<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR FISCAL YEAR ENDED: SEPTEMBER 30, 1997
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________________ to ________________
Commission file number 33-1599
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D-VINE, LTD.
------------------------------------------
(Exact name of small business issuer as
specified in its charter)
DELAWARE 22-2732163
------------------------------- ----------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
712 FIFTH AVENUE, 7TH FLOOR, NEW YORK, NEW YORK 10019
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number (212) 582-3400
---------------------------
Securities registered under Section 12(b) of the Act: NONE
----------------------
Securities registered under Section 12(g) of the Act: NONE
----------------------
<PAGE>
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X
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No _____
Total pages: 24
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Exhibit Index Page: 12
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FORM 10-KSB
Check if there is no disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
KSB or any amendment to this form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year. $ -0-
-----------
As of December 31, 1998, there were 24,607,731 shares of the Registrant's
common stock, par value $0.01, issued and outstanding. The aggregate market
value of the Registrant's voting stock held by non-affiliates of the Registrant
was approximately $-0- computed at the average bid and asked price as of January
10, 1997.
DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly describe
them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant
to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"): NONE
Transitional Small Business Disclosure Format (check one):
Yes _______; No X
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TABLE OF CONTENTS
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<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ITEM NUMBER AND CAPTION
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PART I
1. Description of Business............................................................... 4
2. Description of Property............................................................... 4
3. Legal Proceedings..................................................................... 5
PART II
4. Submission of Matters to a Vote of Security Holders................................... 5
5. Market for Common Equity and Related Stockholder Matters.............................. 5
6. Management's Discussion and Analysis or Plan of Operations............................ 6
7. Financial Statements.................................................................. 8
8. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.. 8
PART III
9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.................................... 9
10. Executive Compensation................................................................ 10
11. Security Ownership of Certain Beneficial Owners and Management........................ 11
12. Certain Relationships and Related Transactions........................................ 11
13. Exhibits and Reports on Form 8-K...................................................... 11
</TABLE>
<PAGE>
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PART I DESCRIPTION OF BUSINESS
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GENERAL
The Company is seeking to effect a merger, exchange of capital stock, asset
acquisition or other similar business combination with an operating business.
The business objective of the Company is to effect a business combination with a
business which the Company believes has significant growth potential. The
Company intends to utilize equity in affecting a business
combination.
HISTORY
The Company was incorporated as Trans West, Inc. on July 22, 1985 in
Delaware.
During the period from October 31, 1986 to March 31, 1987, the Company
remained in the development stage while attempting to enter certain businesses.
The Company was unsuccessful in these start up efforts and all activity ceased
during 1987 as a result of foreclosure on various loans in default and/or
abandonment of all assets. From March 31, 1987 to September 27, 1995 the
Company was an inactive corporation. On September 27, 1995 the Company revived
its corporate charter in Delaware and was reactivated.
Since September 28, 1995, the Company has not engaged in any business
activities and the business purpose of the Company is to seek out and obtain an
acquisition or merger transaction whereby its stockholders would benefit by
owning an interest in a viable enterprise. Since the Company has no operations
or significant assets, its principal potential for profits comes solely from
operations it would receive in any acquisition or merger transaction. A merger
or acquisition transaction with the Company would allow a privately held company
to become a publicly held corporation with a broad shareholder base without
experiencing the substantial time and filing requirements and financial
expenditures imposed by federal and state securities laws.
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ITEM 2. DESCRIPTION OF PROPERTY
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The Company at this time has no properties.
Since 1995 all activities of the Company have been conducted by corporate
officers from either their home or business offices. Currently, there are no
outstanding debts owed by the Company for the use of these facilities and there
are no commitments for future use of the facilities.
4
<PAGE>
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ITEM 3. LEGAL PROCEEDINGS
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NONE.
PART II
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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NONE.
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ITEM 5. MARKET FOR COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
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The Company's common stock is quoted under the symbol "DVNL" on the NASD
OTC Bulletin Board. The last reported activity on the OTC Bulletin Board in the
Company's common stock was on February 16, 1995. Currently, no market exists for
the Company's securities and there is no assurance that a regular trading market
will develop, or if developed, that it will be sustained. A shareholder in all
likelihood, therefore, will be unable to resell the securities referred to
herein should he or she desire to do so. Furthermore, it is unlikely that a
lending institution will accept the Company's securities as pledged collateral
for loans unless a regular trading market develops. To the best knowledge of
management, there was no other trading of shares during the past two years
except as reported on Form 8-K September 25, 1996.
