SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
X Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 (Fee Required) for the year ended December 31, 1995
Transition Report Pursuant to Section 13 or 15(a)of the Securities
Exchange Act of 1934 (No Fee Required) for the transition period from
to
Commission File Number: 0-17394
CORFACTS, INC.
(Name of small business issuer in its charter)
New Jersey 22-2478379
(State or jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
50 Route 9, Morganville, New Jersey 07751
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: (908)972-2500
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, No Par Value
(Title of Class)
Indicate by check mark whether the Registrant (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 file such reports) and (2) has been subject to
such filing requirements for the past 90 days. Yes No X
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendments to the Form 10-KSB. X
State the issuer's revenues for its most recent fiscal year:
$46,695
The aggregate market value of the voting stock held by non-affiliates, based
on the closing price as reported by NASDAQ was $287,082 at December 31, 1995.
All directors and more than 5% stockholders of the Registrant have been
deemed"affiliates" for the purpose of calculating such aggregate market value.
Registrant had 8,005,314 shares of Common Stock, no par value, outstanding on
December 31, 1995.
Transitional Small Business Disclosure Format: Yes No X <PAGE>
PART I
Item 1. BUSINESS
GENERAL DESCRIPTION OF BUSINESS
The Company was organized in 1983 under the name "Business Journal of New
Jersey, Inc." Commencing in October, 1983 the Company introduced print media
to the New Jersey business community through the publication of two monthly
magazines, Business Journal of New Jersey and Garden State Home & Garden,
which were subsequently sold to Micromedia Affiliates, Inc. in March of 1990,
at which time the name of the Company was changed to Corfacts, Inc.
After the Company sold off its magazine division, it accelerated its efforts
to expand and develop its business information database, consisting of
approximately 100,000 companies in a tri-market region. Corfacts streamlined
and standardized its product lines into two major areas: directories and non-
print custom data with a change in focus from print oriented products dis-
tributed by the company's sales force toward non-print data and computer
generated information distributed by a substantially reduced sales force.
On October 2, 1991, Corfacts executed a Sale of Assets agreement, dated as
of August 1, 1991 with Ford Publishing Inc. Pursuant to this agreement,
Corfacts sold to Ford certain assets relating to the Information Division.
At the present time, Corfacts, Inc. is actively seeking to merge with or
acquire an interest in an existing company. Presently operations consist of
the management of two small joint ventures, one of which is a partnership
which purchases tax lien certificates in New Jersey, the other consists of
various underwritings of special projects of the buyer of the information
division. Additionally, the Company manages its own investment in tax lien
certificates, including the monitoring and sometimes subsequent purchase of
liens on properties the Company currently holds, to insure a priority
position when the liens are ready for redemption. In an effort to utilize
the Company's other liquid assets, which consist primarily of cash, the
Company continues to invest in short-term Certificates of Deposit.
Sufficient funds remain readily available to invest in any potential
candidate, when that determination is made.
EMPLOYEES AND CONSULTANTS
As of December 31, 1995, the Company had one permanent employee, Larry
Finkelstein, who is the President and Chief Executive Officer, at a salary
of $85,000 per year. Mr. Finkelstein now devotes the majority of his time to
finding a proper investment for the assets of Corfacts, Inc., in addition to
supervising numerous pilot projects to determine if they would be suitable
long term ventures for the Company. All administrative work is performed by
TDK Group, Ltd. at the rate of $1,250 per month.
FACILITIES
Corfacts currently has no outstanding leases for office space. The Company
currently shares office space with the buyer of the Information Division,
Ford Publishing Inc. Corfacts pays $380 per month to Ford Publishing Inc.
for shared office space and expenses. This agreement is on a month-to-month
basis and cancelable without notice.
Item 2. PROPERTIES
None.
Item 3. LEGAL PROCEEDINGS
The Company is not currently subject to any material pending legal
proceedings.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the year ended December 31, 1995.<PAGE>
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) MARKET PRICES OF COMMON STOCK
The following table sets forth the high and low bid prices for the common
stock in each quarter for the fiscal years ended December 31, 1995, and
1994, which are listed on the "pink sheets" since the Company was delisted
from NASDAQ in 1989.
