U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
-----------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 1-10077
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MEDIVEST, INC.
--------------
(Name of Small Business Issuer in its Charter)
UTAH 87-0401761
---- ----------
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
178 South 350 West
Mona, Utah 84645
---------------------------
(Address of Principal Executive Offices)
Issuer's Telephone Number: (801) 489-3238
3646 West 2100 South
Salt Lake City, Utah 84120
--------------------------
(Former Name or Former Address, if changed since last Report)
Securities Registered under Section 12(b) of the Exchange Act: None
Name of Each Exchange on Which Registered: None
Securities Registered under Section 12(g) of the Exchange Act: Common
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 Company was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
--- --- --- ---
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of Company'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: December 31, 1998 -
$0.
<PAGE>
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date
within the past 60 days.
February 8, 1999 - $115. There are approximately 115,464 shares of
common voting stock of the Company held by non-affiliates. Because there has
been no "established trading market" for the Company's common stock during the
past five years, the Company has arbitrarily valued these shares at par value
of $0.001 per share.
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)
Check whether the issuer has filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court. Yes X No
---- ----
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of shares outstanding of each of the Issuer's
classes of common equity, as of the latest practicable date:
February 8, 1999
4,372,639
DOCUMENTS INCORPORATED BY REFERENCE
A description of "Documents Incorporated by Reference" is contained
in Item 13 of this Report.
Transitional Small Business Issuer Format Yes X No
--- ---
<PAGE>
PART I
Item 1. Description of Business.
------------------------
Business Development.
- ---------------------
Medivest, Inc. (the "Company") was incorporated under the laws of the
State of Utah on November 10, 1983, and from its inception and until the
filing of bankruptcy proceedings in 1989, it was engaged in the development,
manufacture and sale of medical products and medical-related transportation
services. These operations were unsuccessful, and the Company filed a Chapter
11 Bankruptcy Petition in the U.S. Bankruptcy Court for the District of Utah
on April 12, 1989. By Order of the Bankruptcy Court, the Company's bankruptcy
was closed on June 15, 1993. See the 10-KSB Annual Report for the year
ended December 31, 1996 ("10-KSB Annual Report"), and which is incorporated
herein by reference, and Item 3 of this Report.
Effective the 30th of September, 1998, the Board of Directors authorized
a reverse split of the outstanding voting securities of the Company on a basis
of 18 for 1, while retaining the authorized capital and par value, with
appropriate adjustments in the capital accounts of the Company. All
computations herein take into account this reverse split.
The Company sold 3,000,000 "restricted securities" (common stock) to
Jeannie Hullinger in consideration of the sum of $20,000, and the then duly
elected directors and executive officers of the Company resigned, in seriatim,
and appointed Jeannie Hullinger, President and director; Kevin Hullinger, Vice
President and director; and Brenda M. Hall, Secretary/Treasurer and director
of the Company, to serve until the next annual meeting of the stockholders or
until their successors are elected and qualified or their prior resignations
or terminations. For information regarding beneficial holdings of Ms.
Hullinger see Item 11 of this Report. An 8-K Current Report dated October 29,
1998, respecting this change in control, was filed with the Securities and
Exchange Commission and is incorporated herein by reference. See Item 13 of
this Report.
Subsequently, on or about November 5, 1998, the Company sold 1,200,000
"restricted securities" (common stock) to "accredited investors" or
"sophisticated investors" as defined in Rule 506 of the Securities and
Exchange Commission pursuant to Section 4(2) of the Securities Act of 1933, as
amended. For information regarding beneficial holdings of these people see
Item 11 of this Report.
On December 15, 1998, the Company authorized the issuance of 100,000
shares of its $0.001 par value common stock to the Company's counsel for
services rendered and valued at $13,532.
Business.
- ---------
Other than the above-referenced matters and seeking and investigating
potential assets, properties or businesses to acquire, the Company has had no
business operations for the past five calendar years. To the extent that the
Company intends to continue to seek the acquisition of assets, property or
business that may benefit the Company and its stockholders, it is essentially
a "blank check" company. Because the Company has limited assets and conducts
no business, management anticipates that any such acquisition would require it
to issue shares of its common stock as the sole consideration for the
acquisition. This may result in substantial dilution of the shares of current
stockholders. The Company's Board of Directors shall make the final
determination whether to complete any such acquisition; the approval of
stockholders will not be sought unless required by applicable laws, rules and
regulations, its Articles of Incorporation or Bylaws, or contract. The
Company makes no assurance that any future enterprise will be profitable or
successful.
The Company is not currently engaging in any substantive business
activity and has no plans to engage in any such activity in the foreseeable
future. In its present form, the Company may be deemed to be a vehicle to
acquire or merge with a business or company. The Company does not intend to
restrict its search to any particular business or industry, and the areas in
which it will seek out acquisitions, reorganizations or mergers may include,
but will not be limited to, the fields of high technology, manufacturing,
natural resources, service, research and development, communications,
transportation, insurance, brokerage, finance and all medically related
fields, among others. The Company recognizes that the number of suitable
potential business ventures that may be available to it may be extremely
limited, and may be restricted to entities who desire to avoid what these
entities may deem to be the adverse factors related to an initial public
offering ("IPO"). The most prevalent of these factors include substantial time
requirements, legal and accounting costs, the inability to obtain an
underwriter who is willing to publicly offer and sell shares, the lack of or
the inability to obtain the required financial statements for such an
undertaking, limitations on the amount of dilution to public investors in
comparison to the stockholders of any such entities, along with other
conditions or requirements imposed by various federal and state securities
laws, rules and regulations. Any of these types of entities, regardless of
their prospects, would require the Company to issue a substantial number of
shares of its common stock to complete any such acquisition, reorganization or
merger, usually amounting to between 80 and 95 percent of the outstanding
shares of the Company following the completion of any such transaction;
accordingly, investments in any such private entity, if available, would be
much more favorable than any investment in the Company.
In the event that the Company engages in any transaction resulting in a
change of control of the Company and/or the acquisition of a business, the
Company will be required to file with the Commission a Current Report on Form
8-K within 15 days of such transaction. A filing on Form 8-K also requires the
filing of audited financial statements of the business acquired, as well as
pro forma financial information consisting of a pro forma condensed balance
sheet, pro forma statements of income and accompanying explanatory notes.
