<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
/ / Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended June 30, 1996
-------------
/ / Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from _______________ to _______________
Commission file number 0-17772
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CORSAIRE SNOWBOARD, INC.
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(Exact Name of Small Business Issuer as Specified in Its Charter)
State of Delaware 55-067263
- ------------------------------------------- ---------------------------------
(State or Other Jurisdiction (I.R.S. Employer)
of Incorporation or Organization) Identification No.)
3838 Camino del Rio North, Suite 333, San Diego, California 92108
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(Address of Principal Executive Offices)
(619) 280-8000
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(Issuer's Telephone Number, Including Area Code)
N/A
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(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
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.
Yes X No
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APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes No
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APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 3,291,859
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Traditional Small Business Disclosure Format (check one):
Yes X No
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Total No. Of Pages 16
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CORSAIRE SNOWBOARD, INC.
TABLE OF CONTENTS
FORM 10-QSB
PAGE
----
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.................................................3
Balance Sheet for the Period Ended
June 30, 1996 (Unaudited)............................................4
Statement of Operations for the
6 Months Ended June 30, 1996 (Unaudited).............................5
Statements of Cash Flows for the 6
Months Ended June 30, 1996 (Unaudited).............................6-7
Statements of Changes in Shareholder's
Equity for the 6 Months Ended June 30, 1996
and the Year Ended 1995 (Unaudited)..................................8
Notes to Financial Statements for 6 Months Ended
June 30, 1996 and the Year Ended 1995 ............................9-13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION...................................................14
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS...................................................15
ITEM 2. CHANGES IN SECURITIES...............................................15
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.....................................15
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.................15
ITEM 5. OTHER INFORMATION...................................................15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K....................................15
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The accompanying unaudited financial statements have been
prepared in accordance with the instructions to Form 10-QSB in
conformity with generally accepted accounting principles and include
all information and footnotes necessary for a complete presentation
of financial position, results of operations, cash flows and
stockholders' equity.
Except as disclosed herein, there has been no material change
in the information disclosed in the notes to the financial
statements included in the Company's annual report in Form 10-KSB
for the year ended December 31, 1995.
In the opinion of Management, all adjustments considered
necessary for a fair presentation of the results of operations and
financial position have been included and all such adjustments are
of a normal recurring ature.
Operating results for the six months ended June 30, 1996 are
not necessarily indicative of the results that can be expected for
the year ending December 31, 1996.
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Corsaire Snowboard, Inc.
(Formerly Known as Acunet Corporation)
Balance Sheet
June 30, 1996
(Unaudited)
ASSETS
June 30, 1996 December 31, 1995
------------- -----------------
Current Assets
Cash in Bank $ 178 $ 178
Refundable deposit receivable 5,000 5,000
-------------- --------------
$ 5,178 $ 5,178
-------------- --------------
-------------- --------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 64,411 $ 137,062
-------------- --------------
Total current liabilites 64,411 137,062
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Stockholders' Equity
Common Stock, $.001 par value;
25,000,000 authorized; 3,291,859
and 3,189,900 outstanding in 1996 and
1995, respectively 3,292 3,190
Paid in capital 2,495,423 2,267,359
Prepaid stock-based officer compensation (131,250) (131,250)
Accumulated deficit (2,426,698) (2,271,183)
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Total shareholders' equity (59,233) (131,884)
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Total liabilities and
shareholders' equity $ 5,178 $ 5,178
-------------- --------------
-------------- --------------
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Corsaire Snowboard, Inc.
(Formerly Known as Acunet Corporation)
Statement of Operations
For the 6 Months Ended June 30, 1996
(Unaudited)
6 months ended For the Year
June 30, 1996 Ended 1995
--------------- -------------
Revenues $ 0 $ 0
--------------- -------------
Expenses:
Officer's compensation 0 93,750
Consulting services 95,000 1,929,250
Legal fees and expenses 60,515 244,460
Other general and administrative
expenses 0 3,723
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Total expenses 155,515 2,271,183
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Loss before provision for taxes (155,515) (2,271,183)
Provision for income taxes 0 0
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Net loss $ (155,515) $ (2,271,183)
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Corsaire Snowboard, Inc.
(Formerly Known as Acunet Corporation)
Statements of Cash Flows
For the 6 Months Ended June 30, 1996
(Unaudited)
6 months ended For the Year
June 30, 1996 Ended 1995
-------------- ------------
Cash flow used by operating activities:
Net loss $ (155,515) $ (2,271,183)
Adjustments to reconcile net loss to
net cash used by operating activities:
Issuance of common stock for
consulting and legal services and
satisfaction of amounts due officer 0 2,138,779
Changes in assets and liabilities:
Decrease in accounts payable (72,651) 137,062
Increase in organization costs 0 520
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Cash provided by operations (228,166) 5,178
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Cash flows used by investing activities:
Increase in refundable deposit 0 (5,000)
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Cash used by investing activities 0 (5,000)
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Cash flows provided from financing activities:
Proceeds from common stock 145 0
Proceeds from paid in capital 228,114 0
Used for common stock (43) 0
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Corsaire Snowboard, Inc.
(Formerly Known as Acunet Corporation)
Statement of Cash Flows (cont.)
For the 6 Months Ended June 30, 1996
(Unaudited)
Used for paid in capital (50) 0
---------- ----------
Net cash provided by financing 228,166 0
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Increase in cash 0 178
Cash - beginning of year 178 0
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Cash - end of year $ 178 $ 178
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Corsaire Snowboard, Inc.