COMMON STOCK
High Low High Low
1995 Bid Bid Ask Ask
1st quarter .04 .02 .10 .09
2nd quarter .04 .02 .10 .09
3rd quarter .04 .02 .10 .09
4th quarter .04 .02 .10 .09
1994
1st quarter .04 .02 .10 .10
2nd quarter .04 .02 .10 .10
3rd quarter .04 .02 .10 .10
4th quarter .04 .02 .09 .10
The price information stated in the above table, and in the preceding
paragraph, is as reported by the National Quotation Bureau. The prices
represent prices between dealers, do not include retail mark-up, mark-down,
or commissions, and do not represent actual transactions.
(b) HOLDERS
As of December 31, 1995, there were approximately 355 shareholders of record
of issued and outstanding common stock of Corfacts, Inc.
(c) DIVIDENDS
To date, the Company has not declared or paid a dividend on its common stock.
The payment of future dividends by the Company, if any, will depend upon the
Company's short term and long term cash availability, working capital and
working capital needs and other factors, including the achievement of
profitable operations, as determined by the Company's Board of Directors.
<PAGE>
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Year ended December 31, 1995 as compared to the year ended December 31, 1994
The Company has been actively engaged in the search for a viable business
opportunity since the sale of the Information Division in August 1991. The
Company's goal is to better utilize its remaining funds and improve share-
holder value. The Company has utilized the services of various business
brokers, newspaper advertisements and referrals in its ongoing search for
a new operation. A number of potential opportunities have been evaluated,
but other than the joint ventures for tax liens and Ford Publishing, dis-
cussed below, no situation has yet satisfied the criteria selected by man-
agement for effecting a transaction. It is management's intent to either
locate an ongoing business that has sustained revenue growth and
profitability for some time, or is able to demonstrate the ability to
recognize increased revenues and profits within a twelve month period.
Management intends to either purchase the business in its entirety or to
develop a strategic alliance with the other company.
Among the criteria that the Company has included in its business search is a
service-oriented or light manufacturing operation. Management has also
focused its search on companies without the risk of high receivables and
many employees. The Company has also evaluated a number of start-up concepts
that exhibit revenue growth and profit potential in several fast growth
industries. By limiting the financial resources for each pilot project, the
Company is able to test market ideas with minimal capital risk. Management
remains focused on completing a strategic alliance of other suitable business
venture to increase the operating status of the Company.
In connection with the sale of the Information division, the Company has
entered into various marketing contracts with Ford Publishing Inc., the buyer
of the Information division in August, 1991, to publish certain business
information directories. The Company has realized a satisfactory return on
its investment with each of the joint ventures it has done with Ford
Publishing, Inc. and is evaluating additional publishing projects in other
geographic areas for 1996 with Ford Publishing Inc.
Loss from operations for the year ended December 31, 1995 was $82,458 as
compared to a loss of $62,999 for the same period a year earlier. This
increase is mainly attributable to the increase of $18,000 in Officer's
salary for the year ended December 31, 1995.
Net interest income for the year ended December 31, 1995 was $16,492 as
compared to $16,312 for the year ended December 31, 1994. Investment in
Municipal Tax Lien Certificates yielded a total of $18,748 in revenues for
the twelve months ended December 31, 1995, as compared to total revenue from
tax liens of $19,933 for the twelve months ended December 31, 1994. The
majority of the Company's Tax Lien Certificates have either been redeemed or
assigned. The Company elected to assign many of its Tax Lien Certificates
to third parties in order to eliminate the costs of foreclosure on those
properties that had reached the two year threshold, which would have allowed
the Company to start foreclosure proceedings. Many investment companies are
willing to take assignments on older Certificates bearing up to 18% interest
because the market for these Certificates has become very competitive, with
interest rates that are typically well below those rates that are available
with Certificates of Deposit.
LIQUIDITY AND CAPITAL RESOURCES
Working capital was $588,392 at December 31, 1995 as compared to $552,866 at
December 31, 1994. The ratio of current assets to current liabilities at
December 31, 1995 was 26 to 1, as compared to a ratio of 32 to 1 for the
period ended December 31, 1994.
