding shares of
the Company following the acquisition.
The Reorganization Agreement requires that the Company cause a 1 for 40
reverse stock split to occur prior to the Closing and that the Shareholders
approve the same at the next annual meeting. To that end, the company is
presently preparing a proxy statement for delivery to shareholders of record
following receipt of approval of the same from the Commission. The Company
anticipates the completion of the acquisition with BzAds to be completed on or
before October 31, 2000. However, both the Company and BzAds have agreed that
this date may be extended by mutual consent of parties.
ITEM 2. PROPERTIES
On August 15, 1993, the registrant leased office space from Palm Plaza
Associates, for space located 136 South Palm Drive, Beverly Hills, California
for $1600 per month. The aforementioned lease expired on August 14, 1994 and
continued on a month to month basis at the rate of $1,550 per month through
April 30, 1996. On April 21, 1999, new management collected the files and
records from the former office of the Company. The Company has since moved its
official address to 11601 Wilshire Blvd., suite 2040, Los Angeles, California,
at the offices of its accounting firm London & Co.
ITEM 3. LEGAL PROCEEDINGS
The following sets forth legal proceedings involving the Company:
Coldwater Capital, LLC v Tridon Enterprises, Inc.
The Company was recently served with a complaint filed by Coldwater
Capital, LLC ("CCL") in the Superior Court for the State of California, bearing
case number SC057089, in which the CCL is seeking both compensatory and punitive
damages in excess of ten million dollars ($10,000,000.00). The complaint alleges
that the Company offered to sell two million (2,000,000) shares of its common
stock to CCL in exchange for consideration of ten thousand dollars ($10,000.00).
On September 9, 1999, the Company executed a settlement and release agreement
with CCL. Under the terms of the settlement, the Company obtained a dismissal of
the lawsuit and issued CCL two million (2,000,000) restricted common shares.
5
<PAGE>
Lucas Plaza Associates v Tridon Enterprises, Inc.
In 1989, the Company was sued by Lucas Plaza Associates ("LPA") in the
Circuit Court for the State of Missouri, bearing case number 902-2217. LPA has
alleged that the Company is in breach of contract for lease obligations on
property located in St. Louis, Missouri. While the case lay dormant for many
years, LPA has recently begun the prosecution of the case and the Company is
defending the action. The complaint filed by LPA is seeking both compensatory
and punitive damages of one hundred ninety six thousand six hundred dollars
($196,600). The Company was informed that LPA obtained a judgment against the
Company in the amount of $196,600 by way of a motion for summary judgment filed
by LPA. On December 21, 1999, the Company executed a release of all claims
agreement with LPA in exchange for three million (3,000,000) restricted common
shares. Under the terms of the agreement, LPA filed a full satisfaction of
judgment in the Circuit Court in the State of Missouri.
J. Kujawa v Tridon Enterprises, Inc.
In 1989, the Company was sued by James Kujawa ("JK") in the Circuit Court
for the State of Missouri, bearing case number 902-02138. JK has alleged that
the Company is indebted to JK for performance of labor and materials supplied
for buildout of leased property space located in St. Louis, Missouri. While the
case lay dormant for many years, JK has recently begun the prosecution of the
case and the Company is defending the action. The complaint filed by JK is
seeking both compensatory and punitive damages of one hundred sixty two thousand
nine hundred twenty-two dollars ($162,922). The Company was informed that JK
obtained a judgment against the Company in the amount of $162,922 by way of a
motion for summary judgment filed by JK. On May 17, 2000 the Company executed a
settlement and mutual release agreement with JK. Under the terms of the
settlement and mutual release agreement, JK agrees to file a full satisfaction
of judgment in the Circuit Court in the State of Missouri in exchange for fifty
thousand dollars ($50,000) and two hundred and twenty five thousand (225,000)
restricted common shares of the Company's stock following the reorganization
with BzAds.com, Inc.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Subsequent to the year end, the Company entered into a "Plan of Reorganization"
with BzAds.com, Inc. The agreement calls for the Company to do a reverse stock
split and exchange its stock for the stock of BzAds.com, Inc. BzAds.com, Inc.
will become a subsidiary of Tridon Enterprises. The Company has prepared a proxy
statement and will file for approval with the Securities and Exchange
Commission. As of the date of this report the agreement has not been finalized.
6
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Registrant's common stock is traded in the over-the counter market. The
symbol for this stock is TEIM. Set forth below are the high and low sale prices
for the Common Stock of the Company for each quarterly period for the last two
fiscal years, as reported on the OTCBB.
High Low
----- -----
2000
quarter ended March 31, 2000 $.20 $.03
Quarter ended June 30, 2000 $.138 $.038
1999
quarter ended March 31, 1999 $.74 $.12
quarter ended June 30, 1999 $.47 $.06
quarter ended September 30, 1999 $.082 $.031
quarter ended December 31, 1999 $.064 $.033
1998
quarter ended September 30, 1998 $.10 $.021
quarter ended December 31, 1998 $.26 $.021
Such quotations reflect inter-dealer prices, without retail mark-up,
markdown or commissions and may not necessarily represent actual transactions.
The Registrant has not in the past, nor does it currently intend to pay cash
dividends on its common stock.
ITEM 6. SELECTED FINANCIAL DATA
Balance Sheet Data:
------------------
April 30, April 30, April 30, April 30, April 30,
1996 1997 1998 1999 2000
--------- --------- --------- --------- ----------
Total Assets $ 59,641 $256,672 $184,399 $815,057 $ 52,099
Working
Capital
(deficit) 55,277 18,936 682 1,031 1,250
Long-term
obligations 0 0 0 0 0
Stockholder's
equity
(deficit) (85,326) 174,961 1,257 300,749 (353,185)
Cash
dividends per
common share 00.00 00.00 00.00 00.00 00.00
Tangible Book
Value per share 00.001 00.001 00.001 00.001 00.001
7
<PAGE>
Statement of Operations Data:
----------------------------
Year end Year end Year end Year end Year end
April 30, April 30, April 30, April 30, April 30,
1996 1997 1998 1999 2000
--------- --------- --------- --------- ----------
Revenues $ 00.00 $ 00.00 $ 00.00 $ 00.00 $ 00.00
Income
(loss) 3,666,424 (2,072,867) (1,857,604) (2,990,515) (1,197,634)
Income (loss)/
share (0.02) 0.42 (0.08) (0.05) (0.015)
ITEM 7. MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
On August 2, 1999, Tridon Enterprises, Inc. (the "Company") entered into an
agreement of reorganization with Satellite Link Communications, Inc., a
California Corporation. On May 30, 2000, prior to the effective date of the
agreement, management of Satellite Link Communications, Inc. requested a release
from the agreement due internal management disputes interfering with the
Satellite Link Communications' ability to execute its business plan. On June 1,
2000, the Board of Directors of Tridon Enterprises, Inc. accepted Satellite Link
Communications, Inc. request and granted a release from the agreement of
reorganization dated August 2, 1999.
On June 6, 2000, Tridon Enterprises, Inc. (the "Company") entered into an
agreement of reorganization with BzAds, Inc. ("BzAds"), a Delaware Corporation.
To accomplish the acquisition, the Company intends to issue shares of its voting
common stock to the shareholders of BzAds in exchange of all of the issued and
outstanding shares of common stock of BzAds. BzAds shall receive that number of
shares of common stock of the Company following the merger that will result in
BzAds owning ninety five percent (95%) of the issued and outstanding shares of
the Company following the acquisition.
As of the date of this filing, the authorized capitalization of the Company
consists of 100,000,000 shares of Common Stock, with a par value of $.001 per
share and there are 78,894,734 shares issued and outstanding. The Company also
has 20,000,000 shares of Convertible Preferred Stock, with a par value of $.001
per share, of which 53,300 shares are issued and outstanding as of this date of
this filing.
