UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the year Ended April 30, 1999
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 [ ].
At April 30, 1999, there were 66,094,734 shares outstanding of
the Registrant's common stock, $.001 par value.
<PAGE>
TABLE OF CONTENTS
Item Page
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security
Holders
Item 5. Market for the Registrant's Common Stock and
Related Securities Matters
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Item 8. Financial Statements (sub pages 1- )
Item 9. Disagreements on Accounting and Financial
Disclosure
Item 10. Directors and Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners
and Management
Item 13. Certain Relationships and Related Transactions
Item 14. Exhibits, Financial Statement, Schedules, and
Reports on Form 8K
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 anew 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.
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.
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.
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.
The Company now rents office space from Paul Ebeling at the same
location for $600.00 per month on a month-to-month basis. On
April 21, 1999, new management collected the files and records
from the 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). The Company
believes that the complaint filed by CCL is without merit and the
Company is prepared to defend the action. At this point, the
Company has filed an answer to the Complaint and the case is
proceeding forward. The Company, will attempt to negotiate a
settlement with the plaintiff, if a settlement is possible.
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. The Company, in order to conserve
resources, will attempt to negotiate a settlement with the
plaintiff, if a settlement is possible.
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. The
Company, in order to conserve resources, will attempt to
negotiate a settlement with the plaintiff, if a settlement is
possible.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
As explained in ITEM 1, on October 10, 1989 the shareholders
approved a merger of Tridon Development Corporation into HCSI
with HCSI changing its name to Tridon Corporation.
On January 20, 1994 the shareholders approved an amendment to the
Articles of Incorporation to permit the Company to divide and
issue 20,000,000 shares of preferred shares in series.
On February 22, 1996 the stockholders of the Company approved an
amendment to its Articles of Incorporation: that officers and
directors of the Company liability be limited to the full extent
as provided for in the Colorado Corporations Code, Section 7,
Article 9, as amended. The stockholders also voted to amend the
Articles of Incorporation to change the name of the Corporation
to Tridon Enterprises Incorporated and to split the shares of the
company one for ten. The stockholders also voted to authorize
the Board of Directors to place its Vertex(R) technology in a
wholly-owned subsidiary Corporation. On February 25, 1997, the
Company incorporated Vertex Corporation, a Nevada corporation, as
a wholly-owned subsidiary.
Subsequent to the year end the Company entered into a "Plan of
Reorganization" with Satellite Link Communications Corporation
(SLC). The agreement calls for the Company to do a reverse stock
split and exchange its stock for the stock of SLC. SLC 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.
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. The stock had a high
bid of $.74 and a low bid of $.015 per share during the past
fiscal year. Such over-the-counter market quotations reflect
inter-dealer prices without retail mark-up, mark-down, or
commission, 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
<TABLE>
Balance Sheet Data:
<S> <C> <C> <C> <C> <C>
April 30, April 30, April 30, April 30, April 30,
1995 1996 1997 1998 1999
Total Assets 36,647 59,641 256,672 184,399 815,057
Working
Capital
(deficit) (121,963) 55,277 18,936 682 1,031
Long-term
obligations 3,874,927 0 0 0 0
Stockholder's
equity
(deficit) (4,090,090) (85,326) 174,961 1,257 300,749
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
</TABLE>
<TABLE>
Statement of Operations Data:
<S> <C> <C> <C> <C> <C>
Year end Year end Year end Year end Year end
April 30, April 30, April 30, April 30, April 30,
1995 1996 1997 1998 1999
Revenues 00.00 00.00 00.00 00.00 00.00
Income
(loss) (625,399) 3,666,424 (2,072,867) (1,857,604) (2,990,515)
Income (loss)/
share (0.02) 0.42 (0.08) (0.05) (0.05)
</TABLE>
ITEM 7. MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company discontinued its operations in August of 1986 because
of significant operation losses. The Company is developing its
Vertex hair replacement prosthesis for introduction to the
market. It identified the market and believes its products are
viable for that market. The Company management believes that
with the appointment of Dr. Harold Lancer as Medical Director and
with the establishment of a working relationship with California
Cybernetics Corporation, that the Vertex(R) development project
will be successful.