The average monthly cash usage, net of interest and revenues earned on
investments for the twelve month period ended December 31, 1995 was $7,200.
The investment in a new business or joint venture would of course, change
this monthly cash usage with the initial outlays required, results of the
investment, and the length of time it would take for the investment to be-
come self funding.
There are no plans at this time to increase personnel or make any capital
expenditures during fiscal 1996.
There are no plans to raise additional capital or to liquidate the Company.
Most of the cash available in the Company has been invested in 90 day FDIC
insured Certificates of Deposit at various local banking institutions. The
interest rates on these Certificates averaged between 2.5% to 4.0% for
the period. Management reviews these Certificates as they mature.
At December 31, 1995, the total Company investment in Tax Lien Certificates,
directly and through its partnership, LBM, was approximately $31,000. The
total revenue earned on all Tax Lien Certificates for the twelve months
ended December 31, 1995, was $18,748, as compared to Tax Lien investment
revenues of $19,933 for the same twelve month period a year earlier.
Revenues from Tax Lien investments will diminish in fiscal 1996 to a minimal
amount as more of the existing liens are either redeemed or assigned. It is
not expected that additional liens will be purchased due to the growing
popularity of these instruments and the increasing number of investors
willing to purchase these liens at very low interest rates.
<PAGE>
Item 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements of Corfacts, Inc., together with notes and the
Independent Auditors Report, are set forth immediately following Item 13 of
this Form 10-KSB.
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The executive officers and directors of the Company are as follows:
Name Age Position
Larry Finkelstein 49 President, Chief Executive Officer,
Secretary and Chairman of the Board
Michael Weitz 49 Director
Executive officers of the Company are elected annually to hold office until
their successors have been elected and have duly qualified.
Larry Finkelstein was a co-founder of the Company in 1983, and has served
as Chief Executive Officer and Chairman of The Board of Directors since that
time.
Michael Weitz, Director of the Company, has been a Vice President of JEM
Management Systems Inc. and an officer of Main Street Capital Corporation,
both of which are real estate investment companies, since 1983.
Item 10. EXECUTIVE COMPENSATION
The only corporate officer/employee to earn in excess of $60,000 is Larry
Finkelstein, President and Chief Executive Officer. Mr. Finkelstein's
current salary is $85,000.
Employment Agreement
On January 2, 1994, Larry Finkelstein entered into an employment agreement
with Corfacts, Inc. Mr. Finkelstein's agreement retains him as Chief
Executive Officer at an annual compensation of $67,000, amended to $85,000
in January 1995, with automatic renewals for successive twenty-four month
periods.
Director's Compensation
None of the Company's directors receives compensation for or payment of
expenses incurred in connection with their attendance at director meetings.
The Company has no present plan to pay director fees or expenses, but may
decide to do so in the future.
Incentive Stock Option Plan
On May 9, 1988 the Board of Directors of the Company established an Incen-
tive Stock Option Plan (the "Plan"), adopted by the shareholders on June 28,
1988, under which the options to purchase an aggregate of 600,000 shares of
Common Stock may be granted prior to May 9, 1998. The Plan is administered
by the Board of Directors, which has the power to determine the manner in
which options may be exercised and to impose conditions on their exercise.
Options for Larry Finkelstein to purchase 300,000 common sxercised.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the current record and beneficial shareholdings of
persons who own more than 5% of the Company's Common Stock outstanding as of
December 31, 1995 and all directors and officers individually and all
directors and officers as a group as of December 31, 1995.
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership % of Class
Larry Finkelstein 3,864,088 48.0
Corfacts, Inc.
50 Highway 9
Morganville, NJ 07751
Michael Weitz 40,050 .5
50 Highway 9
Morganville, NJ 07751
All Officers and Directors
as a Group (2 persons) 3,904,138 48.5
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From time to time, Lawrence Finkelstein has borrowed money from the Company.
At December 31, 1995, the outstanding balance on all of Mr. Finkelstein's
obligations was $132,114. As per the original agreement of Mr. Finkelstein,
he is entitled to the use of a company car. However, in lieu of accruing
interest on the obligations that Mr. Finkelstein now has outstanding, he
has elected not to use the company car that is part of his agreement. In
addition, Mr. Finkelstein has pledged 2,000,000 shares of his stock as col-
lateral on these loans.