Management intends to consider a number of factors prior to making any
decision as to whether to participate in any specific business endeavor, none
of which may be determinative or provide any assurance of success. These may
include, but will not be limited to an analysis of the quality of the entity's
management personnel; the anticipated acceptability of any new products or
marketing concepts; the merit of technological changes; its present financial
condition, projected growth potential and available technical, financial and
managerial resources; its working capital, history of operations and future
prospects; the nature of its present and expected competition; the quality and
experience of its management services and the depth of its management; its
potential for further research, development or exploration; risk factors
specifically related to its business operations; its potential for growth,
expansion and profit; the perceived public recognition or acceptance of its
products, services, trademarks and name identification; and numerous other
factors which are difficult, if not impossible, to properly or accurately
analyze, let alone describe or identify, without referring to specific
objective criteria.
Regardless, the results of operations of any specific entity may not
necessarily be indicative of what may occur in the future, by reason of
changing market strategies, plant or product expansion, changes in product
emphasis, future management personnel and changes in innumerable other
factors. Further, in the case of a new business venture or one that is in a
research and development mode, the risks will be substantial, and there will
be no objective criteria to examine the effectiveness or the abilities of its
management or its business objectives. Also, a firm market for its products or
services may yet need to be established, and with no past track record, the
profitability of any such entity will be unproven and cannot be predicted with
any certainty.
Management will attempt to meet personally with management and key
personnel of the entity sponsoring any business opportunity afforded to the
Company, visit and inspect material facilities, obtain independent analysis or
verification of information provided and gathered, check references of
management and key personnel and conduct other reasonably prudent measures
calculated to ensure a reasonably thorough review of any particular business
opportunity; however, due to time constraints of management, these activities
may be limited.
The Company is unable to predict the time as to when and if it may
actually participate in any specific business endeavor. The Company
anticipates that proposed business ventures will be made available to it
through personal contacts of directors, executive officers and principal
stockholders, professional advisors, broker dealers in securities, venture
capital personnel, members of the financial community and others who may
present unsolicited proposals. In certain cases, the Company may agree to pay
a finder's fee or to otherwise compensate the persons who submit a potential
business endeavor in which the Company eventually participates. Such persons
may include the Company's directors, executive officers, beneficial owners or
their affiliates. In this event, such fees may become a factor in negotiations
regarding a potential acquisition and, accordingly, may present a conflict of
interest for such individuals.
Although the Company has not identified any potential acquisition target,
the possibility exists that the Company may acquire or merge with a business
or company in which the Company's executive officers, directors, beneficial
owners or their affiliates may have an ownership interest. Current Company
policy does not prohibit such transactions. Because no such transaction is
currently contemplated, it is impossible to estimate the potential pecuniary
benefits to these persons.
Further, substantial fees are often paid in connection with the
completion of these types of acquisitions, reorganizations or mergers, ranging
from a small amount to as much as $250,000. These fees are usually divided
among promoters or founders, after deduction of legal, accounting and other
related expenses, and it is not unusual for a portion of these fees to be paid
to members of management or to principal stockholders as consideration for
their agreement to retire a portion of the shares of common stock owned by
them. In the event that such fees are paid, they may become a factor in
negotiations regarding any potential acquisition by the Company and,
accordingly, may present a conflict of interest for such individuals.
Principal Products and Services.
- --------------------------------
The limited business operations of the Company, as now contemplated,
involve those of a "blank check" company. The only activities to be conducted
by the Company are to manage its current limited assets and to seek out and
investigate the acquisition of any viable business opportunity by purchase and
exchange for securities of the Company or pursuant to a reorganization or
merger through which securities of the Company will be issued or exchanged.
Distribution Methods of the Products or Services.
- -------------------------------------------------
Management will seek out and investigate business opportunities through
every reasonably available fashion, including personal contacts,
professionals, securities broker dealers, venture capital personnel, members
of the financial community and others who may present unsolicited proposals;
the Company may also advertise its availability as a vehicle to bring a
company to the public market through a "reverse" reorganization or merger.
Status of any Publicly Announced New Product or Service.
- --------------------------------------------------------
None; not applicable.
Competitive Business Conditions.
- --------------------------------
Management believes that there are literally thousands of "blank check"
companies engaged in endeavors similar to those engaged in by the Company;
many of these companies have substantial current assets and cash reserves.
Competitors also include thousands of other publicly-held companies whose
business operations have proven unsuccessful, and whose only viable business
opportunity is that of providing a publicly-held vehicle through which a
private entity may have access to the public capital markets. There is no
reasonable way to predict the competitive position of the Company or any other
entity in the strata of these endeavors; however, the Company, having limited
assets and cash reserves, will no doubt be at a competitive disadvantage in
competing with entities which have recently completed IPO's, have significant
cash resources and have recent operating histories when compared with the
complete lack of any substantive operations by the Company for the past
several years.
Sources and Availability of Raw Materials and Names of Principal
Suppliers.
- -----------
None; not applicable.
Dependence on One or a Few Major Customers.
- -------------------------------------------
None; not applicable.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty
Agreements or Labor Contracts.
- ------------------------------
None; not applicable.
Need for any Governmental Approval of Principal Products or
Services.
- ---------
Because the Company currently produces no products or services, it is not
presently subject to any governmental regulation in this regard. However, in
the event that the Company engages in a merger or acquisition transaction with
an entity that engages in such activities, it will become subject to all
governmental approval requirements to which the merged or acquired entity is
subject.
Effect of Existing or Probable Governmental Regulations on
Business.
- ---------
The integrated disclosure system for small business issuers adopted by
the Commission in Release No. 34-30968 and effective as of August 13, 1992,
substantially modified the information and financial requirements of a "Small
Business Issuer," defined to be an issuer that has revenues of less than $25
million; is a U.S. or Canadian issuer; is not an investment company; and if a
majority-owned subsidiary, the parent is also a small business issuer;
provided, however, an entity is not a small business issuer if it has a public
float (the aggregate market value of the issuer's outstanding securities held
by non-affiliates) of $25 million or more.
The Commission, state securities commissions and the North American
Securities Administrators Association, Inc. ("NASAA") have expressed an
interest in adopting policies that will streamline the registration process
and make it easier for a small business issuer to have access to the public
capital markets. The present laws, rules and regulations designed to promote
availability to the small business issuer of these capital markets and similar
laws, rules and regulations that may be adopted in the future will
substantially limit the demand for "blank check" companies like the Company,
and may make the use of these companies obsolete.
Research and Development.
- -------------------------
None; not applicable.
Cost and Effects of Compliance with Environmental Laws.