Up until April 30, 1994, the Company issued $48,000 in principle
of convertible notes payable. The Company's management estimates
that it will require approximately $500,000 to develop Vertex(R).
Liquidity and Capital Resources
On June 7, 1994, the Company offered $1,000,000 of 7% cumulative
preferred stock in a private placement memorandum. The Company
has received $188,000 from the offering. The offering is closed.
As a result of the discontinued operations, the Company has no
revenues and expenses related only to administration and product
development. In the opinion of management the Company's
continued existence is dependent upon the completion of a
successful merger with and/or acquisition by an operating company
or be successful in raising sufficient capital to develop and
market Vertex(R).
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.
ITEM 8. FINANCIAL STATEMENTS
TRIDON ENTERPRISES INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
FINANCIAL STATEMENTS
APRIL 30, 1999 AND 1998
<PAGE>
Table of Contents
Page
Independent Auditors' Report 1
Prior Independent Auditors' Report 2
Balance Sheets 3-4
Statements of Operations 5-6
Statements of Changes in Stockholders' Equity (Deficit) 7-10
Statements of Cash Flows 11-13
Notes to Financial Statements 14-22
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Tridon Enterprises Incorporated
We have audited the accompanying consolidated balance sheets of
Tridon Enterprises Incorporated and subsidiaries (companies in
the development stage) as of April 30, 1999 and 1998, and the
related statements of operations, changes in stockholders' equity
(deficit), and cash flows for the years ended April 30, 1999,
1998 and 1997. 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
did not audit the financial statements of Vertex Corporation, a
wholly owned subsidiary, for the year ended April 30, 1998, which
statements reflect total assets of $121 as of April 30, 1998, and
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, 1999 and 1998, and the
results of their operations and their cash flows for the years
ended April 30, 1999, 1998 and 1997 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 to
continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of
that uncertainty.
As discussed in Note 1 to the financial statements, the amounts
for April 30, 1999 and 1998 include Tridon Enterprises
Incorporated and its wholly owned subsidiary, Vertex Corporation.
The amounts shown for April 30, 1997 are for Tridon Enterprises
Incorporated only.
CALDWELL, BECKER, DERVIN, PETRICK & CO., L.L.P.
November 11, 1999
<PAGE>
TRIDON ENTERPRISES INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
BALANCE SHEETS
ASSETS
<TABLE>
<S> <C> <C>
(Consolidated) (Consolidated)
April 30,1999 April 30,1998
CURRENT ASSETS
Cash $ 1,031 $ 682
Advances to officers (Note 3) 0 30,000
Note receivable and interest
receivable (Note 5), 275,000 275,000
less allowances for uncollectible
amounts (275,000) (275,000)
Inventory (Note 1) 7,506 5,325
Prepaid advertising costs (Note 1) 36,000 29,253
Prepaid consulting fees (Note 13) 752,250 0
Prepaid expense (Note 1) 2,310 0
---------- ----------
Total Current Assets 799,097 65,260
---------- ----------
PROPERTY AND EQUIPMENT, AT COST
(Notes 1 and 2) 25,462 17,993
Accumulated depreciation (9,502) (6,305)
---------- ----------
Net Property and Equipment 15,960 11,688
---------- ----------
OTHER ASSETS
Marketable equity securities (Note 4) 0 107,451
---------- ----------
Total Other Assets 0 107,451
---------- ----------
Total Assets $ 815,057 $ 184,399
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued
expenses (Note 11) $ 342,794 $ 129,297
Advances from officers (Note 3) 130,578 48,845
Advances from shareholder (Note 3) 1,536 5,000
Advances to Vertex Marketing (Note 3) 39,400 0
---------- ----------
Total Current Liabilities 514,308 183,142
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 11) 0 0
---------- ----------
Total Liabilities $ 514,308 $ 183,142
---------- ----------
STOCKHOLDERS' EQUITY (Page 10)