Item 13. EXHIBITS, LISTS AND REPORTS
(a) Financial Statements
Report of Schuhalter, Coughlin & Suozzo F-1
Balance Sheets as of December 31, 1995 and
December 31, 1994 F-2
Statements of Operations for the years ended December 31,
1995, and 1994 F-3
Statement of Stockholders Equity for the years ended
December 31, 1995 and 1994 F-4
Statements of Cash Flows for the years ended December 31,
1995, and 1994 F-5
Notes to Financial Statements F-6 to F-12
Schedule VIII - Valuation and Qualifying Accounts F-13
(b) Exhibits
Following is a list of exhibits filed as part of this Annual Report on
Form 10-KSB. Where so indicated by footnote, exhibits which were previously
filed are incorporated by reference.
Exhibit Number
Reference Description
(3a)* Articles of Incorporation, as amended
(3b)* By-laws, as amended
(4)* Specimen of Common Stock certificate
(10b)* Incentive Stock Option Plan
(10c)* Form of Incentive Stock Option
(101)* Escrow Agreement dated March 2, 1990 between NBT Corp. and Business
Journal of New Jersey
(10m)* Employment Agreement with Lawrence Finkelstein
(11) 1.Computation of Earnings Per Share
(12)* Sale of Assets Agreement
* The above items were previously filed and are hereby incorporated by
reference.
1. Enclosed herewith
(c) Reports on Form 8-K
None <PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
March 29, 1996 Corfacts, Inc.
By:
/s/ Lawrence Finkelstein
Lawrence Finkelstein
President, Chief Executive Officer and Chairman of the
Board
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
March 29, 1996 /s/ Lawrence Finkelstein
Lawrence Finkelstein
President, Chief Executive Officer and Chairman of the
Board<PAGE>
CORFACTS, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1995
<PAGE>
INDEPENDENT AUDITOR'S REPORT
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
CORFACTS, INC.
We have audited the balance sheet of Corfacts, Inc. as of December 31, 1995,
and the related statements of operations, changes in stockholders' equity,
and cash flows for the years ended December 31, 1995 and 1994 in the
accompanying index to financial statements and schedules (Item 13 (A)).
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 and schedules listed in the
accompanying index to financial statements (Item 13 (A)) present fairly, in
all material respects, the financial position of Corfacts, Inc. as of
December 31, 1995 and the results of its operations and its cash flows for
the years ended December 31, 1995 and 1994 in conformity with generally
accepted accounting principles.
/s/ Schuhalter, Coughlin & Suozzo
Schuhalter, Coughlin & Suozzo
Certified Public Accountants
Somerville, New Jersey
March 19, 1996
F-1<PAGE>
CORFACTS, INC.
BALANCE SHEET
DECEMBER 31, 1995
ASSETS
CURRENT ASSETS
Cash $ 75,830
Interest bearing deposits 442,306
Interest receivable 1,954
Contract royalty and revenue
sharing receivable 6,376
Notes receivable buyer 15,208
Accounts receivable
Officer 40,389
Other receivable - municipal
tax liens (net of estimated
disposition costs of $3,500)
22,762
Other interest receivable -
tax liens 6,896
TOTAL CURRENT ASSETS 611,721
PROPERTY AND EQUIPMENT, at cost,
less accumulated depreciation
of $110,130 -
OTHER ASSETS
Loan receivable - officer 91,725
Investment in partnership 1,863
Other assets 1,200
TOTAL OTHER ASSETS 94,788
TOTAL ASSETS $ 706,509
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued
expenses $ 23,329
TOTAL CURRENT
LIABILITIES 23,329
STOCKHOLDERS' EQUITY
Common stock, no par value,
20,000,000 shares authorized;
8,005,314 shares issued and
outstanding 1,159,571
(Deficit) (476,391)
TOTAL STOCKHOLDERS'
EQUITY 683,180
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 706,509
The accompanying notes are an integral part of these financial statements.
F-2<PAGE>
CORFACTS, INC.
