FORM 10-KSB40/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] AMEND. NO. 1 TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: March 31, 1997
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: 33-8819-D
HALLMARK PROPERTIES, INC.
(Name of small business issuer in its charter)
Colorado 84-1036901
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3802 East 36th Street
Tulsa, Oklahoma 74135-4532
(Address of principle executive offices) (Zip Code)
Issuer's telephone number: (918) 832-0057
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: None
Indicate by check mark whether the issuer (1) filed all reports required by
Section 13 or 15(d) of the Exchange Act 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 at least
the past 90 days. Yes [X] No [ ].
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B 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 amendment to
this Form 10-KSB. [X]
Issuer's revenues for its most recent fiscal year: $7,000.00
Aggregate market value of voting stock held by non-affiliates as of May 15,
1997: $-0-. There is currently no trading market for the Registrant's
securities.
Number of shares of Common Stock, no par value, outstanding as of March 31,
1997: 56,674,970.
Documents incorporated by reference: None.
<PAGE>
HALLMARK PROPERTIES, INC.
FORM 10-KSB
PART I
Item 1. Description of Business
(a) Business Development.
Hallmark Properties, Inc., ("Hallmark" or the "Company") was organized under
the laws of the State of Colorado on August 11, 1986, for the purpose of
evaluating and seeking merger candidates. Commencing in December, 1986,
under the name of Diversified Management Acquisitions, Inc., the Registrant
sold in a public offering 15,000,000 units at $0.02 per unit, for total
proceeds of $300,100 which closed on April 28, 1987. Each unit contained
one share of Common Stock and one Callable Common Stock Purchase Warrant. All
Warrants expired, without exercise, on December 2, 1988.
(b) Business of Issuer.
Since inception in 1986, management of Hallmark has been actively seeking
business opportunities. Several potential candidates were identified between
1986 and the end of fiscal 1997, however, no combination with any of these
companies was ever completed. The Company has no agreement in principle or
any formal contract to acquire or enter into any business opportunity as of
the date of this 10-KSB Report.
The Company has engaged in limited activities but has been hampered in its
efforts due to its lack of capital. It is likely that the Company will need
a substantial amount of additional capitalization before it will be able to
participate in any merger activities. There is no assurance that the Company
will obtain any additional capitalization.
The Company competes with numerous companies and firms which are larger,
better established, have greater financial and other resources, more
employees, and more extensive facilities than the Company. The Company is
at a competitive disadvantage to these other entities.
The Investment Company Act of 1940 defines an "investment company" as an
issuer which is or holds itself out as being engaged primarily in the
business of investing, reinvesting or trading securities. While the Company
does not intend to engage in such activities, the Company could become
subject to regulation under the Investment Company Act of 1940 in the event
the Company obtains or continues to hold a minority interest in a number of
enterprises. The Company could be expected to incur significant registration
and compliance cost if required to register under the Investment Company Act
of 1940.
The Company intends to structure any merger or acquisition in such a manner
as to minimize federal and state tax consequences to the Company and any
target company.
Item 2. Description of Property
The Registrant's current offices are located at 3802 East 36th Street,
Tulsa, Oklahoma 74135-4532. These facilities are provided free for the
Registrant. See Item 12.
Item 3. Legal Proceedings
The Company is not a party to any legal proceedings and no such proceedings
are known to be contemplated.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
<PAGE>
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
(a) Market Information.
The Company's Common Stock is not eligible for listing on the NASDAQ system,
and trading, if any, has been strictly limited to the over-the-counter
market. The Common Stock has been quoted from time to time in the "Pink
Sheets" maintained by the National Quotation Bureau, Inc., however, the
Common Stock has not been so listed for the last three fiscal years.
(b) Holders.
(b)(1) The approximate number of record holders of the Company's Common
Stock, no par value, as of March 31, 1997 was 225. This figure does not
reflect an indeterminable number of shareholders whose shares are held in
"street name."
(c) Dividends.
The Company has not paid a dividend with respect to its Common Stock and
cannot be expected to pay a dividend on its Common Stock in the foreseeable
future.
