FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Mark One
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE OF 1934
FOR THE FISCAL YEAR ENDED: December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO N/A
COMMISSION FILE NUMBER: 33-03328-D
COFITRAS ENTERTAINMENT, INC.
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(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
NEVADA 87-0542172
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STATE OF INCORPORATION (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
7829 South 3500 East
SALT LAKE CITY, UT 84121
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code:
(801) 944-4452
Attorney for Registrant - Julian D. Jensen: (801) 531-6600
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the Registration (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to files such reports), and (2) has been subject to such
filing requirements for the past 90 days. (1) X YES as to filing; (2) X Yes as
to requirement.
As of December 31, 1998, and extended to the filing date of this Report, the
aggregate value of the voting stock held by non-affiliates of the Registrant,
computed by reference to the average of the bid and ask price on such date was
$0.00 as the Registrant has no current trading market.
As of December 31, 1998, and currently, the Registrant has outstanding
approximately 8,984,025 shares of common stock ($.001 par value).
An index of the documents incorporated herein by reference and/or annexed as
exhibits to the signed originals of this report appears on page 14.
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TABLE OF CONTENTS TO ANNUAL REPORT
ON FORM 10-KSB
YEAR ENDED DECEMBER 31, 1998
PART I
Item 1. Description of Business..............................................3
Item 2. Description of Property..............................................5
Item 3. Legal Proceedings....................................................5
Item 4. Submission of matters to a Vote of Security Holders..................6
PART II
Item 5. Market for Registrant's Common Equity & Related Stockholder
Matters..............................................................6
Item 6. Management's Discussion & Analysis of Financial Condition &
Results of Operations................................................6
Item 7. Financial Statements.................................................9
Item 8. Changes in and Disagreements with Accountants on Accounting
& Financial Disclosure..............................................10
PART III
Item 9. Directors & Executive Officers, Promoters & Control Persons,
Compliance with Section 16 (a) of the Exchange Act..................10
Item 10. Executive Compensation..............................................11
Item 11. Security Ownership of Certain Beneficial Owners & Management........12
Item 12. Certain Relationships & Related Transactions........................12
Item 13. Exhibits & Reports on Form 8-K......................................14
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PART I.
ITEM 1. DESCRIPTION OF BUSINESS
A. THE REGISTRANT
Historical Data
Cofitras Entertainment, Inc. (the "Company or "Registrant") was
incorporated on January 26, 1986 as Vantage, Inc., a Nevada corporation. In
1995, the Company changed its name from Vantage, Inc. to Cofitras Entertainment,
Inc.
In February 1987, the Company closed an initial public offering under
the then Rule S-18 Registration format which generated gross proceeds of
$175,650. It appears from historical records that the Company was intended as
what is sometimes known as a "Blind Pool" offering. That is, management had
broad discretion to enter into initially undesignated business activities and
employ the proceeds of the offering for those purposes without further
shareholder approval.
In 1988, the Company appears to have entered a "Reverse Acquisition"
with a stock brokerage firm known as StonePointe Financial Services, but which
acquisition was fully rescinded by 1989.
In March 1990, the Company entered into a purchase agreement under
which the Company acquired a United States patent dealing with a roof mount for
a disk antenna, a patent filed for an antilightning direct burial satellite
cable, and certain contracts relating to the patent in exchange for shares of
restricted voting common stock which represented a controlling interest in the
Company. In December 1990, the Company entered into an exclusive license
agreement with a wire manufacturer to manufacture and sell the cable.
Thereafter, Company management determined that it would seek other business
opportunities due to the lack of sales of its satellite business. No material
revenues have been received by the Company from the cable T.V. related
technology and the Company now regards the technology as obsolete and of no
further value.
In September 1992, shares of the Company's outstanding common stock
were sold pursuant to an Agreement of Purchase and Sale of Common Stock. The
sale of the shares resulted in a change in the control of the Company.
The acquiring shareholders transferred various media and entertainment
production rights for the majority share acquisition. These media license rights
expired in 1993 and the Company has continued after that date without any
material assets or business purposes.
In November 1992, the Company's Board of Directors, as part of the
foregoing acquisition, declared a 1 for 5 reverse stock split of its outstanding
common stock (no other Company securities were outstanding on the date of the
split). All references to shares outstanding herein have been adjusted to
reflect the effect of this reverse split, as well as the subsequent reverse
split described below, on a retroactive bases.
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Since 1993, the Company has essentially existed as an inactive
reporting company without any material assets or business activities. This type
of company is commonly referred to as a "public shell" corporation. It should
also be noted that for much of the period subsequent to 1993 to the present,
management has consisted of a single officer/director. The most recent sole
officer/director has been Ms. Christine Green who served from the period of
approximately April, 1998 to November, 1998.
As previously reported in a December 1998 8-K Filing, the Company
entered into an agreement for an acquisition of the majority of its outstanding
shares in November, 1998. The substance of this November 30, 1998 agreement,
which was finally closed as of March 5, 1999, can be outlined as follows:
1. The Company agreed, effective November 30, 1998, to reverse split
its shares on a sixty-to-one (60:1) ratio which essentially resulted in
approximately 984,025 shares being deemed to be issued and outstanding.
2. The Company agreed to issue 8,000,000 reverse split shares to a
group of private investors, acting though Mr. Dennis Madsen as their agent, for
payment of $30,000 to the Company (subsequently loaned to Ms. Green with
obligation now assumed by Mr. Madsen) and a commitment to acquire the majority
of the issued and outstanding shares. Mr. Dennis Madsen subsequently became the
Secretary/Treasurer of the Company and his son, Damon Madsen, became the
President pursuant to the majority share acquisition.
3. The November 30, 1998 agreement also provided that within 100 days
of the agreement, the new shareholders now holding the majority shares pursuant
to the November 30, 1998 agreement would acquire from the prior principal
shareholder, Eversfield Corporation, acting through its principal agent and
attorney in fact, Christine Green, approximately 80% of the otherwise issued and
outstanding stock of the Company consisting of approximately 787,200 reverse
split shares. This secondary acquisition was completed as of March 5, 1999 as
earlier reported.
4. Ms. Christine Green agreed to conditionally resign on November 30,
1998 pending the completion of the final share acquisition in March, 1999 and
voted her majority share position, on behalf of Eversfield Corporation, for the
election of Mr. Damon Madsen as a Director, Mr. Gregory Stringham as a Director,
and Mr. Dennis Madsen as a Director. These directors, as elected, then appointed
themselves as the officers of the Company with Mr. Damon Madsen as President,
Mr. Gregory Stringham as Vice-President, and Mr. Dennis Madsen as
Secretary/Treasurer. This resignation became irrevocable pursuant to the closing
on March 5, 1999.