- -------------------------------------------------------
None; not applicable. However, environmental laws, rules and regulations
may have an adverse effect on any business venture viewed by the Company as an
attractive acquisition, reorganization or merger candidate, and these factors
may further limit the number of potential candidates available to the Company
for acquisition, reorganization or merger.
Number of Employees.
- --------------------
None.
Item 2. Description of Property.
------------------------
Other than cash and certain prepaid assets, the Company has
virtually no assets, property or business; its principal executive office
address and telephone number are the business office address and telephone
number of its President, Jeannie Hullinger, and are currently provided at no
cost. Because the Company has had no business, its activities will be limited
to keeping itself in good standing in the State of Utah, seeking out
acquisitions, reorganizations or mergers and preparing and filing the
appropriate reports with the Securities and Exchange Commission. These
activities have consumed an insubstantial amount of management's time.
Item 3. Legal Proceedings.
------------------
The Company is not a party to any pending legal proceeding. To the
knowledge of management, no federal, state or local governmental agency is
presently contemplating any proceeding against the Company. No director,
executive officer or affiliate of the Company or owner of record or
beneficially of more than five percent of the Company's common stock is a
party adverse to the Company or has a material interest adverse to the Company
in any proceeding.
The Company filed a Chapter 11 Bankruptcy Petition in the U.S. Bankruptcy
Court for the District of Utah on April 12, 1989. By Order of the Bankruptcy
Court, the Company's bankruptcy was closed on June 15, 1993. For material
documentation respecting these bankruptcy proceedings, see the 10-KSB Annual
Report.
During the pendency of its bankruptcy proceedings, the Company was
involuntarily dissolved in the State of Utah for failure to file its annual
report for 1990. It was reinstated by Order of the Third District Court of
the State of Utah on August 24, 1995. See the 10-KSB Annual Report.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
No matter was submitted to a vote of the Company's security holders
during the fourth quarter of the calendar year covered by this Report or
during the two previous calendar years. Further, there have been no meetings
of stockholders since the Company's bankruptcy in 1989.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
---------------------------------------------------------
Market Information
- ------------------
The Company's common stock is listed for quotations on the OTC Bulletin
Board of the National Association of Securities Dealers ("NASD"), under the
symbol "MVTN." There is no "established trading market" for shares of common
stock of the Company; no assurance can be given that any "established trading
market" for the Company's common stock will develop in the future or be
maintained, if one does develop.
Restricted Securities
- ---------------------
There are currently 4,372,638 outstanding shares of the Company's common
stock, of which 4,257,175 are designated as "restricted securities." Of these
restricted securities, 55,553 have been held for in excess one year, and may
be publicly resold under Rule 144 of the Securities and Exchange Commission.
Any such sales could have an adverse effect on any market which may develop
for the Company's common stock.
Holders
- -------
The number of record holders of the Company's common stock as of the date
of this Report is approximately 454.
Dividends
- ---------
The Company has not declared any cash dividends with respect to its
common stock and does not intend to declare dividends in the foreseeable
future. The future dividend policy of the Company cannot be ascertained with
any certainty, and until the Company completes any acquisition, reorganization
or merger, as to which no assurance may be given, no such policy will be
formulated. There are no material restrictions limiting, or that are likely to
limit, the Company's ability to pay dividends on its common stock.
Item 6. Management's Discussion and Analysis or Plan of Operation.
----------------------------------------------------------
Plan of Operation.
- ------------------
The Company has not engaged in any material operations or had any
revenues from operations during the last two calendar years. The Company's
plan of operation for the next 12 months is to continue to seek the
acquisition of assets, properties or businesses that may benefit the Company
and its stockholders. Management anticipates that to achieve any such
acquisition, the Company will issue shares of its common stock as the sole
consideration for such acquisition.
During the next 12 months, the Company's only foreseeable cash
requirements will relate to maintaining the Company in good standing or the
payment of expenses associated with reviewing or investigating any potential
business venture, which the Company expects to pay from its cash resources,
and, in the event of the completion of a reorganization, payment of the non-
affiliated party's note. As of December 31, 1998, it had $5,000 in cash or
cash equivalents. If additional funds are required during this period,
such funds may be advanced by management or stockholders as loans to the
Company. Because the Company has not identified any such venture as of the
date of this Report, it is impossible to predict the amount of any such loan.
However, any such loan should not exceed $25,000 and will be on terms no less
favorable to the Company than would be available from a commercial lender in
an arm's length transaction. As of the date of this Report, the Company is
not engaged in any negotiations with any person regarding any such venture.
Results of Operations.
- ----------------------
Other than restoring and maintaining its good corporate standing in the
State of Utah, compromising and settling its debts and seeking the acquisition
of assets, properties or businesses that may benefit the Company and its
stockholders, the Company has had no material business operations in the two
most recent calendar years, or since its bankruptcy proceedings in 1989.
At December 31, 1998, the Company's had $5,000 in assets. See the Index
to Financial Statements, Item 7 of this Report.
During the calendar year ended December 31, 1998, the Company had net
income of ($8,634). This compares to a net income of $105,810, attributable
to the restructuring of its debt during the calendar year ended December 31,
1997. The Company has received no revenues in either of its two most recent
calendar years. See the Index to Financial Statements, Item 7 of this Report.
Liquidity.
- ---------
The Company received $50,000 for the sale of 4,200,000 "restricted
securities" (common stock) of the Company during the year ended December 31,
1998. The Company total cash assets and total liabilities for the year ended
December 31, 1998, were $5,000 and $805, respectively.
"Year 2000".
- -----------
Because the Company is not presently engaged in any substantial business
operations, management does not believe that computer problems associated with
the change of year to the year 2000 will have any material effect on its
operations. However, the possibility exists that the Company may merge with
or acquire a business that will be negatively affected by the "year 2000"
problem. The effect of such problem or the Company in the future can not be
predicted with any accuracy until such time as the Company identifies a merger
or acquisition target.
Item 7. Financial Statements.
---------------------
Financial Statements for the years ended
December 31, 1998 and 1997
Independent Auditors' Report
Balance Sheets - December 31, 1998 and 1997
Statements of Operations for the years ended
December 31, 1998 and 1997
Statements of Stockholders' Equity for the
years ended December 31, 1998 and 1997
Statements of Cash Flows for the years ended
December 31, 1998 and 1997
Notes to the Financial Statements
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
- ---------------------
There have been no changes in the Company's principal independent
accountant in the past two calendar years or as of the date of this Report.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
- --------------------------------------------------
There were no delinquent filings by any directors, executive officers or
"affiliate" of the Company during the last calendar year.