8
<PAGE>
The Reorganization Agreement requires that the Company cause a 1 for 40
reverse stock split to occur prior to the Closing and that the Shareholders
approve the same at the next annual meeting which is scheduled for July 31,
2000. To that end, the company is presently preparing in proxy statement for
delivery to shareholders of record following receipt of approval of the same
from the Commission. Following the acquisition, the Company shall have
approximately forty million shares of common stock outstanding of which
approximately two million shall be owned by shareholders of record as of the
date of the receipt of shareholder approval of the proposed acquisition.
Following the completion of the acquisition, BzAds shall become a wholly-
owned subsidiary the Company and BzAds shall continue to operate as a separate
legal entity. BzAds shall take such steps, in cooperation with the Company, as
may be reasonably required to effectuate the acquisition, including the filing
of all required documents. Following the consummation of the acquisition, the
Officers and the Directors of the Company shall be reconstituted and those
individuals not remaining shall resign and shall tender their written
resignations to the Company. Following the receipt of shareholder approval of
the acquisition, the shareholders of the Company shall elect a new board of
directors. This is scheduled for the next shareholder meeting and shall be
included in the proxy materials the Company will file shortly with the
Commission.
The proposed acquisition is subject to certain condition precedents and the
completion of certain items of due diligence as between the Company and BzAds.
To accomplish, the Company and BzAds will permit their authorized
representatives to have full access to the premises and books, files and records
of each other at any reasonable time and in any reasonable manner, and will
furnish each other at such time such financial and operating data and other
information with respect to its business and properties as each shall reasonably
request so that the due diligence and pre-acquisition contingencies can
completed.
The Company anticipates the completion of the acquisition with BzAds to be
completed on or before October 31, 2000. However, both the Company and BzAds
have agreed that this date may be extended by mutual consent of parties.
LIQUIDITY AND CAPITAL RESOURCES
The Company's auditors has expressed uncertainty to continue as a going
concern. The Company and its subsidiaries, have suffered substantial losses
since inception. In order to continue as a going concern, the Company is
dependent upon management's ability to raise capital from various sources,
including loans from shareholders, advances from officers and the development of
an ongoing source of revenue.
In efforts to develop an ongoing source of revenue, the Company executed a
reorganization agreement with BzAds.com, Inc. on June 6, 2000. Should the
reorganization with BzAds.com, Inc. fail to finalize, the Company's future is
uncertain as to the ability to meet the financial commitments required to
maintain current SEC filings and to meet working capital requirements.
9
<PAGE>
ITEM 8. Financial Statements
TRIDON ENTERPRISES, INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2000 AND 1999
Table of Contents
Page
Independent Auditors' Report F-1
Prior Independent Auditors' Report F- 2
Consolidated Balance Sheets F-3 - F-4
Consolidated Statements of Operations F-5 - F-6
Consolidated Statements of Changes in Stockholders'
Equity (Deficit) F-7 - F-11
Consolidated Statements of Cash Flows F-12 - F-15
Notes to Consolidated Financial Statements F-16 - F-26
10
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Tridon Enterprises, Incorporated and Subsidiaries
We have audited the accompanying consolidated balance sheets of Tridon
Enterprises, Incorporated and subsidiaries (companies in the development stage)
as of April 30, 2000 and 1999, and the related statements of operations, changes
in stockholders' equity (deficit), and cash flows for the years ended April 30,
2000, 1999 and 1998. These financial statements are the responsibility of the
Companies' management. Our responsibility is to express an opinion on these
financial statements based on our audits. We did not audit the financial
statements of Vertex Corporation, a wholly-owned subsidiary, for the year ended
April 30, 1998, which statements reflect total revenues of $0. Those statements
were audited by other auditors whose report has been furnished to us, and our
opinion, insofar as it relates to the amounts included for Vertex Corporation
for the year ended April 30, 1998, is based solely on the report of the other
auditors. We did not audit the Tridon Enterprises, Incorporated statements of
operations, changes in stockholders= equity (deficit), and cash flows for the
period from the inception of the development stage to April 30, 1994. Those
financial statements were audited by another auditor, whose report has been
furnished to us, and our opinion, insofar as it relates to the amounts from the
inception of the development stage to April 30, 1994, is based solely on the
report of the other auditor.
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 and the report of the other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of the other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of Tridon Enterprises Incorporated and subsidiaries
(companies in the development stage) as of April 30, 2000 and 1999, and the
results of their operations and their cash flows for the years ended April 30,
2000, 1999 and 1998 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company and its subsidiaries will continue as a going concern. As discussed in
Note 10 to the financial statements, there is substantial doubt about the
ability of the Company and Subsidiaries to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of that uncertainty.
/s/ Caldwell, Becker, Dervin, Petrick & Co., L.L.P.
CALDWELL, BECKER, DERVIN, PETRICK & CO., L.L.P.
August 29, 2000
F-1
<PAGE>
CONRAD NAGEL
CERTIFIED PUBLIC ACCOUNTANT
3761 EAST LINCOLNWAY, SUITE 504
CHEYENNE, WY 82001
August 12,1994
To the Stockholders and Board of Directors of Tridon Corporation
I have audited the accompanying balance sheets of Tridon Corporation (a
development stage company) as of April 30, 1994 and April 30, 1993 and the
related statements of operations , changes in stockholders equity, and cash
flows for the two fiscal years ended April 30, 1994 and April 30, 1993. These
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I 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 bases, 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.
I believe that my audit provides a reasonable basis for my opinion.
The accompanying financial statements have been prepared assuming that the
Company will continue. The Company has suffered recurring losses since inception
that raises substantial doubt about its ability to continue as a going concern.
The continuation of the Company as a going concern is dependent on future
developments and profitable operations. The financial statements do not include
any adjustments relating to the recoverability of assets and classification of
any liabilities that might be necessary should the Company be unable to continue
in existence, which are not now identifiable. In my opinion, subject to the
potential adjustments to the financial statements, if any, which may result from
the outcome of the uncertainty discussed in the preceding paragraph, the
financial statements referred to above presently fairly the financial position
of Tridon Corporation as of April 30, 1994 and 1993 and the results of
operations and cash flows, in conformity with generally accepted principles.
