UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-K
(Mark One)
(X) Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1995
OR
( ) Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from_________________to________________________
Commission file Number 0-14614
CHESTER COUNTY SECURITY FUND, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-1726390
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2240 Woolbright Rd. Suite 336, Boynton Beach, FL 33426
Address of principal executive offices ) (Zip Code)
Registrant's telephone number, including area code (407) 739-9151
Securities registered pursuant to Section 12(b) of the Act:
Name of exchange
Title of each class on which registered
None None
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 __x_ No____
The number of shares outstanding of the registrant's only class of common stock
was 3,300,000, no par value, issued and outstanding at December 31, 1995.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (s 229.405 of this chapter) is not contained herein, and
will not 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-K or any amendment to this Form 10-K (x)
As of February 2, 1996 the value of Common shares held by non-affliates, after
giving effect to a reverse 1 for 20 split was $866,250 (165,000 shares at an
average between the bid and asked of $ 5.25)
<PAGE>
CHESTER COUNTY SECURITY FUND, INC.
INDEX TO FORM 10-K REPORT
I. Part I. Page
Item 1. Business 3
Item 2. Properties 3
Item 3. Legal Proceedings 3
Item 4. Submission of Matters to a Vote of Security
Holders 3
II. Part II.
Item 5. Market for Registrant's Common Stock and
Related Stockholder Matters 3
Item 6. Selected Financial Data 4
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 4
Item 8. Financial Statements and Supplementary Data 4
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 5
III. Part III.
Item 10. Directors and Executive Officers of the
Registrant. 5
Item 11. Executive Compensation 6
Item 12. Security Ownership of Certain Beneficial
Owners and Management 6
Item 13. Certain Relationships and Related Transactions 6
IV. Part IV.
Item 14. Exhibits, Financial Statements Schedules,
and Reports on Form 8-K 6
<PAGE>
PART I
Item 1. Business
(a) General Development of Business.
Registrant is a holding company organized under the laws of
Pennsylvania. Registrant has conducted virtually no business operations
in the past four years, other than its efforts to seek merger partners.
Subsequent to year end the Registrant entered into an agreement to
exchange approximately 83.5% of its no par value common stock for
approximately 60% of the common stock of Communications/USA, Inc.
(Comm/USA).
Comm/USA owns and operates interactive voice messaging franchises in
the Voice-Tel system. Voice -Tel is the largest interactive voice
messaging company in the United States, operating a digital
telecommunications network through independently owned franchises.
The system operates on proprietary software which was created by
Centigram Communications Corporation. Comm/USA operates in the
following sales territories: (i)the cities of Tampa, St.
Petersburg, Clearwater, Largo, Bradenton, and Sarasota; and
(ii) the Metropolitan Statistical Areas of Lakeland-Winter Haven,
Melbourne-Titusville-Palm Bay, Fort Pierce, Fort Myers-Cape Coral,
and Naples.
After the merger, the Registrant expects to change its name to
NET LNNX, Inc., to more closely identify with the high technology
nature of its future business. Besides the above mentioned
interactive voice messaging, the Registrant expects to form and
operate an Internet Service Provider, and Comm/USA expects to
provide additional services including ,long distance debit or
prepaid cards, long distance re-selling, as well as purchasing
its own paging company.
Item 2. Properties.
The executive and business office of the Registrant consist of office
space located at 2240 Woolbright Rd. Suite 336, Boynton Beach, FL
33426.
Item 3. Legal Proceedings.
There were no material legal proceedings pending or known to be
threatened or contemplated to which registrant is a party.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of holders of Registrant's Common
Stock during 1995.
PART II
Item 5. Market for Registrant's Common Stock and Related Stockholders Matters.
Registrant's Common Stock has been traded on the over-the-counter market
since May 1989. The following table sets forth the range of high and low
bid quotations for each quarterly period in the fiscal year ended
<PAGE>
December 31, 1995 as reported by brokers making a market in the
Company's stock. The quotations shown do not include commissions and
therefore do not reflect actual transactions.
