<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1999
-----------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________ to __________
Commission File Number 33-14065-D
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e resources inc
-----------------------------
(Exact name of registrant as specified in charter)
Utah 87-0476117
- ------------------------------ -------------------------
State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization
304 North Highway 377, Roanoke, Texas 76262
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (817) 491-8698
---------------
Securities registered pursuant to section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None N/A
- ------------------ -----------------------------------------
Securities registered pursuant to section 12(g) of the Act: None
----------------
(Title of class)
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 registrant 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 [ ]
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not 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 amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $ -0-
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<PAGE> 2
State the aggregate market value of the voting stock held by nonaffiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days:
At December 31, 1999, the aggregate market value of the voting stock held by
nonaffiliates was $14,321,266 (based on 79,562,588 shares held by
nonaffiliates multiplied by a bid price of $0.18 per share).
As of December 31, 1999, the Registrant had 129,562,588 shares of common
stock issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and
the part of the form 10-KSB (e.g., part I, part II, etc.) into which the
document is incorporated: (1) Any annual report to security holders; (2) Any
proxy or other information statement; and (3) Any prospectus filed pursuant to
rule 424(b) or (c) under the Securities Act of 1933:
NONE.
<PAGE>
<PAGE> 3
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Organization and Corporate History
- ----------------------------------
e resources inc (formerly Dryden Industries, Inc., and previously Dry Dairy
International, Inc. and Wonder Capital, Inc.), hereinafter the "Company" or
"Registrant", was incorporated under the laws of the state of Utah on March 6,
1987. On February 3, 1995, the Company changed its name from Wonder Capital,
Inc., to its current name, Dry Dairy International, Inc. The Company was
originally formed to be a vehicle for ongoing business entities to become
public through a merger or acquisition with the Company.
On March 6, 1987, in connection with its organization, the Company sold
750,000 shares of its common stock to its founders for $5,000 cash.
Thereafter, the Company engaged in a public offering of its securities
pursuant to a Registration Statement on Form S-18 filed with the Securities
and Exchange Commission. On February 11, 1988, the Company closed its initial
public offering having sold 1,990,000 units at the offering price of $0.10 per
unit. Each unit consisted of one share of common stock, par value $0.001 per
share (the "Common Stock") and one Class A warrant and one Class B warrant to
purchase a like number of shares of Common Stock. The offering resulted in
net offering proceeds to the Company of approximately $171,967. The Company
intended to use the funds received in the offering to facilitate the merger
with an existing company. The Class A and Class B warrants have since expired
pursuant to their terms.
The Company subsequently used the funds received in the public offering in two
transactions. The Company received 1,625,000 shares of American Technology
and Information, Inc. in exchange for 2,437,500 shares of the Company's Common
Stock. The Company also entered into an agreement by which $100,000 was paid
to Penny Stock News Communications, Inc. for 50% of future stock subscription
news letter proceeds. A total of $175,000 was paid out in these transactions
and the Company did not receive any material benefit in return.
Thereafter, the Company attempted to conduct various businesses, but was
unsuccessful in its efforts until the acquisition of Dry Dairy International,
Inc. On December 4, 1994, the Company purchased all the assets of Dry Dairy
International, Inc., a Florida corporation ("Dry Dairy"), pursuant to the
terms and conditions of an Asset Purchase Agreement dated December 4, 1994,
(the "Original Agreement"). Under the terms of the Original Agreement, the
Company acquired all of the assets of Dry Dairy in exchange for 3,000,000
shares of the Company's Common Stock. The 3,000,000 shares of Common Stock
were to be subject to certain performance criteria before they were to be
issued. The Company and the principal owner of Dry Dairy subsequently
renegotiated the purchase price for the Dry Dairy assets based on the
inability to substantiate predecessor cost of the formulas and the other
intangible assets to be acquired. Accordingly, on March 27, 1995, the Company
and Dry Dairy amended the Original Agreement to change the purchase price from
3,000,000 shares of Common Stock to 100,000 shares of Common Stock. No other
changes were made to the Agreement. The amendment to the purchase price did
not change the value of the assets on the Company's books, which at December
31, 1994, was recorded at zero value, but it did reduce the authorized and
issued shares of the Company to 9,287,215 from 12,187,215.
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<PAGE> 4
Effective February 15, 1995, the Company acquired all of the issued and
outstanding shares of Lombardo's Pastaria, Inc., a Florida corporation
("Lombardo's") through the exchange of 195,122 shares of the Company's Common
Stock, par value $0.001 per share (the "Common Stock"), for all of the issued
and outstanding shares of Lombardo's capital stock, all pursuant to the terms
of an agreement dated February 2, 1995 (the Lombardo's Agreement"). Pursuant
to the terms of the Lombardo's Agreement, 1,000 shares of Lombardo's issued
and outstanding capital stock were converted on a pro rata basis into $100,000
of the Company's Common Stock, which value was determined by the 10 day
average closing price of the Company's Common Stock, beginning February 1,
1995 and ending February 14, 1995, the day before the effective date of the
exchange. The 10 day average of the bid price was $0.5125, as quoted by the
National Association of Security Dealers' OTC Bulletin Board, resulting in the
issuance of 195,122 shares of the Company's Common Stock to the principal
shareholders of Lombardo's.