Common stock, $.001 par value,
100,000,000 shares authorized,
67,994,734 and 42,275,734 shares
issued and outstanding, respectively $ 67,995 $ 42,276
Preferred stock, 7% cumulative
convertible, par value $.001,
20,000,000 shares authorized,
83,300 shares issued and
outstanding (Note 8) 83 83
Additional paid-in capital 12,030,854 9,270,566
Common stock subscribed (Note 12) 0 (225,000)
Common stock subscribed - unearned
compensation (Note 12) 0 (279,000)
Deficit accumulated during
development stage (11,798,183) (8,807,668)
---------- ----------
Total Stockholders' Equity 300,749 1,257
---------- ----------
Total Liabilities and
Stockholders' Equity $ 815,057 $ 184,399
========== ==========
See Accompanying Auditors' Report
See Accompanying Notes to the Financial Statements
</TABLE>
<PAGE>
TRIDON ENTERPRISES INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
STATEMENTS OF OPERATIONS
<TABLE>
<S> <C> <C> <C> <C>
(Consolidated) (Consolidated)
Twelve Twelve Twelve
Inception Months Months Months
To Ended Ended Ended
April 30, April 30, April 30, April 30,
1999 1999 1998 1997
------------ ------------ ------------ -----------
REVENUE
Net sales $ 151,729 $ 0 $ 0 $ 0
Cost of sales 182,581 0 0 0
------------ ------------ ------------ -----------
Gross (Loss) (30,852) 0 0 0
------------ ------------ ------------ -----------
OPERATING EXPENSES
General and administrative 5,757,482 1,644,267 841,314 375,065
Research and development 132,697 0 0 3,117
Computer software development
costs 630,066 0 0 0
Interest 869,166 0 0 0
------------ ------------ ------------ -----------
Total Operating Expenses 7,389,411 1,644,267 841,314 378,182
------------ ------------ ------------ -----------
Net (Loss)
from Operations (7,420,263) (1,644,267) (841,314) (378,182)
------------ ------------ ------------ -----------
OTHER INCOME (EXPENSES)
Loan fees related to
common stock issued (Note 1) (1,049,016) (239,016) 0 (810,000)
Officer's salary related to
common stock issued (Note 1) (1,157,328) (748,305) 0 (409,023)
Interest 94,099 0 8,333 16,695
Casualty loss - boat (3,000,000) 0 0 0
Gain on settlement 411,495 0 0 0
Forgiveness of interest 8,901 0 0 0
Forgiveness of debt 123,994 0 0 0
Realized gain (loss) on
disposition of marketable
securities (Note 4) 2,720 51,375 3,677 (47,585)
Loss on permanent impairment of
securities (Note 4) (1,120,050) 0 (1,027,500) (92,550)
Miscellaneous 4,396 976 0 0
Bad debt expense (351,422) 0 0 (351,422)
Litigation settlement (Note 11) (410,478) (410,478) - -
------------ ------------ ------------ -----------
Total Other Income (Loss) (6,442,689) (1,345,448) (1,015,490) (1,693,885)
(Loss) from Continuing
Operations Before Income
Tax (Provision) Benefit (13,862,952) (2,989,715) (1,856,804) (2,072,067)
(Provision) Benefit for
Income Taxes (Note 6)
Current $ 81,805 $ (800) $ (800) $ (800)
Deferred - - - -
------------ ------------ ------------ -----------
(Loss) from Continuing
Operations (13,781,147) (2,990,515) (1,857,604) (2,072,867)
Gain on Disposal of Segment 3,836,964 0 0 0
Loss on Discontinued Operations (1,854,000) 0 0 0
Net Income (Loss) $(11,798,183) $(2,990,515) $(1,857,604) $(2,072,867)
============ ============ ============ ===========
EARNINGS (LOSS) PER SHARE $ (.05) $ (.05) $ (.08)
============ ============ ===========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING DURING
THE PERIOD (Note 1) 54,796,395 35,115,734 25,941,648
============ ============ ===========
See Accompanying Auditors' Report
See Accompanying Notes to the Financial Statements
</TABLE>
<PAGE>
TRIDON ENTERPRISES INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED APRIL 30, 1988 TO 1999
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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)
-------- ------- -------- -------- ------- ------- ----------- --------- -----------
Balance at
inception $ $ $ 0 $
Common stock
issued 1,727,043 1,727 4,168,828 4,168,555
Net losses from
inception to
April 30, 1988
0 0 0 (4,267,549) (4,267,549)