F-2
<PAGE>
<TABLE>
<CAPTION>
TRIDON ENTERPRISES, INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
CONSOLIDATED BALANCE SHEETS
ASSETS
April 30,
-------------------------------
2000 1999
-------------- --------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 1,250 $ 1,031
Note receivable and interest receivable, 277,310 275,000
less allowances for uncollectible amounts (277,310) (275,000)
Inventory -- 7,506
Prepaid advertising costs -- 36,000
Prepaid consulting fees -- 752,250
Prepaid expense -- 2,310
Loans receivable and related interest 37,567 --
-------------- --------------
Total Current Assets 38,817 799,097
-------------- --------------
PROPERTY AND EQUIPMENT, AT COST 25,462 25,462
Accumulated depreciation (12,180) (9,502)
-------------- --------------
Net Property and Equipment 13,282 15,960
-------------- --------------
Total Assets $ 52,099 $ 815,057
============== ==============
</TABLE>
See Accompanying Auditors' Report
See Accompanying Notes to the Financial Statements
F-3
<PAGE>
<TABLE>
<CAPTION>
TRIDON ENTERPRISES, INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
CONSOLIDATED BALANCE SHEETS (CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
April 30,
-------------------------------
2000 1999
-------------- --------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 232,671 $ 342,794
Advances from officers 13,600 130,578
Advances from shareholder 119,613 1,536
Advances to Vertex Marketing 39,400 39,400
-------------- --------------
Total Current Liabilities 405,284 514,308
-------------- --------------
COMMITMENTS AND CONTINGENCIES -- --
-------------- --------------
Total Liabilities $ 405,284 $ 514,308
-------------- --------------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, 7% cumulative convertible,
par value $.001, 20,000,000 shares authorized,
53,300 and 83,300 shares issued and outstanding
respectively 53 83
Common stock, $.001 par value, 100,000,000
shares authorized, 79,594,734 and 67,994,734
shares issued and outstanding, respectively 79,595 67,995
Additional paid-in capital 12,563,784 12,030,854
Deficit accumulated during development stage (12,996,617) (11,798,183)
-------------- --------------
Total Stockholders' Equity (Deficit) (353,185) 300,749
-------------- --------------
Total Liabilities and
Stockholders' Equity (Deficit) $ 52,099 $ 815,057
============== ==============
</TABLE>
See Accompanying Auditors' Report
See Accompanying Notes to the Financial Statements
F-4
<PAGE>
<TABLE>
<CAPTION>
TRIDON ENTERPRISES, INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the For the For the
Year Year Year
Inception To Ended Ended Ended
April 30, April 30, April 30, April 30,
2000 2000 1999 1998
-------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
REVENUE
Net sales $ 151,729 $ -- $ -- $ --
Cost of sales 182,581 -- -- --
-------------- ------------ ------------- ------------
Gross (Loss) (30,852) -- -- --
-------------- ------------ ------------- ------------
OPERATING EXPENSES
General and administrative 6,184,167 426,685 1,644,267 841,314
Consulting fees 752,250 752,250 -- --
Research and development 132,697 -- -- --
Computer software
development costs 630,066 -- -- --
Interest 869,175 9 -- --
-------------- ------------ ------------- ------------
Total Operating Expenses 8,568,355 1,178,944 1,644,267 841,314
-------------- ------------ ------------- ------------
Net (Loss)from Operations (8,599,207) (1,178,944) (1,644,267) (841,314)
-------------- ------------ ------------- ------------
OTHER INCOME (EXPENSES)
Loan fees related to common
stock issued (1,049,016) -- (239,016) --
Officer's salary related to
common stock issued (1,157,328) -- (748,305) --
Interest 94,099 -- -- 8,333
Casualty loss - boat (3,000,000) -- -- --
Gain on settlement 411,495 -- -- --
Forgiveness of interest 8,901 -- -- --
Forgiveness of debt 123,994 --
Realized gain (loss) on
disposition of marketable
securities 2,720 -- 51,375 3,677
Loss on permanent impairment
of Securities (1,120,050) -- -- (1,027,500)
Miscellaneous 7,516 3,120 976 --
Bad debt expense (353,732) (2,310) -- --
Litigation settlement (429,978) (19,500) (410,478) --
-------------- ------------ ------------- ------------
Total Other Income
(Expenses) (6,461,379) (18,690) (1,345,448) (1,015,490)
(Loss) from Continuing
Operations Before Income
Tax (Provision) Benefit (15,060,586) (1,197,634) (2,989,715) (1,856,804)
</TABLE>
F-5
<PAGE>
<TABLE>
<CAPTION>
TRIDON ENTERPRISES, INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
For the For the For the
Year Year Year
Inception To Ended Ended Ended
April 30, April 30, April 30, April 30,
2000 2000 1999 1998
------------ --------------- -------------- ------------
<S> <C> <C> <C> <C>
(Provision) Benefit for
Income Taxes
Current $ 81,005 $ (800) $ (800) $ (800)
Deferred -- -- -- --
------------- --------------- -------------- ------------
(Loss) from Continuing
Operations (14,979,581) (1,198,434) (2,990,515) (1,857,604)
Gain on Disposal of Segment 3,836,964 -- -- --
Loss on Discontinued
Operations (1,854,000) -- -- --
------------- --------------- -------------- ------------
Net (Loss) $(12,996,617) $ (1,198,434) $ (2,990,515) $(1,857,604)
============= =============== ============== ============
(LOSS) PER SHARE $ (.02) $ (.05) $ (.05)
=============== ============== ============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING DURING THE
PERIOD $ 73,718,844 $ 54,796,395 $35,115,734
=============== ============== ============
</TABLE>
See Accompanying Auditors' Report
See Accompanying Notes to the Financial Statements
F-6
<PAGE>
<TABLE>
<CAPTION>
TRIDON ENTERPRISES, INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED APRIL 30, 1988 TO 2000
Common Preferred
------------------------------- --------------------------- (Deficit) Total
During the Common Stockholders'
Par Paid in Par Paid in Development Stock Equity
Shares Value Capital Shares Value Capital Stage Subscribed (Deficit)
---------- ------- ---------- -------- ------- -------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at inception -- $ -- $ -- $ -- $ --
Common stock issued 1,727,043 1,727 4,166,828 4,168,555
Net losses from inception
to April 30, 1988 -- -- -- (4,267,549) (4,267,549)
---------- ------- ---------- -------- ------- -------- ------------ ---------- -------------
Balances at April 30, 1988 1,727,043 1,727 4,166,828 (4,267,549) (98,994)
Net income for the year
April 30, 1989 -- -- -- -- --
---------- ------- ---------- -------- ------- -------- ------------ ---------- -------------
Balances at April 30, 1989 1,727,043 1,727 4,166,828 (4,267,549) (98,994)
Merger on October 10,
1989 with Tridon
Development Corporation 1,800,000 1,800 (4,964) -- (3,164)
Net income for the year
April 30, 1990 -- -- -- 127,339 127,339
---------- ------- ---------- -------- ------- -------- ------------ ---------- -------------
Balances at April 30, 1990 3,527,043 3,527 4,161,864 (4,140,210) 25,181
Net loss for the year
April 30, 1991 -- -- -- (181) (181)
---------- ------- ----------- -------- ------- -------- ------------ ---------- -------------
Balances at April 30, 1991 3,527,043 3,527 4,161,864 (4,140,391) 25,000
Net loss for the year
April 30, 1992 -- -- -- (14,546) (14,546)
---------- ------- ---------- -------- ------- -------- ------------ ---------- -------------
Balances at April 30, 1992 3,527,043 3,527 4,161,864 (4,154,937) 10,454
</TABLE>
See Accompanying Auditors' Report
See Accompanying Notes to the Financial Statements
F-7
<PAGE>
<TABLE>
<CAPTION>
TRIDON ENTERPRISES, INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED APRIL 30, 1988 TO 2000
(CONTINUED)
Common Preferred
------------------------------- ----------------------------- (Deficit) Total
During the Common Stockholders'
Par Paid in Par Paid in Development Stock Equity
Shares Value Capital Shares Value Capital Stage Subscribed (Deficit)
---------- ------- ---------- --------- ------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net loss for the year
April 30, 1993 -- $ -- $ -- $(3,180,791) $ (3,180,791)
---------- ------- ----------- --------- ------- ---------- ------------ ---------- -------------
Balances at April 30, 1993 3,527,043 3,527 4,161,864 (7,335,728) (3,170,337)
Acquisition of Polaris
Pictures Corporation
on June 6, 1993 200,000 200 $ 39,800 40,000
Stock bonuses 330,000 330 65,670 66,000
Net loss for the year
April 30, 1994 -- -- -- (582,494) (582,494)
---------- ------- ---------- --------- ------- ---------- ------------ ---------- -------------
Balances at April 30,
1994 - consolidated 4,057,043 4,057 4,267,334 (7,918,222) (3,646,831)
Common stock issued 160,000 160 242,840 243,000