On March 15, 1997, the company purchased the assets of Tulip Pita Bread
Center, a Florida corporation in the business of producing specialty breads
and distributing these fresh-baked products to supermarkets and institutions.
Pursuant to the terms of the purchase the Company issued 2,800,000 shares of
restricted Common Stock and $165,000 cash to be paid over 15 months. The
company formed two operating subsidiaries, Tulip bakery, Inc. and NGU
Distribution, Inc., to manage the new business.
In November 1997, the Company paid $250,000 cash to A&C Bakeries, Inc. of
Miami, Florida for the exclusive distribution rights for all fresh-baked
products for the Florida and Georgia markets. Management estimated the annual
sales to be in excess of $7,000,000 from the deal. In January of 1998, A&C
terminated the contract without cause. The Company has filed an arbitration
suit against A&C seeking the return of funds invested and damages from A&C.
In March of 1998, the Company discontinued operations in its NGU Distribution,
Inc. and Tulip Bakery subsidiaries as a result of the losses resulting from
the cancellation of the exclusive distribution agreement. In June 1998, the
Company discontinued operations in its Lombardo's Pastaria, Inc. subsidiary,
as a result of recurring losses in the subsidiary.
The Company then changed its status to a development stage company and wrote
off the assets that were attributable to its three operating subsidiaries. In
addition, on December 30, 1999, the Company sold the corporations that
comprised its previous operating subsidiaries to and all present and future
liabilities associated with the corporations. The Company recorded a gain on
the sale of $231,348 as a result of the buyer assuming all liabilities of the
subsidiaries.
In January of 2000, the Company completed a contribution agreement whereby it
issued 46,630,863 shares of its common stock in exchange for each of the
partners respective interest is Vista Photographic and Video Group, Ltd.
("Vista"). The shares issued by the Company represented approximately 25% of
the total shares of the Company's issued and outstanding shares immediately
following the acquisition. See "Events Subsequent to the Company's Fiscal Year
End" below.
Employees
- ---------
The Company during the 1999 year employed one person who serves as the
Company's President and Chairman. Professional fees are paid to a controller.
<PAGE> 5
Events Subsequent to the Company's Fiscal Year End
- --------------------------------------------------
On January 27, 2000, the Company's shareholders ratify a Contribution
Agreement entered into January 3, 2000 (the "Contribution Agreement"), between
the Company and Vista Photographic & Video Group, Ltd, a Texas limited
partnership (hereinafter "Vista"), which provided for the issuance of shares
of the Company's common stock to the partners of Vista, in an aggregate amount
representing 25% of the Company's issued and outstanding shares on a fully
diluted basis after giving effect to a private placement of the Company's
common stock for purposes of funding Vista's business operations (the "Equity
Funding"). In February 2000, the Company sold 14,280,000 shares of its common
stock for aggregate proceeds of $1,428,000 and issued the Vista's Partners
46,630,863 shares of the Company's common stock. An additional 5,000,000
shares were issued to an affiliate of the Company as a bonus for completing
the acquisition transaction. In connection with the ratification of the
Contribution Agreement, the Company's shareholders also approved effecting a
plan of recapitalization whereby the issued and outstanding shares of the
Company's common stock would be reverse split on a 1-for-20 basis so that
shareholders received one share of the Company's common stock for each twenty
shares held. In addition, the shareholders authorize the board of directors to
prepare and file a name change amendment to the Company's Articles of
Incorporation to change the Company's name to e resources inc. The reverse
split was effective April 4, 2000, and the name change was filed on March 24,
2000. After the completion of the Vista acquisition the Company moved its
offices from Sarasota, Florida, to 304 North Highway 377, Roanoke, Texas
76262, where its telephone and fax numbers are (817) 491-8698 and (817) 491-
9634, respectively.
Summary of Vista's Business
- ---------------------------
Vista combines the resources of a full service video production house with the
evolving technology of streaming media for Internet commerce. Vista offers
complete production services from turnkey to rental. Customers can hire Vista
to either produce their industrial film and videos or rent Vista's equipment
and studio space to produce their own productions (Industrials). Vista's
expansion of services resulted from its acquisition of a new non-linear video
editing system. This technology has increased Vista's post-production
capabilities and has given Vista the ability to serve corporate clients.