Identification of Directors and Executive Officers
- --------------------------------------------------
The following table sets forth the names of all current directors and
executive officers of the Company. These persons will serve until the next
annual meeting of the stockholders or until their successors are elected or
appointed and qualified, or their prior resignation or termination.
<TABLE>
<CAPTION>
Date of Date of
Positions Election or Termination
Name Held Designation or Resignation
- ---- ---- ----------- --------------
<S> <C> <C> <C>
John M. Williams President 3/89 11/5/98
Vice President 10/86 11/5/98
Director 10/86 11/5/98
William R. Stoddard Secretary 10/86 11/5/98
Treasurer 10/86 11/5/98
Director 10/86 11/5/98
Jeannie Hullinger President 11/5/98 *
Director 11/5/98 *
Kevin Hullinger Vice President 11/5/98 *
Director 11/5/98 *
Brenda M. Hall Secretary 11/5/98 12/28/98
Treasurer 11/5/98 12/28/98
Director 11/5/98 12/28/98
Sheryl A. Ross Secretary 12/28/98 *
Treasurer 12/28/98 *
Director 12/28/98 *
</TABLE>
* These persons presently serve in the capacities indicated.
Business Experience.
- --------------------
Jeannie Hullinger. President and Director. Ms. Hullinger is 51 years of
age and has been employed by Wagon Wheel Ranch since 1985 as manager and
trainer. Her job includes hiring employees, complete management of the
breeding operations, mare and foal management and training of the race horses,
including planning each one's individual race obligation for the year. Prior
to 1985, she was self employed as a public race trainer since 1977, where she
managed a complete operation from billing, bookkeeping, training and racing, a
race stable in the Western United States.
Kevin Hullinger. Vice President and Director. Mr. Hullinger is 41 years
of age and has been employed at Envirotech Pump Systems since June 1993 as a
pattern maker for pump molds. Prior to that he worked for Cate Equipment in
the repair and maintenance department for heavy equipment from 1990 to 1993.
From 1986 to 1990, he worked for Buehner Concrete Products as a carpenter and
pattern maker for architectural concrete molds. Mr. Hullinger attended Utah
Technical College for two years.
Sheryl A. Ross. Secretary/Treasurer and Director. Ms. Ross is 49 years
of age and is employed as an office manager and assistant by Leonard W.
Burningham, Esq. Ms. Ross has worked for Leonard W. Burningham, Esq. for the
past 30 years.
Significant Employees.
- ----------------------
The Company has no employees who are not executive officers,
but who are expected to make a significant contribution to the Company's
business.
Family Relationships.
- ---------------------
With the exception that Jeannie Hullinger and Kevin Hullinger are husband
and wife, there are no family relationships between any directors or executive
officers of the Company, either by blood or by marriage.
Involvement in Certain Legal Proceedings.
- -----------------------------------------
Except as stated above, during the past five years, no director, person
nominated to become a director, executive officer, promoter or control person
of the Company:
(1) was a general partner or executive officer of any business against
which any bankruptcy petition was filed, either at the time of the bankruptcy
or two years prior to that time;
(2) was convicted in a criminal proceeding or named subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses);
(3) was subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting his involvement in any type of business, securities or banking
activities; or
(4) was found by a court of competent jurisdiction (in a civil action),
the Securities and Exchange Commission or the Commodity Futures Trading
Commission to have violated a federal or state securities or commodities law,
and the judgment has not been reversed, suspended or vacated.
Compliance with Section 16(a) of the Exchange Act
- -------------------------------------------------
No reports required to be filed during the preceding two calendar years
or since the bankruptcy proceedings of the Company in 1989 which were required
to be filed by directors of executive officers of the Company have not been
timely filed.
Item 10. Executive Compensation.
-----------------------
The following table sets forth the aggregate compensation
paid by the Company for services rendered during the periods
indicated:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Secur-
ities All
Name and Year or Other Rest- Under- LTIP Other
Principal Period Salary Bonus Annual rictedlying Pay- Comp-
Position Ended ($) ($) Compen-Stock Optionsouts ensat'n
- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John M.
Williams, 12/31/96 0 0 0 0 0 0 0
President, 12/31/97 0 0 0 0 0 0 *
V.P. and 12/31/98 0 0 0 0 0 0 0
Director
William R.
Stoddard, 12/31/96 0 0 0 0 0 0 0
Secretary/ 12/31/97 0 0 0 0 0 0 *
Treasurer, 12/31/98 0 0 0 0 0 0 0
Director
Jeannie
Hullinger 12/31/98 0 0 0 0 0 0 0
President,
Director
Kevin
Hullinger 12/31/98 0 0 0 0 0 0 0
Vice Pres,
Director
Sheryl A. 12/31/98 0 0 0 0 0 0 0
Ross, Sec/
Tres,
Director
</TABLE>
* On September 5, 1997, the Company authorized the
issuance of 38,890 "unregistered" and "restricted"
shares of its $0.001 par value common stock to two of
its executive officers and directors, 19,445 shares
to each, for services rendered and valued at $3,500
each. See the caption "Business Development" of Item
1, Part II of the Company's 10-KSB Annual Report for the
year ended December 31, 1997.
No cash compensation, deferred compensation or long-term incentive plan
awards were issued or granted to the Company's management during the calendar
years ending December 31, 1998, 1997, or 1996, or the period ending on the
date of this Report.
Compensation of Directors.
- --------------------------
There are no standard arrangements pursuant to which the Company's
directors are compensated for any services provided as director. No additional
amounts are payable to the Company's directors for committee participation or
special assignments.
There are no arrangements pursuant to which any of the Company's
directors was compensated during the Company's last completed calendar year
for any service provided as director.
Employment Contracts and Termination of Employment and
Change-in-Control Arrangements.
- -------------------------------
There are no employment contracts, compensatory plans or arrangements,
including payments to be received from the Company, with respect to any
director or executive officer of the Company which would in any way result in
payments to any such person because of his or her resignation, retirement or
other termination of employment with the Company or any subsidiary, any change
in control of the Company, or a change in the person's responsibilities
following a change in control of the Company.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
---------------------------------------------------------------
Security Ownership of Certain Beneficial Owners.
- ------------------------------------------------
The following table sets forth the shareholdings of those persons who
beneficially own more than five percent of the Company's common stock as of
the date of this Report, with the computations being based upon 4,372,639
shares of common stock being outstanding.