Preferred stock issued 33,000 33 163,288 163,321
Common stock subscribed (225,000) (225,000)
Net loss for the year
April 30, 1995 -- -- -- (625,399) (625,399)
---------- ------- ---------- --------- ------- ---------- ------------ ---------- -------------
Balances at April 30, 1995 4,217,043 4,217 4,510,174 33,000 33 163,288 (8,543,621) (225,000) (4,090,909)
Common stock issued 5,782,991 5,783 122,876 128,659
Preferred stock issued 50,300 50 210,450 210,500
Net income for the year
April 30, 1996 -- -- -- 3,666,424 3,666,424
---------- ------- ---------- --------- ------- ---------- ------------ ---------- -------------
</TABLE>
See Accompanying Auditors' Report
See Accompanying Notes to the Financial Statements
F-8
<PAGE>
<TABLE>
<CAPTION>
TRIDON ENTERPRISES, INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED APRIL 30, 1988 TO 2000
(CONTINUED)
Common Preferred
-------------------------------- ---------------------------- (Deficit) Total
During the Common Stockholders'
Par Paid in Par Paid in Development Stock Equity
Shares Value Capital Shares Value Capital Stage Subscribed (Deficit)
---------- ------- ---------- ------- ------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at April 30,1996 10,000,034 $10,000 $4,633,050 83,300 $ 83 $ 373,738 $ (4,877,197) $ (225,000) $ (85,326)
Common stock issued 4,641,333 4,641 438,809 443,450
Common stock issued in
exchange for Madera
International, Inc.stock 2,000,000 2,000 375,200 377,200
Common stock issued in
exchange for services
rendered 1,436,667 1,437 156,597 158,034
Common stock issued in
exchange for services
rendered 9,000,000 9,000 891,000 900,000
Common stock issued for
increase in advances
to officers 4,547,700 4,548 449,922 454,470
Net loss for the year
April 30, 1997 -- -- -- (2,072,867) (2,072,867)
----------- ------ ---------- ------- ------- ---------- ----------- ---------- ------------
Balances at April 30, 1997 31,625,734 31,626 6,944,578 833,000 83 373,738 (6,950,064) (225,000) 174,961
Common stock issued 983,333 983 64,250 65,233
Common stock issued in
exchange for services
rendered 6,566,667 6,567 584,600 591,167
Common stock issued in
exchange for future
compensation 3,100,000 3,100 275,900 (279,000) --
Paid in capital -
non-reciprocal transfer 1,027,500 1,027,500
</TABLE>
See Accompanying Auditors' Report
See Accompanying Notes to the Financial Statements
F-9
<PAGE>
<TABLE>
<CAPTION>
TRIDON ENTERPRISES, INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED APRIL 30, 1988 TO 2000
(CONTINUED)
Common Preferred
------------------------------- ----------------------------- (Deficit) Total
During the Common Stockholders'
Par Paid in Par Paid in Development Stock Equity
Shares Value Capital Shares Value Capital Stage Subscribed (Deficit)
---------- ------- ---------- -------- ------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Consolidated net (loss)
for the year
April 30, 1999 -- $ -- $ -- $ $ $(1,857,604) $ (1,857,604)
----------- ------- ---------- -------- ------- --------- ------------- ---------- ------------
Balances at April 30,1999 42,275,734 42,276 8,896,828 83,300 83 373,738 (8,807,668) (504,000) 1,257
Common stock issued 5,210,000 5,210 79,412 84,622
Cancellation of common
stock (3,100,000) (3,100) (275,900) 279,000 --
Common stock issued in
exchange for services
rendered 5,100,000 5,100 1,649,400 1,654,500
Prior common stock
subscribed reclassified -- -- -- 225,000 225,000
Common stock issued in
exchange for debt
reductions and officer's
salary 15,509,000 15,509 1,113,776 1,129,285
Common stock issued in
settlement of lawsuits 3,000,000 3,000 193,600 196,600
Consolidated net (loss)
for the year
April 30, 2000 -- -- -- (2,990,515) (2,990,515)
----------- ------- ---------- -------- ------- --------- ------------- ---------- -------------
Balances at April 30,1999 67,994,734 67,995 11,657,116 83,300 83 373,738 (11,798,183) -- 300,749
</TABLE>
See Accompanying Auditors' Report
See Accompanying Notes to the Financial Statements
F-10
<PAGE>
<TABLE>
<CAPTION>
TRIDON ENTERPRISES, INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED APRIL 30, 1988 TO 2000
(CONTINUED)
Common Preferred
-------------------------------- -------------------------------- (Deficit) Total
During the Common Stockholders'
Par Paid in Par Paid in Development Stock Equity
Shares Value Capital Shares Value Capital Stage Subscribed (Deficit)
---------- ------- ---------- -------- ------- ---------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Common stock issued in
exchange for prior
services rendered 3,000,000 $ 3,000 $ 267,000 $ $ $ $ $ 270,000
Common stock issued in
settlement of lawsuit 500,000 500 19,000 19,500
Common stock issued 1,400,000 1,400 33,600 35,000
Common stock issued for
services and cash 1,000,000 1,000 9,000 10,000
Common stock issued in
exchange for reduction
in accounts payable and
current services rendered 4,500,000 4,500 205,500 210,000
Preferred stock converted
to common stock (1:40) 1,200,000 1,200 123,800 (30,000) (30) (124,970) --
Consolidated net (loss)
for the year
April 30, 2000 -- -- -- (1,198,434) (1,198,434)
----------- -------- ------------ -------- -------- ----------- ------------- ------------ -------------
Balance at April 30, 2000 79,594,734 $79,595 $12,315,016 53,300 $ 53 $ 248,768 $(12,996,617) $ -- $ (353,185)
=========== ======== ============ ======= ======== =========== ============= ============ ============
</TABLE>
See Accompanying Auditors' Report
See Accompanying Notes to the Financial Statements
F-11
<PAGE>
<TABLE>
<CAPTION>
TRIDON ENTERPRISES, INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the For the For the
Inception Year Year Year
To Ended Ended Ended
April 30, April 30, April 30, April 30,
2000 2000 1999 1998
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
CASH FLOWS PROVIDED (USED) BY
OPERATING ACTIVITIES:
Net income $(12,996,617) $ (1,198,434) $ (2,990,515) $ (1,857,604)
Adjustments to reconcile net
(loss) to net Cash used by
operations:
(Loss) on disposal of segment (3,836,964) -- -- --
Loss on permanent impairment
of marketable securities 1,120,050 -- -- 1,027,500
(Gain) loss on sale of
marketable securities (7,467) -- (51,375) (3,677)
Write down of investment 25,000 -- -- --
Depreciation 12,346 2,678 3,198 1,459
Increase in allowance for
uncollectible amounts 372,948 2,310 -- 8,333
Professional fees 12,885 -- -- --
Outside services paid by
issuance of common stock 1,580,923 361,471 902,250 51,167
Reclassification of common
stock subscribed 225,000 -- 225,000 --
Officer's salary related to
common stock issued 1,697,328 -- 748,305 540,000
Operating expenses paid by
officer 110,699 -- 11,694 99,005
Loan fees related to common
stock issued 1,049,016 -- 239,016 --
Write-down of screenplays 49,800 -- -- --
Loss of fixed asset disposal 1,253 -- -- --
Research and development 88,000 -- -- --
Interest expense 349,745 -- -- --
Forgiveness of interest (8,901) -- -- --
Maritime loss 3,462,825 -- -- --
Forgiveness of debt (123,994) -- -- --
Stock issued in litigation
settlement 429,978 19,500 410,478 --
</TABLE>
See Accompanying Auditors' Report
See Accompanying Notes to the Financial Statements
F-12
<PAGE>
<TABLE>
<CAPTION>
TRIDON ENTERPRISES, INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the For the For the
Inception Year Year Year
To Ended Ended Ended
April 30, April 30, April 30, April 30,
2000 2000 1999 1998
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
CASH FLOWS PROVIDED (USED) BY
OPERATING ACTIVITIES: (continued)
(Increase) decrease in:
Inventory write-off -- 7,506 (2,181) (5,325)
Prepaid expenses 759,940 788,250 (9,057) (19,253)
Interest in notes receivable (5,567) (2,567) -- --
Interest receivable (25,000) -- -- (8,333)
Increase (decrease) in:
Accounts payable and accrued
expenses 393,760 17,406 127,275 94,500
Preferred stock subscription 10,000 -- -- --
Estimated future cost of
discounted operations 3,125 -- -- --
Accounts payable - Vintage
Group, Inc. 45,574 -- -- --
------------- ------------- ------------- ------------
Net Cash Flows (Used) by
Operating Activities (5,204,315) (1,880) (385,912) (72,228)
------------- ------------- ------------- ------------
</TABLE>
See Accompanying Auditors' Report
See Accompanying Notes to the Financial Statements
F-13
<PAGE>
<TABLE>
<CAPTION>
TRIDON ENTERPRISES, INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the For the For the
Inception Year Year Year
To Ended Ended Ended
April 30, April 30, April 30, April 30,
2000 2000 1999 1998
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
CASH FLOWS PROVIDED (USED) BY
INVESTING ACTIVITIES:
Loans made $ (375,757) $ (35,000) $ -- $ --
Investment in marketable
equity securities (238,550) -- -- --
