SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
/ X / ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
For the Fiscal Year Ended March 31, 1997
Commission File #33-18521-NY
DAVIN ENTERPRISES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 11-2854355
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
240 Clarkson Avenue, Brooklyn, NY 11226
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, Including Area Code 718-469-3132
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
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 and Exchange Act of 1934 during the preceding twelve
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 ninety days. Yes / X / No / /.
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K 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. / /
The aggregate market value of the voting stock held by non-
affiliates of the registrant is $8915 at June 23, 1997. Common
Stock $.0001 par value.
The Number of Shares Outstanding of the Registrant at June 23, 1997
was 1,937,452.
Part 1. Financial Information
Item 1. Business.
Davin Enterprises, Inc. ("The Registrant") is a development
stage company which was incorporated on April 8, 1987. The
Registrant has no predecessors and has no history prior to its date
of organization. The proposed business of the Company is to
provide a mechanism to take advantage of business opportunities
which management believes arise from time to time. It is believed
that the Company's ability to take advantage of some business
opportunities is enhanced by its status as a small, publicly held
entity with liquid assets which could be deployed quickly to
investigate, acquire an interest in and devote to business
operations, product development, asset acquisition of other
opportunities.
On April 21, 1988, the Registrant concluded an agreement with
Target Vision, Inc. ("TVI") for the merger of TVI with the
Registrant. In conjunction with the merger agreement, the Company
loaned TVI $685,078.08. Subsequently, litigation ensued relating
to the note which was settled on June 28, 1991. Pursuant to the
agreement, on July 31, 1991, the Registrant converted $685,078 of
debt into 2,883,333 shares of TVI common stock, representing
approximately 9.1% of the outstanding shares of TVI, with a
potential dilution to 8.7% if additional shares are issued.
For the year ended September 30, 1996, TVI generated net
revenues of $8,616,999 and net income of $797,050. At September
30, 1996, TVI had total assets of $4,684,632, and stockholders'
equity of $1,176,821. The figures already mentioned for the year
ended September 30, 1996 and the balance sheet figures at September
30, 1996 were audited. TVI's primary product is a computer based
business television that is used in a variety of environments as a
communication vehicle. Its dominant application is in industry,
where communicators use the product as an employee communication
tool. Its system combines television with the technology of
computers to allow for immediate updating and dissemination of
information.
With the termination of the proposed merger, the Registrant
began seeking out additional appropriate business opportunities.
To date, no such opportunities have been available.
Item 2. Properties
As of March 31, 1997, the Registrant owned no property.
Item 3. Legal Proceedings
The President and Secretary-Treasurer of the Registrant have
been included as defendants in a class action entitled "Barker et.
al v. Power Securities Corp., et. al" in the Western District of
New York which commenced in February 1989. The Registrant is not
a defendant in the above titled class action. The complaint
alleges violations of the securities laws, in trading certain
securities including those of the Company and its affiliated
company, Daine Industries Inc., by all of the defendants. Certain
officers and directors of the Company who are also officers and
directors of Daine Industries Inc., deny the allegations and
believe the suit to be without merit. The alleged violations refer
to Section 10b and Rule 10b-5 of the Securities and Exchange Act of
1934. The Registrant has undertaken to advance any expenses
necessary and incurred by the officers and directors in the
litigation subject to an undertaking by such officer and director
to repay the advances if it be ultimately determined that the
officer or director is not entitled to be indemnified. At this
date, expenses are not material. Discovery as it relates to the
Registrant's officers is in its early stages and no activity has
occurred for the past few years. In the event that the plaintiffs
were to prevail against the officers and directors and a judgment
was issued against them, this may have a material adverse effect on
the Registrant's future financial condition.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholders Matters.
For the year ended March 31, 1996, there was no reported bid
price for the common stock of the Registrant's shares and there
were no pink sheet market makers for the Registrant's common stock.