The Company's ability to pay dividends is restricted by provisions of the
Colorado Business Corporation Act which provides that a Colorado corporation
may only pay dividends if, after giving effect to the dividend, the
corporation would be able to pay its debts as they become due in the usual
course of business, or the corporation's total assets would be less than its
total liabilities plus the amount that would be needed, if the corporation
were to be dissolved at the time of the dividend, to satisfy the
preferential rights upon dissolution of shareholders whose preferential
rights are superior to those receiving the dividends.
Item 6. Management's Discussion and Analysis or Plan of Operation
Results of Operations
Years Ended March 31, 1996 and 1997.
The Company raised $300,100 in April 1987 in consideration for the issuance
of 15,000,000 shares of the Company's Common Stock in a public offering. The
Company was essentially inactive from 1990 until the 1996 fiscal year. As a
result, during the last two fiscal years the Company achieved only $7,000.00
as operating revenues, expense of $7,000.00 and recognized a net gain of $-0-
for the fiscal year ended March 31, 1996 as compared with a net gain of $-0-
for the fiscal year ended March 31, 1997. The smaller net income during the
1996 fiscal year was due to the Company's being dormant during that time as
compared to new financing being obtained and operations resuming in the 1997
fiscal year.
Liquidity and Capital Resources
The Company had been without adequate funds to conduct any actual business
from 1990 through the date of this Report. The Company settled a substantial
portion of its outstanding debt ($24,386.81) with proceeds of sale of
restricted shares of Common Stock in fiscal 1997. See Item 12. The Company
presently has no cash or other liquid assets.
Plan of Operation
In August 1996, the Company sold 40,000,000 shares of restricted Common
Stock to two individuals, for $24,386.81 cash, which the Company used to pay
debts the Company had incurred. In connection with the change in control of
the Company resulting from the issuance of such 40,000,000 shares of its
Common Stock, the Company subsequently changed its name to Hallmark
Properties, Inc. No brokers were involved in this transaction and no
commission or discounts were paid. The Company relied on the 4(2) exemption
from registration to sell these restricted securities.
The Company will continue reviewing opportunities to merger with or acquire
other companies. The Company may need a substantial amount of capital from
third parties to close any merger or acquisition transaction, however there
can be no assurance that the Company will be able to raise such needed funds.
<PAGE>
Item 7. Financial Statements
The following financial statements are filed as a part of this Form 10-KSB
immediately following the signature page:
Report of Independent Certified Public
Accountants . . . . . . . . . . . . . . . . . . . . . . . .F-1
Balance Sheet - March 31, 1996 and 1997 . . . . . . . . . . F-2
Statement of Operations - For the Years
Ended March 31, 1996 and 1997 and
Cumulative Amounts from Inception of
the Development Stage (August 11, 1986)
through March 31, 1997 . . . . . . . . . . . . . . . . . .F-3
Statement of Stockholders' Equity (Deficit) -
For the Period from Inception of the Development
Stage (August 11, 1986) through March 31, 1997 . . . . . F-4-6
Statements of Cash Flows - For the Years
Ended March 31, 1996 and 1997 and
Cumulative Amounts from Inception of
the Development Stage (August 11, 1986)
through March 31, 1997 . . . . . . . . . . . . . . . . . F-7
Notes to Financial Statements - For the
Years Ended March 31, 1996 and 1997 . . . . . . . . . . F-8-9
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
There have been no disagreements between the Registrant and its independent
accountants on any matter of accounting principles or practices or financial
statement disclosure since the Registrant's inception.
<PAGE>
Part III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act
(a) Identification of Directors and Executive Officers.
The directors of the Company are elected to hold office until the next
meeting of shareholders and until their respective successors have been
elected and qualified. Officers of the Company are elected by the Board of
Directors and hold office until their successors are elected and qualified.