<TABLE>
<CAPTION>
High Low
1994 Bid Asked Bid Asked
<S> <C> <C> <C> <C>
1st Quarter $.125 $ .50 $.125 $. 50
2nd Quarter $.375 $.625 $.375 $.625
3rd Quarter $.125 $ .50 $.125 $ .50
4th Quarter $.125 $ .50 $.125 $ .50
1995
1st Quarter $ .05 $ .25 $ .05 $ .25
2nd Quarter $ .05 $ .25 $ .05 $ .25
3rd Quarter $ .05 $ .25 $ .05 $ .25
4th Quarter $ .05 $ .25 $ .05 $ .25
</TABLE>
As of March 29, 1996, there were approximately 2,300 holders of record
of Common Stock. No cash dividends were paid in the last 4 years.
Item 6. Selected Financial Data.
None
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
LIQUIDITY AND CAPITAL RESOURCES
Registrant has projected that it will incur only minor operating costs
during 1996. After the merger with Comm/USA, some working capital will
flow from the subsidiary to the Registrant in the form of management
fees. The company expects these fees to be in the vicinity of $10,000 per
month which more than adequately cover any expected expenses that may
occur. The Registrant ended the year with $2,164 of cash, which was used
to pay for expenses of the merger.
RESULTS OF OPERATIONS
There was a loss of $186 for the year which is a result of stock transfer
fee income and associated miscellaneous operating expenses. The company
expects that its revenues will approximate $1,000,000 from its
interactive voice messaging services. The company's subsidiary Comm/USA
expects to have a net income of 10%-12% of revenues for the 1996 year.
Item 8. Financial Statements and Supplementary Data.
Financial Statements of Registrant and Financial Statement schedules
are attached as Appendix A (following Exhibits) and included as part of
this Form 10-K Report. A list of said Financial Statements and
Financial Statement Schedules is provided in response to Item 14 (a).
<PAGE>
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
Not applicable
PART III
Item 10. Directors and Executive Officers of the Registrant.
(A) Identification of Directors
Age Director Since
Robert C. Hackney 45 December 1995
Each director is elected until the next Annual Meeting of shareholders
and until his successor is qualified.
(B) Identification of Executive Officers
Name Office Age When Elected
Robert C. Hackney President 45 December 1995
Each officer is elected until the next Annual Meeting of Directors is held and
until his successor is qualified
(C) Not required as Registrant was subject to Section 13(a) of
Securities Act of 1934
(D) Business experience
Robert C. Hackney: Has been a Director of the Company since December 1995. He
will be in charge of implementing the Company's acquisition strategy. For
nearly two decades his corporate and securities law practice has included
public and private securities offerings, mergers and acquisitions, tender
offers, and complex corporate structures. From 1988 until 1995, Mr. Hackney was
a partner in the law firm of DeSantis, Gaskill & Hunston P.A., in North Palm
Beach, Florida. He is a former securities fraud prosecutor and state securities
regulator. He also serves on the Board of Directors of Micro Typing Systems,
Inc., a company in the medical products industry. Mr. Hackney is a member of
the Florida Bar, the United States District Court, Middle District of Florida,
the United States Court of Appeals for the Eleventh Circuit. He has lectured
and authored several books in the area of corporate securities law, including
"The Complete Guide to Mergers and Acquisitions", (1989), " An Insiders Guide
to Non-Bank Business Financing" (1990), and "Firesale! Advice on Buying
Financially Distressed Companies" (1991). Mr. Hackney is a member of United
States Senator Connie Mack's Senate Roundtable and is listed in the Who' Who
Registry.
<PAGE>
Item 11. Executive Compensation.
No officer or Director received any cash compensation during the fiscal
year ended December 31, 1995.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table identifies the only persons known by the Company
who owned beneficially as of March 28, 1995, more than five percent of
any class of the Company's voting securities, after giving effect to a 1
for 20 reverse split which was anounced by the Company on January 3,
1996.