As reported by Yahoo Finance, for the 52 week period ended June 23,
1997, the shares were quoted at a range of $.01 - .53125. The last
traded was at June 9, 1997 at a price of $.02. The bid price on
June 23, 1997 was $.01. The prices reflect the reverse stock split
effective May 29, 1996.
Number of shareholders - 1220 (as of June 20, 1997).
Dividends - The Company has not paid any dividends since its
inception and presently anticipates that all earnings, if any, will
be retained for development and expansion of the Company's
business, and that no dividends on the Common Stock will be
declared in the foreseeable future.
On May 29, 1996, the Registrant declared a reverse stock
split. The Registrant effected a one(1) for one hundred(100)
reverse split and reduced the number of authorized shares from
250,000,000 to 50,000,000.
Item 6. Selected Financial Data
For The Year Ended March 31,
1997 1996 1995 1994 1993
Interest Income $ 2,442 $ 4,131 $ 4,390 $ 3,806 $ 4,017
Net Profit (Loss) 193,505 (254,657) (16,623) (21,616) (29,060)
Net Income (Loss)
Per Share $.10 $(.13) $(.01) $(.01) $(.01)
Total Assets 732,095 537,057 791,714 808,337 829,203
Long Term Debt -0- -0- -0- -0- -0-
Item 7. Management's Discussion And Analysis of Financial
Condition and Results of Operations.
During the year ended March 31, 1997, the Registrant generated
a net income of $193,505 which was principally attributed to a
revaluation $235,078 of the Registrant's investment in Target
Vision Inc. back to cost of $685,078. General and administrative
expenses for the year ended March 31, 1997 amounted to $43,282
which was offset by interest income of $2,442. The increase in
general and administrative expenses is principally due to the
Registrant's reverse stock split effected in May of 1996. The
Registrant also generated franchise tax expenses of $733. Included
in the $43,282 of general and administrative expenses were
management fees of $9,600, paid to a company in which certain
officers and directors of the Registrant are majority shareholders.
No salaries have been paid to the officers and directors of the
Registrant since inception. Services to the Registrant such as
administrative, bookkeeping and clerical are provided for through
the management fee compensation arrangement. The Registrant's
management has determined that considerable monetary savings can be
achieved through such an arrangement as compared to hiring the
additional personnel needed to perform the comparable
administrative, clerical and bookkeeping services. At March 31,
1997, the Registrant had total assets of $732,095, consisting of
cash $45,717, Investment - Target Vision, Inc. $685,078, and other
assets of $1,300 and total liabilities of $2,283.
During the year ended March 31, 1996, the Registrant generated a
loss of $254,657, which was principally attributed to a writedown
in its investment in Target Vision, Inc. General and
administrative expenses for the year ended March 31, 1996 amounted
to $23,450 which was offset by interest income of $4,131. The
Registrant also generated franchise tax expenses of $260.
During the year ended March 31, 1995, the Registrant generated
a loss of $16,623, which was principally attributed to professional
fees, amounting to $20,153 (primarily professional fees of $8,327).
Other general and administrative expenses for the year ended March
31, 1995 amounted to $11,826 which was offset by interest income of
$4,390. The Registrant also generated a franchise tax expense of
$860. The Registrant has sufficient funds to pay for anticipated
expenditures for fiscal year ended March 31, 1998. There are no
plans at this time for material capital expenditures for the fiscal
year ended March 31, 1998.
Item 8. Financial Statements and Supplementary Data
Attached and listed in Item 14.
Item 9. Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The executive officers and directors of the Company are as
follows:
Age Term Expires
Arthur Seidenfeld 46 President and Director Next annual meeting
Anne Seidenfeld 84 Secretary-Treasurer
and Director Next annual
meeting
Gerald Kaufman 56 Director Next annual meeting
Each of the above named individuals has served the Company in
the capacity indicated since its formation on April 8, 1987 with
the exception of Anne Seidenfeld who became secretary of the
Company during December 1989 and Gerald Kaufman who became a
director during 1990.
Arthur Seidenfeld, President and Director was awarded a B.S.