-------- ------- ---------- -------- ------- ------- ----------- --------- -----------
Balances at
April 30, 1988
1,727,043 1,727 4,168,828 (4,267,549) (98,994)
Net income
for the year
April 30, 1989
0 0 0 0 0
-------- ------- ---------- -------- ------- ------- ----------- --------- -----------
Balances at
April 30, 1989
1,727,043 1,727 4,168,828 (4,267,549) (98,994)
-------- ------- ---------- -------- ------- ------- ----------- --------- -----------
Merger on
October 10, 1989
with Tridon
Development
Corporation
1,800,000 1,800 (4,964) 0 (3,164)
Net income
for the year
April 30, 1990
0 0 0 127,339 127,339
-------- ------- ---------- -------- ------- ------- ----------- --------- -----------
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
0 0 0 (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
0 0 0 (14,546) (14,546)
Balances at
April 30, 1992
3,527,043 3,527 4,161,864 (4,154,937) 10,454
Net loss
for the year
April 30, 1993
0 0 $ 0 $(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
0 0 0 (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 (Note 12) (225,000) (225,000)
Net loss
for the year
April 30, 1995
0 0 0 (625,399) (625,399)
-------- ------- ---------- -------- ------- ------- ----------- --------- -----------
Balances at
April 30, 1995 -
consolidated
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
0 0 0 3,666,424 3,666,424
-------- ------- ---------- -------- ------- ------- ----------- --------- -----------
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
(Note 1)
9,000,000 9,000 891,000 900,000
Common stock
issued for
increase in
advances to
officers
(Note 1)
4,547,700 4,548 449,922 454,470
Net loss
for the year
April 30, 1997
0 0 0 (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
(Note 12)
3,100,000 3,100 275,900 (279,000) 0
Paid in capital -
non-reciprocal
transfer (Note 4) 1,027,500 1,027,500
Consolidated net
(loss) for the year
April 30, 1998
0 $ 0 $ 0 $ $ $(1,857,604) $(1,857,604)
-------- ------- ---------- -------- ------- ------- ----------- --------- -----------
Consolidated
balances at
April 30, 1998
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
(Note 12)
(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
(Note 12) 0 0 0 225,000 225,000
Common stock
issued in
exchange for
debt reduction
and officer's
salary
(Note 1)
15,509,000 15,509 1,113,776 1,129,285
Common stock
issued in
settlement of
lawsuit
(Note 11)
3,000,000 3,000 193,600 196,600
Consolidated net
(loss) for the year
April 30, 1999
0 0 0 (2,990,515) (2,990,515)
-------- ------- ---------- -------- ------- ------- ----------- --------- -----------
Consolidated
balances at
April 30, 1999
67,994,734 $67,995 $11,657,116 83,300 $ 83 $373,738 $(11,798,183) 0 $ 300,749
======== ======= ========== ======== ======= ======= =========== ========= ===========
See Accompanying Auditors' Report
See Accompanying Notes to the Financial Statements
</TABLE>
<PAGE>
TRIDON ENTERPRISES INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
STATEMENTS OF CASH FLOWS
<TABLE>
<S> <C> <C> <C> <C>
(Consolidated) (Consolidated)
Twelve Twelve Twelve
Inception Months Months Months
To Ended Ended Ended
April 30, April 30, April 30, April 30,
1999 1999 1998 1997
------------ ------------ ------------ -----------
CASH FLOWS PROVIDED (USED) BY
OPERATING ACTIVITIES:
Net income $(11,798,183) $ (2,990,515) $ (1,857,604) $(2,072,867)
Adjustments to reconcile
net (loss) to net cash
used by operations:
(Loss) on disposal of segment (3,836,964) 0 0 0
Loss on permanent impairment
of marketable securities (Note 4) 1,120,050 0 1,027,500 92,550
(Gain) loss on sale of
marketable securities (7,467) (51,375) (3,677) 47,585
Write down of investment 25,000 0 0 0
Depreciation 9,668 3,198 1,459 1,634
Increase in allowance for
uncollectible amounts 370,638 0 8,333 351,422
Professional fees 12,885 0 0 0
Outside services paid by issuance of
common stock 1,219,452 902,250 51,167 248,034
Reclassification of common stock
subscribed (Note 12) 225,000 225,000 0 0
Officer's salary related to common
stock issued (Note 1) 1,697,328 748,305 540,000 409,023