Title Name and Address Amount & Nature of Percent
of Class of Beneficial Owner Beneficial Ownership of Class
_______ _________________ ____________________ ________
Common Robert C. Hackney
No par value Palm Beach Gardens, Fl 835,000 83.5%
Item 13. Certain Relationships and Related Transactions.
No related transactions have taken place during 1995
PART IV
Item 14. Exhibits, Financial Statements, Schedules, and Reports on Form 8-K
(a) (1) Financial Statements.
The following Financial Statements of Registrant are filed as part of
this Form 10-K Report:
1. Audited Balance Sheet as of December 31, 1995 and Unaudited
Balance Sheet as December 31, 1994.
2. Audited Statement of Operation for the Year ended December 31,
1995 and Unaudited Statements of Operations for the years ended
December 31, 1994 and 1993.
3. Audited Statement of Cash Flows for the year ended December 31,
1995 and Unaudited Statements of Cash Flows for the Years ended
December 31, 1994 and 1993.
4. Notes to Financial Statements
All schedules are omitted because they are not required, are not
applicable or the required information is given in the financial
statements or notes thereto.
(a) (3) Exhibits
(3) (A) Articles of Incorporation (incorporated by reference to Registrant's
Form 10-K Report for the year ended December 31, 1983, Exhibit (3)
(A), File No. 0-6553)
(3) (B) By-Laws(incorporated by reference to Registrant's Form 10-K report for
the year ended Decenber 31, 1983, Exhibit (3) (B) , File No. 0-6503)
(11) Earnings per share
<PAGE>
(b) Reports on Form 8-K
During the year ended December 31, 1995 no reports on Form 8-K were
filed by Registrant.
<PAGE>
SIGNATURES
Pursuant to the requirements of Secetion 13 or 15(d) of the Securities
and Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized:
CHESTER COUNTY SECURITY FUND, INC.
By:/S/ Robert C. Hackney
Robert C. Hackney, President and Director
Date: March 29,1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following on behalf of the Registrant
and in the capacities and on the dates indicated.
By: /S/Robert C. Hackney
Robert C. Hackney, President and Director
Date: March 29,1996
<PAGE>
NET LNNX, INC.
FORMERLY CHESTER COUNTY SECURITY FUND, INC.
FINANCIAL STATEMENTS
December 31, 1995, 1994 and 1993
<PAGE>
NET LNNX, INC.
FORMERLY CHESTER COUNTY SECURITY FUND, INC.
TABLE OF CONTENTS
For the Years Ended December 31, 1995, 1994 and 1993
INDEPENDENT AUDITOR'S REPORT Front
FINANCIAL STATEMENTS
Balance Sheets 1
Statements of Operations and Retained Earnings 2
Statements of Cash Flows 3
Notes to Financial Statements 4
<PAGE>
Independent Auditor's Report
The Board of Directors
Net Lnnx, Inc.
Boynton Beach, Florida
I have audited the accompanying balance sheet of Net Lnnx, Inc. (formerly
Chester County Security Fund, Inc.) (the "Company") as of December 31, 1995,
and the related statements of operations, retained earnings, and cash flows for
the year then ended. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. I believe that my audit provides a reasonable basis for my
opinion.
In my opinion, the financial statements referred to in the first paragraph
present fairly, in all material respects, the financial position of Net Lnnx,
Inc. as of December 31, 1995 and the results of its operations and cash flows
for year then ended in conformity with generally accepted accounting
principles.
Richard C. Gates, CPA
January 16, 1996, except for Notes B and C,
as to which the date is March 25, 1996
West Palm Beach, Florida
<PAGE>
<TABLE>
NET LNNX, INC.
FORMERLY CHESTER COUNTY SECURITY FUND, INC.
BALANCE SHEETS
December 31, 1995 and 1994
<CAPTION>
1994
1995 (Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash in bank $ 2,164 $ 2,350
STOCKHOLDERS' EQUITY
Stockholders' equity
"Common stock - no par value, 20,000,000 shares authorized,
3,300,000 shares issued and outstanding." 1,000 1,000
Retained earnings 1,164 1,350
$ 2,164 $ 2,350
</TABLE>
See accompanying notes and accountant's report.