Additional computer equipment allows Vista to create high-end graphics, three
dimensional animation and interactive CD-ROMS. Through the acquisition of new
technology, Vista is capable of providing streaming media for Internet
commerce. Streaming media is the instantaneous on demand access to sound
and/or video content over the Internet. Vista's business strategy calls for
the acquisition of expertise and assets required to build the network
infrastructure that would allow it to deliver live streaming content via the
Internet to thousand of users. Vista's marketing focus is on developing
relationships with corporations across the country that need business services
programming for informational, marketing or training purposes. The majority of
Vista's streaming media revenue will come from the hosting of Industrials and
broadcasting of video conferencing, shareholder meetings and analyst
conference calls. Concurrent with Vista's hosting services, Vista will be in a
position to produce content for clients that need to update the material that
is hosted on its web site. Vista currently employs 14 people, including 3
administrative personnel. Vista leases office space located at 2155 Chenault,
Suite 310, Carrollton, TX 75006, where its telephone and fax numbers are
(972) 416-9333 and (972) 478-8044, respectively.
<PAGE> 6
ITEM 2. LEGAL PROCEEDINGS
None.
ITEM 3. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None.
PART II
ITEM 4. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The table on the following page sets forth, for the respective periods
indicated, the prices for the Company's common stock in the over-the-counter
market as reported by the NASD's OTC Bulletin Board. The bid prices represent
inter-dealer quotations, without adjustments for retail mark-ups, markdowns or
commissions and may not necessarily represent actual transactions.
At December 31, 1999, the Company's Common Stock was quoted on the OTC
Bulletin Board at a bid and asked price of $0.16 and $0.19, respectively.
Fiscal Year Ended December 31, 1997 High Bid Low Bid
- ----------------------------------- -------- -------
First Quarter $0.12 $0.08
Second Quarter $0.16 $0.08
Third Quarter $0.14 $0.08
Fourth Quarter $0.12 $0.07
Fiscal Year Ending December 31, 1998
- ------------------------------------
First Quarter $0.09 $0.06
Second Quarter $0.06 $0.03
Third Quarter $0.05 $0.02
Fourth Quarter $0.04 $0.01
Fiscal Year Ending December 31, 1999
- ------------------------------------
First Quarter $0.03 $0.01
Second Quarter $0.12 $0.02
Third Quarter $0.04 $0.01
Fourth Quarter $0.23 $0.03
Since its inception, the Company has not paid any dividends on its Common
Stock, and the Company does not anticipate that it will pay dividends in the
foreseeable future. At December 31, 1999, the Company had approximately 162
shareholders of record based on information provided by the Company's transfer
agent.
<PAGE>
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ITEM 5. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Plan of Operation
- -----------------
The Company began the year as a development stage company having exited in
1998 its businesses of operating as a manufacturer and marketer of specialty
pastas and breads to gourmet restaurants and wholesale food service
distributors and supermarkets. The classification as a development stage
company reflects the lack of current on-going operations. The Company actively
searched during 1999 for acquisitions to bring new operations and
opportunities. In the fourth quarter of 1999, the Company signed a Letter of
Intent agreement to acquire Vista Photographic and Video, Ltd.("Vista"), a
Dallas, Texas based limited partnership in the business of producing videos
for corporations and streaming video content on the Internet. The acquisition
of Vista was completed in early 2000 bring new operations to the Company. Due
to the lack of assets and available funds, the Company's audited financial
statements contain a "going concern" disclosure which places into question the
Company's ability to continue without substantial increases in revenue or
financing. See "Events Subsequent to the Company's Fiscal Year End" and
"Summary of Vista's Business" above.
The Company has financed the development of Vista's business operations by
selling shares of its common stock during January and February of 2000. The
Company received proceeds of $1,428,000 from the sale of its restricted common
shares in a private placement. The Company intends to sell additional shares
as needed to fund its growth.
Liquidity and Capital Resources
- -------------------------------
At December 31, 1999, the Company had total current assets of $ -0- and total
current liabilities of $112,662, resulting in a working capital deficit of
$(112,662), as opposed to current assets of $ 161 and total current
liabilities of $1,281,506 at December 31, 1998, resulting in a working capital
deficit of $(1,281,345).
During 1999, the Company issued 19,816,900 shares of its common stock for the
payment of $312,988 of outstanding debt and accounts payables. In addition, in
1999, the Company issued 13,750,000 shares for services valued at $275,000 or
$0.02 per share; 50,000,000 shares to an affiliate of the Company for the
assumption of $673,391 of debt associated with the Company's line of credit;
and 500,000 shares for the conversion of $55,667 in debt. While during 1998,
the Company issued no shares of common stock.