STATEMENTS OF OPERATIONS
Year Ended
December 31,
1995 1994
INCOME
Revenue sharing $ 9,920 $ 11,189
Contract royalty revenue 1,535 2,099
Equity in earnings of unconsolidated
investee 3,496 8,328
Income from tax lien certificates, net of
$3,500 reserve for expenses
in 1994 15,252 11,605
Interest income 16,492 16,312
TOTAL INCOME 46,695 49,533
COSTS AND EXPENSES
General and administrative 129,153 108,686
Depreciation and amortization - 3,846
TOTAL COSTS AND EXPENSES 129,153 112,532
NET (LOSS) $ (82,458) $ (62,999)
NET (LOSS) PER SHARE $ (.010) $ (.008)
WEIGHTED AVERAGE SHARES OUTSTANDING 8,005,314 8,005,314
The accompanying notes are an integral part of these financial statements.
F-3<PAGE>
CORFACTS, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
Number Common
of Shares Stock (Deficit) Total
Balance, January 1, 1994
8,005,314 1,159,571 (330,934) 828,637
Net (loss) for the year - - (62,999) (62,999)
Balance, December 31, 1994
8,005,314 1,159,571 (393,933) 765,638
Net (loss) for the year - - (82,458) (82,458)
Balance, December 31, 1995
8,005,314 $1,159,571 $ (476,391) $ 683,180
The accompanying notes are an integral part of these financial statements.
F-4<PAGE>
CORFACTS, INC.
STATEMENTS OF CASH FLOWS
Year Ended
December 31,
1995 1994
Cash flows from operating activities:
Cash received from revenue sharing and other
income $ 9,469 $ 14,434
Cash paid to employees and suppliers (123,992) (123,467)
Interest received 16,392 17,701
Tax lien certificate income received 21,871 6,698
Partnership distributions of income 3,496 8,328
Net cash (used in) operating
activities (72,764) (76,306)
Cash flows from investing activities:
Investment in partnership (220) -
Redemption (purchase) of tax lien
receivables 93,955 (5,858)
(Advance) repayment on contract (net) - 14,990
Partnership distribution of capital 45,013 4,362
Net cash provided by investing
activities 138,748 13,494
Cash flows from financing activities:
(Advance to) repayment from partner - 31,504
Note receivable advances to buyer (57,842) (47,581)
Repayment from (loan to) officer (35,725) 16,056
Repayments from buyer 55,865 44,380
Net cash provided by (used in) financing
activities (37,702) 44,359
Net increase (decrease) in cash and cash equivalents
28,282 (18,453)
Cash and cash equivalents - beginning of period
489,854 508,307
Cash and cash equivalents - end of period $ 518,136 $ 489,854
Reconciliation of net income to net cash
used by operating activities:
Net (loss) $ (82,458) $ (62,999)
Adjustments:
Depreciation and amortization - 3,846
Estimated disposition costs -
tax lien certificates - 3,500
Changes in assets and liabilities:
(Increase) in other receivable -
tax lien interest 6,619 (8,407)
(Increase) decrease in interest receivable (100) 1,389
(Increase) decrease contract royalty
receivable (2,349) 1,146
Increase (decrease) in accounts payable and
accrued expenses 5,524 (4,781)
(Decrease) in due to stockholder - (10,000)
Net cash (used in) operating activities
$ (72,764) $ (76,306)
The accompanying notes are an integral part of these financial statements.
F-5<PAGE>
CORFACTS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - NATURE OF BUSINESS
Corfacts, Inc. was organized in June 1983, originally as the Business Journal
of New Jersey, Inc. Since selling the magazine business in 1990, and
discontinuance and sale of the information division in August of 1991, the
company has directed its efforts to seek potential acquisitions and invest-
ments deemed appropriate for the company to generate a return on equity.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Equity Method
The investment in partnership in which the company has a 33% interest is
carried at cost, adjusted for the partnership's proportionate share of their
undistributed earnings.
Property and Equipment
Depreciation is computed using straight-line and accelerated methods over
the five year estimated useful lives of the assets. Repairs and maintenance
which do not extend the useful life of the related assets are expensed as
incurred. Depreciation expense charged to operations in 1995 and 1994 was
$0 and $ 3,846, respectively.