5. A Notice to Shareholders explaining these transactions, including
the completion of the majority share acquisition and reverse split, was mailed
to all shareholders of record on or about April 10, 1999, a copy of which is
attached to this 10-KSB filing as an Exhibit.
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The net capital gained by the corporation from this transaction is a
note payable by Mr. Dennis Madsen to Coftrias (Note Receivable to the Company)
for $30,000. Mr. Madsen has advanced a repayment of approximately $2,350 to date
on this note for costs related to filing and other securities matters. The note
requires repayment to be made no later than December 31, 1999. In the interim,
Mr. Dennis Madsen has commited to pay funds as required by the Company. It is
anticipated, based upon representations of Mr. Madsen, that the note will be
fully paid in a timely manner. For accounting purposes, this $30,000 obligation
will be treated as additional capital to be contributed.
New management is presently engaged in attempting to find suitable
merger/acquisition or joint venture candidates for an appropriate business
purpose for the corporation. However, no agreement in principle has been entered
as to any such merger, acquisition, or other business venture. The Company will
file the appropriate 8-K notice when, or if, such an agreement is reached in
principle.
Business of Issuer
The Company has no current business operations. The Company's business
plan is to seek one or more potential business ventures, such as a merger or
acquisition, that, in the opinion of management, may warrant involvement by the
Company. The Company recognizes that because of its limited financial,
managerial and other resources, the type of suitable potential business ventures
which may be available to it will be extremely limited. The Company's principal
business objective will be to seek long-term growth potential in the business
venture in which it participates rather than to seek immediate, short-term
earnings. In seeking to attain the Company's business objective, it will not
restrict its search to any particular business or industry, but may participate
in business ventures of essentially any kind or nature. It is emphasized that
the business objectives discussed are extremely general and are not intended to
be restrictive upon the discretion of management.
The Company will not restrict its search for any specific kind of
firms, but may participate in a venture in its preliminary or development stage,
may participate in a business that is already in operation or in a business in
various stages of its corporate existence. It is impossible to predict, at this
stage, the status or terms of any venture in which the Company may participate,
in that the venture may need additional capital, may merely desire to have its
shares publicly traded, or may seek other perceived advantages which the Company
may offer. In some instances, the business endeavors may involve the acquisition
or merger with a corporation which does not need substantial additional cash,
but which desires to establish a public trading market for its common stock.
There is no assurance that the Company will be able to successfully
identify and negotiate a suitable potential business venture.
The Company has no employees. The Company presently maintains its
business office at 7829 South 3500 East, Salt Lake City, Utah 84121, which is
the home-business office of its Secretary/Treasurer. Mr. Madsen has not charged
any fee for this accommodation.
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ITEM 2. DESCRIPTION OF PROPERTIES
The Company has no significant assets, property, or operating capital.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to, nor are its properties the subject of,
any pending legal proceedings and no such proceedings are known to the Company
to be threatened or contemplated by or against it.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of the security holders during the
4th quarter of the fiscal year covered by this report. A notice of the completed
reorganization, as described above, was mailed to all shareholders of record.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY & RELATED STOCKHOLDER
MATTERS
Market Information
To the knowledge of current management, their is no public trading
market for the Company's common stock.
Holders
At December 31, 1998, there were approximately 215 holders of record of
the Company's common stock. As of December 31, 1998, there were approximately
8,984,025 shares outstanding.
Dividends
The Company has not declared any cash dividends within the past two
years on its common stock. The Company does not anticipate or contemplate paying
dividends in the foreseeable future. It is the present intention of management
to utilize available funds, if any, for the development of the Company's
business.
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ITEM 6. MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
OPERATIONS
As will be noted from the financial statements, the Company does not
have any present revenues, income, or material assets. It does have a modest
amount of accrued debt and liability, together with a note receivable for
approximately $30,000 from its Secretary/Treasurer. No detailed analysis of
operations can be completed until or unless the Company is successful in
obtaining a potential merger, acquisition, or other business relationship. At
that time, the Company would intend to file the appropriate 8-K filing, which
would contain a description of intended business activities and any pro forma
consolidated financial statements pertaining to a potential merger or
acquisition candidate.
It should also be noted that unless the Company is successful in
obtaining some form of business reorganization, it is not likely that it can
continue indefinitely as an inactive public shell corporation.
The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of the
Company's consolidated results of operations and financial condition. The
discussion should be read in conjunction with the consolidated financial
statements and notes thereto.
Plan of Operation
The Company has no business operations, and very limited assets or
capital resources. The Company's business plan is to seek one or more potential
business ventures that, in the opinion of management, may warrant involvement by
the Company. The Company recognizes that because of its limited financial,
managerial and other resources, the type of suitable potential business ventures
which may be available to it will be extremely limited. The Company's principal
business objective will be to seek long-term growth potential in the business
venture in which it participates rather than to seek immediate, short-term
earnings. In seeking to attain the Company's business objective, it will not
restrict its search to any particular business or industry, but may participate
in business ventures of essentially any kind or nature. It is emphasized that
the business objectives discussed are extremely general and are not intended to
be restrictive upon the discretion of management.
The Company will not restrict its search for any specific kind of
firms, but may participate in a venture in its preliminary or development stage,
may participate in a business that is already in operation or in a business in
various stages of its corporate existence. It is impossible to predict at this
stage the status of any venture in which the Company may participate, in that
the venture may need additional capital, may merely desire to have its shares
publicly traded, or may seek other perceived advantages which the Company may
offer. In some instances, the business endeavors may involve the acquisition of
or merger with a corporation which does not need substantial additional cash but
which desires to establish a public trading market for its common stock.
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The Company does not have sufficient funding to meet its cash needs.
The officers have expressed their intent to borrow funds, to the extent
possible, to fund the costs of operating the Company until a suitable business
venture can be completed. Management does not anticipate raising capital funds
during the next twelve months. There is no assurance that the Company will be
able to successfully identify and/or negotiate a suitable potential business
venture.
The Board has designated Mr. Dennis Madsen to act as a finding agent
for the Company related to its intention to seek out various merger or
acquisition candidates. Mr. Madsen has been given authority to negotiate
preliminary agreements of merger or acquisition or other business ventures,
subject to Board approval.
The Company has experienced net losses during the development stage
(April 1989 to present) and has had no significant revenues during such period.
During the past four fiscal years the Company has had no business operations. In
light of these circumstances, the ability of the Company to continue as a going
concern is significantly in doubt. The attached financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Forward-Looking Statements
When used in this Form 10-K or other filings by the Company with the
Securities and Exchange Commission, in the Company's press releases or other
public or shareholder communications, or in oral statements made with the
approval of an authorized officer of the Company's executive officers, forward
sounding words or phrases such as "would be", "will allow", "intends to", "will
likely result", "are expected to", "will continue", "is anticipated",
"estimate", "project", or similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995.