Management believes that new acquisitions of companies with current operations
can be successfully financed by third parties. The Company will continue to
seek other sources of financing. Due to the Company's financial condition it
does not anticipate receiving substantial, if any, debt financing.
Results of Operations
- ---------------------
The Company experienced a net loss from discontinued operations of $148,363
during fiscal year 1999, down from a net loss of $1,347,516 from discontinued
operations during fiscal year 1998. At December 31, 1999, the Company had an
accumulated deficit of $2,591,722 prior to its reclassification as a
development stage company, in large part attributed to losses prior to the
acquisitions of Dry Dairy and Lombardo's Pastaria, plus the operating losses
incurred by the Company during fiscal year 1995 and 1996. The Company has
incurred an accumulated deficit of $1,495,879 during it entered the
development stage operations.
<PAGE>
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ITEM 6. FINANCIAL STATEMENTS
The financial statements of the Company are set forth immediately following
the signature page to this form 10-KSB.
ITEM 7. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
The Company has had no disagreements with its certified public accountants
with respect to accounting practices or procedures or financial disclosure.
PART III
ITEM 8. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The following table sets forth as of December 31, 1999, the name, age, and
position of each executive officer and director and the term of office of each
director of the Company.
Name Age Position Director or Officer Since
---- --- -------- -------------------------
Robert L. Matzig 42 President & CEO December 1995
and Secretary
Biographical Information
- ------------------------
Set forth below is certain biographical information for each of the Company's
Officers and Directors:
Robert L. Matzig graduated from Texas Christian University, Fort Worth, Texas,
in 1979. Mr. Matzig began his professional career with Lacerte Software
Corporation, in direct sales of software products. He worked for three years
with Arthur Andersen & Co. managing a direct sales force selling software
products to nationwide tax professionals. He held similar positions with
Accountants Micro Systems, Inc. and SCS/Compute before joining Rosenthal
Collins Group in 1993 to work with client development and marketing programs
for commodity traders and managed accounts. Mr. Matzig joined the Company in
September 1995, and was appointed to the vacated position of President and
C.E.O. in December 1995.
Each director of the Company serves for a term of one year and until his
successor is elected at the Company's annual shareholders' meeting and is
qualified, subject to removal by the Company's shareholders. Each officer
serves, at the pleasure of the board of directors, for a term of one year and
until his successor is elected at the annual meeting of the board of directors
and is qualified.
Compliance with Section 16(a) of the Exchange Act
The Company is not subject to the requirements of Section 16(a) of the
Exchange Act.
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ITEM 9. EXECUTIVE COMPENSATION
The following tables set forth certain summary information concerning the
compensation paid or accrued for each of the Company's last three completed
fiscal years to the Company's or its principal subsidiaries chief executive
officer and each of its other executive officers that received compensation in
excess of $100,000 during such period (as determined at December 31, 1999, the
end of the Company's last completed fiscal year):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
Other Restricted
Name and Annual Stock Options LTIP All other
Principal Position Year Salary Bonus($) Compensation Awards /SARs Payout Compensation
- ------------------ ---- ------ -------- ------------ ------ ------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert L. Matzig 1999 $69,000 -0- -0- -0- -0- -0- -0-
President & CEO 1998 $20,000 -0- -0- -0- -0- -0- -0-
1997 $51,000 -0- -0- -0- -0- -0- -0-
</TABLE>
Employment Contracts and Termination of Employment and Changes in Control
Arrangements
- -------------------------------------------------------------------------
There are no compensatory plans or arrangements, including payments to be
received from the Company, with respect to any person named as a director,
executive officer, promoter or control person above which would in any way
result in payments to any such person because of his resignation, retirement,
or other termination of such person's employment with the Company or its
subsidiaries, or any change in control of the Company, or a change in the
person's responsibilities following a changing in control of the Company.
except as noted below:
Board Compensation
- ------------------
The Company's directors receive no compensation or cost reimbursement for
attendance at board meetings.
<PAGE>
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ITEM 10. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of December 31, 1999, the name and the
number of shares of the Company's Common Stock, par value $0.001 per share,
held of record or beneficially by each person who held of record, or was known
by the Company to own beneficially, more than 5% of the 129,562,588 issued and
outstanding shares of the Company's Common Stock, and the name and
shareholdings of each director and of all officers and directors as a group.
Security Ownership of Management of the Company
- -----------------------------------------------
Title
of Name and Position of Amount and Nature of Percentage
Class Officer and/or Director Beneficial Ownership(1) of Class
- ----- ----------------------- -------------------- ----------
Common Robert L. Matzig, Pres. & CEO D 50,000,000 38.59
All Officers and Directors
as a Group (1 person) D 50,000,000 38.59
(1) Indirect and Direct ownership are referenced by an "I" or "D",
respectively. All shares owned directly are owned beneficially and of record
and such shareholder has sole voting, investment, and dispositive power,
unless otherwise noted.