The number of shareholders of record of the Company's common stock as of
December 31, 1998 was 91.
The Company has not paid any cash dividends to date and does not anticipate
paying dividends in the foreseeable future. It is the present intention of
management to utilize all available funds for the development of the Company's
business.
5
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
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The Company is considered a development stage company with no assets
or capital and with no operations or income since approximately 1988. The costs
and expenses associated with the preparation and filing of this registration
statement and other operations of the Company have been paid for by shareholders
of the Company. It is anticipated that the Company will require only nominal
capital to maintain the corporate viability of the Company and necessary funds
will most likely be provided by the Company's existing shareholders or its
officers and directors in the immediate future. The Company is actively seeking
business opportunities.
The statements contained in this Report on Form 10-KSB that are not
historical facts are forward-looking statements (as such term is defined in the
Private Securities Litigation Reform Act of 1995) that involve risks and
uncertainties. Such forward-looking statements may be identified by, among other
things, the use of forward-looking terminology such as "believes," "expects,"
"may," "will," "should" or "anticipates" or the negative thereof or other
variations thereon or comparable terminology, or by discussions of strategy that
involve risks and uncertainties. From time to time, the Company or its
representatives have made or may make forward-looking statements, orally or in
writing. Such forward-looking statements may be included in various filings made
by the Company with the Securities and Exchange Commission (the "SEC"), or press
releases or oral statements made by or with the approval of an authorized
executive officer of the Company. These forward-looking statements, such as
statements regarding anticipated future revenues, capital expenditures, Year
2000 compliance and other statements regarding matters that are not historical
facts, involve predictions. The Company's actual results, performance or
achievements could differ materially from the results expressed in, or implied
by, these forward-looking statements. Potential risks and uncertainties that
could affect the Company's future operating results include, but are not limited
to: (i) economic conditions, including economic conditions related to entry into
any new business venture; (ii) the availability of equipment from the Company's
vendors at current prices and levels; (iii) the intense competition in the
markets for the Company's new products and services; (iv) the Company's ability
to integrate acquired companies and businesses in a cost-effective manner; (v)
the Company's ability to effectively implement its branding strategy; and (vi)
the Company's ability to develop, market, provide, and achieve market acceptance
of new service offerings to new and existing clients.
6
<PAGE>
RESULTS OF OPERATIONS
Results of operations for the year ended September 30, 1997 as compared to
the year ended September 30, 1996
Revenues were $-0- for the year ended September 30, 1997 as compared to $0
for the year ended September 30, 1996. Costs of goods sold for the year ended
September 30, 1997, were $0 as compared to $0 for the year ended September 30,
1996 representing a cost of goods sold percentage of 0% for the year ended
September 30, 1997 as compared to 0% for the year ended September 30, 1996.
General and administrative costs for the for the year ended September 30,
1997 were $27,125, an increase of 389% over expenses of $6,978 for the year
ended September 30, 1996.
Liquidity and capital resources as of September 30, 1997.
The Company's cash balance was $-0- and working capital was a negative
$2,125 as at September 30, 1997.
The Company's primary short-term needs for capital, which are subject to
change, are for the acquisition of new business opportunities.
Income tax: As of September 30, 1997, the Company has a tax loss carry-
forward of $865,946. The Company's ability to utilize its tax credit carry-
forwards in future years will be subject to an annual limitation pursuant to the
"Change in Ownership Rules" under Section 382 of the Internal Revenue Code of
1986, as amended. However, any annual limitation is not expected to have a
material adverse effect on the Company's ability to utilize its tax credit
carry-forwards.
The Company currently plans to continue to accept funds from or accrue
expenses incurred officers, directors and other related parties to seek new a
new business opportunity.
The Company expects its capital requirements to increase over the next
several years as it commences new search and development efforts, undertakes new
product development, increases sales and administration infrastructure and
embarks on developing in-house business capabilities and facilities. The
Company's future liquidity and capital funding requirements will depend on
numerous factors, including the extent to which the Company's present management
can fund the continued capital requirements, the timing of regulatory actions
regarding the Company's potential acquisitions, the costs and timing of
expansion of sales, marketing activities, facilities expansion needs, and
competition in any business entered into.