Operating expenses paid by officer 110,699 11,694 99,005 0
Loan fees related to common stock
issued (Note 1) 1,049,016 239,016 0 810,000
Write-down of screenplays 49,800 0 0 0
Loss of fixed asset disposal 1,253 0 0 0
Research and development 88,000 0 0 0
Interest expense 349,745 0 0 0
Forgiveness of interest (8,901) 0 0 0
Maritime loss 3,462,825 0 0 0
Forgiveness of debt (123,994) 0 0 0
Stock issued in litigation
settlement (Note 11) 410,478 410,478 0 0
(Increase) decrease in:
Inventory (7,506) (2,181) (5,325) 0
Prepaid expenses (28,310) (9,057) (19,253) 0
Notes receivable (3,000) 0 0 0
Interest receivable (25,000) 0 (8,333) (16,667)
Increase (decrease) in:
Accounts payable and accrued expenses 376,354 127,275 94,500 (49,902)
Preferred stock subscription 10,000 0 0 0
Estimated future cost of discounted
operations 3,125 0 0 0
Accounts payable-Vintage Group Inc. 45,574 0 0 0
------------ ------------ ------------ -----------
Net Cash Flows (Used) by
Operating Activities (5,202,435) (385,912) (72,228) (179,188)
------------ ------------ ------------ -----------
CASH FLOWS PROVIDED (USED) BY
INVESTING ACTIVITIES:
Loans made $ (340,757) $ 0 $ 0 $ (340,757)
Investment in marketable equity
securities (238,550) 0 0 (200,000)
Proceeds from sale of
securities (Note 4) 440,743 107,451 3,677 329,615
Sale of common stock 13,550 0 0 0
Investment in screenplays (40,000) 0 0 0
Purchase of property and equipment (26,881) (7,469) (10,417) 0
Advances to officers (91,627) 0 (10,519) (76,108)
Investment in production (1,925) 0 0 0
Repayments of notes receivable 6,000 0 6,000 0
------------ ------------ ------------ -----------
Net Cash Provided (Used) by
Investing Activities (279,447) 99,982 (11,259) (287,250)
------------ ------------ ------------ -----------
CASH FLOWS PROVIDED (USED) BY
FINANCING ACTIVITIES:
Proceeds from issuance of
common stock 4,870,325 84,622 65,233 443,450
Proceeds from issuance of
convertible preferred stock 135,003 0 0 0
Increase in paid-in capital 99,866 0 0 0
Proceeds from issuance of
convertible notes payable 59,025 0 0 0
Advances from officer 324,075 165,340 0 0
Repayments of advances from officer (44,785) (3,083) 0 (13,353)
Advances from Vertex Marketing 39,400 39,400 0 0
------------ ------------ ------------ -----------
Net Cash Provided by
Financing Activities 5,482,909 286,279 65,233 430,097
------------ ------------ ------------ -----------
NET INCREASE (DECREASE) IN CASH 1,027 349 (18,254) (36,341)
CASH AT BEGINNING OF PERIOD 4 682 18,936 55,277
------------ ------------ ------------ -----------
CASH AT END OF PERIOD $ 1,031 $ 1,031 $ 682 $ 18,936
------------ ------------ ------------ -----------
NON CASH INVESTING AND
FINANCING TRANSACTIONS:
Common stock issued for
advance to officers (Note 1) $ 45,447 $ 0 $ 0 $ 45,447
============ ============ ============ ===========
Common stock issued in exchange for
Madera International, Inc. stock $ 377,200 $ 0 $ 0 $ 377,200
============ ============ ============ ===========
Increase in additional paid in
capital - non-reciprocal
transfer (Note 4) $ 1,027,500 $ 0 $ 1,027,500 $ 0
============ ============ ============ ===========
Payments by officer on behalf
of Company reducing accounts
payable $ 41,914 $ 0 $ 41,914 $ 0
============ ============ ============ ===========
Payments by officer on behalf
of Company increasing prepaid
expense $ 10,000 $ 0 $ 10,000 $ 0
============ ============ ============ ===========
Issuance of common stock for
future services (Note 13) $ 1,031,250 $ 752,250 $ 279,000 $ 0
============ ============ ============ ===========
Cancellation of common
stock subscribed $ 279,000 $ 279,000 $ 0 $ 0
============ ============ ============ ===========
Issuance of common stock in
exchange for debt conversion $ 141,964 $ 141,964 $ 0 $ 0
============ ============ ============ ===========
CASH PAID FOR:
Income taxes $ 5,600 $ 800 $ 0 $ 800
============ ============ ============ ===========
Interest $ 0 $ 0 $ 0 $ 0
============ ============ ============ ===========
See Accompanying Auditors' Report