Name Age Position
James L. Porter 37 Director, President and Treasurer
Louis Porter 69 Director, Vice President and Secretary
James L. Porter has approximately 20 years of experience in the formation
and administration of private and public companies in a number of different
sectors, including the oil and gas industry, real estate development, and
import-export to the Pacific Rim nations. Currently, Mr. Porter is president
and a director of Capital Holding Company, a private real estate development
company, and he is the president and director of Sino-America International,
Inc., a private import-export company. Mr. Porter devotes such time as is
neccessary to the affairs of the Company. Mr. Porter is completing his Bachelor
of Science Degree, International Business, from Bartlesville Wesleyan College,
Oklahoma.
Louis Porter has been active as an executive officer and founder of several
public and private companies in Canada and America, in the oil and gas
industry, manufacturing (steel, plastic and insulation materials), and real
estate development. Mr. Porter also served as a director of American Bank
and Riverside Bank, both located in Tulsa, Oklahoma, during the period from
1976 until 1978. Mr. Porter received his Bachelor of Science Degree,
petroleum and natural gas engineering, from Texas A&M, Texas. Except for his
limited activities with respect to the Company, Mr. Porter has been retired
since 1990.
(b) Significant Employees.
The Company has no significant employees at the present time.
(c) Family Relationships.
James L. Porter is the son of Louis Porter.
(d) Involvement in Certain Legal Proceedings.
During the past five years, no director, executive officer, promoter or
control person of the Company has:
(1) Had any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that date;
(2) Been convicted in a criminal proceeding or been subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses);
(3) Been subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or likewise
limiting his involvement in any type of business, securities or banking
activities; or
(4) Been found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, where the judgment has not
been reversed, suspended, or vacated.
(e) Compliance with Section 16(a) of the Exchange Act.
Not applicable.
Item 10. Executive Compensation
Cash Compensation.
During the past three (3) fiscal years, no officer of the Company received any
compensation. Neither James L. Porter, the Company's president and chief
executive officer nor Louis Porter, the Company's vice-president have
received any stock options, employee benefits, or other form of direct or
indirect remuneration from the Company during the 1995, 1996 and 1997 fiscal
years. Messers. Porter are currently devoting such time as is necessary to
the affairs of the Company to facilitate the Company.
Compensation Under Plans.
Stock Options and Bonus Plans. No stock bonuses were ever granted under any
stock bonus plan.
Other Compensation.
No other compensation was paid or distributed to any officer or director of
the Company for services rendered as such, during the last three fiscal years.
Compensation of Directors.
The Company does not pay its directors for their services in that capacity;
however, officers and directors receive reimbursement for out-of-pocket
expenses incurred by them in connection with the business of the Company.
Currently, the Company does not pay any directors fees for attendance at
board meetings.
The Company has no other arrangements pursuant to which any director of the
Company was compensated during the fiscal year ended March 31, 1997 for
services as a director.
Termination of Employment and Change of Control.
The Company has no compensation plan or arrangement with respect to any
executive officer which plan or arrangement results or will result from the
resignation, retirement or any other termination of such individual's
employment with the Company. The Company has no plan or arrangement with
respect to any persons which will result from a change in control of the
Company or a change in the individual's responsibilities following a change
in control.
Item 11. Security Ownership of Certain Beneficial Owners and Management
(a)(b) Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth information as of March 31, 1997 as to the
beneficial ownership of shares of the Company's only outstanding class of
securities, its Common Stock, by each person who, to the knowledge of the
Company at that date, was a beneficial owner of 5% or more of the outstanding
shares of Common Stock, by each person who is an officer and/or director of
the Company and by all officers and directors of the Company as a group. The
table does not include information regarding shares of Common Stock held in
the names of certain depositories/clearing agencies as nominiee for various
brokers and individuals. No broker or individual is believed to hold greater
than5% of the Company's Common Stock.
Amount and
Name and Address Nature of
Title of of Beneficial Beneficial Percent of
Class Owner Owner Class
Common James L. Porter 20,000,000 (1) 35.3%
Stock 3802 E. 36 Street
Tulsa, OK 74135
Common Louis Porter 20,000,000 (1) 35.3%
Stock 3802 E. 36 Street
Tulsa, OK 74135
Common Officers and directors 40,000,000 (1) 70.6%
Stock as a group (two persons)
(1) Ownership is direct.