Proceeds from sale of securities
(Note 4) 440,743 -- 107,451 3,677
Sale of common stock 13,550 -- -- --
Investment in screenplays (40,000) -- -- --
Purchase of property and equipment (26,881) -- (7,469) (10,417)
Advances to officers (91,627) -- -- (10,519)
Investment in production (1,925) -- -- --
Repayments of notes receivable 6,000 -- -- 6,000
------------- ------------- ------------- ------------
Net Cash Provided (Used)
by Investing Activities (314,447) (35,000) 99,982 (11,259)
------------- ------------- ------------- ------------
CASH FLOWS PROVIDED (USED) BY
FINANCING ACTIVITIES:
Proceeds from issuance of common
stock 4,906,325 36,000 84,622 65,233
Proceeds from issuance of
convertible preferred stock 135,003 -- -- --
Increase in paid-in capital 99,866 -- -- --
Proceeds from issuance of
convertible notes payable 59,025 -- -- --
Advances from officer 325,174 1,099 165,340 --
Repayments of advances from
officer (44,785) -- (3,083) --
Advances from Vertex Marketing 39,400 -- 39,400 --
------------- ------------- ------------- ------------
Net Cash Provided by
Financing Activities 5,520,008 37,099 286,279 65,233
------------- ------------- ------------- ------------
NET INCREASE (DECREASE) IN CASH 1,246 219 349 (18,254)
CASH AT BEGINNING OF PERIOD 4 1,031 682 18,936
------------- ------------- ------------- ------------
CASH AT END OF PERIOD $ 1,250 $ 1,250 $ 1,031 $ 682
============= ============= ============= ============
</TABLE>
See Accompanying Auditors' Report
See Accompanying Notes to the Financial Statements
F-14
<PAGE>
<TABLE>
<CAPTION>
TRIDON ENTERPRISES, INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the For the For the
Inception Year Year Year
To Ended Ended Ended
April 30, April 30, April 30, April 30,
2000 2000 1999 1998
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
NON CASH INVESTING AND
FINANCING TRANSACTIONS:
Common stock issued for advance
to officers $ 45,447 $ -- $ -- $ --
============= ============= ============= ============
Common stock issued in exchange
for Madera International, Inc.
stock $ 377,200 $ -- $ -- $ --
============= ============= ============= ============
Increase in additional paid in
captial - non=reciprocal
transfer $ 1,027,500 $ -- $ -- $ 1,027,500
============= ============= ============= ============
Payments by officer on behalf
of Company reducing accounts
payable $ 41,914 $ -- $ -- $ 41,914
============= ============= ============= ============
Payments by officer on behalf
of Company increasing prepaid
expense $ 10,000 $ -- $ -- $ 10,000
============= ============= ============= ============
Issuance of common stock for
future services $ 1,031,250 $ -- $ 752,250 $ 279,000
============= ============= ============= ============
Cancellation of common stock
subscribed $ 279,000 $ -- $ 279,000 $ --
============= ============= ============= ============
Issuance of common stock in
exchange for debt conversion $ 141,964 $ -- $ 141,964 $ --
============= ============= ============= ============
Common stock issued for
reduction in accounts payable $ 127,529 $ 127,529 $ -- $ --
============= ============= ============= ============
Preferred stock converted to
common stock $ 125,000 $ 125,000 $ -- $ --
============= ============= ============= ============
CASH PAID FOR:
Income taxes $ 5,600 $ -- $ 800 $ --
============= ============= ============= ============
Interest $ -- $ -- $ -- $ --
============= ============= ============= ============
</TABLE>
See Accompanying Auditors' Report
See Accompanying Notes to the Financial Statements
F-15
<PAGE>
TRIDON ENTERPRISES, INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies
Organization
Tridon Enterprises, Incorporated (the Company) was incorporated in the state of
Colorado on October 7, 1983 as Turco Computer Systems, Inc. The Company changed
its name to Hammer Computer Systems, Inc. September 27, 1984.
In October 1989, Hammer Computer Systems, Inc. (HCSI) and Tridon Development
Corporation merged, with HCSI being the surviving corporation. The Company then
changed its name to Tridon Corporation.
In June 1993, the Company acquired 100% of the outstanding common stock of
Polaris Pictures Corporation in exchange for 2,000,000 shares of its common
stock.
On April 29, 1995, the Company irrevocably transferred in trust all shares of
the stock of Polaris Pictures Corporation to a trust (see Note 9).
On March 15, 1996, the Company changed its name from Tridon Corporation to
Tridon Enterprises Incorporated.
Vertex Corporation (a wholly-owned subsidiary) was incorporated under the laws
of the state of Nevada on February 25, 1997 with an authorized capital of 25,000
shares of no par value common stock. The Company is engaged in the research,
development, manufacture, and the sale and licensing for sale of non-surgical
hair replacement products and any and all products related to such business,
establishing international hair replacement enterprises; and providing customers
and/or licensees with all services and support available with regard to the
management of said hair replacement enterprises.
On January 9, 1998, Tridon Enterprises, Incorporated invested $20,100 in
exchange for 25,000 shares of no par value common stock (100% of the stock) of
Vertex Corporation. For the period from February 25, 1997 to April 30, 1997,
there was no activity in Vertex Corporation, and for the period from May 1, 1997
to January 8, 1998, the activity was immaterial. Therefore, the amounts from
Vertex Corporation for the entire year ended April 30, 1998 have been
consolidated with Tridon Enterprises, Incorporated.
Tridon Communications Corporation (a wholly-owned subsidiary) was incorporated
under the laws of the state of Nevada on March 9, 1999. As of the date of this
report the subsidiary has not authorized or issued any shares of common or
preferred stock. The only transaction that took place for the year ended April
30, 1999 was a payment of $2,310 made by the parent company on behalf of Tridon
Communication to the Federal Communication Commission for a license to operate
as a reseller of telecommunication services. This amount has been expensed in
the year ended April 30, 2000.
F-16
<PAGE>
TRIDON ENTERPRISES, INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies (CONTINUED)
Basis of Consolidation and Combination
For the year ended April 30, 1994, and all prior periods, the statements of
loss, changes in shareholders' equity, and cash flows of Tridon Corporation and
Polaris Pictures Corporation are consolidated. All significant intercompany
transactions have been eliminated from the financial statements. See Note 9 for
disposition of wholly-owned subsidiary. The consolidated financial statements
for April 30, 2000 and 1999 include the accounts of Tridon Enterprises,
Incorporated and its wholly-owned subsidiary, Vertex Corporation. Significant
intercompany accounts and transactions have been eliminated in consolidation.
Tridon Communications Corporation was inactive for the period of incorporation,
March 9, 1999, to April 30, 2000.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect 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. Accordingly,
actual results could differ from those estimates.
Inventory
Inventory was valued at lower of cost (first-in, first-out) or market. Inventory
consists of samples of finished products. As of April 30, 2000, inventory has
been written off as obsolete.
Basis of Presentation
The Companies have not generated significant revenues since inception.
Consequently, the accompanying financial statements have been prepared using the
accounting formats prescribed for development stage enterprises in accordance
with Financial Accounting Standards Board Statement 7.
Cash Equivalents
The Companies consider all highly liquid investments purchased with a maturity
of three months or less to be cash equivalents.
Statements of Cash Flows
For the current year ended April 30, 2000, Tridon Enterprises, Incorporated
entered several non-monetary transactions as described below:
Preferred stock consisting of 30,000 shares valued at $125,000 was converted
into 1,200,000 common shares.
F-17
<PAGE>
TRIDON ENTERPRISES, INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies (continued)
Statements of Cash Flows (continued)
The Company issued 4,500,000 shares of common stock in exchange for conversion
of payables in the amount of $127,529 and current services rendered in the
amount of $82,471. The Company also issued 500,000 shares in settlement of a
lawsuit in the amount of $19,500. In addition, the Company issued 3,000,000
shares for services rendered in the amount of $270,000 (See Note 12).