Cash and Cash Equivalents
For purposes of the statement of cash flows, cash equivalents include time
deposits, certificates of deposit, and all highly liquid debt instruments
with original maturities of three months or less.
Reclassification of Financial Statement Presentation:
Certain reclassifications have been made to the 1994 financial statements
to conform with the 1995 financial statement presentation. Such reclass-
ifications have had no effect on net loss as previously reported.
Earnings Per Share
Earnings per share of common stock are calculated on the weighted average
number of shares outstanding during each year.
Contract Royalty Revenue
Earnings from royalty contract for the initial receipts from book sales
are recorded based upon the ratio that amounts collected bear to the total
amounts to be collected under the royalty contract.
F-6<PAGE>
CORFACTS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)
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 and
disclosure of contingent assets and liabilities at the date of the financial
statement and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
NOTE 3 - INVESTMENTS
The company has an interest in a partnership which is primarily involved
in investing in delinquent municipal tax lien certificates which are
collateralized by the real estate being taxed.The investment is accounted
for using the equity method and represents a 33% ownership in the partner-
ship. The Company's accumulated equity in the undistributed earnings of the
partnership included in Deficit amounted to $1,862 and $5,048 at December 31,
1995 and 1994, respectively.
Condensed financial information for the partnership is as follows:
Summary of Statements of Financial Condition
December 31,
Assets 1995 1994
Delinquent municipal tax lien certif. $ 4,705 $ 125,506
Accrued interest - tax lien certif. 1,336 15,143
Total Assets $ 6,041 $ 140,649
Liabilities and Partners' Equity
Accrued expenses $ 450 $ 683
Total Liabilities 450 683
Partners' Equity
Corfacts, Inc. 1,863 46,655
Other 3,728 93,311
Total Liabilities and Partners' Equity
$ 5,591 $ 140,649
Summary of Statement of Operations
Interest Income $10,917 $ 24,983
Expenses 427 -
Net Income $10,490 $ 24,983
F-7<PAGE>
CORFACTS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - PROPERTY AND EQUIPMENT
The following is a summary of property and equipment - at cost, less accumu-
lated depreciation.
December 31,
1995
Furniture and fixtures $ 22,260
Equipment 87,870
110,130
Less: accumulated depreciation 110,130
$ -
NOTE 5 - INTEREST EXPENSE
Interest expense totalled $0 and $0 for the years ended December 31, 1995
and 1994, respectively.
NOTE 6 - LEASES
Operating Leases
The Company leased office space in Morganville, New Jersey until September 30,
1991 at which time the company was released by the landlord from the
remaainder of all office leases. The company now shares office space with
the buyer of the information division and rents on a month by month basis.
Rental expense for office space was $4,560 in 1995 and $4,560 in 1994.
NOTE 7 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accrued expenses consist of the following:
December 31,
1995
Administrative expenses $ 7,590
Payroll tax liabilities 15,739
Total $ 23,329
F-8<PAGE>
CORFACTS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 8 - INCOME TAXES
No provision for income taxes have been made for the periods presented as the
company incurred losses during those periods.
As of 1995 the Company has available operating loss carryforwards which may
be used to reduce Federal and State taxable income and tax liabilities in
future years as follows:
Net Operating Losses
Available Through Book Federal State
1997 $ - $ - $ 58,824
1998 - - 174,793
1999 - - 68,262
2000 - - -
2005 17,114 101,111 104,764
2006 192,007 183,445 63,924
2007 68,145 68,594 78,354
2008 52,798 104,797 -
2009 62,999 64,780 -
2010 82,458 78,761 -
Total $ 475,521 $ 601,488 $ 548,921
NOTE 9 - COMMITMENTS
On March 2, 1990, the Company entered into an employment agreement with its
President through March 1, 1992 with annual compensation of $60,000 and
automatic renewals for successive twelve month periods. The agreement
specified that the president was to be provided a company owned vehicle.
Additionally, the President was granted an option to purchase 300,000 shares
of common stock of the Company pursuant to the Incentive Stock Option Plan.