See Accompanying Notes to the Financial Statements
</TABLE>
<PAGE>
TRIDON ENTERPRISES INCORPORATED AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
NOTES TO 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 10).
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 Enterprise
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 prior to year end 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 is included in prepaid expenses.
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 10 for
disposition of wholly-owned subsidiary. The consolidated
financial statements for April 30, 1999 and 1998 include the
accounts of Tridon Enterprises Incorporated and its wholly-owned
subsidiary, Vertex Corporation. Significant intercompany
accounts and transactions have been eliminated in consolidation
(see Note 1 - Organization). The financial statements for April
30, 1997 are for Tridon Enterprises Incorporated only. Tridon
Communications Corporation was inactive for the period of
incorporation, March 9, 1999, to April 30, 1999.
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 is valued at lower of cost (first-in, first-out) or
market. Inventory consists of samples of finished products.
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 and 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, 1999, the Company entered
into several non-monetary transactions as described below:
The Company issued 1,650,000 shares of common stock for future
services to be performed for the Company valued at $752,250 (see
Note 14).
The Company issued 15,509,000 shares of common stock in exchange
for $2,500 cash and conversion of outstanding debt and payables
in the amount of $141,964.
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.
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 $3,198, $1,459 and $1,634 for the years
ended April 30,1999, 1998 and 1997, 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 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.
Long-Lived Assets
In 1998, the Company 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 Company are reviewed for impairment whenever
events or changes in circumstances indicated that the carrying
amount of an asset may not be fully recoverable. 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. The Company has produced an infomercial to be aired
sometime in the future. The Company has elected to expense the
cost when the infomercial is aired.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and consist of the
following:
April 30,
-----------------------------
1999 1998
---------- ----------
Computers $ 10,259 $ 10,259
Furniture and fixtures 4,821 4,821
Equipment 2,913 2,913
Leaseholds improvements 7,469 0
---------- ----------
25,462 17,993
Less: Accumulated Depreciation 9,502 6,305
---------- ----------
$ 15,960 $ 11,688
========== ==========
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
$12,500 to the Company in a non interest bearing loan, which is
included in the $130,578 advance from officers balance.
During the years ended April 30, 1999 and 1998, net non-interest
bearing funds were advanced from Paul Ebeling, a former officer
of the Company, to Tridon Enterprises Inc. and Subsidiaries.
Balances owed by the Companies to Mr. Ebeling were $118,078 and
$48,845 for the years ended April 30, 1999 and 1998,
respectively. These amounts are included in advances from
officers balance. During the year, 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 has 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 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 Subsidiaries 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.
During the year ended April 30, 1997, the Company purchased 1
million 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 current year.
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, and therefore, this
receivable and accrued interest was reserved for. As of the date
of this report, the condition of this receivable and accrued
interest is unchanged.