The Company believes that its available cash and cash from management
contributions will be sufficient to satisfy its funding needs. Thereafter, if
cash generated from any newly acquired or developed business operations is
insufficient to satisfy the Company's working
7
<PAGE>
capital and capital expenditure requirements, the Company may be required to
sell additional equity or debt securities or obtain additional credit
facilities. There can be no assurance that such financing, if required, will be
available on satisfactory terms, if at all.
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ITEM 7. FINANCIAL STATEMENTS
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The financial statements of the Company and supplementary data are included
beginning immediately following the signature page to this report. See Item 14
for a list of the financial statements and financial statement schedules
included.
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ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
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There are not and have not been any disagreements between the Company and
its accountants on any matter of accounting principles, practices or financial
statements disclosure.
8
<PAGE>
PART III
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ITEM 9. DIRECTORS EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
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EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth the name, age, and position of each
executive officer and director of the Company:
<TABLE>
<CAPTION>
DIRECTOR'S
NAME AGE OFFICE TERM EXPIRES
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Edward Tobin 42 Chief Executive Officer, Chairman of Next Annual
the Board of Directors and President Meeting
Thomas Tuttle 32 Director Next Annual
Meeting
Christopher F. Brown 36 Director Next Annual
Meeting
Steven A. Saide 52 Secretary Next Annual
Meeting
</TABLE>
Edward Tobin has served as chairman and chief executive officer of the
Company since September 11, 1996. Mr. Tobin is also Managing Director of GEM
Ventures, Ltd. Prior to joining GEM, Mr. Tobin was Managing Director of
Lincklaen Partners, a private venture capital group. Mr. Tobin received his
M.B.A. from the Wharton School, and a Master of Science in Engineering and a
Bachelor of Science in Economics from the University of Pennsylvania.
Thomas Tuttle has served as a director of the Company since September 12,
1996. Mr. Tuttle is also a Managing Director of Global Emerging Markets North
America, Inc. Prior to this he was the Indonesian county manager for Morgan
Stanley where he was responsible for capital raising and advisory services in
that market.
Christopher F. Brown has served as a director of the Company since
September 12, 1996. Mr. Brown is also the President of GEM North America Inc.
Previously he was with Drexel Burnham Lambert as an associate, Smith Barney as
an Investment Advisor from 1986 to 1988, and Shearson Lehman Brothers from 1988
to 1993. He subsequently founded and managed the Mergers and Acquisitions
department at Drake Capital Securities, Inc.
9
<PAGE>
Steven A. Saide has served as Secretary of the Company from September 12,
1996. Mr. Saide is also a partner in the New York office of the Firm of Bryan
Cave LLP attorneys.
The Company's Certificate of Incorporation provides that the board of
directors shall consist of from one to four members as elected by the
shareholders. Each director shall hold office until the next annual meeting of
stockholders and until his successor shall have been elected and qualified.
BOARD MEETINGS AND COMMITTEES
The Directors and Officers will not receive remuneration from the Company
until a subsequent offering has been successfully completed, or cash flow from
operating permits, all in the discretion of the Board of Directors. Directors
may be paid their expenses, if any, of attendance at such meeting of the Board
of Directors, and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as Director. No such payment shall
preclude any Director from serving the Corporation in any other capacity and
receiving compensation therefrom. No compensation has been paid to the
Directors. The Board of Directors may designate from among its members an
executive committee and one or more other committees. No such committees have
been appointed.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based solely upon a review of forms 3, 4, and 5 and amendments thereto,
furnished to the Company during or respecting its last fiscal year, no director,
officer, beneficial owner of more than 10% of any class of equity securities of
the Company or any other person known to be subject to Section 16 of the
Exchange Act of 1934, as amended, failed to file on a timely basis reports
required by Section 16(a) of the Exchange Act for the last fiscal year.
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ITEM 10. EXECUTIVE COMPENSATION
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NONE.
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ITEM 11. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
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PRINCIPAL SHAREHOLDERS
The table below sets forth information as to each person owning of record
or who was known by the Company to own beneficially more than 5% of the
24,607,731 shares of issued and
10
<PAGE>
outstanding Common Stock of the Company as of December 31, 1998 and information
as to the ownership of the Company's Stock by each of its directors and
executive officers and by the directors and executive officers as a group.