Degree in Accounting from New York University in 1972 and an M.B.A.
in Finance in 1978 from Pace University. He is founder and
President of American Israel Ventures Corporation, a private
company which was registered as an advisory firm under the
Investment Advisory Act of 1940 from 1972 (except for a two year
period from August 1979 to January 1981 when such registration was
voluntarily withdrawn as the firm did not carry on investment
advisory operations) until November 1988, when its registration was
voluntarily withdrawn as the firm terminated its investment
advisory operations. American Israel Ventures Corp. is still in
business.
He has also served as President and Director of Modern
Technology Corp., a company which shares are publicly traded and a
principal shareholder of the Company since 1983. Mr. Seidenfeld is
also President and a Director of Daine Industries, Inc., a "blind
pool' company that went public in March 1988 and in February 1990
became engaged in the manufacture and sale of wiring devices,
through the acquisition of the business and assets of Lite King
Corporation. Mr. Seidenfeld is also President of Lite King Corp.,
a wholly owned subsidiary of Daine Industries, Inc., and Coral
Development Corp., a fully reporting company.
Anne Seidenfeld, Secretary-Treasurer and Director, received
her diploma from Washington Irving High School, New York City, in
1931. From 1972 to 1978 she was a partner in M. Seidenfeld and
Son, a retail concern. From 1972 to the present she has served as
Secretary and Treasurer of American Israel Ventures Crop. Mrs.
Seidenfeld is the Treasurer-Secretary of Modern Technology Corp.
and Daine Industries, Inc. and is secretary-treasurer of Lite King
Corp. She is also Treasurer-Secretary and a Director of Coral
Development Corp., a fully reporting company.
Gerald Kaufman, Director, has been a practicing attorney for
the past thirty years. He has served as a director of the
Registrant, along with being a director of Modern Technology Corp.
and Daine Industries Inc. since November 1990. He has also been a
director of American Mayflower Life Insurance Co. since 1973.
Arthur Seidenfeld is the son of Anne Seidenfeld.
Item 11. Management - Executive Compensation
The officers of the Company did not receive salaries from the
Company during the year ended March 31, 1996. Modern Technology
Corp., a principal shareholder received a monthly management fee of
$1,666 through June 30, 1991. As of July 1, 1991, Modern
Technology Corp. agreed to receive $800 per month for the services
provided.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
a. The following are known to Registrant to be beneficial owners
of 5% or more of the Company's common stock.
Title of Class
Common Stock
Name of Beneficial Owner Amount & Percentage
Nature of of Class
Beneficial
Ownership
Arthur Seidenfeld
461 Beach 124 Street
Belle Harbor, NY 540,910 27.9%
Modern Technology Corp.
461 Beach 124 Street
Belle Harbor, NY 501,000 25.9%
b. The shares owned by management are as follows:
Common Stock.
Arthur Seidenfeld 540,910 27.9%
Anne Seidenfeld 4,000 0.2%
Gerald Kaufman 30,000 1.5%
Item 13. Certain Relationships and Related Transactions.
The Company presently utilized office space of Modern
Technology Corp. Modern Technology Corp. receives a monthly
management fee of $800. Arthur Seidenfeld and Anne Seidenfeld are
president and secretary-treasurer respectively of Modern Technology
Corp. and also own 47% and approximately 12% respectively of Modern
Technology Corp. During the fiscal year ended March 31, 1997,
Modern Technology Corp. has received management fees in the amount
of $9,600.
Item 14. Exhibits, Financial Statement Schedules, and Report on
Form 8-K.
a) Financial Statements and Financial Statement Schedules.
1 - Financial Statements filed with this form 10-K include:
Balance Sheet as of March 31, 1997 and 1996.
Statement of Operations for the twelve months ended March 31,
1997, 1996 and 1995.
Statement of Cash Flows for the twelve months ended March 31,
1997, 1996 and 1995.
Statement of Stockholders Equity for the Period April 8, 1987
(inception) to March 31, 1997.
Notes to Financial Statements.
Schedules:
None.