Revaluation of Common Stock
Common stock issued should be valued at an estimated fair market value. A fair
market value was determined based on what an independent outside party would be
willing to pay for a share of the Company's common stock. For the year ended
April 30,1997, the stock issued in exchange for consulting services and as an
increase to advances to officers was valued based on an estimated fair market
value of $.10 per share. The 9,000,000 shares of common stock issued in exchange
for consulting services of $90,000 was revalued to $900,000 by an increase of
$810,000 to additional paid in capital and an increase to loan fee expense. The
4,547,700 shares of common stock issued for advances to officers in exchange for
$45,447, was revalued to $454,470 by an increase of $409,023 to additional paid
in capital and an increase to officer's salary.
For the year ended April 30, 1999, common stock issued in exchange for debt
conversion, was valued at a fair market value of $.07 per share. The 10,845,000
shares of common stock issued to the former President of the Company in exchange
for relief of $10,845 of debt, was revalued to $759,150 by an increase of
$748,305 to additional paid capital and officer's salary.
The 3,464,000 shares of common stock issued in exchange for $2,500 cash and
$3,464 of debt conversion to a Company shareholder, was revalued to $242,480, by
an increase of $239,016 to additional paid in capital and loan fee expense.
These amounts are included in "common stock issued in exchange for debt
reduction" of $1,129,285.
For the year ended April 30, 2000, 1,000,000 shares of restricted common stock
were issued for $1,000 cash for services as directors fees. This amount has been
revalued to $10,000, and an additional $9,000 has been expensed and recorded as
additional paid in capital. All other non-cash transactions for common stock for
year-end April 30, 2000 are considered reasonably valued.
F-18
<PAGE>
TRIDON ENTERPRISES, INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies (continued)
Property and Equipment
Depreciation is provided on the straight line and double declining methods over
the lives of related assets as follows:
Period
--------------
Computers 5 Years
Furniture and Fixtures 5 - 7 Years
Office equipment 5 Years
Leasehold improvements 27 1/2 Years
Depreciation expense was $2,678, $3,198 and $1,459 for the years ended April 30,
2000, 1999 and 1998, respectively.
Deferred Income Tax Accounts
Deferred tax provisions/benefits are calculated for certain transactions and
events because of differing treatments under generally accepted accounting
principles and the currently enacted tax laws of the federal government. The
results of these differences on a cumulative basis, known as temporary
differences, result in the recognition and measurement of deferred tax assets
and liabilities in the accompanying balance sheets. The liability method (FASB
109) is used to account for these temporary differences.
For tax purposes, Tridon Enterprises Incorporated and its wholly-owned
subsidiaries, Vertex Corporation and Tridon Communication Corporation, have
fiscal year ends of April 30.
Marketable Equity Securities
The Companies have adopted the Financial Accounting Standards Board Statement
No. 115, Accounting for Certain Investments in Debt and Equity Securities (FAS
115). Under the provisions of FAS 115, marketable securities considered
available for sale are recorded at fair market value.
Long-Lived Assets
In 1998, the Companies adopted SFAS 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of." In accordance
with SFAS 121, long-lived assets held and used by the Companies are reviewed for
impairment whenever events or changes in circumstances indicated that the
carrying amount of an asset may not be fully recoverable.
F-19
<PAGE>
TRIDON ENTERPRISES, INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies (continued)
Long-Lived Assets (Continued)
For purposes of evaluating the recoverability of long-lived assets, the
estimated future cash flows associated with the assets would be compared to the
assets' carrying amount to determine if a write-down to market value or
discounted cash flow value is required.
Year 2000 Compliance
Management does not believe any material year 2000 problems with the Company's
vendors, service providers, or other third parties will affect the Company's
financial information.
Earnings per Common Share
Net loss per share is computed using the weighted average number of common
shares outstanding during the period. Stock options have not been considered in
the calculation of loss per share because they are antidilutive.
Research and Development
Research and development costs are expensed as incurred.
Advertising Costs
The Company classified $36,000 as prepaid advertising costs, per SOP 93-7 prior
to April 30, 1999. The Company has produced an infomercial to be aired sometime
in the future. Because of the uncertainty of releasing the infomercial, the
Company has elected to expense the cost in the year ended April 30, 2000.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and consist of the following:
April 30,
--------------------------------
2000 1999
-------------- --------------
Computers $ 10,259 $ 10,259
Furniture and fixtures 4,821 4,821
Equipment 2,913 2,913
Leaseholds improvements 7,469 7,469
-------------- --------------
25,462 25,462
Less: Accumulated Depreciation 12,180 9,502
-------------- --------------
$ 13,282 $ 15,960
============== ==============
F-20
<PAGE>
TRIDON ENTERPRISES, INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - RELATED PARTY TRANSACTIONS
Advances to Kevin Welch, current President of the Company, as of April 30,1998,
were $30,000. During the year ended April 30, 1999, these advances were
exchanged for services rendered and expensed as directors' fees. In addition,
Mr. Welch advanced $12,501 to the Company in a non-interest bearing loan. During
the year ended April 30, 2000, Mr. Welch advanced an additional $1,099 in a
non-interest bearing loan. Of the outstanding balance of $130,578, shown in
advance from officers at April 30, 1999, $118,077 has been reclassified to
advances from shareholders for the year ended April 30, 2000, as explained
below.
During the years ended April 30, 1999, net non-interest bearing funds were
advanced from Paul Ebeling, a former officer of the Company, to Tridon
Enterprises, Incorporated and Subsidiaries. Balances owed by the Companies to
Mr. Ebeling were $118,077 for the year ended April 30, 1999. This amount was
included in advances from officers' balance. During the year ended April 30,
2000, Mr. Ebeling resigned as an officer of the Company. Advances from Mr.
Ebeling were reclassified as advances from shareholders. During the year ended
April 30, 1999, Mr. Ebeling converted $10,845 of the amount owed to him into
10,845,000 shares of the Company's common stock. This transaction has been
revalued to reflect the fair market value of the common stock at the date of
issuance at $.07 per share, or $759,150. The additional value increased paid in
capital and officer's salary.
Non-interest bearing advances from Steve Antebi, a shareholder of the Company,
were $5,000 as of April 30, 1998. During the year ended April 30, 1999, Mr.
Antebi converted $3,464 of the amount owed to him into 3,464,000 shares of the
Company's common stock. This transaction has been revalued to reflect to fair
market value of the common stock at the date of issuance at $.07 per share, or
$242,480. The additional value has increased paid in capital and loan fee
expense.
The Subsidiary received $39,400 of advances from Vertex Marketing for the April
30, 1999. Paul Ebeling owns Vertex Marketing 100%.
There are no signed notes for any of these transactions. For additional related
party transactions, see Notes 1 (Revaluation of Common Stock) and 4.
NOTE 4 - MARKETABLE EQUITY SECURITIES
The Company has adopted the Financial Accounting Standards Board Statement No.
115, "Accounting for Certain Investments in Debt and Equity Securities (FAS
115)". Under the provisions of FAS 115, marketable securities considered
available for sale are recorded at fair market value if they have a readily
determinable fair value. The corresponding unrealized gain or loss in the fair
market value in relation to cost is accounted for as a separate item in the
shareholders= equity section of the balance sheet, unless there is a permanent
impairment to the marketable security, in which case it is recorded as a loss in
the income statement. Management treated its investment in marketable securities
as an investment that was available for sale for the year ended April 30, 1998.
F-21
<PAGE>
TRIDON ENTERPRISES, INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - MARKETABLE EQUITY SECURITIES (CONTINUED)
During the year ended April 30, 1997, the Company purchased 1,000,000 shares of
International Forest Industries, Inc. stock with an initial cost of $200,000. At
April 30, 1997, the stock was worth $531,250. Subsequent to the year-end,
International Forest Industries changed its name to Fluor City International.