Except as otherwise indicated, all shares are owned directly, and the persons
named in the table have sole voting and investment power with respect to shares
shown as beneficially owned by them.
<TABLE>
<CAPTION>
Name and Address Nature of Number of
of Beneficial Owners Ownership Shares Owned Percent
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Edward Tobin/(1)/ Common Stock 19,500,000 79.24%
Christopher F. Brown/(1)/ Common Stock 19,500,000 79.24%
Thomas Tuttle Common Stock 0 0
Steven A. Saide Common Stock 0 0
All Executive Officers Common Stock 19,500,000 79.24%
and Directors as a Group
(4 persons)
</TABLE>
______________
/(1)/ Edward Tobin and Christopher F. Brown are partners in D-Vine Investment
Partners, which is the direct beneficial owner of the Shares.
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ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------------------------------
NONE.
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ITEM 13. EXHIBITS, AND REPORTS ON FORM 8-K
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(a) The following documents are filed as part of this report.
<TABLE>
<CAPTION>
1. Financial Statements Page
----
<S> <C>
Report of Thomas Monahan, Independent Certified Public Accountant F-1
Balance Sheets as of September 30, 1997 F-2
Statements of Operations for the years ended
September 30, 1997, and 1996 F-3
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
Statement of Stockholders' Equity for the years ended
September 30, 1997, and 1996 F-4
Statements of Cash Flows for the years ended
September 30, 1997 and 1996 F-5
Notes to Financial Statements F-6
</TABLE>
2. FINANCIAL STATEMENT SCHEDULES
The following financial statement schedules required by Regulation S-X are
included herein.
All schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
3. EXHIBITS
(a) The following exhibits are included as part of this report:
<TABLE>
<CAPTION>
SEC
EXHIBIT REFERENCE
NUMBER NUMBER TITLE OF DOCUMENT LOCATION
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<S> <C> <C> <C>
Item 3. Articles of Incorporation and Bylaws
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3.01 3 Articles of Incorporation of Trans West Inc,. Incorporated
a Delaware Corporation now known as by Reference
D-Vine, Ltd.
3.02 3 Bylaws Incorporated
by Reference
</TABLE>
(b) The Company filed a report on Form 8-K dated August 1, 1997 regarding
the sale of warrants pursuant to Regulation S promulgated under the
Securities Act of 1933, as amended. The Form 8-K is incorporated by
reference.
(c) The exhibits listed in Item 14(a)(3) are incorporated by reference.
(d) No financial statement schedules required by this paragraph are
required to be filed as a part of this form.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on it behalf by the undersigned, thereunto duly authorized.
D-VINE, LTD.
Dated: March 15, 1999 By /s/ Edward J. Tobin
---------------------------------
Edward J. Tobin, President
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 indicated on this 15th day of March 1999.
D-VINE, LTD.
By /s/ Edward J. Tobin
---------------------------------
Edward J. Tobin, Director and
Principal Executive, Financial
And Accounting Officer
By /s/ Thomas Tuttle
---------------------------------
Thomas Tuttle, Director
By /s/ Christopher F. Brown
---------------------------------
Christopher F. Brown, Director
13
<PAGE>
THOMAS P. MONAHAN
CERTIFIED PUBLIC ACCOUNTANT
208 LEXINGTON AVENUE
PATERSON, NEW JERSEY 07502
(973) 790-8775
To The Board of Directors and Shareholders
of D-Vine, Ltd. (a development stage company)
I have audited the accompanying balance sheet of D-Vine, Ltd. (a development
stage company) as of September 30, 1997 and the related statements of
operations, cash flows and shareholders' equity for the year ending September
30, 1997. The related statements of operations, cash flows and shareholders'
equity for the years ending September 30, 1996 were examined by other auditors.
These financial 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 basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles 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.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of as of September 30, 1997 and the
related statements of operations, cash flows and shareholders' equity for the
year ending September 30, 1997 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that D-Vine,
Ltd ( a development stage company) will continue as a going concern. As more
fully described in Note 2, the Company has incurred operating losses since
inception and requires additional capital to continue operations. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans as to these matters are described in Note 2.
The financial statements do not include any adjustments to reflect the possible
effects on the recoverability and classification of assets or the amounts and
classifications of liabilities that may result from the possible inability of D-
Vine, Ltd. (a development stage company) to continue as a going concern.