Schedules are not submitted, because the information is
included elsewhere in the financial statements or the notes
thereto, or the conditions requiring the filing of these schedules
are not applicable.
(c) Exhibits- (1) Articles of Incorporation*. (2) By Laws*.
(3) Exhibit 27 - Financial Data Schedule
*Incorporated by reference to Registration Statement #33-14521-NY.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto duly
authorized.
DAVIN ENTERPRISES, INC.
BY: Arthur Seidenfeld
President
Dated: June 24, 1997
Pursuant to the requirements of the Securities Act of 1934,
this report has been signed below by the following persons on
behalf of the registrant and the capacities and on the date
indicated.
Name Signature Title Date
Arthur Seidenfeld President and Director
Chief Executive and
Financial Officer June 24, 1997
Anne Seidenfeld Secretary-Treasurer
and Director June 24, 1997
Gerald Kaufman Director June 24, 1997
Supplemental Information to be Furnished With Reports Filed
Pursuant to Section 15(d) of the Act by Registrant Which Have Not
Registered Securities Pursuant to Section 12 of the Act:
d) No annual report or proxy material for the year ended March 31,
1997 has been sent to securities holders. If such report or proxy
material is furnished to securities holders subsequent to the
filing of this report, copies shall be furnished to the Commission
when sent to securities holders.
DAVIN ENTERPRISES, INC.
FINANCIAL STATEMENTS
MARCH 31, 1997 AND 1996
I N D E X
Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 1
BALANCE SHEETS 2
STATEMENTS OF STOCKHOLDERS' EQUITY 3-4
STATEMENTS OF OPERATIONS 5
STATEMENTS OF CASH FLOWS 6
NOTES TO THE FINANCIAL STATEMENTS 7-9
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders
DAVIN ENTERPRISES, INC.
Brooklyn, New York 11226
We have audited the accompanying balance sheets of DAVIN
ENTERPRISES, INC. (A Development Stage Enterprise) as of March 31,
1997 and 1996 and the related statements of operations,
stockholders' equity and cash flows for the three years ended March
31, 1997. 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 audit.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statements presentation. We believe that our audit
provides 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 DAVIN
ENTERPRISES, INC. as of March 31, 1997 and 1996, and the results of
its operations and its cash flows for the three years ended March
31, 1997, in conformity with generally accepted accounting
principles.
GREENBERG & COMPANY, LLC
Springfield, New Jersey
June 17, 1997
Page 1 of 9
DAVIN ENTERPRISES, INC.
(A Developement Stage Enterprise)
BALANCE SHEETS
March 31,
1997 1996
A S S E T S
CURRENT ASSETS
Cash and Cash Equivalents $ 45,717 $ 80,757
OTHER ASSETS
Deferred Acquisition Fees (Note 4) -0- 5,000
Organization Costs 1,300 1,300
Investment - Target Vision, Inc.
- (Note 3) 685,078 450,000
686,378 456,300
TOTAL ASSETS $ 732,095 $ 537,057
L I A B I L I T I E S A N D S T O C K H O L D E R S' E Q U I T Y
CURRENT LIABILITIES
Accrued Taxes and Expenses $ 2,283 $ 750
Contingencies (Note 7)
STOCKHOLDERS' EQUITY
Common Stock (Par Value $.0001)
50,000,000 Shares Authorized
1,937,452 Shares Issued and
Outstanding 194 194
Paid-In Capital In Excess Of
Par Value 1,072,526 1,072,526
(Deficit) Accumulated During
Development Stage (342,908) (536,413)
729,812 536,307
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 732,095 $ 537,057
The accompanying notes are an integral part of these financial
statements.