Subsequent to the balance sheet date, but prior to issuance of the April 30,
1997 report, the stock had several reverse splits and eventually was sold in May
1998 for $107,451. Due to this permanent impairment, the net unrealized holding
loss in the amount of $92,550 has been shown as a loss in the statements of
operations for the year ended April 30, 1997.
In April 1998, Tridon Enterprises, Incorporated received 20,550,000 shares of
North American Exploration Corporation. The shares were received from Paul
Ebeling, president of Tridon Enterprises, Incorporated, in a non-reciprocal
transfer. The shares were valued at the date of the transfer at $.05 per share,
or $1,027,500. Subsequent to the year-end, North American Exploration
Corporation issued a statement relating to the cancellation of the 20,550,000
shares issued to Tridon Enterprises, Incorporated, as nominee for Paul Ebeling.
Due to this potential permanent impairment of this asset, the entire amount of
$1,027,500 was reserved for in the year ended April 30, 1998. During the year
ended April 30, 1999, North American stock underwent a reverse split of 1:100.
Tridon Enterprises, Incorporated agreed to sell to Paul Ebeling the 205,500
shares after the reverse split for $.25 per share (the fair market value at the
date of exchange). The Company recorded a $51,375 gain on sale during the year
ended April 30, 1999.
NOTE 5 - NOTE RECEIVABLE
The Company has a $250,000 note receivable from Madera International, Inc.
receivable interest only, quarterly, beginning December 31, 1996 at 10% per
annum. All unpaid interest and principal were due September 3, 1997. At April
30, 1998, unpaid interest was $25,000. As of April 30, 1997, this receivable and
related interest was past due. Therefore, a reserve has been recorded for this
receivable and accrued interest. As of the date of this report, the condition of
this receivable and accrued interest is unchanged. The Company also advanced
$2,310 to Tridon Communications in 1999. A reserve has also been recorded for
this amount as of April 30, 2000.
NOTE 6 - INCOME TAXES
The provision for income taxes consists of:
April 30,
-----------------------------------------
2000 1999 1998
----------- ----------- ----------
Federal $ -- $ -- $ --
State 800 800 800
----------- ----------- ----------
800 800 800
Deferred Taxes -- -- --
----------- ----------- ----------
Provision for Income Taxes $ 800 $ 800 $ 800
=========== =========== ==========
F-22
<PAGE>
TRIDON ENTERPRISES, INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - INCOME TAXES (CONTINUED)
Loss Carryforwards
Tridon Enterprises, Incorporated has net operating loss carryforwards that are
from HCSI prior to its merger with Tridon Enterprises, Incorporated. The amounts
that the Company may ultimately apply to future taxable income may be limited by
application of tax law. Tentative expiration dates of these losses are as
follows:
2000 $ 475,000
2001 1,401,000
2002 1,001,000
-------------
Totals $ 2,877,000
=============
Subsequent to the merger of HCSI and Tridon Development Corporation, the Company
has accumulated a tax loss carryforward of approximately $4,800,000 for federal
tax purposes and a $2,040,000 tax loss carryforward for California franchise tax
purposes. Federal net operating losses (NOL's) are carried forward 15 - 20 years
and expire between 1999 and 2020. State NOL's are carried forward 5 years and
expire between 1999 and 2005.
In addition, Polaris Pictures Corporation (Polaris) had accumulated a tax loss
carryforward of approximately $265,000 for federal tax purposes, whose net
operating loss carryforwards expire in 2009.
Vertex Corporation has a net operating loss of approximately $19,000, which
expires in 2013, and a net operating loss of approximately $128,000, which
expires in 2019 and 2020 if not utilized.
All loss carryforward amounts are subject to review and revision by tax
authorities.
NOTE 7 - DEFERRED INCOME TAXES
The net deferred tax amount included in the accompanying balance sheets for the
years ended April 30, include the following amounts of deferred tax assets and
liabilities:
2000 1999
--------------- ---------------
Deferred Tax Asset - Non-current $ 2,801,800 $ 2,876,113
Deferred Tax Liability - Non-current --
Less Valuation Allowance (2,801,800) (2,876,113)
--------------- ---------------
$ -- $ --
=============== ===============
F-23
<PAGE>
TRIDON ENTERPRISES, INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 - DEFERRED INCOME TAXES (CONTINUED)
The deferred tax asset results mainly from the net operating loss carryforward
for federal and state income tax purposes.
Due to the Company's going concern problem, a valuation for the full amount of
the asset has been recorded. The valuation allowance decreased by $74,313 for
the year ended April 30, 2000.
NOTE 8 - OFFERING OF CUMULATIVE CONVERTIBLE PREFERRED STOCK
In June 1994, the Company offered $1,000,000 of 7% cumulative convertible
preferred stock at $10 per share in a private placement memorandum. The
preferred stock is convertible to 4,000,000 shares of common stock one year
after issuance and may be called by the Company two years after the issue date.
During the year ended April 30, 1996, $150,000 of advances from an officer was
converted to 15,000 cumulative convertible preferred shares. As of April 30,
1999, 83,300 cumulative convertible preferred shares were issued and
outstanding. Dividends in arrears on the cumulative preferred stock were $65,953
and $49,622 for the years ended April 30, 1999 and 1998, respectively. During
the year ended April 30, 2000, 30,000 preferred shares were converted into
common stock. Cumulative dividends in arrears on those preferred stocks were
$42,050. Cumulative dividends in arrears on remaining preferred stock is
$87,464.
For the years ended April 30, 2000, 1999 and 1998, no dividends were declared or
paid.
NOTE 9 - DISPOSITION OF WHOLLY-OWNED SUBSIDIARIES
On April 29, 1995, the Board of Directors of Tridon Enterprises, Incorporated
irrevocably transferred in trust 100% of the stock of Polaris Pictures
Corporation to be held for the benefit of the creditors of Polaris.
On April 29, 1996, Paul Ebeling resigned as an officer/director of Polaris
Pictures Corporation. Consequently, Tridon and Polaris are not under common
control.
The financial statements reflect the disposition of Polaris as a discontinued
operation in accordance with generally accepted accounting principles. A gain of
$3,836,964 is recognized in the statement of operations.
F-24
<PAGE>
TRIDON ENTERPRISES, INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 - UNCERTAINTY OF ABILITY TO CONTINUE AS A GOING CONCERN
Tridon Enterprises, Incorporated and its subsidiary, Vertex Corporation have
suffered substantial losses since inception. In order for the Company to
continue as a going concern, Tridon Enterprises, Incorporated and Subsidiaries
are dependent upon their ability to raise capital from various sources,
including loans from shareholders and others as well as the development of an
ongoing source of revenue.
The continuation of the Company as a going concern is dependent upon the
Company's ability to establish itself as a profitable business. It is the
Company's belief that it will continue to incur losses during the coming year
and possibly require additional funds. The additional funding will be
accomplished by seeking additional funds from private or public equity
investments, and possible future collaborative agreements to meet such needs, in
order that the Company will be a viable entity. The Company's ability to achieve
these objectives cannot be determined at this time.
NOTE 11 - COMMITMENTS AND CONTINGENCIES
The Company was sharing office space with their subsidiary. The lease was at
$3,269 per month, expiring September 30, 2001. Due to inactivity of the Company
and its subsidiary, this space was vacated in June 1999. The space was re-leased
and no action has been taken by the landlord against the subsidiary. The Company
and its subsidiary are currently working out of one of the officer's office.
Rent expense relative to this lease was charged to operations, and for the years
ended April 30, 2000, 1999 and 1998 was $3,239, $35,080 and $14,400,
respectively.
The Company previously leased a vehicle on a month-to month basis. Rent expense
relative to this lease was charged to operations, and for the year ended April
30, 1998 was $5,400. Auto expense for the fiscal years ended April 30, 1998 of
approximately $2,700 was paid directly by the president of the Company. The
Company plans to repay this expense when funds are available. This expense has
been included in the amount due officer.