The option price was $.1875 (3/16) and the option expired March 2, 1995. On
September 1, 1990, the compensation agreement with the President was changed to
a consulting agreement. For 1992 and 1993 the consulting agreement with the
President was for an annual fee of $60,000. Effective January 1, 1994 the
Board of Directors approved an employment agreement for a two year period
with annual base compensation of $67,000. January 1, 1995 the board of
directors increased the annual base compensation to $85,000.
On November 9, 1991 the company entered into an investment banking agreement
with a former stockholder of the company. The agreement is for a period of
five years from April 1, 1992 through March 31, 1997. The company has agreed
to pay a 5% commission on any transaction which involves capital received by
the company from another party, should the company approve such a transac-
tion, which was introduced by the former shareholder. Capital shall include
all cash or common stock, whose market value will be determined by market
quotes or independent appraisal.
F-9<PAGE>
CORFACTS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 9 - COMMITMENTS - (Continued)
Covenants
As part of an agreement in 1990, when the magazine division was sold, the
Company provided a covenant not to compete with the buyer for twenty (20)
years whereby the Company will no longer produce magazine products in any
geographic location in which the buyer or any of its subsidiaries serve.
Additionally, the president of the Company provided a covenant not to compete
individually for a period of five (5) years.
The buyer provided a covenant not to compete with the company which based
upon the various terms of the agreement will expire December 31, 1996.
NOTE 10 - INCENTIVE STOCK OPTION PLANS
On May 9, 1988, the Company adopted an Incentive Stock Option Plan under
which options to purchase an aggregate of 600,000 shares of common stock may
be granted prior to May 8, 1998 at an option price to be determined at the
date of grant. There are no options outstanding as of December 31, 1995.
NOTE 11 - TRANSACTIONS WITH RELATED PARTIES
These amounts represent advances by the Company to the President and bear
interest rates of 10% and 9% and have various maturities.
The President initially agreed to repay his initial loan over 3 years at
$1,000 a month including interest at 9%, with a lump sum payment of $62,952
in March of 1992. In consideration of reducing the monthly consulting fee
and certain automobile expense reimbursements discussed in Note 9, the
company waived interest on these advances for 1995, 1994, and 1993 on the
unsecured borrowings. In 1993 the officer repaid, net of accrued consulting
fees, $10,000 of the preceding advances. In 1993 the officer secured
additional borrowings of $29,150 with 414,316 shares of stock. In 1994. the
officer repaid $1,147 of prior years accrued interest, $880 current years
interest and $16,056 towards principle of the secured 1993 borrowings.
In 1995 the officer secured additional borrowings of $35,725 with 2,000,000
shares of stock.
Included in interest income for 1995 and 1994 for interest not waived from
the officer was $0 and $880 respectively.
The company has periodically provided working capital loans to Ford
Publishing, Inc. The interest rate was 10% and the term was generally
ninety days. During 1993 these transactions were combined in a form of a
credit line with interest at 12% which had a balance outstanding at December
31, 1995 and 1994 of $15,708 and $13,231, respectively. This note is
collateralized by the accounts receivable and inventory of Ford Publishing,
Inc.
F-10<PAGE>
CORFACTS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 11 - TRANSACTIONS WITH RELATED PARTIES - (Continued)
The company periodically assists in the collection of Ford Publishing's
credit card sales. During 1995 and 1994 the company collected $44,854 and
$43,010 respectively, net of related bank charges for Ford Publishing. These
funds were used to pay back several working capital loans given to Ford
Publishing during the year.
Included in interest income was $2,348 and $2,341 from Ford Publishing, Inc.
for the periods ended December 31, 1995 and 1994, respectively.
Contract royalty revenue represents earnings on contracts with Ford
Publishing underwritten by the company. Such revenue from Ford Publishing
was $1,535 and $2,099 for 1995 and 1994.
Contract royalty revenue and revenue sharing included in income from Ford
Publishing, Inc. totaled $9,920 and $13,288 for the periods ended December
31, 1995 and 1994, respectively.
The company subleases office space from Ford Publishing, Inc. for $380 per
month plus expenses on a month to month basis. The lease is classified as
an operating lease and is cancelable by either party without notice. Included
in rent expense was $4,560 for 1995 and $4,560 for 1994, respectively, paid
to Ford Publishing.