The Company cautions readers not to place undue reliance on any
forward-looking statements, which speak only as of the date made, and advises
readers that forward-looking statements involve various risks and uncertainties
and are only reasonable projections of management based upon limited current
information. The Company does not undertake, and specifically disclaims, any
obligation to update any forward-looking statements to reflect occurrences or
unanticipated events or circumstances after the date of such statement.
Year 2000 Compliance
At present, the Company only has access to a desktop PC to maintain its
rudimentary accounting and check ledger entries. The Company has had this
computer reviewed and has determined that it and its software programs are
compatible with the change-over in the year 2000 and should not cause a problem.
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The year 2000 (hereafter Y2K) computer compliance problem is primarily
based upon the fact that many computers and computer software programs may not
be compatible with the year change from 1999 to the year 2000. As a result, many
computer programs may fail or lose data as the millennium approaches. The
Company has focused its concern on this Y2K problem in three general areas.
First, computer programs and related software owned or used by the Company.
Secondly, collateral equipment such as potential communication systems and other
equipment that relies upon computer based components. Thirdly, Y2K problems
which may occur within the industry in which the Company may become involved.
As noted above, the Company has only access and use of a small desktop
PC which is Y2K compatible and therefore, does not believe any further review or
remedial work required to be Y2K compliant as to its in-house computer systems.
The Company is adopting a policy that any computer system purchased will have to
be warranted as Y2K compliant to be acquired by the Company.
Since the Company has no collateral equipment which is reliant upon
computer based systems, it also has determined that it does not have any problem
in the second category, but has adopted a policy that any collateral equipment,
such as communication systems, that will have computer components will have to
have a warranty or certification that they are Y2K compliant to be purchased or
leased by the Company in the event of reorganization.
The Company does not know which industry, if any, it may participate in
any potential reorganizations. As part of its due diligence in any acquisition
or merger proposal, it will require, as a necessary term and condition, that all
computer systems sought to be acquired or in which the Company will participate
through any type of reorganization must be certified as Y2K compliant. Further,
the Company will consider as a significant element in any reorganization efforts
what Y2K problems may exist in the industry in which the Company will
participate and whether sufficient remedial steps have been taken to ensure
against dramatic failures within that industry.
The Company believes that the foregoing constitutes all reasonable
efforts which may be taken and have been taken for Y2K compliance. Should the
Company acquire significant computer related programs or equipment as part of
any future merger or acquisition, it will appoint an officer having
responsibility for Y2K compliance as part of the Company's due diligence
efforts. To date, the Company has not expended any measurable resources on Y2K
compliance.
ITEM 7. FINANCIAL STATEMENTS
See attached financial statements.
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ITEM 8. CHANGES IN & DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING & FINANCIAL
DISCLOSURE
The Company is not aware, and has not been advised by its auditors, of
any disagreement on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure. The Company does note, as
of March, 1999 an 8-K filing in which it announced the change of auditors from
Jones, Jensen & Co. of Salt Lake City, to Hansen, Barnett & Maxwell of Salt Lake
City. A copy of this 8-K filing is attached as an Exhibit. Also in that 8-K, the
Company noted in prior filings that its authorized capital had been misstated at
300,000,000 shares and will be corrected to 75,000,000 in all subsequent
filings.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS & CONTROL PERSONS, COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT
Identify Directors and Executive Officers
Set forth below is certain information concerning each of the directors
and executive officers of the Company as of December 31, 1998:
With
Company
Name Age Position Since
Damon Madsen 25 Director/President 11/98
Gregory Stringham 56 Director/Vice-President 11/98
Dennis Madsen 56 Director/Secretary/Treasur 11/98
Chief Financial Officer
Biographical information as to current management:
DAMON MADSEN - Mr. Madsen is single and resides in Salt Lake City, Utah. Mr.
Damon Madsen is a high school graduate and works part-time at various
occupations. Mr. Madsen does not have extensive management experience, but has
served on other small development stage public companies as a director. Mr.
Madsen will serve the Company on an as needed part-time basis.
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GREGORY STRINGHAM - Mr. Stringham is single and resides in Bountiful, Utah.. Mr.
Stringham is a 1969 graduate of Weber State University with a B.S. Degree in
Engineering. Mr. Stringham is currently an independent business consultant and
works for Davis County, Utah as an Engineer. He has extensive experience over
the past 20 years serving on the Board and as a part-time officer of various
small public companies, usually of a start-up variety. Mr. Stringham will serve
on an as needed part-time basis.
DENNIS MADSEN - Mr. Dennis Madsen is single and resides in Salt Lake City, Utah.
He has made a portion of his residence available as the temporary offices for
the Company. Mr. Madsen is a 1967 graduate of the University of Utah with a BS
degree in Biology. He has been involved almost continuously, since graduation as
a business consultant and promoter to various small public companies, generally
of a start-up variety or as engaged in reorganization efforts. Mr. Madsen will
serve the Company part-time as its Secretary, Treasurer, and CFO and will act as
a special agent to pursue and negotiate proposed reorganization plans.
Identify Significant Employees
The Company has no employees, except for the officers described above.
Family Relationships
Mr. Damon Madsen, the President, is the son of Mr. Dennis Madsen, the
Secretary/Treasurer, who also acts as a special acquisition agent for the
Company.
Involvement in Certain Legal Proceedings
None of the director/officers have been involved in any material legal
proceedings which occurred within the last five years of any type as described
in Regulation S-K.
Compliance With Section 16(a) of the Exchange Act
The Company does not have a class of equity securities registered
pursuant to Section 12 of the Exchange Act. As a result, no reports are required
to be filed pursuant to Section 16(a).
ITEM 10. EXECUTIVE COMPENSATION
During the last fiscal year, the Company's officer and director did not
receive any salary, wage or other compensation. During the current fiscal year
the Company has no present plans or means to pay compensation to its officers
and directors. It is anticipated, though not warranted, that the current
officers/directors may be paid some accrued compensation in cash or shares in
the event of a successful reorganization of the Company resulting in the
acquisition of an active business purpose. There are presently no ongoing
pension or other plans or arrangements pursuant
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to which remuneration is proposed to be paid in the future to any of the
officers and directors of the Company.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS &
MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the common stock of the Company as of March 31, 1999,
for: (i) each person who is known by the Company to beneficially own more than
five percent (5%) of the Company's common stock, (ii) each of the Company's
directors, (iii) each of the Company's Named Executive Officers, and (iv) all
directors and executive officers as a group. As of March 31, 1999, the Company
had 8,984,025 shares of common stock outstanding.