(c) Changes in Control.
Management is not aware of any arrangements which may result in a change of
control of the Company.
Item 12. Certain Relationships and Related Transactions
(a)(b)(c) Transactions with Management and Others.
In fiscal 1997, James L. Porter and Louis Porter invested $24,387 cash in
the Company, in payment of the Company issuing 20,000,000 restricted shares
of Common Stock to James L. Porter and an additional 20,000,000 restricted
shares of Common Stock to Louis Porter. The Company used the capital to pay
third party accounts payable.
Limited office sharing facilities are provided to the Company, at no cost,
by Shield Technology Corporation, an affiliate of James L. Porter and Louis
Porter.
(d) Transactions with Promoters.
Not applicable.
Item 13. Exhibits and Reports on Form 8-K.
(a) Exhibits required to be filed are listed below and, except where
incorporated by reference, immediately follow the Financial Statements.
Number Description
3.1 Articles of Incorporation, as amended, incorporated by reference from
the Annual Report on Form 10-KSB for the five fiscal years ended March 31,
1991.
3.2 Bylaws, incorporated by reference from the Annual Report on Form 10-KSB
for the five fiscal years ended March 31, 1991.
3.3 Articles of Amendment to the Articles of Incorporation, incorporated
by reference from the Form 8-K dated Aug 19, 1996 filed August 21, 1996.
10 Agreement to Acquire Control of DMA - Tierra.
(b) During the last quarter of the period covered by this report the Company
filed no reports on Form 8-K.
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(d) OF THE EXCHANGE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED
SECURITIES PURSUANT TO SECTION 12 OF THE EXCHANGE ACT:
The Registrant has not sent to its security holders any annual report or
proxy material during the last fiscal year. If such report or proxy material
is furnished to security holders subsequent to the filing of this Form
10-KSB, the Registrant shall furnish copies of such material to the
Commission when it is sent to security holders.
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: September 15, 1997
HALLMARK PROPERTIES, INC.
By _________________________
James L. Porter, President
In accordance with the Securities Exchange Act of 1934, this report has been
signed below by the following person on behalf of the Registrant and in the
capacities and on the date indicated.
Dated: September 15, 1997 By _________________________
James L. Porter, President,
Principle Executive Officer,
Principle Accounting Officer,
Principle Financial Officer
and Director
Dated: September 15, 1997 By _________________________
Louis Porter, Director
<PAGE>
Tannenbaum & Company, P.C.
Certified Public Accountants
July 29, 1997
The Board of Directors
Hallmark Properties, Inc.
3802 East 36th Street
Tulsa, Oklahoma 74135
We have audited the Balance Sheet of Hallmark Properties, Inc. (formally
Tierra Environmental Corporation), (a development stage company) as of March
31, 1996 and 1997, and the related Statement of Operations, Stockholders'
Equity and Cash Flows for the years then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based upon our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Hallmark Properties, Inc.
as of March 31, 1996 and 1997, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted
accounting principles.
CERTIFIED PUBLIC ACCOUNTANTS
1873 S. Bellaire ~ Suite 908 ~ Denver, Colorado 80222
(303)756-5216 FAX (303)757-5279
<PAGE>
Tannenbaum & Company, P.C.
Certified Public Accountants
Hallmark Properties, Inc.