<PAGE>
<TABLE>
NET LNNX, INC.
FORMERLY CHESTER COUNTY SECURITY FUND, INC.
STATEMENTS OF CASH FLOWS
For the Years Ending December 31, 1995, 1994 and 1993
<CAPTION>
1994 1993
1995 (Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (186) $ 264 $ 234
Cash at beginning of year 2,350 2,086 1,852
Cash at end of year $ 2,164 $ 2,350 $ 2,086
</TABLE>
See accompanying notes and accountant's report.
<PAGE>
<TABLE>
NET LNNX, INC.
FORMERLY CHESTER COUNTY SECURITY FUND, INC.
STATEMENTS OF OPERATIONS and RETAINED EARNINGS
For the Years Ending December 31, 1995, 1994 and 1993
<CAPTION>
1994 1993
1995 (Unaudited) (Unaudited)
<S> <C> <C> <C>
Operating revenues $ 150 $ 264 $ 234
Operating expenses 336 - -
Operating income (loss) (186) 264 234
Retained earnings - beginning of period 1,350 1,086 852
Retained earnings - end of period $ 1,164 $ 1,350 $ 1,086
Income Per Common share:
Income (loss) per common share $ (.00) $ .00 $ .00
Weighted average number of common shares
outstanding 3,300,000 3,300,000 3,300,000
</TABLE>
See accompanying notes and accountant's report.
<PAGE>
NET LNNX, INC.
FORMERLY CHESTER COUNTY SECURITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Chester County Security Fund, Inc. (the
"Company") was a wholly-owned subsidiary of Corporate
Investment Company on December 31, 1988. On May 5, 1989
Corporate Investment Company distributed all of the
outstanding stock of the Company to the shareholders of
Corporate Investment Company as a one share stock for stock
dividend.
Business - The Company is a holding company organized under
the laws of Pennsylvania. It has conducted virtually no
business operation in the past three years, other than its
efforts to seek merger partners.
Income (Loss) per Common Share - Income or loss per common
share is computed using the weighted average number of common
shares outstanding during each period. There are no common
stock equivalents or other dilutive securities outstanding
during 1993, 1994 or 1995.
B - EXPENSES OF OPERATIONS
During 1995, many normal operating expenses, such as
accounting fees to prepare SEC filings and tax returns, legal
expenses, state franchise expenses, etc., were paid by a
company under the control of the controlling shareholders.
<PAGE>
C - SUBSEQUENT EVENT
On December 29, 1995, the former directors authorized the
issuance of 83.5% of the authorized stock to Robert C.
Hackney in consideration for him exchanging his controlling
interest in Communications/USA, Inc. The former directors
resigned and Mr. Hackney was appointed President and sole
director. During January 1996, the cash on the balance sheet
was disbursed for expenses of the transfer of control. The
name of the Company was changed to Net Lnnx, Inc. and
Communications/USA, Inc. began operating as a subsidiary of
Net Lnnx, Inc. On January 3, 1966, the Company had a 1 for
20 reverse stock split.
Summary financial for Communications/USA, Inc. as of October
31, 1995 is as follows:
Current Assets $ 177,070
Property and Equipment $78,106
Total Assets $4,335,121
Current Liabilities $ 634,669
Long Term Liabilities $346,160
Shareholders Equity $3,374,292
Total Liabilities and Equity $4,335,121
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Balance
Sheets, Statement of Operations and Retained Earnings, Statement of Cash Flows
and Notes thereto incorporated in Part II., Item 8. of this Form 10-K and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000793375
<NAME> NET LNNX, INC.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 2,164
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,164
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,164
<CURRENT-LIABILITIES> 0
<BONDS> 0
1,000
0
<COMMON> 0
<OTHER-SE> 1,164
<TOTAL-LIABILITY-AND-EQUITY> 2,164
<SALES> 0
<TOTAL-REVENUES> 150
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 336
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (186)
<INCOME-TAX> (186)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (186)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