ITEM 11. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others
- ---------------------------------------
A shareholder of the Company had previously agreed to provide a line of credit
to the Company. The line of credit bears interest at 8% per annum on the
average monthly balance. The line of credit is due on demand and is unsecured.
The balance owed on the line of credit as of December 31, 1999 was $43,468. On
November 18, 1999, the President of the the Company and sole director
personally assumed $673,391 of the outstanding line of credit balance on that
date in exchange for receiving 50,000,000 shares of the Company's common
stock.
In December 1999, the Company sold all of its subsidiaries to a Texas
corporation in which the Company's president is a majority shareholder. See
"Note 6 - SALE OF SUBSIDIARIES" in the accompanying financial statements.
In February 2000, in connection with the completion of the acquisition of
Vista, the Company's president was issued 5,000,000 shares of the Company's
common stock as bonus compensation. See "Events Subsequent to the Company's
Fiscal Year End" and "Summary of Vista's Business" above.
Other than the transaction described above, for the periods indicted, there
were no material transactions, or series of similar transactions, since the
beginning of the Company's last fiscal year, or any currently proposed
transactions, or series of similar transactions, to which the Company was or
is to be party, in which the amount involved exceeds $60,000, and in which any
director or executive officer, or any security holder who is known by the
Company to own of record or beneficially more than 5% of any class of the
Company's common stock, or any member of the immediate family of any of the
foregoing persons, has an interest.
<PAGE>
<PAGE> 11
Indebtedness of Management
- --------------------------
There were no material transactions, or series of similar transactions, since
the beginning of the Company's last fiscal year, or any currently proposed
transactions, or series of similar transactions, to which the Company was or
is to be a party, in which the amount involved exceeds $60,000 and in which
any director or executive officer, or any security holder who is known to the
Company to own of record or beneficially more than 5% of any class of the
Company's common stock, or any member of the immediate family of any of the
foregoing persons, has an interest.
Transactions with Promoters
- ---------------------------
The Company was organized more than five years ago; hence transactions between
the Company and its promoters or founders are not deemed to be material.
<PAGE>
<PAGE> 12
ITEM 12. EXHIBITS AND REPORTS ON FORM 8-K
(a)(1)FINANCIAL STATEMENTS. The following financial statements are included
in this report:
Title of Document Page
- ----------------- ----
Independent Auditor's Report of Jones, Jensen & Company.................. 13
Consolidated Balance Sheet as of December 31, 1999....................... 14
Consolidated Statements of Operations for the years ended
December 31, 1999 and 1998............................................. 15
Consolidated Statements of Stockholders' Equity for the years
ended December 31, 1999 and 1998........................................ 16
Consolidated Statements of Cash Flows for the years ended
December 31, 1999 and 1998.............................................. 17
Notes to Consolidated Financial Statements............................... 18
(a)(2)FINANCIAL STATEMENT SCHEDULES. The following financial statement
schedules are included as part of this report:
None.
(a)(3)EXHIBITS. The following exhibits are included as part of this report:
SEC
Exhibit Reference
Number Number Title of Document Location
- ------- --------- ----------------- ------------
27 27 Financial Data Schedule This Filing
(b) Reports on Form 8-K. There were no reports on Form 8-K filed with the
Commission during the quarter ended December 31, 1999.
SIGNATURES
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 Registrant and in the capacities and on the dates indicated:
DRY DAIRY INTERNATIONAL, INC.