/s/ Thomas Monahan
- -----------------------------------
Thomas P. Monahan, CPA
March 8, 1999
Paterson, New Jersey
F-1
<PAGE>
D-VINE, LTD.
(A Development Stage Company)
BALANCE SHEETS
SEPTEMBER 30, 1997
<TABLE>
<S> <C>
ASSETS
Current assets
Cash $ -0-
---------
Current assets -0-
Total assets $ -0-
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 2,125
Stockholders' equity
Preferred Stock authorized 10,000,000 shares, $0.01 par value each. At
September 30, 1997, the number of shares outstanding is -0-.
Common Stock authorized 50,000,000 shares, $0.01 par value each. At
September 30, 1997, there are 22,607,731 shares outstanding. 226,077
Additional paid in capital 637,744
Deficit accumulated during development stage (865,946)
---------
Total stockholders' equity (2,125)
---------
Total liabilities and stockholders' equity $ -0-
=========
</TABLE>
See accompanying notes to the financial statements.
F-2
<PAGE>
D-VINE, LTD.
(A Development Stage Company)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE PERIOD
FROM REORGANIZATION,
OCTOBER 1, 1995
FOR THE FOR THE TO
YEAR ENDED YEAR ENDED SEPTEMBER 30,
SEPTEMBER SEPTEMBER
30, 1996 30, 1997 1997
----------- ----------- --------------------
<S> <C> <C> <C>
Revenue $ -0- $ -0- $ -0-
Costs of goods sold -0- -0- -0-
----------- ----------- --------------------
Gross profit -0- -0- -0-
Operations:
General and administrative 6,978 27,125 34,103
Depreciation and amortization -0- -0- -0-
----------- ----------- --------------------
Total expense 6,978 27,125 34,103
Net loss $ (6,978) $ (27,125) $ (34,103)
=========== =========== ====================
Net loss per share -basic $(0.00) $(0.00) $(0.00)
=========== =========== ====================
Number of shares outstanding-basic 20,107,731 22,607,731 22,607,731
=========== =========== ====================
</TABLE>
See accompanying notes to the financial statements.
F-3
<PAGE>
D-VINE, LTD.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
DEFICIT ACCUMULATED
PREFERRED PREFERRED COMMON COMMON ADDITIONAL PAID DURING DEVELOPMENT
Date STOCK STOCK STOCK STOCK IN CAPITAL STAGE TOTAL
- ---- ----- ----- ----- ----- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
09-30-1994 16,666,657 $166,667 $ 665,176 $(831,843) $ -0-
09-28-1995 10 $ 1 3,999 4,000
--- ---- --------- --------
09-30-1995 10 $ 1 16,666,657 $166,667 $ 669,175 $(831,843) $ 4,000
=== ==== ========== ======== ========= ========= ========
Reverse split 150 to 1 10 $ 1 107,731 1,077 834,765 (831,843) $ 4,000
Capital contribution 2,978 2,977
Conversion of preferred
stock to common (10) (1) 20,000,000 200,000 (199,999) -0-
09-30-1996 Net profit (loss) (6,978) (6,977)
----------------- ---- ---------- -------- --------- -------- --------
09-30-1996 -0- $ -0- 20,107,731 $201,077 $ 637,744 $(838,821) $ -0-
Issuance of shares for consulting
fees 2,500,000 25,000 25,000
Net loss (27,125) (27,125)
---- ---------- -------- --------- --------- --------
09-30-1997 -0- $ -0- 22,607,731 $226,077 $ 637,744 (865,946) (2,125)
=== ==== ========== ======== ========= ========= ========
</TABLE>
See accompanying notes to the financial statements.