Page 2 of 9
DAVIN ENTERPRISES, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
For The Period April 8, 1987 (Inception) to March 31, 1997
# of $.0001 Paid In Deficit Total
Shares Par Value Capital Accumulated Stock-
During Holders'
Development Equity
Stage
Initial Investment
in Capital
Stock 1,600,000 $160 $ 426,220 $426,380
Warrants
Exercised 222,550 22 475,078 475,100
Offering Costs (68,705) (68,705)
Loss for the Period
April 8, 1987
(Inception) to
March 31, 1988 $ (13,113) (13,113)
BALANCES -
APRIL 1, 1988 1,822,550 182 832,593 (13,113) 819,662
Warrants
Exercised 114,902 12 239,933 239,945
Loss for the
Year Ended
March 31, 1989 (60,555) (60,555)
BALANCES -
MARCH 31, 1989 1,937,452 194 1,072,526 (73,668) 999,052
Loss for the
Year Ended
March 31, 1990 (73,354) (73,354)
BALANCES -
MARCH 31, 1990 1,937,452 194 1,072,526 (147,022) 925,698
Loss for the
Year Ended
March 31, 1991 (35,500) (35,500)
BALANCES -
MARCH 31, 1991 1,937,452 194 1,072,526 (182,522) 890,198
Loss for the
Year Ended
March 31, 1992 (31,935) (31,935)
BALANCES -
MARCH 31, 1992 1,937,452 194 1,072,526 (214,457) 858,263
The accompanying notes are an integral part of these financial statements.
Page 3 of 9
DAVIN ENTERPRISES, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
For The Period April 8, 1987 (Inception) to March 31, 1997
(Continued)
# of $.0001 Paid In Deficit Total
Shares Par Value Capital Accumulated Stock-
During Holders'
Development Equity
Stage
BALANCES -
MARCH 31, 1992 1,937,452 $194 $1,072,526 $(214,457) $858,263
Loss for the
Year Ended
March 31, 1993 (29,060) (29,060)
BALANCES -
MARCH 31, 1993 1,937,452 194 1,072,526 (243,517) 829,203
Loss for the
Year Ended
March 31, 1994 (21,616) (21,616)
BALANCES -
MARCH 31, 1994 1,937,452 194 1,072,526 (265,133) 807,587
Loss for the
Year Ended
March 31, 1995 (16,623) (16,623)
BALANCES -
MARCH 31, 1995 1,937,452 194 1,072,526 (281,756) 790,964
Loss for the
Year Ended
March 31, 1996 (254,657) (254,657)
BALANCES -
MARCH 31, 1996 1,937,452 194 1,072,526 (536,413) 536,307
Net Income for
the Year Ended
March 31, 1997 193,505 193,505
BALANCES -
MARCH 31, 1997 1,937,452 $194 $1,072,526 $(342,908) $729,812
The accompanying notes are an integral part of these financial statements.
Page 4 of 9
DAVIN ENTERPRISES, INC.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
For The Years Ended
March 31,
1997 1996 1995
Income $ -0- $ -0- $ -0-
General and Administrative
Expenses
Management Fees 9,600 9,600 9,600
Professional Fees 23,163 11,532 8,327
Investor Relations and
Research 5,962 1,722 1,867
Miscellaneous Expenses 4,557 596 359
(43,282) (23,450) (20,153)
Other Income
Interest Income 2,442 4,131 4,390
(Loss) Before Franchise Taxes
and Extraordinary Item (40,840) (19,319) (15,763)
Franchise Taxes (Note 6) 733 260 860
(Loss) Before Extraordinary Item (41,573) (19,579) (16,623)
Extraordinary Item
Unrealized (Loss) Appreciation
of Investment (Note 3) 235,078 (235,078) -0-
Net Income (Loss) $ 193,505 $(254,657) $ (16,623)
Net Income (Loss) Per Share $0.10 $(.13) $(.01)
Weighted Average Number
of Shares 1,937,452 1,937,452 1,937,452
Cumulative Amounts From Inception
Income $ -0-
Expenses (409,525)
Interest Income 92,032
(Loss) Before Franchise Taxes
and Extraordinary Item (317,493)
Franchise Taxes (25,415)
(Loss) Before Extraordinary Item (342,908)
Extraordinary Item -0-
(Loss) $(342,908)
The accompanying notes are an integral part of these financial statements.