NOTE 6 - INCOME TAXES
The provision for income taxes consists of:
April 30,
----------------------------------------
1999 1998 1997
-------- -------- --------
Federal $ 0 $ 0 $ 0
State 800 800 800
-------- -------- --------
800 800 800
Deferred Taxes 0 0 0
-------- -------- --------
Provision for
Income Taxes $ 800 $ 800 $ 800
======== ======== ========
Loss Carryforwards
Tridon Enterprises Incorporated has net operating loss
carryforwards which 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:
1999 $ 918,000
2000 475,000
2001 1,401,000
2002 1,001,000
----------
Totals $3,795,000
==========
As of the date of these financial statements, the Company has not
filed income tax returns for April 30, 1998 or April 30, 1999.
Subsequent to the merger of HCSI and Tridon Development
Corporation, the Company has accumulated a tax loss carryforward
of approximately $4,071,000 for federal tax purposes and a
$1,997,415 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 2019. State
NOL's are carried forward 5 years and expire between 1999 and
2004. In addition, Polaris Pictures Corporation (Polaris) had
accumulated a tax loss carryforward of approximately $265,000 for
federal tax purposes and a $132,000 loss carryforward for
California franchise tax purposes, whose net operating loss
carryforwards expire in 2009 and 1999, respectively.
Vertex Corporation has a net operating loss of approximately
$19,000 which expires in 2013, and a net operating loss of
approximately $126,000 which expires in 2019 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:
1999 1998
----------- -----------
Deferred Tax Asset - Non-current $2,876,113 $2,174,811
Deferred Tax Liability - Non-current 0 0
Less Valuation Allowance (2,876,113) (2,174,811)
----------- -----------
$ 0 $ 0
The deferred tax asset also results from reserves for the note
receivable, and the issuance of Company stock for services and
compensation which are deductible for financial statement
purposes, but not for income tax purposes until the note is
actually written off and the services and compensation is
recognized as income by the recipients. The deferred tax asset
also 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 increased by $701,302 for the year ended April 30,
1999.
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
$112,273, $86,282 and $60,291 for the years ended April 30, 1999,
1998 and 1997, respectively.
For the years ended April 30, 1999, 1998 and 1997, 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.
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
Currently the Company is sharing office space with their
subsidiary. Rent expense relative to this lease was charged to
operations, and for the years ended April 30, 1999, 1998 and 1997
was $5,715, $14,400, and $0, respectively. As of April 30, 1999,
the Company is not paying office rent. The subsidiary started
leasing space in Beverly Hills at $3,269 per month on October 1,
1998. The lease expires September 30, 2001. Rent expense for
the year ended April 30,1999 was $22,887. Future minimum rental
payments required under the lease are as follows:
September 30,
-------------
2000 $ 39,228
2001 $ 39,228
2002 $ 16,345
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 years ended April 30, 1998 and 1997 was
$5,400 and $0 respectively. Auto expense for the fiscal years
ended April 30, 1998 and 1997 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 judgement for $196,600
was settled for 3,000,000 shares of Tridon Enterprises stock. In
the second lawsuit a company paid Tridon Enterprises Inc. $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. A third
lawsuit has not been settled as of the date of this report,
although a judgement in the amount of $213,878 has been entered
against Tridon Enterprises Inc. This amount has been accrued and
is included in accounts payable and litigation settlement
expense.
NOTE 12 - COMMON STOCK SUBSCRIBED
During the fiscal year ended April 30, 1995, the Company issued
100,000 shares of common stock in consideration for future
consulting services valued at $225,000. During the fiscal year
ending April 30, 1999, these services have been rendered. The
common stock subscribed has been reclassified to consulting
expense.
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. Subsequent to the balance sheet date, the
shares were to be canceled. As of the date of this report, these
shares have not been received, and the outcome of this
transaction cannot be determined, however, stop transfers have
been placed on the shares. The $279,000 and the related
3,100,000 shares have been reversed.
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 theses services 3,300,000 shares of common stock were issued,
valued at $1,504,500. The agreements are all for a one-year
period commencing November 2, 1998. As of April 30, 1999,
$752,250 of those consulting agreements have been earned and
$752,250 are unearned and are classified as a prepaid expense.
As of the date of this financial statement, all services have
been performed.