F-4
<PAGE>
D-VINE, LTD.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE PERIOD
FROM
REORGANIZATION,
FOR THE FOR THE OCTOBER 1, 1995
YEAR ENDED YEAR ENDED TO
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1996 1997 1997
--------------- --------------- -----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss (6,978) (27,125) $(34,103)
Depreciation -0- -0-
------- --------
Accounts payable 2,125 2,125
-------- --------
TOTAL CASH FLOWS FROM OPERATIONS -0- 25,000 (31,978)
CASH FLOWS FROM INVESTING ACTIVITIES -0- -0-
------- --------
TOTAL CASH FLOWS FROM INVESTING ACTIVITIES -0- -0-
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of shares of common stock 25,000 25,000
Capital contribution 2,978 2,978
Sale of preferred stock 4,000 4,000
------- --------
TOTAL CASH FLOWS FROM FINANCING ACTIVITIES 6,978 25,000 31,978
NET INCREASE IN CASH -0- -0- -0-
CASH BALANCE BEGINNING OF PERIOD -0- -0- -0-
------- -------- --------
CASH BALANCE END OF PERIOD $ -0- $ -0- $ -0-
======= ======== ========
</TABLE>
See accompanying notes to the financial statements.
F-5
<PAGE>
D-VINE, LTD
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
NOTE 1. ORGANIZATION OF COMPANY AND ISSUANCE OF COMMON STOCK
----------------------------------------------------
a. Creation of the Company
D-Vine, Ltd., (the "Company") was formed under the laws of the state of
Delaware on July 22, 1985. On February 13, 1996, the Company amended its
certificate of incorporation, changing its name to D-Vine, Ltd.
b. Description of the Company
The Company is a development stage company that has remained dormant for the
last ten years. The Company is seeking new and profitable business
opportunities.
c. Issuance of Shares of Common Stock
The Company sold 10 shares of preferred stock for an aggregate consideration of
$4,000 from Erma S. Warburg.
On February 10, 1996, the Company reverse split the number of shares of common
stock outstanding from 16,666,657 to 107,731.
In September, 1996, the 10 shares of 1995 Series AA Convertible Preferred Stock
were converted into 20,000,000 shares of common stock.
In September, 1996, the Company received an additional capital contribution of
$2,978.
In September, 1996, the shares of preferred stock were converted into 20,000,000
shares of common stock.
In October, 1996, the Company issued 2,500,000 shares of common stock in
consideration for consulting fees valued at $25,000 or $0.01 per share.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
a. Basis of Financial Statement Presentation
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company incurred net losses of
$865,943 for period from July 22, 1985 to September
F-6
<PAGE>
D-VINE, LTD
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
30, 1997. On September 12, 1996, the Company changed managerial control. The
Company has not generated any income and has been dependent upon management to
pay the expenses to maintain the Company's existence and pay the costs of
ongoing maintenance. These factors indicate that the Company's continuation as a
going concern is dependent upon its ability to obtain adequate financing.
The financial statements presented consist of the balance sheet of the Company
as at September 30, 1997 and the related statements of operations and cash
flows for the years ending September 30, 1996 and 1997 and for the period from
reorganization, October 1, 1995 to September 30, 1997.
b. Cash and cash equivalents
The Company treats temporary investments with a maturity of less than three
months as cash.
c. Revenue recognition
Revenue is recognized when products are shipped or services are rendered.
d. Selling and Marketing Costs
Selling and Marketing - Certain selling and marketing costs are expensed in the
period in which the cost pertains. Other selling and marketing costs are
expensed as incurred.
e. Earnings per share
Earnings per share have been computed on the basis of weighted average number
of shares outstanding. for the year ended September 30, 1995 and 1996. The
weighted average number of shares outstanding was 20,107,731 and 22,607,731
respectively.
f. Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
effect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
F-7
<PAGE>
D-VINE, LTD
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
g. Asset Impairment
The Company adopted the provisions of SFAS No. 121, Accounting for the
impairment of long lived assets and for long-lived assets to be disposed of
effective January 1, 1996. SFAS No. 121 requires impairment losses to be
recorded on long-lived assets used in operations when indicators of impairment
are present and the estimated undiscounted cash flows to be generated by those
assets are less than the assets' carrying amount. SFAS No. 121 also addresses
the accounting for long-lived assets that are expected to be disposed of. There
was no effect of such adoption on the Company's financial position or results of
operations.
NOTE 3 - RELATED PARTY TRANSACTIONS
--------------------------
a. Change in Managerial Control
On September 12, 1996, D-Vine Investment Partners, a Delaware general
partnership between Christopher F. Brown and Edward Tobin, purchased 17,000,000
shares of the Company's common stock in a private transaction with Erma S.
Warburg. The sale represented approximately 84.5% of the Company's total issued
and outstanding common stock as of the date of the transaction. The aggregate
purchase price for the purchased shares was $150,000 ($.00824 per share) plus
the satisfaction of Warburg's legal fees and expenses in connection with the
transaction in the aggregate amount of $10,000. The funds required by the Buyer
were provided by Messrs. Brown and Tobin from their personal resources.