Page 5 of 9
DAVIN ENTERPRISES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For The Years Ended Cumulative
March 31, Amounts From
1997 1996 1995 Inception
Cash Flows From Operating Activities:
Net Income (Loss) $ 193,505 $(254,657) $(16,623) $ (342,908)
(Increase) Decrease in
Other Assets 5,000 -0- -0- (1,300)
Increase (Decrease) in Accrued
Expenses and Taxes 1,533 -0- -0- 2,283
Net Cash Provided By (Used In)
Operating Activities 200,038 (254,657) (16,623) (341,925)
Funds Provided By (Used In)
Investing Activities:
Investment-Target Vision Inc. -0- -0- -0- (685,078)
Net Funds Provided By (Used In)
Investing Activities -0- -0- -0- (685,078)
Funds Provided By (Used In)
Financing Activities:
Proceeds From Issuance of
Common Stock and Warrants, Net
of Offering Costs of $68,705 -0- -0- -0- 1,072,720
Write (Up) Down of Investment (235,078) 235,078 -0- -0-
Net Funds Provided By (Used In)
Financing Activities (235,078) 235,078 -0- 1,072,720
Net Increase (Decrease) In Cash (35,040) (19,579) (16,623) 45,717
Cash and Cash Equivalents -
Beginning of Period 80,757 100,336 116,959 -0-
CASH AND CASH EQUIVALENTS -
END OF PERIOD $ 45,717 $ 80,757 $100,336 $ 45,717
Supplemental Cash Flow
Disclosure:
Income Taxes Paid $ -0- $ 260 $ 860 $ 24,682
Interest Paid -0- -0- -0- -0-
Disclosure of Accounting Policy:
Cash equivalents consist of highly liquid, short-term investments with
maturities of 90 days or less.
The accompanying notes are an integral part of these financial statements.
Page 6 of 9
DAVIN ENTERPRISES, INC.
(A Development Stage Enterprise)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
Note 1: ORGANIZATION AND NATURE OF OPERATIONS
Davin Enterprises, Inc. (Davin) was organized under the laws
of Delaware on April 8, 1987 to function initially as an
inactive publicly held corporation pursuing a combination with
a privately held business engaged in any area of business.
Davin is located in New York. Davin is considered a
Development Stage Enterprise as it has not begun any
commercial operation. Davin's principal assets are cash and
an investment in a private company.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL INFORMATION
Davin Enterprises, Inc. was organized under the laws of
Delaware on April 8, 1987 to function initially as an inactive
publicly held corporation pursuing a combination with a
privately held business engaged in any area of business.
Costs associated with its proposed initial public offering
have been charged directly to paid in capital in excess of par
value.
CASH
Cash equivalents consist of highly liquid, short-term
investments with maturities of 90 days or less.
INCOME TAXES
During 1993, the Company adopted Statement of Financial
Accounting Standards No. 109(SFAS 109), Accounting for Income
Taxes. SFAS 109 requires an asset and liability approach to
measuring deferred income taxes. Previous standards required
an income statement approach. The cumulative effect of this
change in the method of accounting for income taxes was not
material.
PREPARATION OF FINANCIAL STATEMENTS
Preparation of the Company's financial statements in
conformity with generally accepted accounting principles
requires the use of management's estimates, primarily related
to the fair values of investments. Accordingly, actual
results could differ from those estimates.
Note 3: INVESTMENT - TARGET VISION, INC., AT LOWER OF COST OR FAIR
VALUE
On April 21, 1988, the Company concluded an agreement with
Target Vision, Inc. ("TVI") for their merger, which agreement
was subsequently terminated.
Page 7 of 9
DAVIN ENTERPRISES, INC.
(A Development Stage Enterprise)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
(Continued)
As part of the merger agreement, the Company had agreed to
lend TVI up to $800,000 from the proceeds of Class "A" and
Class "B" warrants exercised. The Company advanced $685,078
to TVI. Subsequently, litigation ensued relating to the note
with TVI, which was settled on June 28, 1991.