Shares Percentage of
Name and Address Beneficially Shares
of Beneficial Owner1 Owned Beneficially Owned2
- -------------------- ----- -------------------
Damon Madsen (Director/President) 2,666,667 30%
Gregory Stringham (Director/Vice-President) 2,666,667 30%
Dennis Madsen (Director/Secretary/Tresurer) 2,666,667 30%
1There are no outstanding options or rights to acquire shares.
2Rounded to nearest whole percentage.
ITEM 12. CERTAIN RELATIONSHIPS & RELATED TRANSACTIONS
The President of the Company and one of three directors is the son of the
Secretary/Treasurer and director. Mr. Dennis Madsen, the Secretary/Treasurer,
acted as an informal agent for various purchasers of the Company's stock in the
November, 1998 majority share acquisition. Because of their majority share
position, the related or affiliated parties constituting current management
should retain effective control over the corporation pending any subsequent
reorganization.
ITEM 13. EXHIBITS AND REPORTS ON FROM 8-K
Exhibits
Listed on page 14 hereof.
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Reports on Form 8-K
The Company filed an 8-K Report pertaining to the current majority share
acquisition in the Company as of December, 1998. The Company has also recently
filed an 8-K in March, 1998 discussing the change in auditors and related
accounting matters.
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act, the
registrant has duly caused this report to be signed by the undersigned,
"hereunto duly authorized.
Cofitras Entertainment, Inc.
(Registrant)
/s/ Damon Madsen Date April 14, 1999
-----------------------------
Damon Madsen
President/Director
/s/ Gregory Stringham Date April 14, 1999
-----------------------------
Gregory Stringham
Vice-President/Director
/s/ Dennis Madsen Date April 14, 1999
-----------------------------
Dennis Madsen
Secretary/Treasurer/Director
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description of Exhibits:
A Preliminary Agreement pertaining to Majority
Shareholder Consent Previously filed December, 1998
8-K
B Majority Shareholder Consent to Majority Share Acquisition
Previously filed as Exhibit to December, 1998 8-K.
C Board Minutes pertaining to November 1998 Majority Share
Acquisition.
D Closing Statement of March 5, 1999 pertaining to Majority Share
Acquisition.
E Notice to Shareholders related to Majority Share Acquisition and
Reverse Split of Stock.
F Financial Statements
23 Consent of Independent Auditors
27 Financial Data Schedule
FINANCIAL STATEMENT INDEX
Independent Auditor's Report.............................................
Balance Sheets............................................................
Statements of Operations.................................................
Statements of Stockholders' Equity (Deficit).............................
Statements of Cash Flows.................................................
Notes to the Financial Statements........................................
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Exhibit C
MAJORITY SHAREHOLDER CONSENT Cofitras Entertainment,
Inc.
November 30, 1998
The undersigned is a holder of the majority of the issued and
outstanding shares of Cofitras Entertainment, Inc., a Nevada Corporation
("Cofitras").
In accordance with Nevada Law, the undersigned majority shareholder
understands and agrees that she may waive notice of a shareholders' meeting and
agree to the adoption of any action or election of directors which could be
enacted or voted upon by a majority of the Cofitras shareholders at a
shareholder meeting regularly called for such purposes. The undersigned hereby
wishes to exercise such right and does hereby waive notice of a Special
Shareholders Meeting and the opportunity to vote at such meeting and hereby
expresses, by her majority consent, approval to the following corporate actions
and elections requiring shareholder consent and approval:
1. Even though not required under Nevada Law, the undersigned
shareholder wishes to ratify, as part of the Majority Share
Acquisition Agreement, the reverse split by the Board of
Directors of the Company's shares on a sixty to one (60:1)
ratio, including the shares of the undersigned.
2. The election of the following nominees by Mr. Dennis Madsen to
be the new Board of Directors of the Company:
(a) Damon Madsen
(b) Dennis Madsen
(c) Gregory Stringham
The undersigned fully casts all of her votes which she is entitled to
vote in favor of the election and appointment of the foregoing to the Board of
Directors, subject only to the full performance of the Majority Share
Acquisition Agreement. The undersigned is fully advised that if the full
consideration is not timely paid under the Majority Share Acquisition Agreement,
then the above Directors-Elect will resign and be replaced by the prior Board.
While not requiring shareholder approval, the undersigned also wishes
to ratify and affirm the Board's decision to issue out, as part of the Majority
Share Acquisition Agreement Eight Million Reverse Split Shares of the Company to
Mr. Dennis Madsen in escrow, also subject to full performance under the Majority
Share Acquisition Agreement.
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The undersigned represents she has been fully informed of the terms of
the Majority Share Acquisition Agreement and has been given an opportunity to
review such Agreement before entering this informed consent. The undersigned
shareholder further represents that she has had a full opportunity to ask
questions of and discuss the proposed matters listed above, and the other terms
and conditions of the Acquisition, and is fully satisfied with the fact that it
has been given full and complete disclosure of such transaction and herewith
voluntarily and willfully approve such transaction of its own free will and
accord and pursuant to resolution of the Board of Directors of the undersigned.
Further, the undersigned represents it understands it may consent to such action
or may withhold its consent and that it is fully entitled to review this
decision with outside legal or accounting experts of its own choosing and has
either done so, or knowingly elected not to do so.
Finally, the undersigned shareholder understands and agrees that with
her majority approval of these matters, a formal meeting and proxy will not be
solicited of the other shareholders in the Company.
The undersigned, Christine Green, acknowledges her resignation as an
officer and director of Cofitras effective November 30, 1998 in favor of the
above nominees, but subject to automatic reappointment if the above referenced
Share Acquisition Agreement is not fully performed.
WITNESS the signature and date the undersigned majority shareholder of
the Company constituting a majority of all issued and outstanding shares on this
30th day of November, 1998.
/s/ 11/30/98 47,233,207
----------------------- -------- -----------
By: Christine Green Date # of Shares
Majority Shareholder
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Exhibit D
CLOSING AGREEMENT & STATEMENT
Agreement made and entered in duplicate on this _____ day of March,
1999 by and between Christine Green of 1155 East 2100 South #325, Salt Lake
City, Utah 84106 ("Green"), in her individual capacity and as agent for certain
sellers of Cofitras Entertainment, Inc. ("Cofitras") shares to Dennis Madsen,
individually and as agent for other buyers of Cofitras Stock, all of 476 East
South Temple #205, Salt Lake City, Utah 84111 ("Madsen") in Salt Lake County,
State of Utah. Whenever both Green and Madsen are referred to in this Agreement,
they may be collectively described as the "Parties."