<TABLE>
<CAPTION>
Number of Shares Percentage
Name and Address Beneficially Owned of Class (1)
- ---------------- ------------------ --------
<S> <C> <C>
Jeannie Hullinger 3,000,000 68.61%
Box 367
Mona, Utah 84645
Dassity, Inc.* 400,000 9.15%
55 West 200 North #2
Provo, Utah 84601
------- ----
3,400,000 77.76%
*Owned or controlled by Brenda M. Hall. 200,000 of the 400,000 shares
are in the name of Dassity, Inc. Profit Sharing Plan.
</TABLE>
The following table sets forth the shareholdings of those persons who
beneficially own more than five percent of the Company's common stock as of
the December 31, 1998, with the computations being based upon 4,372,639
shares of common stock being outstanding.
<TABLE>
<CAPTION>
Number of Shares Percentage
Name and Address Beneficially Owned of Class (1)
- ---------------- ------------------ --------
<S> <C> <C>
Jeannie Hullinger 3,000,000 68.61%
Box 367
Mona, Utah 84645
TradeCo Corp.* 400,000 9.15%
55 West 200 North #2
Provo, Utah 84601
------- ----
3,400,000 77.76%
* Owned or controlled by David N. Nemelka.
</TABLE>
Security Ownership of Management.
- ---------------------------------
The following table sets forth the shareholdings of the Company's
directors and executive officers as of the date of this Report:
<TABLE>
<CAPTION>
Number of Percentage of
Name and Address Shares Beneficially Owned of Class *
- ---------------- ------------------------- --------
<S> <C> <C>
Jeannie Hullinger 3,000,000 68%
55 West 200 North, #2
Provo, Utah 84601
Kevin Hullinger -0- -0-
55 West 200 North, #2
Provo, Utah 84601
Sheryl A. Ross -0- -0-
6113 Loder Drive
Kearns, Utah 84116
------- ------
All directors and executive
officers as a group 3,000,000 68%
(3 persons)
</TABLE>
See Item 9 of this Report for information concerning the offices or other
capacities in which the foregoing persons serve with the Company.
Changes in Control.
- -------------------
There are no present arrangements or pledges of the Company's securities
which may result in a change in control of the Company.
Item 12. Certain Relationships and Related Transactions.
-----------------------------------------------
Transactions with Management and Others.
- ----------------------------------------
With the exception of the issuance of "unregistered" and "restricted"
shares of common stock of the Company as compensation for services rendered to
the prior directors and executive officers of the Company, all as outlined
under the caption "Business Development" of Item 1, Part I, there have been no
material transactions, series of similar transactions, currently proposed
transactions, or series of similar transactions, to which the Company or any
of its subsidiaries was or is to be a party, in which the amount involved
exceeded $60,000 and in which any director or executive officer, or any
security holder who is known to the Company to own of record or beneficially
more than five percent of the Company's common stock, or any member of the
immediate family of any of the foregoing persons, had a material interest.
Certain Business Relationships.
- -------------------------------
With the exception of the issuance of "unregistered" and "restricted"
shares of common stock of the Company as compensation for services rendered to
the prior directors and executive officers of the Company, all as outlined
under the caption "Business Development" of Item 1, Part I, there have been no
material transactions, series of similar transactions, currently proposed
transactions, or series of similar transactions, to which the Company or any
of its subsidiaries was or is to be a party, in which the amount involved
exceeded $60,000 and in which any director or executive officer, or any
security holder who is known to the Company to own of record or beneficially
more than five percent of the Company's common stock, or any member of the
immediate family of any of the foregoing persons, had a material interest.
Indebtedness of Management.
- ---------------------------
With the exception of the issuance of "unregistered" and "restricted"
shares of common stock of the Company as compensation for services rendered to
the prior directors and executive officers of the Company, all as outlined
under the caption "Business Development" of Item 1, Part I, there have been no
material transactions, series of similar transactions, currently proposed
transactions, or series of similar transactions, to which the Company or any
of its subsidiaries was or is to be a party, in which the amount involved
exceeded $60,000 and in which any director or executive officer, or any
security holder who is known to the Company to own of record or beneficially
more than five percent of the Company's common stock, or any member of the
immediate family of any of the foregoing persons, had a material interest.
Parents of the Issuer.
- ----------------------
The Company has no parents.
Transactions with Promoters.
- ----------------------------
With the exception of the issuance of "unregistered" and "restricted"
shares of common stock of the Company as compensation for services rendered to
the prior directors and executive officers of the Company, all as outlined
under the caption "Business Development" of Item 1, Part I, there have been no
material transactions, series of similar transactions, currently proposed
transactions, or series of similar transactions, to which the Company or any
of its subsidiaries was or is to be a party, in which the amount involved
exceeded $60,000 and in which any promoter or founder, or any member of the
immediate family of any of the foregoing persons, had a material interest.
Item 13. Exhibits and Reports on Form 8-K.
---------------------------------
Reports on Form 8-K
- -------------------
An 8-K Current Report dated October 29, 1998, was filed with the
Securities and Exchange Commission on November 9, 1998, regarding a change in
control of the Company and a reverse split one for 18, effective October 9,
1998.
Exhibits
- --------
Exhibit
Number Description
- ------ -----------
5 Opinion of Counsel respecting reverse split
27 Financial Data Schedule
99 Resolution of Board of Directors respecting reverse split
DOCUMENTS INCORPORATED BY REFERENCE
Form 10 Registration Statement filed with the Commission on or about
May 13, 1988.
Form 8-K Current Report dated April 12, 1989.
10-KSB Annual Report for the period ended December 31, 1996.
Petition for Voluntary Bankruptcy
Order Authorizing Trustee's Motion for Final Decree
Articles of Incorporation, as amended
Bylaws, as amended
Consent Resolutions regarding reverse split
and Acquisitions Act
Opinion of counsel regarding reverse split
Reinstatement Order
10-KSB Annual Report for the period ended December 31, 1997.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this Report
to be signed on its behalf by the undersigned, thereunto duly authorized.
MEDIVEST, INC.
Date: 2/12/99 /s/Jeannie Hullinger
Jeannie Hullinger
President and Director
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 Company and in the capacities and on the dates indicated:
MEDIVEST, INC.
Date: 2/12/99 /s/Jeannie Hullinger
Jeannie Hullinger
President and
Director
Date: 2/12/99 /s/Kevin Hullinger
Kevin Hullinger
Vice President and Director
Date: 2/22/99 /s/Sheryl A. Ross
Sheryl A. Ross
Secretary/Treasurer and Director
MEDIVEST, INC.