Pursuant to the Company's receipt of 2,883,333 shares of TVI
common stock, representing approximately 9.1% of the
outstanding stock, the action was discontinued. The
implementation of the settlement agreement took place on July
31, 1991. Therefore, the loan receivable was reclassified to
an investment in common stock. The cost of this investment is
$685,078, which was the carrying amount of the loan.
EXTRAORDINARY ITEM
In the first quarter of fiscal year 1996 a sale of TVI stock
occurred. The sale was by an unrelated shareholder and
resulted in a complete liquidation of that stockholders
interest. The current financial statements reflect a $235,078
extraordinary write up of the Company's investment to reflect
management's estimate of fair value, as there currently is no
market for TVI stock. The fair value was estimated based
primarily on the financial condition and operating results of
TVI and not the single liquidation of a minority shareholder's
interest. Audited financial information of TVI for the year
ended September 30, 1996 follows:
Total Assets $4,684,632
Stockholders' Equity 1,176,821
Revenues 8,616,999
Net Income 797,050
Note 4: DEFERRED ACQUISITION COSTS
The Company retained a business brokerage firm ("BBF") to
locate business opportunities. A good faith non refundable
deposit was placed with the broker. The Company ceased using
the services of BBF, the good faith deposit was forfeited and
was charged to operations.
Note 5: RELATED PARTY TRANSACTIONS
The Company entered into an oral agreement with Modern
Technology Corp., a principal shareholder, to provide services
and the partial use of its office to the Company for the sum
of $800 per month since July 1, 1991. Arthur Seidenfeld,
president of the Company, is also president of Modern
Technology Corp.
Page 8 of 9
DAVIN ENTERPRISES, INC.
(A Development Stage Enterprise)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
(Continued)
Note 6: FRANCHISE TAX
Franchise taxes represent payment of New York State and New
York City taxes. No federal income tax was due as the Company
has generated a loss since inception. The Company has
available approximately $320,000 of Net Operating Loss (NOL)
carryforwards which can be used to offset future income.
These NOL's expire between the years 2003 and 2010. The tax
benefit relating to these NOL's has been fully reserved in the
valuation allowance account since the Company has never had
taxable income and the realization of these benefits is highly
uncertain.
Note 7: CONTINGENCIES
Certain officers and directors of the company have been
included as defendants in a class action entitled "Barker et
al v. Power Securities Corp., et al" in the Western District
of New York, which action alleges violations of the securities
laws, in trading certain securities including those of the
company and its affiliated company, Daine Industries Inc., by
all of the defendants. Certain officers and directors of the
company, who are also officers and directors of Daine
Industries Inc., deny the allegations and believe the suit to
be without merit. The alleged violations refer to Section 10b
and Rule 10b-5 of the Securities and Exchange Act of 1934.
Note 8: POSTRETIREMENT EMPLOYEE BENEFITS
The company does not have a policy to cover employees for any
health care or other welfare benefits that are incurred after
employment (postretirement). Therefore, no provision is
required under FAS'S 106 or 112.
Note 9: STOCK SPLIT
On May 29, 1996 the company declared a reverse stock split.
The company effected a one (1) for one hundred (100) reverse
split and reduced the number of authorized shares from
250,000,000 to 50,000,000. All share and per share amounts
presented in these financial statements have been adjusted to
reflect this reverse stock split on a retroactive basis.
Page 9 of 9
Our examination was made for the purpose of forming an opinion on
the basic financial statements taken as a whole. The information
contained in the following Schedules is presented for purposes of
additional analysis and is not a required part of the basic
financial statements, but is supplementary information required by
the Securities and Exchange Commission. Such information has been
subjected to the auditing procedures applied in the examination of
the basic financial statements and, in our opinion, is fairly
stated in all material respects the financial data required to be
set forth therein in relation to the basic financial statements
taken as a whole.
GREENBERG & COMPANY, LLC
Springfield, New Jersey
June 17, 1997
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