RECITALS
WHEREAS, Madsen, effective November 30, 1998, acting as a principal and
agent acquired from Cofitras, in a private placement, 8,000,000 restricted
reverse split shares of the Company for a capital advance of $30,000, but
conditional upon the purchase and closing of other outstanding Cofitras shares,
as outlined in this Closing Agreement and Statement;
WHEREAS, Madsen and Green, acting in their individual capacities and as
agents for various sellers and buyers, entered into an agreement for the
purchase of eighty percent (80%) or more of the issued and outstanding shares of
Cofitras prior to the private placement described above, effective on November
30, 1998 which agreement was originally designated as the "Preliminary
Agreement," but is designated for the purposes of this Closing Agreement and
Statement as the "Purchase Agreement";
WHEREAS, under the terms of the Purchase Agreement, Madsen,
representing certain buyers, had previously agreed to tender to Green $80,000
for the purchase of approximately 47,233,207 shares of Cofitras on a pre-reverse
split basis and currently constituting approximately 787,220 post-split shares;
WHEREAS, under the terms of the Purchase Agreement, Green has agreed
and stipulated to cause to be delivered, concurrently with the execution of this
Closing Agreement and Statement, the 787,220 shares standing in the name of
Eversfield Corporation;
WHEREAS, Green and Madsen both agree and stipulate that the Eversfield
Shares will be released to Madsen upon the conclusion of the closing represented
by this Agreement in negotiable form and free of restrictive legends or adverse
claims pursuant to the provisions of SEC Rule 144(k);
WHEREAS, Madsen and Green further stipulate and agree that the name
appearing on the certificates tendered by Green is a company called Eversfield
Corporation, but that Green has produced a document, which is attached as
Exhibit A to this Closing Agreement and Statement, evidencing that she has full,
complete, and exclusive authority, pursuant to resolution of the Eversfield
Board of Directors, to convey such shares and to retain all proceeds of sale;
NOW THEREFORE, the parties mutually agree and covenant as follows:
1
<PAGE>
WITNESSETH
1.0 Consideration. Christine Green herewith acknowledges receipt and
sufficiency of the total final consideration under the Purchase Agreement of
$80,000 for the purchase of the prior control shares tendered. This Agreement is
further supported by the recital of other prior considerations tendered, and by
the mutual covenants set-out herein.
2.0 Tender of Shares. Madsen, in his individual capacity and for and on
behalf of various purchasers of Cofitras stock for whom he acts as agent,
herewith acknowledges receipt and sufficiency of the total shares of Cofitras to
be issued pursuant to the Purchase Agreement. Which share consideration as
tendered on a reverse split basis and free of restrictive legends constitute
787,220 reverse split shares. Green further represents and warrants that such
shares constituted not less than 80% of all issued and outstanding shares of
Cofitras prior to the earlier issuance of the 8,000,000 reverse split shares to
Madsen and assigns by Cofitras for the $30,000 capital contribution.
3.0 Representations & Warranties of Green.
3.1 The 787,220 shares herewith tendered to Madsen are delivered free
and clear of any encumbrance, liens, adverse claims, assignments, or any known
entitlement or claims of any third person or party.
3.2 Green further represents that she is the full and exclusive agent
for the subject Cofitras Shares and has full right and authority to endorse,
negotiate, and tender such shares to Madsen or assigns in consummation of this
closing and has done so with full legal authority and exclusively has all
beneficial rights and interest in and to the proceeds of such sale.
3.3 Green further represents that the attached and incorporated
authorization to tender such shares by Eversfield represents a true and accurate
representation of her authority.
3.4 Green represents, to the best of her knowledge, that the last
financial statements prepared for Cofitras incident to the filing of the
December 31, 1998 10-QSB Report constitutes an accurate description of the
financial condition of the Company, as well its assets, debts, and obligations.
Based upon such financial statements, Green represents, to the best of her
knowledge, that there are no remaining outstanding debts or obligations to or
from the corporation upon the assignment of her $30,000 loan from the Company to
Madsen.
3.5 Green represents that she is not aware of any creditor claims,
litigation claims, or other adverse claims or proceedings or any litigation or
administrative proceedings or claims currently instituted against Cofitras or to
which Cofitras is a party.
3.6 Green represents that she has tendered all stock certificate forms,
certificate books, records, accounting, and other documents related to Cofitras
to Madsen, or to an attorney at law designated by Madsen for the purpose of this
closing.
4.0 Representations and Warranties of Madsen.
2
<PAGE>
4.1 Madsen represents that he has acted in good faith to secure the
participants in the purchase of the majority share interest in Cofitras and that
all of the participants in such purchase have acted with full knowledge and
consent to Madsen acting as their agent for the purchase of such shares. Madsen
represents that he has acted on advice of legal counsel that such purchasers
would constitute sophisticated business investors participating as principal
long term investors, and that there is not required any registration or other
securities disclosure as to the shares acquired. Madsen further agrees to hold
harmless and indemnify Green from any and all adverse claims which may hereafter
be asserted by any party purchasing by, through, or with Madsen pursuant to the
Purchase Agreement.
4.2 Madsen represents that he has been duly appointed by majority
shareholder consent to be a director and officer of the Company along with Mr.
Gregory Stringham and Mr. Damon Madsen, and that he will continue in such
capacity and attempt to find a suitable merger, acquisition, or other business
purpose for the corporation in such capacity as management.
4.3 Except as to those warranties of title for the securities set-out
herein, Madsen stipulates and agrees that there has been no warranty - expressed
or implied - concerning the Company's profitability, suitability for the
purposes intended, or that the Company may continue as a reporting company or
trading company.
5.0 Completed Transaction. Both parties mutually agree and stipulate
that upon the tender of the shares and consideration as recited by this
Agreement and subject only to the specific representations and warranties
contained herein, the stock for cash transaction represented in this closing has
been fully closed and consummated upon signature of this statement and that
there are no further additional obligations, undertakings, or responsibilities
of either party. Provided, however, that any material breach of any
representation contained in this Closing Agreement and Statement shall
constitute a basis by either party to seek recision of the transaction and/or
damages.
BOTH PARTIES FURTHER AGREE THAT THIS AGREEMENT SUPERCEDES ALL PRIOR AGREEMENTS
OR REPRESENTATIONS, WRITTEN OR ORAL, EXISTING BETWEEN THE PARTIES.
6.0 Miscellaneous.
6.1 This Closing Agreement and Statement evidences the final agreement
and transaction between the parties related to the purchase of Cofitras stock.
6.2 This Agreement shall be applied and construed in accordance with
Utah Law.
6.3 This Agreement shall be binding upon or inur to the benefit of any
assign or successor in interest of either party hereto.