(A Development Stage Company)
- : -
INDEPENDENT AUDITOR'S REPORT
DECEMBER 31, 1998 AND 1997
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Medivest, Inc.
(a Development Stage Company)
We have audited the accompanying balance sheets of Medivest, Inc., (A
Development Stage Company) as of December 31, 1998 and 1997, and the related
statements of operations, retained earnings, and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Medivest, Inc., (A
Development Stage Company) as of December 31, 1998 and 1997 and the results of
its operations, and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
Respectfully submitted,
/S/Robison, Hill & Co.
Certified Public Accountants
Salt Lake City, Utah
February 3, 1999
<TABLE>
MEDIVEST, INC.
(A Development Stage Company)
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
<CAPTION>
1998 1997
<S> <C> <C>
Assets
Cash and Cash Equivalents $ 5,000 $ -
Total Assets $ 5,000 $ -
Liabilities and Stockholders' Equity
Liabilities
Accounts Payable $ 705 $ 15,603
Income Tax Payable 100 100
Note Payable(see Note 7) - 35,000
Total Liabilities 805 50,703
Stockholders' Equity
Common Stock, authorized
50,000,000 shares of
$.001 par value, issued
and outstanding 4,372,639 in
1998, and 72,639 in 1997 4,373 73
Additional Paid in Capital 1,675,788 1,616,556
Previous Retained Deficit (1,867,999) (1,867,999)
Earnings(Deficit)Accumulated
During Development Stage 192,033 200,667
Total Stockholders' Equity 4,195 (50,703)
Total Liabilities and Stockholders' Equity $ 5,000 $ -
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
MEDIVEST, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<CAPTION>
Cumulative
Since
Inception
Of
December 31, December 31, Development
1998 1997 Stage
<S> <C> <C> <C>
Revenues
$ - $ - $ -
General & Administrative Expenses (8,534) (37,268) (63,195)
Net Loss Before Taxes and Extraordinary
Item - (37,268) (63,195)
Net Taxes (100) (100) (300)
Net Loss Before Extraordinary Item (8,634) (37,368) (63,495)
Extraordinary Item - Gain on
Restructuring of Debt, Net of Taxes - 143,178 255,528
Net Income (Loss) $ (8,634) $ 105,810 $ 192,033
Basic Earnings (Loss) Per Common Share
Loss from Operations
Before Extraordinary Item $ (.03) $ (.77)
Extraordinary Item - 2.96
Net Earnings (Loss) Per Share $ (.03) $ 2.19
Weighted Average Shares Outstanding 339,488 48,278
Diluted Earnings (Loss) Per Common Share
Loss from Operations
Before Extraordinary Item $ (.03) $ (.74)
Extraordinary Item - 2.83
Net Earnings (Loss) Per Share $ (.03) $ 2.09
Weighted Average Shares Outstanding 339,488 50,595
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
MEDIVEST, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED December 31, 1996 and 1995
<CAPTION>
Earnings
(Deficit)
Accumulated
Additional Retained During
Common Stock Paid-in Earnings Development
Shares Amount Capital (Deficit) Stage
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 36,471 $ 36 $1,608,726 $(1,867,999) $ 94,857
2/21/97 Issuance of stock to
Thomas Crowther, Esq. for
settlement of legal debt
at $2.49 per share 237 - 590 - -
2/21/97 Issuance of stock to
Gary Lundsen, Esq. for
settlement of legal debt
at $2.50 per share 111 - 277 - -
9/5/97 Issuance of stock to
John Williams, director and
Executive officer, for
services at $.18 per share 19,445 20 3,480 - -
9/5/97 Issuance of stock to
William Stoddard, director and
executive officer, for
services at $.18 per share 19,445 20 3,480 - -
9/8/97 shares returned by Mr.
Haedrich and canceled (3,070) (3) 3 - -
Net Income - - - - 105,810
Balance at
December 31, 1997 72,639 73 $1,616,556 $(1,867,999)$200,667
12/8/98 Issuance of stock
to Jeannie Hullinger,
President for cash at
$0.01 per share 3,000,000 3,000 17,000 - -
12/8/98 Issuance of stock
to investors for cash at
$0.03 per share 1,200,000 1,200 28,800 - -
12/23/98 Issuance of stock
to Leonard Burningham,
Attorney for legal services
at $0.14 per share 100,000 100 13,432 - -
Net Income (Loss) - - - - (8,634)
Balance at
December 31, 1998 4,372,639 $4,373 $1,675,788 $(1,867,999) $192,033
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
MEDIVEST, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<CAPTION>
Cumulative
Since
Inception
December 31, December 31, Of
1998 1997 Development
<S> <C> <C> <C>
Cash Flows From Operating
Net Income (Loss) $ (8,634) $ 105,810 $ 192,033
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating
Activities:
Common Stock Issued for Services 13,532 7,868 21,400
Common Stock issued for finance
charges - 17,587 17,587
Changes in Assets and Liabilities
(Decrease) Increase in accounts
payable (14,898) 4,541 705
Decrease in other liabilities - (159,231) (276,825)
Increase in taxes payable - - 100
Net Cash Used by Operating Activities (10,000) (23,425) (45,000)
Cash Flows From Investing Activities - - -
Cash Flows From Financing Activities
Payment of note payable (35,000) - -
Proceeds from issuance of common
stock 50,000 - 50,000
Net cash provided by financing
activities 15,000 - 50,000
Net increase (decrease) in cash and
cash equivalents 5,000 (23,425) 5,000
Cash and cash equivalents at beginning
of year - 23,425 -
Cash and cash equivalents at end of
year $ 5,000 $ - $ 5,000
Supplemental disclosure of Cash Flow
Information
Income Taxes $ 100 $ 100 $ 300
Interest - - -
Supplemental Disclosure of Non-Cash Investing and Financing Activities
On September 30, 1998, the Board of Directors authorized an 18 for 1 reverse
stock split.
On December 23, 1998, the Company exchanged 100,000 shares, par value $.001
per share, in settlement of debt for legal services.
</TABLE>
The accompanying notes are an integral part of these financial statements.
MEDIVEST, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for Medivest, Inc. is presented to assist
in understanding the Company's financial statements. The accounting policies
conform to generally accepted accounting principles and have been consistently
applied in the preparation of the financial statements.
Organization and Basis of Presentation
The Company was incorporated under the laws of the State of Utah on November
10, 1983. The Company was involuntarily dissolved on May 1, 1991, for failure
to file its annual report. The Corporate charter was reinstated on March 21,
1995. The Company is in the development stage, and has not commenced planned
principal operations.
