U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended June 30, 1998
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[ ] 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. 33-3358-NY
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COMPOSITE DESIGN, INC.
----------------------
(Name of Small Business Issuer in its Charter)
NEVADA 88-0224219
------ ----------
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
9005 Cobble Canyon Lane
Sandy, Utah 84093
---------------------------
(Address of Principal Executive Offices)
Issuer's Telephone Number: (801) 942-0555
SRS Technical, Inc.
2050 Ellis Way
Elko, Nevada 89801
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(Former Name or Former Address, if changed since last Report)
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
--- --- --- ---
(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____ 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:
July 28, 1998
Common - 1,069,020 shares
DOCUMENTS INCORPORATED BY REFERENCE
A description of any "Documents Incorporated by Reference" is
contained in Item 6 of this Report.
Transitional Small Business Issuer Format Yes X No
--- ---
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The Consolidated Financial Statements of the Company required
to be filed with this 10-QSB Quarterly Report were prepared by management and
commence on the following page, together with related Notes. In the opinion
of management, these Consolidated Financial Statements fairly present the
financial condition of the Company.
<PAGE>
COMPOSITE DESIGN, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
June 30, 1998 and December 31, 1997
<PAGE>
<TABLE>
COMPOSITE DESIGN, INC.
(A Development Stage Company)
Balance Sheets
<CAPTION>
ASSETS
June 30, December 31,
1998 1997
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ - $ -
Total Current Assets - -
TOTAL ASSETS $ - $ -
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 796 $ 695
Total Current Liabilities 796 695
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $0.001 par value,
200,000,000 shares authorized,
1,069,020 and 1,069,020 shares
issued and outstanding, respectively 1,069 1,069
Additional paid-in capital 522,138 522,020
Deficit accumulated during the
development stage (524,003) (523,784)
Total Stockholders' Equity (Deficit) (796) (695)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ - $ -
</TABLE>
<TABLE>
COMPOSITE DESIGN, INC.
(A Development Stage Company)
Statements of Operations
(Unaudited)
<CAPTION>
From
Inception
on January 15,
For the Three Months For the Six Months 1986 Through
Ended June 30, Ended June 30, June 30,
1998 1997 1998 1997 1998
<S> <C> <C> <C> <C> <C>
REVENUE $ - $ - $ - $ - $ -
LOSS ON
DISCONTINUED
OPERATIONS (219) (1,455) (219) (1,455) (524,003)
NET LOSS $ (219) $(1,455) $ (219) $(1,455) $ (524,003)
LOSS PER SHARE $(0.00) $ (0.00) $(0.00) $ (0.00)
WEIGHTED
AVERAGE NUMBER
OF SHARES
OUTSTANDING 1,069,020 1,069,020 1,069,020 1,069,020
</TABLE>
<TABLE>
COMPOSITE DESIGN, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
(Unaudited)
<CAPTION>
Deficit
Accumulated
Additional During the
Common Stock Paid-In Development
Shares Amount Capital Stage
<S> <C> <C> <C> <C>
At inception, January 15, 1986 - $ - $ - $ -
Common stock issued for cash
at approximately $8.20 per share 25,000 25 204,975 -
Stock order offering costs - - (45,853) -
Common stock issued for
purchasing subsidiary at
approximately $5.77 per share 20,000 20 115,395 -
Recision of common stock by
the SEC (8,102) (8) 8 -
Contributed capital by shareholder - - 82,024 -
Net loss from inception January
15, 1986 to December 31, 1994 - - - (356,586)
Balance, December 31, 1994 36,898 37 356,549 (356,586)
Net loss for the year ended
December 31, 1995 - - - -
Balance, December 31, 1995 36,898 37 356,549 (356,586)
Common stock issued for
services at $1.00 per share 162,000 162 161,838 -
Contributed capital by
shareholder - - 2,149 -
Common stock issued for
services at $0.001 per share 870,000 870 - -
Stock split adjustment 122 - - -
Net loss for the year ended
December 31, 1996 - - - (165,019)
Balance, December 31, 1996 1,069,020 1,069 520,536 (521,605)
Contributed capital by
shareholder - - 1,484 -
Net loss for the year ended
December 31, 1997 - - - (2,179)
Balance, December 31, 1997 1,069,020 1,069 522,020 (523,784)
Net loss for the three months
ended March 31, 1998 - - - -
Balance, March 31, 1998 1,069,020 $ 1,069 $522,020 $(523,784)
Contributed capital by shareholder - - 118 -
Net loss for the six months
ended June 30, 1998 - - - (219)
Balance, June 30, 1998 1,069,020 $ 1,069 $522,138 $(524,003)
</TABLE>
<TABLE>
COMPOSITE DESIGN, INC.