6.4 This Agreement shall be given reasonable interpretation and applied
so far as possible. Should any term be deemed void or voidable, the balance
shall be given application and applied so far as possible. In like manner, any
error in grammar, syntax, spelling, gender, or usage shall be given reasonable
application so far as possible.
3
<PAGE>
6.5 Should any action at law or equity be necessary to enforce any term
or provision of this Agreement, the prevailing party shall be entitled to a
reasonable costs, attorney fees, and interest on any damage award at 15% from
the date of loss.
6.6 This Agreement constitutes a complete and integrated contract and
agreement. This Agreement shall not be subject to parol evidence and may be
amended between the parties only in a writing attached hereto and executed by
both parties. All addendums or Exhibits shall be constituted an integrated part
of this Agreement.
6.7 The Recitals contained in this Agreement constitute a necessary and
intrical part of the Agreement and shall be applied to its enforcement and
construction.
Dated the day and date first above written.
Seller: Buyer:
/s/ /s/
- ---------------------------------- -----------------------------
Christine Green Dennis Madsen
4
<PAGE>
Exhibit E
NOTICE TO SHAREHOLDERS
March 31, 1999
Dear Fellow Shareholder,
Let me introduce myself, Mr. Damon Madsen, as the new President of
Cofitras Entertainment, Inc. As a few of you may be aware, prior management of
the Company entered into a conditional agreement in November, 1998, whereby a
new group of shareholders would acquire, for a cash transaction, a majority
shareholder interest in the Company. As a result of this acquisition, which is
more fully explained below, a new management group, of which I am a member, came
into control of the Company. The majority share acquisition was closed in March,
1999. Both the existing and new management approved a sixty-to-one (60:1)
reverse stock split for reorganization purposes and new shares were issued for
cash consideration to the Company. The transaction was approved by majority
shareholder consent under Nevada law, without the calling of a formal meeting.
However, you are being given notice, as a shareholder, of the terms and purpose
of this transaction in accordance with Nevada law, and as a matter of corporate
policy, as more fully detailed below.
As a starting point, I am sure each of you realize that Cofitras
Entertainment, Inc., as of November, 1998, did not have any assets; had a modest
amount of debts and unpaid obligations; and, was without any business purpose or
prospects. This type of corporation, while current on its corporate and SEC
filings, is often referred to and regarded as a "shell" corporation. It was
apparent to both the prior management, principally Christine Green, and new
management: Damon Madsen, Dennis Madsen, and Gregory Stringham, that if the
Company were to survive and to attempt to go forward to acquire a potentially
new and viable business purpose and operation, it would be necessary to change
control in the Company to acquire any new business or enterprise. Since there
were already a substantial number of shares outstanding, approximately
59,041,509 out of an authorized 75,000,000, it was apparent to both prior and
new management that the outstanding number of shares in relationship to the
authorized shares needed to be drastically reduced in order to have any
expectation or hope of attracting a potential acquisition or merger partner.
Accordingly, it was agreed, as part of the Majority Share Acquisition, that the
issued and outstanding shares would be reverse split on a sixty-to-one (60:1)
ratio. That means that for every 60 shares which you previously held or owned in
the Company you would now own one share. The reverse acquisition was implemented
on the basis that there would be no fractional shares and the number of shares
would be rounded to the next whole number of shares to each existing
shareholder, and without any shareholder being reduced below ownership of a
single share.
While at first glance it may appear that this an extreme remedy and
even perhaps unfair to existing shareholders, we would hope that-upon
reflection-you would understand that while you owned a larger portion of an
empty shell which essentially had no business future or prospects, you will now
be in a position to own a lesser share of a company which new management is
hopeful can acquire a viable business enterprise or product and re-establish
some value, business purpose, and-potentially-a trading market. In short, the
realistic evaluation was that your prior interest had essentially lost all value
and the only realistic alternative was to allow the Company to be dissolved.
1
<PAGE>
Some of you may wonder when, or if, new management plans on holding a
regular shareholder meeting and soliciting your vote and proxy on election of
directors and other matters which may appropriately come before the shareholders
for vote. As you may readily anticipate, the Company is in an extremely
diminished cash flow status until it is able to effect any type of
reorganization. It is also anticipated that any type of substantial acquisition
or reorganization would most likely require shareholder approval and potentially
the election of a new management group reflecting the acquired enterprise or
business purpose. Accordingly, it is the present position of management that the
next shareholder meeting should be reserved and deferred until there is a
specific and definitive proposal of acquisition or reorganization, with or
without management change.
Present management would also like to affirm to you certain
administrative policies related to the current status of the Company and your
shares. First, there is no present intent to change the name of the Company from
Cofitras Entertainment, Inc., until or unless a new acquisition has been
negotiated. Accordingly, while new shares have been authorized to reflect the
60:1 reverse split, you do not need to tender over your existing shares in
exchange for new post reverse split shares unless you so elect. It is the
present position of management that the issuance of new shares may occur
normally through the tender of existing shares through the transfer agent
whenever a transfer or sale of such shares occurs and the new shares will be
issued on a post reverse split basis at that time. However, if you would prefer
to presently receive your new reverse split certificates, you may do so at your
own cost and election by contacting the transfer agent, Cottonwood Transfer
Company, at 801/266-7151, or 5899 South State Street, Murray, Utah 84107. They
would be happy to complete an exchange of the old certificates for new
certificates for the standard transfer cost.
Your present management, as described below, would, at any time,
encourage your questions or inquiries concerning the Company and the status of
any merger or acquisition negotiations or discussions that are not otherwise
confidential. The present management will also, as generally described above,
advise you of any proposed merger or acquisition which will most likely require
a shareholder vote and consent. You are also advised that the Company has
elected to change certified auditors for the purpose of filing the currently due
10-KSB Report and would anticipate retaining the services of the new auditing
company into the foreseeable future.
For your information, the retiring auditors of the Company are Jones,
Jensen & Company of Salt Lake City, Utah, and the new auditors are Hansen,
Barnett & Maxwell of Salt Lake City, Utah. Management is not aware of any
material discrepancy or conflict existing between management and either the
prior or new auditors.
By way of general administrative announcement, the Company would
indicate to each shareholder that you may access all periodic filings by the
Company with the Securities and Exchange Commission (SEC) at the SEC Website,
http:\www.sec.gov, or you may contact management and receive a copy of any such
filing and any document referenced in those filings or this Notice. An extension
was filed for the current 10-KSB filing which was due March 31, 1999, and the
same will be filed on or about April 15, 1999 due to an anticipated delay in
completing the audit information with the change of auditors.