Date: April 24, 2000 By /S/ Robert L. Matzig, President and CEO
[Principal Executive and Financial Officer]
Date: April 24, 2000 By /S/ Christopher D. Curtis, Director
<PAGE>
<PAGE> 13
INDEPENDENT AUDITOR'S REPORT
The Board of Directors
Dryden Industries, Inc. and Subsidiaries
(A Development Stage Company)
Dallas, Texas
We have audited the accompanying consolidated balance sheets of Dryden
Industries, Inc. and Subsidiaries as of December 31, 1999 and the related
consolidated statements of operations, stockholders' equity (deficit), and
cash flows for the years ended December 31, 1999 and 1998 and from inception
of the development stage on January 1, 1998 through December 31, 1999. These
consolidated 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 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Dryden Industries, Inc. and Subsidiaries (formerly Dry Dairy International,
Inc. and Subsidiaries)(a development stage company) as of December 31, 1999
and the consolidated results of their operations and their cash flows for the
years ended December 31, 1999 and 1998 and from inception of the development
stage on January 1, 1998 through December 31, 1999 in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 3 to the financial
statements, the Company has suffered recurring losses from operations and has
limited operating capital which together raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 3. The consolidated financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/S/ JONES, JENSEN & COMPANY
Salt Lake City, Utah
April 21, 2000
<PAGE>
<PAGE> 14
DRYDEN INDUSTRIES, INC. AND SUBSIDIARIES
(Formerly Dry Dairy International, Inc. and Subsidiaries)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31,
1999
------------
[S] [C]
CURRENT ASSETS:
Cash $ -
---------
Total Current Assets -
---------
TOTAL ASSETS $ -
===========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Cash overdraft $ 11,731
Accounts payable 7,463
Payable - related party (Note 6) 50,000
Line of credit - related party (Note 5) 43,468
---------
Total Current Liabilities 112,662
---------
TOTAL LIABILITIES 112,662
---------
STOCKHOLDERS' EQUITY (DEFICIT)
Stock authorized 150,000,000 shares at $0.001
par value; 129,562,588 shares issued and
outstanding 129,563
Additional paid-in capital 3,845,376
Accumulated deficit prior to the
development stage (2,591,722)
Accumulated deficit from the inception
of the development stage (1,495,879)
---------
Total Stockholders' Equity (Deficit) ( 112,662)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) $ -
==========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 15
DRYDEN INDUSTRIES, INC. AND SUBSIDIARIES
(Formerly Dry Dairy International, Inc. and Subsidiaries)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
From
Inception of the
Development Stage
On January 1,
For the Years Ended 1998 Through
December 31, December 31,
------------------------------------------------
1999 1998 1999
------------ ------------ -----------
REVENUES $ - $ - $ -
EXPENSES - - -
------------ ------------ ------------
LOSS FROM CONTINUING
OPERATIONS - - -
------------ ------------ ------------
LOSS FROM DISCONTINUED
OPERATIONS (379,711) (1,347,516) (1,727,227)
GAIN ON DISCONTINUED
OPERATIONS 231,348 - 231,348
------------ ------------- ------------
NET (LOSS) $ (148,363) $ (1,347,516) $(1,495,879)
============ ============ ===========
BASIC (LOSS)PER SHARE -
DISCONTINUED OPERATIONS $ (0.00) $ (0.03)
============ ============
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 58,215,597 45,995,688
============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 16
DRYDEN INDUSTRIES, INC. AND SUBSIDIARIES
(Formerly Dry Dairy International, Inc. and Subsidiaries)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
---------- --------- --------- -----------
<S> <C> <C> <C> <C>
Balance, December 31, 1997 45,995,688 $ 45,996 $2,611,897 $(2,591,722)
Net loss for year ended December 31, 1998 - - - (1,277,516)
---------- ---------- ---------- -----------
Balance, December 31, 1998 45,995,688 $ 45,996 $2,611,897 $(3,869,238)
Common stock issued for payables at
approximately $0.02 per share 19,816,900 19,817 293,171 -
Common stock issued for services at $0.02 per share 13,750,000 13,750 261,250 -
Common stock issued for assuming debt of the Company 50,000,000 50,000 623,391 -
Common stock canceled (500,000) (500) 500 -
Common stock issued to convert debt at approximately
$0.11 per share 500,000 500 55,167 -
Net loss for the year ended December 31, 1999 - - - (148,363)
Balance, December 31, 1999 129,562,588 129,563 3,845,376 $(4,087,601)
============ ========= ========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
<PAGE>
<PAGE> 17
DRYDEN INDUSTRIES, INC. AND SUBSIDIARIES
(Formerly Dry Dairy International, Inc. and Subsidiaries)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
From
Inception of the
Development Stage
On January 1,
For the Years Ended 1998 Through
December 31, December 31,
----------------------------------------------
1999 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (148,363) $(1,347,516) $(1,495,879)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Shares issued for services 275,000 - 275,000
Gain on sale of subsidiaries (Note 6) (231,348) - (231,348)
Loss on discontinued operations - 851,596 851,596
Changes in operating assets and liabilities:
Increase (decrease) in accounts payable and other
current payables 22,194 173,655 195,849
---------- ----------- -----------
Net Cash Used by Operating Activities (82,517) (322,265) (404,782)
---------- ----------- -----------
INVESTING ACTIVITIES: - - -
---------- ----------- -----------
FINANCING ACTIVITIES:
Proceeds from notes and line of credit
payable-related 82,356 330,419 412,775
Repayment of notes payable - (7,993) (7,993)
---------- ----------- ----------
Net Cash Provided by Financing Activities 82,356 322,426 404,782
---------- ----------- ----------
INCREASE (DECREASE) IN CASH (161) 161 -
CASH AT BEGINNING OF PERIOD 161 - -
---------- ----------- ----------
CASH AT END OF PERIOD $ - $ 161 $ -
========== =========== ==========
SUPPLEMENTAL CASH FLOWS INFORMATION:
Cash paid for:
Interest $ - $ - $ -
Income Taxes $ - $ - $ -
NON CASH FINANCING ACTIVITIES:
Common stock issued for payables $ 312,988 $ - $ 312,988
Common stock issued to convert debt $ 729,058 $ - $ 729,058
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 18
DRYDEN INDUSTRIES, INC. AND SUBSIDIARIES
(Formerly Dry Dairy International, Inc. and Subsidiaries)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
NOTE 1 - ORGANIZATION
Dryden International, Inc. (formerly Dry Dairy International, Inc.) (the
Company) was incorporated under the laws of the State of Utah on March 6,
1987. The Company was organized for the purpose of providing a vehicle which
could be used to raise capital and seek business opportunities believed to
hold a potential for profit. The Company has been reclassified as a
development stage company per SFAS No. 7, as of January 1, 1998. On June 11,
1999, the Company changed its name to Dryden Industries, Inc. and increased
the authorized number of shares from 50,000,000 to 150,000,000.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's consolidated financial statements are prepared using the accrual
method of accounting. The Company has elected a calendar year end.
b. Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments with maturities
of three months or less at the time of acquisition.
c. Basic Loss Per Share
Basic loss per common share has been calculated based on the weighted average
number of shares of common stock outstanding during the period.
December 31
------------------------
1999 1998
------------------------------
Numerator - loss $ (148,363) $ (1,347,516)
Denominator - weighted average
number of shares outstanding 58,215,597 45,995,688
----------- --------------
Loss per share $ (0.00) $ (0.03)
d. Provision for Taxes on Income
At December 31, 1998, the Company had net operating loss carryforwards of
approximately $4,000,000 that may be offset against future taxable income
through the year 2019. No tax benefit has been reported in the financial
statements, as the Company believes there is a 50% or greater chance the
carryforwards will expire unused. Accordingly, the potential tax benefits of
the loss carryforwards are offset by a valuation account of the same amount.
e. Principles of Consolidation
The accompanying financial statements include the accounts of Drydent
Industries, Inc. (formerly Dry Dairy International, Inc.) and its wholly-owned
<PAGE>
<PAGE> 19
DRYDEN INDUSTRIES, INC. AND SUBSIDIARIES
(Formerly Dry Dairy International, Inc. and Subsidiaries)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
subsidiairies Lombardo's Pastaria, Inc. (Lombardo), NGU Distribution, Inc.
(NGU) and Tulip Bakery, Inc. (Tulip). All significant intercompany
transactions have been eliminated. These subsidiaries were all sold off on
December 30, 1999 (see Note 6).
f. 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 statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
g. Change in Accounting Principles
In June 1998, The FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which requires companies to record
derivatives as assets or liabilities, measured at fair market value. Gains or
losses resulting from changes in the values of those derivatives would be
accounted for depending on the use of the derivative and whether is qualifies
for hedge accounting. The key criterion for hedge accounting is that the
hedging relationship must be highly effective in achieving offsetting changes
in fair market value or cash flows. SFAS No. 133 is effective for all fiscal
quarters of fiscal years beginning after June 15, 1999. Management believes
the adoption of this statement will have no material impact on the Company's
financial statements.
h. Revenue Recognition
The Company currently has no source of revenues. Revenue recognition policies
will be determined when principal operations begin.
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. However, the Company has no cash and has experienced losses from
inception. The Company has also discontinued the operations of its 3
operating subsidiaries.
Management intends to merge with an operating company and to complete
additional debt and equity offerings to meet the cash flow needs of the
Company (see Note 8).
NOTE 4 STOCK TRANSACTIONS
During the year ended 1997, the Company issued 6,600,000 shares for cash at
the average price of $0.07 per share for net proceeds of $475,800. The
Company also issued 500,000 shares for the payment of rent valued at $51,000.
In April 1997, the Company issued 2,800,000 shares of stock to acquire the
assets of Tulip Pita Bread Center II. The net assets were valued at $250,000,
which approximates the predecessor cost to the seller.
<PAGE>
<PAGE> 20
DRYDEN INDUSTRIES, INC. AND SUBSIDIARIES
(Formerly Dry Dairy International, Inc. and Subsidiaries)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
NOTE 5 - LINE OF CREDIT - RELATED PARTY
A shareholder of the Company has agreed to provide a line of credit to the
Company. The line of credit bears interest at 8% per annum on the average
monthly balance. The line of credit is due on demand and is unsecured. The
balance owed on the line of, including interest, was $43,468. On November 18,
1999, the President of the Company personally assumed $673,391 of the line of
credit in exchange for receiving 50,000,000 shares of the Company's common
stock.