(A Development Stage Company)
Statements of Cash Flows
<CAPTION>
From
Inception on
For the For the January 15,
Three Months Ended Six Months Ended 1986 Through
June 30, June 30, June 30,
1998 1997 1998 1997 1998
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Income (loss) from
operation $ (219) $(1,455) $ (219) $ (1,455)$(524,003)
Adjustments to
reconcile net
income to net cash
provided by operating
activities:
Amortization and
depreciation expense - - - - 102,719
Increase (decrease) in
accounts payable 101 - 101 - (659)
Contributed capital for
expenses 118 - 118 - 87,230
Stock issued for services - 1,455 - 1,455 162,870
Net Cash Provided (Used)
by Operating Activities - - - - (171,843)
CASH FLOWS FROM
INVESTING ACTIVITIES
Proceeds from investment - - - - 12,696
Net Cash Provided (Used)
by Investing Activities - - - - 12,696
CASH FLOWS FROM
FINANCING ACTIVITIES
Issuance of common
stock for cash - - - - 205,000
Stock offering costs - - - - (45,853)
Net Cash Provided (Used)
by Financing Activities$- $ - $ - $ - $ 159,147
INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS $- $ - $ - $ - $ -
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD - - - - -
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ - $ - $ - $ - $ -
Cash Paid For:
Interest $ - $ - $ - $ - $ -
Income taxes $ - $ - $ - $ - $ -
NON-CASH FINANCING
ACTIVITIES
Common stock issued
for services $ - $ 1,455 $ - $1,455 $162,870
Contributed capital for
expenses $118 $ - $ 118 $ - $ 87,230
Common stock issued for
subsidiary $ - $ - $ - $ - $115,415
</TABLE>
COMPOSITE DESIGN, INC.
(A Development Stage Company)
Notes to Financial Statements
June 30, 1998 and December 31, 1997
(Unaudited)
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
The Company was incorporated as SRS Technical, Inc. under the laws of
the State of Nevada on January 15, 1986, to engage in the business activity.
On May 29, 1987, the Company acquired a company named Composite Design
Corporation (CDC). 20,000,000 shares of the Company s stock was given in
exchange for the 100% of CDC s shares. CDC was suspended by both the
Secretary of State of California and the Franchise Tax Board in 1988. On
June 2, 1987, the Board of Directors resolved to change the corporate name
from SRS Technical, Inc. to Composite Design, Inc. (CDI). At the current
time, the Company does not have any active business operations.
The Company has authorized 200,000,000 shares of $0.001 par value
common stock. The Company has elected a calendar year end.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting.
b. Provision for Taxes
At June 30, 1998, the Company had net operating loss carryforwards of
approximately $168,000 that may be offset against future taxable income
through 2013. No tax benefit has been reported in the financial statements,
because the Company believes there is a 50% or greater chance the carryforward
will expire unused. Accordingly, the potential tax benefits of the loss
carryforward are offset by a valuation account of the same amount.
c. 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 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.
d. Unaudited Financial Statements
The accompanying unaudited financial statements include all of the
adjustments which, in the opinion of management, are necessary for a fair
presentation. such adjustments are of a normal, recurring nature.
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. The Company has not established revenues
sufficient to cover its operating costs and allow it to continue as a going
concern. Management is seeking a merger with an existing operating company.
In the interim, management is committed to covering all operating and other
costs until sufficient revenues are generated.
NOTE 4 - DISCONTINUED OPERATIONS
The Company discontinued its operations in 1989, therefore, all
revenues generated by the Company have been offset against the expenses and
are grouped into the discontinued operations line on the statement of
operations.
NOTE 5 - STOCK TRANSACTIONS
On February 27, 1996, the Company issued 162,000 shares of common stock
for services rendered which was valued at $162,000. The Company effected a
1,000 for 1 reverse stock split on June 25, 1996 and issued 870,000 shares of
post split common stock for services valued at $870. The reverse split has
been applied retroactively to the financial statements.
NOTE 6 - CONTINGENCIES
The Company s former subsidiary CDC was suspended by the State of
California. In order to operate in the State of California, the Company
may be required to pay back fees of approximately $8,000 plus accrued
interest and penalties.
Item 2. 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 any 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. 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 loans or advances.
However, any such loans or advances should not exceed $25,000 and will be on
terms no less favorable to the Company than would be available from a
non-affiliated lender in an arm's length transaction. As of the date of this
Report, the Company is not involved in any negotiations respecting any such
potential business venture.
Results of Operations.
- ----------------------
Other than restoring and maintaining its good corporate
standing in the State of Nevada, 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 during the two
most recent calendar years, and was dormant from December 1989 to February 1,
1996.
At June 30, 1998, the Company had no assets and $796 in liabilities.
There were no revenues in the six months ended June 30, 1998 and 1997.
Liquidity
- ---------
The Company had no assets, $796 in liabilities and no revenues for the
three months ended June 30, 1998.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None; not applicable.
Item 2. Changes in Securities.
None; not applicable.
Item 3. Defaults Upon Senior Securities.
None; not applicable.
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 first quarter of the calendar year covered by this Report or
during the two previous calendar years; further, no matter has been submitted
to a vote of the Company's security holders since the Company became
dormant in December 1989.
Item 5. Other Information.
None; not applicable.
Item 6. Exhibits and Reports on Form 8-K.
Exhibit
(a) Exhibits.* Number
None.
(b) Reports on Form 8-K.
None.
* A summary of any Exhibit is modified in its entirety by reference
to the actual Exhibit.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned thereunto duly authorized.
COMPOSITE DESIGN, INC.
Date: 7/28/98 By:/s/David C. Merrell
David C. Merrell
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:
COMPOSITE DESIGN, INC.
Date: 7/28/98 By:/s/David C. Merrell
David C. Merrell
President and Director
Date: 7/28/98 By:/s/Corie Merrell
Corie Merrell
Secretary/Treasurer and Director
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 796
<BONDS> 0
0
0
<COMMON> 1069
<OTHER-SE> (1865)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (219)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> (219)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (219)
<EPS-PRIMARY> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