NOTE 12 - SALE OF INFORMATION DIVISION
During 1991, the company executed a Sale of Assets agreement dated as of
August 1, 1991 with Ford Publishing Inc. The owner of Ford Publishing Inc.,
John Ford, was an employee of the company prior to August 1, 1991.
Pursuant to the agreement, Corfacts Inc. sold to Ford (Buyer) all of its
assets relating to its business of publishing and selling books of lists and
directories of business, commercial and industrial data and information.
In payment for these assets, the company received the following consideration:
a) A two-year promissory note for $10,000, bearing 9.5% interest
b) 5% of the first $1 million in sales by Ford, excluding sales of
directories of the Commerce and Industry Association of New Jersey
("CIA directory")
c) 40% of all sales of the CIA directory and,
d) assumption of $7,486 of the accounts payable of Corfacts Inc.
in addition to approximately $5,000 of legal fees incurred by Corfacts.
The obligations of Ford Publishing Inc. are secured by a lien on Ford's
assets. The agreement contains a covenant from Corfacts Inc. that it will
not, for ten years, compete with Ford's business as now constituted.
Through December 31, 1995 the Company has recorded revenue sharing income of
$50,000 for all periods under this agreement and is not entitled to any
future revenue sharing income.
F-11<PAGE>
CORFACTS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 13 - CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the company to concentrations
of credit risk consist principally of temporary cash investments, non-
interest bearing cash deposits, notes receivables and investment in a
partnership. From time to time, the company places its temporary cash
investments and non-interest bearing deposits with financial institutions
with balances in excess of the FDIC insured limits.
Management has attempted to reduce its credit risk by placing its certif-
cates of deposit approximating $100,000 each in various financial
institutions in New Jersey. Consequently, in managements opinion, no
significant concentrations of credit risk exists for the corporation. On
December 31, 1995, $124,661 of cash and interest bearing deposits exceeded
FDIC insured limits.
Other Receivables
Municipal tax liens subject the company to the potential loss of investment.
If the company is forced to foreclose on the real estate listed as collateral
there is a potential for total loss from the investment if the property
cannot be sold.
Investment in Partnership
The partnership's only assets are municipal tax liens. If the company is
forced to foreclose on the real estate listed as collateral there is a
potential for total loss for this investment if the property cannot be sold.
F-12<PAGE>
<PAGE>
CORFACTS, INC.
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
Balance Additions Balance
at Beg. Charged to at End
of Costs and of
Description Period Expenses Deductions Period
Year ended December 31, 1995
Revenues and allowances deducted
from asset accounts:
Estimated disposition costs -
tax lien certificates $ 3,500 $ $ $ 3,500
Year ended December 31, 1994
Revenues and allowances deducted
from asset accounts:
Estimated disposition costs -
tax lien certificates $ 190 $ 3,690 $ 190 $ 3,500
F-13<PAGE>
<PAGE>
Exhibit 11
CORFACTS, INC.
COMPUTATION OF PER SHARE EARNINGS
(In thousands except per share amounts)
1995 1994
Average shares outstanding 8,005 8,005
Net effect of dilutive stock options
based on the treasury stock method
using average market price - -
Total 8,005 8,005
Net (loss) $ (82) $ (63)
Per Share Amounts:
(Loss) from continuing operations (.010) (.008)
F-14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 518,136
<SECURITIES> 0
<RECEIVABLES> 93,585
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 611,721
<PP&E> 110,130
<DEPRECIATION> 110,130
<TOTAL-ASSETS> 706,509
<CURRENT-LIABILITIES> 23,329
<BONDS> 0
0
0
<COMMON> 1,159,571
<OTHER-SE> (476,391)
<TOTAL-LIABILITY-AND-EQUITY> 706,509
<SALES> 0
<TOTAL-REVENUES> 46,695
<CGS> 0
<TOTAL-COSTS> 129,153
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (82,458)
<INCOME-TAX> 0
<INCOME-CONTINUING> (82,458)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (82,458)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> 0
</TABLE>