Nature of Business
The Company intends to acquire interests in various business opportunities,
which in the opinion of management will provide a profit to the Company.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to
be cash equivalents to the extent the funds are not being held for investment
purposes.
Earnings per Share
The following data show the amounts used in computing earnings (loss) per
share and the effect on income and the weighted average number of shares of
dilutive potential common stock.
In 1997, the Financial Accounting Standards Board issued SFAS No. 128,
"Earnings per Share" (EPS). SFAS No. 128 replaced the calculation of primary
and fully diluted earnings per share with basic and diluted earnings per
share.
Basic earnings per common share were computed by dividing net income by the
weighed average number of shares of common stock outstanding during the year.
Diluted earnings per common share for the year ended December 31, 1997 consist
of an agreement where the Company issues shares of stock for services, not to
exceed 10 percent of shares outstanding. Weighted average shares computed
based on date of agreement using 10 percent of shares outstanding on December
31, 1997 (see note 8).
The effect of outstanding common stock are antidilutive for the year ended
December 31, 1998 and are thus not considered.
<TABLE>
Per-Share
Income Shares Amount
For the Year ended December 31, 1997
<S> <C> <C> <C>
Basic Earnings Per Share
Loss from operations before extraordinary
Item $ (37,368) 48,278 $ (.77)
Extraordinary item 143,178 48,278 2.96
Net Earnings Available to
Common Stockholders $ 105,810 48,278 $ 2.19
Diluted Earnings Per Share
Consulting Compensation
Agreement (See Note 8) 2,317
Loss from operations before extraordinary
Item $ (37,368) 50,595 $ (.74)
Extraordinary item 143,178 50,595 2.83
Net Earnings Available
to Common Stockholders $ 105,810 50,595 $ 2.09
For the Year Ended December 31, 1998
Basic Earnings Per share
Loss from operations before
extraordinary item $ (8,634) 339,488 $ (.03)
Extra ordinary item - 339,488 -
Net Earnings (Loss) Available to Common
Stockholders $ (8,634) 339,488 $ (.03)
Diluted Earnings Per Share
Potentially Dilutive Shares -
Loss from operations before
extraordinary item $ (8,634) 339,488 $ (.03)
Extraordinary item - 339,488 -
Net Earnings (Loss) Available to Common
Stockholders $ (8,634) 339,488 $ (.03)
</TABLE>
Income Taxes
The Company has implemented the provisions of SFAS No. 109, "Accounting for
Income Taxes." SFAS No. 109 requires that income taxes be computed using the
liability method. Deferred taxes are determined based on the estimated future
tax effects of differences between the financial reporting and tax reporting
bases of assets and liabilities given the provisions of currently enacted tax
laws.
Pervasiveness of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Reclassifications
Certain reclassifications have been made in the 1997 financial statements to
conform with the 1998 presentation.
NOTE 2 - INCOME TAXES
A nontaxable gain of $143,178 in 1997 on debt forgiveness due to insolvency
resulted in a permanent difference in income reported for tax purposes.
Deferred taxes result from temporary differences in the recognition of income
and expenses for income tax reporting and financial statement reporting
purposes. Deferred benefits of $203,229 and $197,624 for the years ended
December 31, 1998 and 1997, respectively, are the result of net operating
losses.
The Company has recorded net deferred income taxes in the accompanying balance
sheets as follows:
as of December 31
1998 1997
Future deductible temporary differences
related to net operating losses $ 203,229 $ 197,624
Valuation allowance $(203,229) $(197,624)
Net deferred income tax asset $ - $ -
As of December 31, 1998, the Company had a net operating loss ("NOL")
carryforward for income tax reporting purposes of approximately $1,390,000
available to offset future taxable income. This net operating loss
carryforward expires at various dates between December 31, 2005 and 2013. An
NOL generated in a particular year will expire for federal tax purposes if not
utilized within 15 years. Additionally, the Internal Revenue Code contains
provisions which could reduce or limit the availability and utilization of
these NOLs if certain ownership changes have taken place or will take place.
In accordance with SFAS No. 109, a valuation allowance is provided when it is
more likely than not that all or some portion of the deferred tax asset will
not be realized. Due to the uncertainty with respect to the ultimate
realization of the NOLs, the Company established a valuation allowance for the
entire net deferred income tax asset of $203,229 as of December 31, 1998,
resulting from net operating losses carryforward.
The differences between the effective income tax rate and the federal
statutory income tax rate on the loss from continuing operations are presented
below.
For the Years Ended
December 31,
1998 1997
Benefit at the federal statutory rate
of 15% $ 1,295 $ 5,605
Utilization of net operating loss
carryforward $ (1,295) $ (5,605)
$ - $ -
NOTE 3 - DEVELOPMENT STAGE COMPANY
The Company has not begun principal operations and as is common with a
development stage company, the Company has had recurring losses during its
development stage.
NOTE 4 - COMMITMENTS
As of December 31, 1998 and 1997 all activities of the Company have been
conducted by corporate officers from either their homes 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.
NOTE 5 - EMERGENCE FROM BANKRUPTCY
On June 15, 1993, the Company emerged from bankruptcy.
During 1997 the Company compromised and settled certain liabilities carried
over from the bankruptcy in the amount of $159,231. On May 13, 1997, the
Company paid $5,481.73 to the Internal Revenue Service in compromise and
settlement of certain liabilities carried over from the bankruptcy. The
liabilities were on the books at $9,487.42, resulting in an extra-ordinary
gain on debt restructuring of $4,005.69.
NOTE 6 - REVERSE STOCK SPLIT
On September 30, 1998, the Board of Directors authorized an 18 for 1 reverse
stock split of the Company's $.001 par value common stock. As a result of the
split, 1,229,010 shares were canceled, and additional paid-in capital was
increased by $1,229. All references in the accompanying financial statements
to the number of common shares and per-share amounts for 1997 have been
restated to reflect the reverse stock split.
NOTE 7 - NOTE PAYABLE
Note payable, dated December 23, 1997 1997 1998
to Cicero Cinzano, Ltd. (interest at 18%),
principal due earlier of December 23,
1998, or on the closing of a reorganization,
acquisition, merger or similar transactions
involving Medivest. Interest was paid in full
as of October 24, 1997 with common stock. $ - $ 35,000
NOTE 8 - ISSUANCE OF STOCK
On September 5, 1997 Medivest entered into a Consultant Compensation Agreement
with Leonard W. Burningham, Esq. and Branden T. Burningham, Esq.,
"Consultants" for payment of services performed. Shares shall be issued upon
submission of an invoice, not to exceed $10,000, for services performed by the
Consultants, and are subject to the filing of a Registration Statement on Form
S-8. The total number of securities to be issued shall not exceed 10 percent
of the outstanding securities of Medivest on the date of issuance and will be
issued at a price of $0.01 per share. 100,000 shares were issued to Mr.