2
<PAGE>
Finally, the present management would like to present to you, in
outline fashion, the resulting terms and present capitalization of your company
resulting from the Reorganization Agreement for majority share control entered
into in November, 1998 and closed in March, 1999:
1. Mrs. Christine Green resigned as the acting sole director and
officer of the company and was replaced as of November, 1998 by Mr. Damon
Madsen, Director/President; Mr. Dennis Madsen, Director/Reorganization
Agent/Secretary-Treasurer; and Mr. Gregory Stringham, Director/Vice-President.
2. The majority share position of Eversfield Corporation, as
represented by Mrs. Christine Green, was acquired by a group of investors who
installed the present management by Majority Shareholder Consent.
3. All issued and outstanding shares were reverse split on a
sixty-to-one (60:1) basis. The group of new shareholders purchased 8,000,000
post reverse shares for cash from the Company. As a result, there are presently
8,984,025 issued and outstanding shares. You can compute your present sharehold
interest by taking your existing number of shares dividing by 60, rounding to
the next whole number, and then dividing your shares by the above number.
4. The Board designated Mr. Dennis Madsen to act as a special agent for
the Company to seek out, preliminarily negotiate, and present for Board approval
appropriate merger, reorganization, or acquisition proposals.
If you wish to contact management concerning any of the present
activities of the company, Mr. Dennis Madsen has been directed by the Board to
be the Shareholder Liaison, as well as the Merger & Acquisition Agent. You may
contact him at 801/944-4452, or 476 East South Temple #205, Salt Lake City, Utah
84111. You are also advised that present legal counsel of the Company is Mr.
Julian D. Jensen of Jensen, Duffin, Carman, Dibb & Jackson at 311 South State
Street, Suite 380, Salt Lake City, Utah 84111, or 801/531-6600.
Management wishes to thank you for your consideration and understanding
during these difficult transitional periods and would hope that if you have any
comments, suggestions, or questions that you feel free to contact management at
any time.
Sincerely,
Damon Madsen
President
3
<PAGE>
Exhibit F
COFITRAS ENTERTAINMENT, INC.
(A Development Stage Enterprise)
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
AND
FINANCIAL STATEMENTS
December 31, 1998 and 1997
and for the Cumulative Period from April 12, 1989 (Beginning of
Development Stage) through December 31, 1998
HANSEN, BARNETT & MAXWELL
A Professional Corporation
CERTIFIED PUBLIC ACCOUNTANTS
<PAGE>
COFITRAS ENTERTAINMENT, INC.
(A Development Stage Enterprise)
TABLE OF CONTENTS
Page
Report of Independent Certified Public Accountants F-1
Financial Statements:
Balance Sheet - December 31, 1998 F-2
Statements of Operations for the Years Ended December 31, 1998 and 1997
(Unaudited) and for the Cumulative Period from April 12, 1989 (Inception of
Development Stage) through December 31, 1998 (Unaudited) F-3
Statements of Stockholders' Equity for the Cumulative Period from April 12,
1989 (Inception of Development Stage) through December 31, 1996 (Unaudited)
and for the years ended December 31, 1997 (Unaudited) and 1998 F-4
Statements of Cash Flows for the Years Ended December 31, 1998 and 1997
(Unaudited) and for the Cumulative Period from April 12, 1989 (Inception of
Development Stage) through December 31, 1998 (Unaudited) F-5
Notes to Financial Statements F-6
<PAGE>
HANSEN, BARNETT & MAXWELL
A Professional Corporation
CERTIFIED PUBLIC ACCOUNTANTS
(801) 532-2200
Member of AICPA Division of Firms Fax (801) 532-7944
Member of SECPS 345 East Broadway, Suite 200
Member of Summit International Associates Salt Lake City, Utah 84111-2693
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
Cofitras Entertainment, Inc.
We have audited the accompanying balance sheet of Cofitras Entertainment, Inc.
(a development stage enterprise) as of December 31, 1998 and the related
statements of operations, stockholders' equity and cash flows for the year ended
December 31, 1998. 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 audit.
We conducted our audit 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 audit provides 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 Cofitras Entertainment, Inc. as
of December 31, 1998 and the results of its operations and its cash flows for
the year ended December 31, 1998 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company's significant losses raise substantial doubt
about its ability to continue as a going concern. Management's plans regarding
those matters are also described in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
HANSEN, BARNETT & MAXWELL
Salt Lake City, Utah
April 13, 1999
F-1
<PAGE>
<TABLE>
<CAPTION>
COFITRAS ENTERTAINMENT, INC.
(A Development Stage Enterprises)
BALANCE SHEET
ASSETS
<S> <C>
Total Assets $ --
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable $ 1,639
-------------
Total Current Liabilities 1,639
Stockholders' Deficit
Common stock - $0.001 par value; 75,000,000 shares
authorized; 8,984,025 shares issued and outstanding 8,984
Additional paid-in capital 204,256
Deficit accumulated during the development stage (214,879)
-------------
Total Stockholders' Deficit (1,639)
Total Liabilities and Stockholders' Equity $ --
The accompanying notes are an integral part of these
financial statements.
</TABLE>
F-2
<PAGE>
<TABLE>
<CAPTION>
COFITRAS ENTERTAINMENT, INC.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
Cumulative From
April 12, 1989
(Beginning of
For the Years Development Stage)
Ended December 31, through
1998 1997 December 31, 1998
--------------- -------------- -----------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
General and Administrative Expenses $ 21,949 $ 2,363 $ 214,879
--------------- -------------- ---------------
Net Loss $ (21,949) $ (2,363) $ (214,879)
=============== ============== ================
Basic and Diluted Loss Per Share $ (0.00) $ (0.00) $ (0.30)
=============== ============== ===============
Weighted Average Number of
Common Shares 1,663,477 984,025 726,696
=============== ============== ===============
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
COFITRAS ENTERTAINMENT, INC.