NOTE 6 SALE OF SUBSIDIARIES
On December 30, 1999, the Company sold all of its subsidiaries, Lombardo, NGU
and Tulip to a related company. The buyer purchased all assets and assumed
all present and future liabilities of the companies. The Company was required
to pay $50,000 cash as part of the agreement and this liability is included in
the accompanying balance sheet under payable - related party. The Company
recorded a gain o the sale of $231,348 as a result of the buyer assuming all
liabilities of the subsidiaries.
[the remainder of this page is intentionally left blank]
<PAGE>
<PAGE> 21
DRYDEN INDUSTRIES, INC. AND SUBSIDIARIES
(Formerly Dry Dairy International, Inc. and Subsidiaries)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 7 - LOSS FROM DISCONTINUED OPERATIONS
On February 26, 1998, the Board of Directors of the Company decided to
discontinue the operations of Tulip and NGU, and on May 29, 1998, the Company
decided to discontinue the operations of Lombardo's due to a lack of funding
and increased losses. The following is a summary of the loss of discontinued
operations.
From
Inception of the
Development Stage
On January 1,
For the Years Ended 1998 Through
December 31, December 31,
--------------------------- ---------------
1999 1998 1999
----------- ----------- ------------
NET REVENUES $ - $ 601,722 $ 601,722
COST OF PRODUCT SOLD 377,150 377,150
----------- ---------- -----------
Gross Profit 224,572 224,572
----------- ---------- -----------
EXPENSES
Selling, general and
Administrative 324,355 1,343,030 1,667,385
Depreciation 84,000 84,000
---------- ---------- ----------
Total Expenses 324,355 1,427,030 1,751,385
---------- ---------- ----------
LOSS FROM OPERATIONS (324,355) (1,202,458) (1,526,823)
----------- ---------- ----------
OTHER INCOME (EXPENSE)
Other income (expense) - (96,182) (96,182)
Interest expense (55,356) (48,876) (104,323)
----------- ----------- ----------
Total Other Income
(Expense) (55,356) (145,058) (200,414)
----------- ----------- ----------
LOSS BEFORE INCOME TAX
EXPENSE (379,711) (1,347,516) (1,727,227)
INCOME TAX EXPENSE - - -
----------- ---------- ----------
NET LOSS $ (379,711) $ (1,347,516) (1,727,227)
=========== ========== ==========
BASIC LOSS PER SHARE OF
COMMON STOCK $ (0.00) $ (0.03)
=========== ==========
<PAGE> 22
DRYDEN INDUSTRIES, INC. AND SUBSIDIARIES
(Formerly Dry Dairy International, Inc. and Subsidiaries)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 8 - SUBSEQUENT EVENT
Purchase of Vista
- -----------------
On January 3, 2000, the Company completed a contribution agreement whereby
Dryden issued 46,630,863 shares of its common stock in exchange for each of
the partners entire respective ownership interest in Vista Photographic and
Video Group, Ltd. (Vista). The shares issued by the Company represented
approximately 25% of the total shares of the Company's common stock issued and
outstanding immediately following the acquisition. The acquisition is
accounted for as a purchase of Vista.
Consolidated Proforma Statement of Operations
- ---------------------------------------------
The historical information contained herein has been consolidated on a
proforma basis. The purchase of Vista on January 3, 2000 is described above.
The purchase has been presented as though it were effective January 1, 1999.
All significant accounting policies for Vista are the same as the Company's as
defined in Note 1. The purchase resulted in goodwill of $9,346,740 which is
being amortized over a period of fifteen years.
For the Year Ended
December 31, 1999
-----------------------------------------------
Proforma Proforma
Dryden Vista Adjustments Combined
---------- --------- ------------ -----------
Revenues $ - $ 327,188 - $ 372,188
Cost of products sold - 174,238 - 174,238
---------- --------- ------------ ----------
Gross Margin - 197,950 - 197,950
---------- --------- ------------ ----------
Rent - 19,200 - 19,200
Depreciation and
Amortization - 28,080 623,116 651,196
General and administrative 324,355 218,149 - 542,504
----------- --------- ------------ ----------
Total Operating Expenses 324,355 265,429 623,116 1,212,900
----------- --------- ------------ ----------
Operating Loss (324,355) (67,479) (623,116) (1,014,950)
----------- --------- ------------ ----------
Gain on sale of
subsidiaries 231,348 - - 231,348
Interest expense (55,356) (27,752) - (83,108)
----------- --------- ------------ ----------
Total Other Income
(Expense) 175,992 (27,752) - 148,240
----------- --------- ------------ ----------
Net Loss $ 148,363 $ (95,231) $ (623,116) $ (866,710)
=========== ========= ============ ==========
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 112,662
<BONDS> 0
0
0
<COMMON> 3,974,939
<OTHER-SE> (4,087,601)
<TOTAL-LIABILITY-AND-EQUITY> (112,662)
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> (148,363)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (148,363)
<EPS-BASIC> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