Burningham on December 23, 1998.
October 1, 1998
Interwest Stock Transfer
1981 E. Murray-Holladay Road
Salt Lake City, Utah 84117
Medivest, Inc.
3646 West 2100 South
Salt Lake City, Utah 84121
Re: Reverse split of the outstanding shares of Medivest,
Inc., a Utah corporation (the "Company")
Gentlemen:
I have been retained to render an opinion as to the ability of a
Utah corporation to effect a reverse split of its issued and outstanding
common stock without a meeting of its stockholders or the consent of a
majority of its outstanding voting securities.
I understand that this reverse split will be accomplished by
resolution of the Board of Directors without the creation of fractional
shares, and this opinion is premised on these facts. In my opinion, this
action would follow the legal precedent of Seed Products International, Inc.
v. Owen, 768 P.2d 973 (Utah App. 1989) ("Owen").
In Owen, the Utah Court of Appeals discussed the types of
corporate actions for which an amendment to the corporation's Articles of
Incorporation must be filed. The court relied on the long-standing precedent
of Jackson v. Crown Point Mining Co., 59 P. 238 (1899), in which the Utah
Supreme Court held that an amendment to a corporation's Articles of
Incorporation needs to be filed only in cases of "fundamental corporate
changes, i.e., those that alter the character of a corporation, add or
diminish the scope of its powers, or violate state policy." 768 P.2d at 975.
The Owen court concluded that the 20 to 1 reverse split of Seed
Products' stock did not meet the "fundamentality" requirement of Jackson and
that the requirement of filing an amendment to its Articles of Incorporation
did not apply. 768 P.2d at 975.
The Utah Legislature has substantially revised the Utah Business
Corporation Act in the period following the issuance of the Owen decision in
1989. The Utah Revised Business Corporation Act (the "Revised Act") was
promulgated in 1992, a full three years after Owen. It is thus apparent that,
if the Legislature had wanted to overrule Owen through legislation, it could
have done so in the Revised Act.
The Revised Act neither imposes nor specifically denies the
requirement that a corporation amend its Articles of Incorporation in
connection with a reverse split of its stock. This lack of legislation three
years following Owen, when it was still a fairly recent and "fresh" case,
suggests that the Legislature had no desire to overrule the precedent of that
case.
Nor has Owen been overruled by the Utah courts. It remains as
valid as it was when the decision was issued.
The Revised Act does not require stockholder approval of reverse
splits of a corporation's stock. Section 16-10a-1003 discusses certain
corporate actions that require such approval. However, this Section is
inapplicable to the Company's reverse split for two reasons: (i) it pertains
only to an amendment of the Articles of Incorporation, which, as shown above,
is not necessary here; and (ii) even if Section 16-10a-1003 otherwise applied
to this transaction, the only reverse split-related event for which the
Section requires a stockholder vote is triggered when fractional shares are
created, and I understand that no fractional shares will be created here.
Also, see Section 623 of the Revised Act, regarding share
dividends, where the ABA commentators' comments regarding a "reverse" split
requiring an amendment to the Articles of Incorporation were not adopted by
the State of Utah.
Please contact me if you have any questions or comments.
Yours very sincerely,
Leonard W. Burningham
LWB/sr.
cc: Olsen Payne & Co.
Branden shepardized this on 8/19/97.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000788206
<NAME> MEDIVEST, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 5000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5000
<CURRENT-LIABILITIES> 805
<BONDS> 0
0
0
<COMMON> 4373
<OTHER-SE> (178)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 8534
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (8534)
<INCOME-TAX> 100
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8634)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
RESOLUTION OF THE BOARD OF DIRECTORS OF
MEDIVEST, INC.
The undersigned, being all of the duly elected and incumbent
directors of Medivest, Inc., a Utah corporation (the "Corporation"), acting
pursuant to Section 16-10a-821 of the Utah Revised Business Corporation Act,
do hereby unanimously consent to and adopt the following resolutions,
effective the latest date hereof:
RECITALS
WHEREAS, the Company has been unable to interest any
reorganization, merger or acquisition candidate in completing a favorable
transaction with the Company because of the current size of the "public"
float; and
WHEREAS, it is deemed to be in the best interest of the Company
and the stockholders to reduce this float by virtue of a reverse split which
will affect all stockholders equally and may make the Company more attractive
to these types of candidates; and
WHEREAS, due to the health of John M. Williams and the current
business schedule of William R. Stoddard, it is deemed desirable to attempt to
find other persons more experienced in mergers and acquisitions to assume
control of the Company by the investment of sufficient capital to allow the
Company to seek out reorganization, merger or acquisition candidates;
NOW, THEREFORE, it is hereby
RESOLVED, that the Corporation shall undertake a reverse split of
its outstanding common stock on the basis of one share for 18,
retaining the authorized shares at 50,000,000 and retaining the
par value at one mill ($0.001) per share, with appropriate
adjustments being made in the additional paid in capital and
stated capital accounts of the Corporation, effective at 8:00
a.m., Daylight Savings Time, on October 9, 1998; provided that no
stockholder's holdings shall be reduced to less than one share as
a result of said reverse split, with all fractions being rounded
up to the nearest whole share;
FURTHER, RESOLVED, that the Company's transfer agent is hereby
authorized to issue sufficient shares to cover rounding as a
result of the reverse split;
FURTHER, RESOLVED, that Leonard W. Burningham, Esq., is hereby
authorized to prepare such documentation and do such acts as are
necessary to implement said reverse split;
FURTHER, RESOLVED, that the current directors and executive
officers of the Company attempt to find other persons with
substantial experience or contacts regarding mergers,
reorganizations or acquisitions, who are willing to serve as
directors and executive officers of the Company and are willing to
invest not less than $20,000 into the Company to fund the search
for candidates for these types of transactions; and
FURTHER, RESOLVED, that on the finding of any such person or
persons and the investment of such funds, that the current
directors and executive officers of the Company resign, forthwith,
and designate such person or persons to serve in their place and
stead.
Date: 9/30/98 /s/John M. Williams
John M. Williams
Date: 9/30/98 /S/William R. Stoddard
William R. Stoddard