At the end of the fiscal year April 30, 1999, the Company was the defendant in
three lawsuits. Two of the three were settled in exchange for the Company's
stock. One judgment for $196,600 was settled for 3,000,000 shares of Tridon
Enterprises stock. In the second lawsuit, a company paid Tridon Enterprises,
Incorporated $10,000 cash during the year and was awarded 2,000,000 shares of
stock subsequent to year-end. The $196,600 and $10,000 are shown in the
stockholders' equity section and the $196,600 has also been expensed as part of
the litigation settlement expense. As of April 30, 2000, the Company is a
defendant in a lawsuit that has not been settled as of the date of this report,
although a judgment in the amount of $213,878 has been entered against Tridon
Enterprises, Incorporated. This amount has been accrued and is included in
accounts payable.
F-25
<PAGE>
TRIDON ENTERPRISES, INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 - COMMON STOCK SUBSCRIBED
During the fiscal year ended April 30, 1998, 3,100,000 shares of common stock
were issued for future services to be rendered, valued at $279,000. For the year
ending April 30, 1999, the Company was to cancel these shares and elected to
reverse out the common stock issued, due to non-performance. However, for the
year ending April 30, 2000, the Company did complete one of the transactions and
issued 3,000,000 shares of common stock valued at $270,000, for consulting
services rendered.
NOTE 13 - PREPAID CONSULTING FEES
During the fiscal year ended April 30, 1999, the Company entered into five
consulting agreements for future services. In exchange for these services,
3,300,000 shares of common stock were issued, valued at $1,504,500. The
agreements were all for a one-year period commencing November 2, 1998. As of
April 30, 1999, $752,250 of those consulting agreements had been earned and
$752,250 was unearned and were classified as a prepaid expense. During the year
ended April 30, 2000 the remaining $752,250 prepaid expense was earned and
charged to expense.
NOTE 14 - SUBSEQUENT EVENTS
Subsequent to the year-end, the Company entered into a "Plan of Reorganization
Agreement" with BzAds.com, Inc. (BzAds). This agreement calls for the exchange
of each Company's stock whereby BzAds will become a wholly-owned subsidiary of
the Company, and BzAds will continue to operate as a separate legal entity. As
of the date of this report, their agreement has not been finalized.
The "Plan of Reorganization Agreement" with Satellite Link Communications, noted
in the April 30, 1999 financial statement footnotes has been abandoned.
F-26
<PAGE>
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
PART III
ITEM 10. Directors and Officers of the Registrant
Officers and Directors of the Company as of April 30, 2000 are as follows:
Name Age Position
---- --- --------
Kevin Welch 38 CEO, Secretary/Treasurer and Director
Nicolas Weider 41 Director
Each director holds office until the next annual meeting of shareholders and
until their successor has been elected and qualified. Each officer holds office
at the pleasure of the Board of Directors and until their successor has been
elected and qualified.
Kevin Welch joined Tridon Enterprises Incorporated on February 22, 1996 and
serves as Interim CEO, Secretary/Treasurer and a director of the company.
Nicolas Weider joined Tridon Enterprises Incorporated on June 1, 1997 and serves
as director of the company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) ("Section 16(a)") of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), requires executive officers and directors, and
persons who beneficially own more than ten percent (10%) of the Company's Common
Stock, to file initial reports of ownership on Form 3 and reports of changes in
ownership on Form 4 with the Securities and Exchange Commission (the "SEC") and
any national securities exchange on which the Company's securities are
registered. Executive officers, directors and greater than ten percent (10%)
beneficial owners are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company and representations from the executive officers and directors that no
other reports were required, the Company believes that during fiscal 2000, its
executive officers, directors and greater than ten percent (10%) beneficial
owners complied with all applicable Section 16(a) filing requirements.
11
<PAGE>
ITEM 11. Executive Compensation
The following is a summary of executive compensation for the last three fiscal
years ended April 30:
2000 1999 1998
---- ---- ----
Kevin Welch $ 0 $ 0 $ 0
Director Compensation
On March 13, 2000, Nicolas Weider, a director, was issued one million
(1,000,000) shares of restricted common stock. The shares were issued as
director's fees for serving on the Board of Directors for the fiscal years
ending April 30, 1999 and April 30, 2000 and have been valued at $10,000.
During the year ended April 30, 1999, Kevin Welch was issued 500,000 shares
of restricted common stock. The shares were issued as director's fees for
serving on the Board of Directors for the 1999 fiscal year. The shares are
valued at $17,500.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth in the beneficial ownership of the Company's
common stock be each person known to he Company to be the beneficial owner of
more than five percent of the outstanding common stock of the Company and by
directors and executive officers of the Company, both individually and as a
group.
Shares Percentage
Beneficial Owner Beneficially Owned of Class (1)
---------------- ------------------ ------------
Antebi Children's Insurance
Trust of 1995
345 North Maple Drive
Beverly Hills, CA 90210 15,452,444 19.41%
Tridon Trust
19 Rue Du Penthievre
75008 Paris, France 16,917,712 21.25%
Kevin Welch
PO Box 16244
Beverly Hills, CA 90209 2,825,000 3.55%
Nicolas Weider
PO Box 16244
Beverly Hills, CA 90209 1,325,000 1.66%
All Officers and Directors
As a Group (2 persons) 4,150,000 5.21%
(1) Percentage is based on 79,594,734 common shares issued and outstanding as
of April 30, 2000.
12
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On March 13, 2000 Nicolas Weider, a director, was issued one million (1,000,000)
shares of common stock, with a value of $10,000 (see Note 1 to Financial
Statements). Shares were issued as director's fees for serving on the Board of
Directors for the fiscal years ending April 30, 1999 and April 30, 2000.
On June 23, 1999, Mr. Paul Ebeling, a former officer and director of the
Company, entered into a definitive written agreement with an unrelated third
party, known as Tridon Trust, to sell all right, title and interest in and to
the Series A Preferred Stock and Shares of Common Stock of the Company owned by
Mr. Eberling. The sale and purchase agreement closed on July 1, 1999.
13
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report:
1. Financial Statements: included in Item 8, Part II of this report.
2. Exhibits required to be filed by this report:
Exhibit
Number Description
------- -----------
2.1 Agreement of Reorganization with BzAds.com, Inc. (1)
3 Articles of Incorporation and Bylaws
(a) Certificate of Amendment to Articles of Incorporation
dated October 7, 1983 and Articles of Incorporation
dated October 7, 1983. (2)
(b) Certificate of Amendment to Articles of Incorporation
dated August 30, 1984 and Articles of Incorporation
dated September 27, 1984 (2)
(c) Bylaws (2)
(d) Certificate of Amendment to Articles of Incorporation
dated January 20, 1994. (2)
(e) Certificate of Amendment to Articles of Incorporation
dated April 24, 1996. (2)
(1) Incorporated herein by reference to the Registrant's 8-K Current
Report filed June 6, 2000.
(2) Incorporated by reference from Form S-18 filed with the
Securities and Exchange Commission, Commission File No. 0-13628,
filed for fiscal year ended April 30, 1985.
(b) Reports on Form 8K
On June 6, 2000, the Company filed an 8-K Current Report to announce it
entered into an agreement of reorganization with BzAds.com, Inc. ("BzAds"), a
Delaware Corporation. To accomplish the acquisition, the Company intends to
issue shares of its voting common stock to the shareholders of BzAds in exchange
of all of the issued and outstanding shares of common stock of BzAds. BzAds
shall receive that number of shares of common stock of the Company following the
merger that will result in BzAds owning ninety five percent (95%) of the issued
and outstanding shares of the Company following the acquisition.
14
<PAGE>
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 and on the
dates indicated by the undersigned thereunto duly authorized.
TRIDON ENTERPRISES INCORPORATED
/s/ Kevin Welch
Date: September 15, 2000 By: --------------------------
Kevin Welch
Acting Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this Report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ Kevin Welch Acting CEO, September 15, 2000
------------------- Secretary/Treasurer
Kevin Welch and Director
/s/ Nicholas Weider Director September 15, 2000
-------------------
Nicholas Weider, M.D.
15