(A Development Stage Company)
Statement of Operations
(In Thousands, except per share data)
Years Ended March 31, 1996 and 1997
Cummulative
amount from
1996 1997 inception
----------- ------------ -------------
INCOME FROM OPERATIONS -- 7 7
COST OF SALES -- -- --
---------- ------------ -------------
GROSS PROFIT -- 7 7
---------- ------------ -------------
EXPENSES
Organizational costs, SEC (State
and Federal) -- -- 1
Bank Charges -- -- --
Dues, fees, postage, printing,
telephone -- 1 1
Legal, professional and consulting -- 2 10
Merger Expenses -- -- 261
Miscellaneous Expenses -- 3 4
Rent Expense -- -- 6
Salaries -- -- 19
Taxes -- -- --
Travel and Entertainment -- 1 1
--------- --------- ---------
Total expenses -- 7 303
-------- --------- ---------
Net income before income tax -- -- (296)
Income tax -- -- --
-------- --------- ---------
Net income -- -- (296)
Retained Earnings
(Accumulated Deficit)
beginning of the year (296) (296) (296)
-------- --------- ----------
(Accumulated deficit),
end of the year (296) (296) --
-------- --------- ---------
Per share earnings during
reporting period -- -- --
-------- --------- ---------
Weighted average number
of shares 16,674,970 42,222,915 56,309,647
See accompanying notes
<PAGE>
Tannenbaum & Company, P.C.
Certified Public Accountants
Hallmark Properties, Inc.
(A Development Stage Company)
Balance Sheet
(In Thousands, Except Per Share Data)
March 31, 1996 and 1997
March 31, 1996 March 31, 1997
-------------------- --------------------
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents 0 0
Accts Receivable 0 0
Inventory 0 0
Short Term Notes Receivable 0 0
----- -----
TOTAL CURRENT ASSETS 0 0
OTHER ASSETS
Real Estate 0 0
Other 0 0
----- -----
TOTAL OTHER ASSETS 0 0
----- -----
TOTAL ASSETS 0 0
===== ======
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts Payable 24 0
Notes Payable 0 0
----- -----
TOTAL CURRENT LIABILITIES 24 0
STOCKHOLDER'S EQUITY
Common Stock, no par value, 400,000,000 shares
authorized; issued and outstanding
16,674,970 and 56,674,970 at March 31, 1996
and 1997 respectfully 272 296
Deficit Accumulated during the development stage
(296) (296)
---------- ----------
TOTAL STOCKHOLDER'S EQUITY (24) 0
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY
0 0
========= ==========
See accompanying notes
<PAGE>
Tannenbaum & Company, P.C.
Certified Public Accountants
Hallmark Properties, Inc.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For period from inception (August 11, 1986) to March 31, 1996
Common Stock Accumulated Stock sub- Total Stock-
No. of Shares/Amount Deficit scriptions holder's equity
Balance, August 11, 1986
0/$0 $0 $0 $0
Issuance of stock for
cash, August 12, 1986
($0.0001 per share)
33,500,000/3 0 0 3
Issuance of stock for
cash, August 27, 1986
($0.005 per share)
2,200,000/11 0 0 11
Issuance of stock for
cash, August 27, 1986
($0.005 per share)
200,000/1 0 0 1
Stock subscriptions
received
20 20
Loss for period ended
March 31, 1987
(4) (4)
- ---------------------------------------------------------------------------
Balance March 31, 1987
35,900,000/15 (4) 20 31
Issuance of stock for
cash, April, 1987 ($0.02
per share
15,000,000/257 (20) 237
Loss through the year ended
March 31, 1990
(281) (281)
- --------------------------------------------------------------------------
Balance, March 31, 1990
50,900,000/272 (285) 0 (13)
Issuance of stock for
VP merger and returned
to the Treasury
30,000,000
Loss for the year ended
March 31, 1991
(1) (1)
- ----------------------------------------------------------------------------
Balance, March 31, 1991
80,900,000/272 (285) 0 (14)
Income for year ended
March 31, 1992
113 113
- ----------------------------------------------------------------------------
Balance, March 31, 1992
80,900,000/272 (172) 0 99
Reverse Stock Split
15:1, November
10, 1992
(75,506,667)
Issuance of stock
for Tierra Environ-
mental Corp.