As a result of this transaction, Buyer and indirectly Messrs. Brown and
Tobin, have obtained control of the Company. In connection with such change of
control, Erma Warburg, Barbara Tersptra and Margarette Bowles resigned as
officers and directors of the Company and Messrs. Tobin, Brown and Thomas Tuttle
have been appointed as all the members of the Company's Board of Directors.
Additionally, Mr. Tobin has been appointed President of the Company.
b. Office Space
The Company occupies office space at the office's of the Company President, at
712 Fifth Avenue, 7th floor, New York, New York rent free, on a month to month
basis from Edward Tobin.
F-8
<PAGE>
D-VINE, LTD
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
NOTE 4 - COMMITMENTS AND CONTINGENCIES
-----------------------------
As of September 30, 1997, the Company is not a party to any commitments,
contracts or litigation.
NOTE 5 - CAPITAL STOCK
-------------
The Company is authorized to issue 50,000,000 shares of common stock, $0.01
par value each and 10,000,000 shares of preferred stock, $0.01 par value each.
Of the 50,000,000 shares of common stock, 1,000,000 shares are designated as
Class A common.
a. Preferred Stock
On April 5, 1988, the Company amended its certificate of incorporation to
establishing a series of preferred stock designated as the "Series A Convertible
Preferred Stock", $0.01 par value each. The Series A Preferred Stock is
convertible into 1,000,000 shares of common stock.
On October 19, 1995, the Company amended its certificate of incorporation to
establishing a series of preferred stock designated as "1995 Series AA
Convertible Preferred Stock", $0.01 par value each. Each share of Series AA
Preferred Stock is convertible into 2,000,000 shares the Company's common stock.
The Company sold 10 shares of 1995 Series AA Convertible Preferred Stock for an
aggregate consideration of $4,000.
In September, 1996, the shares of preferred stock were converted into 20,000,000
shares of common stock.
On December 20, 1996, the Company amended its certificate of incorporation
eliminating the Series A Convertible Preferred Stock, the Series AA Convertible
Preferred Stock and the Class A Common Stock.
NOTE 6 - INCOME TAXES
------------
The Company provides for the tax effects of transactions reported in the
financial statements. The provision if any, consists of taxes currently due plus
deferred taxes related primarily to differences between the basis of assets and
liabilities for financial and income tax reporting. The deferred tax assets and
liabilities, if any represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled. As of
F-9
<PAGE>
D-VINE, LTD
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
September 30, 1997, the Company had no material current tax liability, deferred
tax assets, or liabilities to impact on the Company's financial position because
the deferred tax asset related to the Company's net operating loss carryforward
and was fully offset by a valuation allowance.
At September 30, 1997, the Company has net operating loss carry forwards for
income tax purposes of $865,946. This carryforward is available to offset future
taxable income, if any, and expires in the year 2010. The Company's utilization
of this carryforward against future taxable income may become subject to an
annual limitation due to a cumulative change in ownership of the Company of more
than 50 percent.
The components of the net deferred tax asset as of September 30, 1997 are as
follows:
Deferred tax asset:
Net operating loss carry forward $ 294,422
Valuation allowance $(294,422)
---------
Net deferred tax asset $ -0-
=========
The Company recognized no income tax benefit for the loss generated in the
period from reorganization, October 1, 1995 to September 30, 1997.
SFAS No. 109 requires that a valuation allowance be provided if it is more
likely than not that some portion or all of a deferred tax asset will not be
realized. The Company's ability to realize benefit of its deferred tax asset
will depend on the generation of future taxable income. Because the Company has
yet to recognize significant revenue from the sale of its products, the Company
believes that a full valuation allowance should be provided.
F-10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET OF D-VINE, LTD. AS OF SEPTEMBER 30, 1997 AND THE RELATED STATEMENTS OF
OPERATIONS AND CASH FLOWS FOR THE YEAR THEN ENDED AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<CASH> 0
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<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
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0
0
<COMMON> 221,076
<OTHER-SE> (228,201)
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<CGS> 0
<TOTAL-COSTS> (27,125)
<OTHER-EXPENSES> 7
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (27,125)
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