NOTE 14 - SUBSEQUENT EVENTS
Subsequent to the year end the Company entered into a "Plan of
Reorganization Agreement" with Satellite Link Communications
(SLC) and several individuals. The agreement calls for Tridon
Enterprises to do a reverse stock split and exchange its stock
for the stock of SLC. SLC will become a subsidiary of Tridon
Enterprises. As of the date for this report this agreement has
not been finalized.
ITEM 9. Disagreements on Accounting and Financial Disclosures
During the 12 months ended April 30, 1999 the Company had no
disagreement with accountants on any matter of accounting
principles or practices of financial statement disclosure.
PART III
ITEM 10. Directors and Officers of the Registrant
Officers and Directors of the Company as of April 30, 1999 are as
follows:
Name Age Position
Kevin Welch 38 CEO, Secretary/Treasurer and Director
Nicolas Weider 40 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.
ITEM 11. Executive Compensation
The following is a summary of executive compensation for the year
ended April 30, 1999: (See Note 1)
Kevin Welch $ 0
Nicolas Weider, MD $ 0
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.
Beneficial Owner Shares Beneficially Percentage of
Owned Class
Antebi Children's Insurance
Trust of 1995
345 North Maple Drive
Beverly Hills, CA 90210 15,452,444 23.38%
Paul Ebeling
PO Box 16244
Beverly Hills, CA 90209 16,917,712 25.60%
Kevin Welch
PO Box 16244
Beverly Hills, CA 90209 3,500,000 5.30%
Nicolas Weider
PO Box 16244
Beverly Hills, CA 90209 1,000,000 1.51%
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Vintage Group inc., as a condition set forth in the Agreement and
Plan of Merger, canceled and forgave all indebtedness and any
other obligations owed to Vintage by Hammer computer Systems,
Inc. (HCSI). The Company advanced $5000 to Vintage Group, Inc.
during the quarter ending October 31, 1994.
President, CEO and director Paul Ebeling has made cash advances
to the Corporation for administrative expenses. The amount owed
to Mr. Ebeling at April 30, 1997 and 1998 is $91,555 and $48,845
respectively (see Note 3).
The son of Paul A. Ebeling, Nicholas Ebeling, purchased $2,500 of
convertible notes from the Company in March of 1992. In addition
another family member bought $3,000 of convertible notes. During
the year ending April 30, 1996 the notes were converted to 2,500
and 3,000 shares of cumulative convertible preferred shares
respectively.
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, during the year ended
April 30, 1999 Mr. Welch was issued 500,000 shares at par value.
During the year ended April 30, 199 Mr. Welch advanced $12,500 to
the Company in a non interest bearing loan, which is included in
the $130,578 Advance from officers balance.
During the years ended April 30, 1999 and 1998, net non-interest
bearing funds were advanced from Paul Ebeling, a former officer
of the Company, to Tridon Enterprises Inc. and Subsidiaries.
Balances owed by the Companies to Mr. Ebeling were $118,078 and
$48,845 for the year ends April 30, 1999 and 1998, respectively.
These amounts are included in Advances from officers balance.
During the year Mr. Ebeling converted $10,845 of the amount owed
to him into 10,845,000 shares of the Company's common stock.
Subsequent to the year end, on June 23, 1999, Mr. Ebeling entered
into a definitive written agreement with an unrelated third party
to sell all right, title and interest in and to the Series A
Preferred Stock and Shares of Common Stock of the Company. The
sale and purchase agreement will close on July 1, 1999 at which
time Mr. Ebeling will own no further shares of stock in the
Company.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
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:
3. Reports on Form 8K dated January 22, February 2, and
April 13, 1999.
Exhibit
Number Description
(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.
(b) Certificate of Amendment to Articles of
Incorporation dated August 30, 1984 and
Articles of Incorporation dated September 27,
1984
(c) Bylaws
(d) Certificate of Amendment to Articles of
Incorporation dated January 20, 1994.
(e) Certificate of Amendment to Articles of
Incorporation dated April 24, 1996.
(24) Consents of Experts and Counsel.
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.
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.
Date: January 16, 2000 By: /s/ Kevin Welch
Kevin Welch,
CEO, Secretary/Treasurer
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