November 10,
1992 ($.00 per
share
11,281,637
Loss for year ended
March 31, 1993
(124) (123)
- ---------------------------------------------------------------------------
Balance, March 31, 1993
16,674,970/272 (296) 0 (24)
Income for year ended
March 31, 1994
0 0
- ----------------------------------------------------------------------------
Balance, March 31, 1994
16,674,970/272 (296) 0 (24)
Income for year ended
March 31, 1995
0 0
- -----------------------------------------------------------------------------
Balance, March 31, 1995
16,674,970/272 (296) 0 0
Income for year ended
March 31, 1996
0 0
- ----------------------------------------------------------------------------
Balance, March 31, 1996
16,674,970/272 (296) 0 0
Income for year ended
March 31, 1997
0 0
Issuance of stock for
cash, August 19,
1997($.0006) per share
40,000,000/24 24
- ----------------------------------------------------------------------------
Balance, March 31, 1997
56,674,970/296 (296) 0 0
============================================================================
See accompanying notes
<PAGE>
Tannenbaum & Company, P.C.
Certified Public Accountants
Hallmark Properties, Inc.
(A Development Stage Company)
Statement of Cash Flows
(In Thousands, except per share data)
Years ended March 31, 1996 and 1997
Cumulative
amount from
1996 1997 inception
-------------------- -------------------- ----------
Cash flows from operating activities
Net Loss 0 0 (272)
Adjustments to reconcile Net
Loss to Net Cash used in
operating activities
Increase (decrease) in
accounts payable 0 (24) (24)
Net cash used in operations 0 (24) (296)
Cash used in investing activities 0 0 0
Cash flows from financing activities
Proceeds from sale of common Stock 0 24 296
Cash balance at beginning of year 0 0 0
Cash balance at end of year 0 0 0
See accompanying notes
<PAGE>
Tannenbaum & Company, P.C.
Certified Public Accountants
Hallmark Properties, Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 1996 and 1997
1. Summary of significant accounting policies
Organization
Hallmark Properties, Inc. ("Hallmark" or the "Company" (formerly Tierra
Environmental Corporation) was organized under the laws of the State of
Colorado on August 11, 1986, for purpose of evaluating and seeking merger
candidates. The Company is currently considered to be in the development
stage as more fully defined in the Financial Accounting Standards Board
Statement No. 7. The Company has engaged in limited activities, but has not
generated significant revenues to date. The Company is currently seeking
business opportunities.
Accounting methods
The Company records income and expenses on the accrual method.
Fiscal year
The Company has selected March 31 as its fiscal year end.
Deferred offering cost
Cost associated with any public offering were charged to the proceeds of
the offering.
Loss per share
All stock outstanding prior to the public offering had been issued at
prices substantially less than that which was paid for the stock in the
public offering (Note 3). Accordingly, for the purpose of the loss per share
calculation, shares outstanding at the end of the period were considered to
be outstanding during the entire period.
2. Income taxes
Since its inception, the Company has incurred a net operating loss. Though
the Company showed a net profit for year ended March 31, 1992, no tax
liability has been assessed due to the accumulated net loss from prior
periods. Accordingly, no provision has been made for income taxes.
The Company has a net operating loss of approximately $296,000 expiring
through 2008.
3. Public offering
The Company sold to the public 15,000,000 units at a public purchase price
of $0.02 per unit. Each unit consists of one share of the Company's no par
value common stock and common stock purchase warrant. The warrants entitle
the holder to purchase one share of common stock in the Company at a purchase
price of $0.10 per share and are exercisable for a two-year period commencing
January 6, 1987. Upon notice to the warrant holders, the Company may redeem
the warrants at a price of $0.0001 per warrant. At March 31, 1987,
subscriptions for 980,050 units had been recieved. At April 28, 1987, the
Company had received subsriptions for the remaining 14,091,950 units and the
stock was issued.
4. Related Party Transactions.
On August 19, 1996 the Company entered into an agreement with James Porter
and Louis Porter whereby the "Porters" paid $24,817 to the Company and the
Company issued 40,000,000 of its common stock to the Porters (20,000,000 to
each). The Company used the cash to settle outstanding liabilities
(approximately $24,000 at March 31, 1996 and $0 at March 31, 1997).