(A Development Stage Enterprise)
STATEMENTS OF STOCKHOLDERS' EQUITY
Deficit
Accumulated
Additional During the Total
Common Stock Paid-In Development Stockholders'
Shares Amount Capital Stage Deficit
------ ------ ------- ----- -------
<S> <C> <C> <C> <C> <C>
Balance - April 12, 1989 30,087 $ 30 $ 23,193 $ -- $ 23,223
Shares issued for patent rights,
March 1990, $0.01 per share 181,733 182 818 -- 1,000
Shares issued for cash, April 1990,
$0.86 per share 30,815 31 26,469 -- 26,500
Shares issued for cash, December 1990,
$0.00 per share 167 -- 5,000 -- 5,000
Shares issued for services, December
1991, $29.94 per share 1,666 2 1,498 -- 1,500
Shares issued for cash, December
1992, $0.05 per share 666,666 666 35,363 -- 36,029
Shares issued for services, December
1995, $0.10 per share 72,891 73 7,427 -- 7,500
Additional paid-in capital for the
cumulative period April 12, 1989
through December 31, 1996 -- -- 82,488 -- 82,488
Net loss for the cumulative period April
12, 1989 through December 31, 1996 -- -- -- (190,567) (190,567)
------------ ------------ ------------ ------------ -----------
Balance - December 31, 1996 (Unaudited) 984,025 984 182,256 (190,567) (7,327)
Net loss for the year ended
December 31, 1997 -- -- -- (2,363) (2,363)
------------ ------------ ------------ ------------ -----------
Balance - December 31, 1997 (Unaudited) 984,025 984 182,256 (192,930) (9,690)
Shares issued for cash, November 30,
1998, $0.00 per share 8,000,000 8,000 22,000 -- 30,000
Net loss for the year ended
December 31, 1998 -- -- -- (21,949) (21,949)
------------ ------------ ------------ ------------ -----------
Balance - December 31, 1998 8,984,025 $ 8,984 $ 204,256 $ (214,879) $ (1,639)
============ ============ ============ ============ ===========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
COFITRAS ENTERTAINMENT, INC.
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
Cumulative From
April 12, 1989
(Beginning of
For the Years Ended Development Stage)
December 31, through
1998 1997 December 31, 1998
---------------- -------------- -----------------
(Unaudited) (Unaudited)
Cash Flows From Operating Activities
<S> <C> <C> <C>
Net loss $ (21,949) $ (2,363) $ (214,879)
Adjustments to reconcile net income to
net cash provided by operating activities:
Amortization -- -- 1,183
Common stock issued for services -- -- 9,000
Change in operating assets and liabilities:
Other assets -- -- 11,029
Shareholder payable -- -- (3,003)
Accounts payable (8,051) 2,363 4,142
---------------- -------------- ---------------
Net Cash Used by Operating
Activities (30,000) -- (192,528)
---------------- -------------- ---------------
Cash Flows From Investing Activities
Cash acquired upon reorganization
of Company -- -- 23,540
---------------- -------------- ---------------
Net Cash Provided by
Investing Activities -- -- 23,540
---------------- -------------- ---------------
Cash Flows From Financing Activities
Issuance of common stock for cash 30,000 -- 86,500
Additional capital contributed -- -- 82,488
---------------- -------------- ---------------
Net Cash Provided by Financing
Activities 30,000 -- 168,988
---------------- -------------- ---------------
Increase in Cash -- -- --
Cash at Beginning of Period -- -- --
Cash at End of Period $ -- $ -- $ --
================ ============== ===============
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-5
<PAGE>
COIFTRAS ENTERTAINMENT, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization -- Cofitras Entertainment, Inc. (Company), was incorporated on
January 26, 1986 as Vantage, Inc. in the State of Nevada. On April 12, 1989, the
Company ceased operations and is currently considered a development stage
enterprise with its business purpose being seeking a suitable merger/acquisition
or joint venture candidate. In 1995, the Company changed its name from Vantage,
Inc. to Cofitras Entertainment, Inc.
Use of Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities 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.
Basis of Presentation -- The Company has no operations and has accumulated
losses since inception of the development stage of $214,879. This situation
raises substantial doubt about its ability to continue as a going concern. The
accompanying financial statements do not include any adjustments relative to the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might result from the outcome of this
uncertainty. Management is currently seeking one or more potential business
ventures through acquiring or merging with a company with viable operations.
Basic and Diluted Loss Per Common Share -- In the fourth quarter 1998, the
Company adopted Statement of Financial Accounting Standards (SFAS) No. 128,
Earnings Per Share. Under SFAS 128, loss per common share is computed by
dividing net loss available to common stockholders by the weighted-average
number of common shares outstanding during the period.
NOTE 2--EQUITY TRANSACTIONS
During the year ended December 31, 1998, the Company agreed to a 1-for-60
reverse stock split. Prior to the reverse stock split, the Company had
59,041,509 shares issued and outstanding. The reverse stock split reduced the
issued and outstanding shares to 984,025. The accompanying financial statements
have been restated to conform to the reverse stock split. Following the reverse
stock split, the Company issued 8,000,000 shares of common stock for cash of
$30,000 or $0.00 per common share to officers who now have controlling interest
in the Company. These officers have committed to contribute up to $30,000 to the
Company as additional capital for which no additional shares will be issued. As
of April 13, 1999, Mr. Madsen had contributed $2,350 to the Company.
NOTE 3--INCOME TAXES
For the year ended December 31, 1998, the Company paid no federal or state
income taxes. The tax effect of each significant type of temporary difference
that gives rise to the deferred tax asset at December 31,1998, is as follows:
Operating loss carry forward $ 80,150
Valuation allowance (80,150)
---------------
Total Deferred Tax Assets $ --
F-6
<PAGE>
COIFTRAS ENTERTAINMENT, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
In 1998, the Company's valuation allowance increased by $7,306. As of December
31, 1998, the Company had net operating loss carry forwards for federal income
tax reporting purposes of $214,879 which if unused will expire from 2001 through
2013. Due to the changes of ownership, the net operating losses may be subject
to limitations under Section 382 of the Internal Revenue Code
The following is a reconciliation of the 1998 and 1997 tax amount computed using
the federal statutory rate to the provision for income taxes:
1998 1997
---------- ----------
Tax at federal statutory rate (34%) $ (7,463) $ (803)
State benefit, net of federal benefit (724) (78)
Change in valuation allowance 8,187 881
---------- ----------
Provision for Income Taxes $ -- $ --
========== ==========
F-7
HANSEN, BARNETT & MAXWELL
A Professional Corporation
CERTIFIED PUBLIC ACCOUNTANTS
Member of AICPA Division of Firms
Member of SECPS
Member of Summit International Associates
(801) 532-2200
Fax (801) 532-7944
345 East Broadway, Suite 200
Salt Lake City, Utah 84111-2693
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders: Cofitras Entertainment, Inc.
We have audited the accompanying balance sheet of Cofitras Entertainment, Inc.
(a development stage enterprise) as of December 31, 1998 and the related
statements of operations, stockholders' equity and cash flows for the year ended
December 31, 1998. 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 audit.
We conducted our audit 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 audit provides 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 Cofitras Entertainment, Inc. as
of December 31, 1998 and the results of its operations and its cash flows for
the year ended December 31, 1998 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company's significant losses raise substantial doubt
about its ability to continue as a going concern. Management's plans regarding
those matters are also described in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Salt Lake City, Utah
April 13, 1999
HANSEN, BARNETT & MAXWELL
<PAGE>
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