(Formerly Known as Acunet Corporation)
Statements of Changes in Shareholder's Equity
For the 6 Months Ended June 30, 1996 and
the Year Ended 1995
(Unaudited)
<TABLE>
<CAPTION>
COMMON STOCK
----------------------
Number of Par Paid in Accumulated
Shares Value Capital Deficit
---------- --------- ---------- ------------
<S> <C> <C> <C> <C>
Balance, December 31, 1995 3,189,900 3,190 2,267,359 (2,271,183)
---------- --------- ---------- ------------
March, 1996 Stockholder paid
accounts payable and the debt of
the stockholder was forgiven 0 0 11,884 0
Net loss for March, 1996 0 0 0 (38,437)
---------- --------- ---------- ------------
Balance, March 31, 1996 3,189,900 $ 3,190 $2,279,423 $(2,309,620)
---------- --------- ---------- ------------
April, 1996 - issued for services 145,000 145 216,000 0
April, 1996 - cancelled shares (43,041) (43) 43 0
Net loss for June 0 0 0 (117,078)
---------- --------- ---------- ------------
Balance, June 30, 1996 3,291,859 $ 3,292 $2,495,423 $(2,426,698)
---------- --------- ---------- ------------
---------- --------- ---------- ------------
</TABLE>
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Corsaire Snowboard, Inc.
(Formerly Known as Acunet Corporation)
Notes to Financial Statements
For the 6 Months Ended June 30, 1996 and
the Year Ended 1995
1. COMPANY BACKGROUND
Corsaire Snowboard, Inc. (the Company or Corsaire) was incorporated in
Delaware in 1987 under the name Acunet Corporation. It became inactive
in 1990 and there are no corporate records or minutes available to
document the activities of the corporation until January 1994.
In January 1994, the Company was reorganized, and as part of the
reorganization, the Board of Directors appointed Mr. Paul L. Parshall,
President and Chief Executive Officer who in concert with his Company,
the Worthington Company, reestablished good standing with the State of
Delaware, and brought current the filings required by the
Securities and Exchange Commission. The Company is publicly traded and its
shares are quoted in the over-the-counter (bulletin board) market.
In March 1995, the Company elected a new President and began a review of
potential acquisitions. In contemplation of a likely merger, the
Company changed its name to Corsaire Snowboard, Inc. After a due
diligence review, the Company decided against the merger but retained the
name.
The Company's principal business purpose is the identification and
evaluation of prospective merger and acquisition opportunities.
2. SIGNIFICANT ACCOUNTING POLICIES
CURRENCY TRANSLATION
The accompanying financial statements are expressed in U.S. dollars. The
Company maintains an office and bank account in Vancouver, British
Columbia, Canada. Expenditures and obligations in Canadian currency
have been translated at the exchange rate prevailing when they were
incurred. Assets and liabilities at December 31, 1995, where
applicable, have been translated at the year-end exchange rate. There were
no significant exchange or translation gains or losses.
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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
VALUATION OF SHARES ISSUED FOR SERVICES
The Company accounts for stock-based compensation in accordance with SFAS
No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION.
INCOME TAXES
No provision for income taxes has been recorded since the Company has
operated at a loss. At December 31, 1995 and June 30, 1996 the Company
has a federal net operating loss carryover of $2,177,433 and $155,515,
respectively, which expires in 2010 and 2011, respectively. Any benefit
which may arise from the utilization of this carryover in future years
has not been recorded in the financial statements since its realization
is dependent on future profitable operations, which cannot be determined
at this time.
SHARE AND PER SHARE DATA
Net loss per share is determined by dividing Net loss by the weighted
average number of common shares outstanding during the year. See Notes
3, 4 and 7 regarding dilution and potential dilution of common shares.
CURRENT OPERATING LOSS
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplates
confirmation of the Company as a going concern. However, the Company has
sustained substantial operating losses in 1995.
In view of these matters, the ability of the Company to continue as a
going concern is dependent upon the Company's ability to raise capital
and the success of its future operations. Management believes that
actions presently being taken to raise capital to fund the Company's
operating and financial requirements and Management's commitment to fund
future operations if need be (Note 3), provide the opportunity for the
Company to continue as a going concern.
3. RELATED PARTY INFORMATION
STOCK ISSUANCE
In January 1994, the Worthington Company received 289,867 (adjusted for
reverse stock split, Note 2) shares of common stock in exchange for
payments of filing fees for the Company.
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3. RELATED PARTY INFORMATION (CONTINUED)
CONTRACT WITH COMPANY PRESIDENT
In March 1995, the Company entered into a two-year agreement with its
President. The agreement provides that he will assist the Company in the
identification and evaluation of prospective merger and acquisition
opportunities, and arrange for the financing of such acquisitions and/or
merger or acquisition is consummated.
In accordance with the agreement, the Company immediately issued 2,250,000
shares of Corsaire common stock to the President for work to be
performed in connection with the acquisition of two major companies.
Additionally, 1,000,000 shares of common stock will be issued for each
additional acquisition up to a maximum total issuance of 4,250,000 shares
of common stock.
The initial 2,250,000 shares issued to the President are considered by the
Board of Directors to be compensation for the period through May 30, 1997
and have been prorated and charged to expense accordingly. These shares
were issued pursuant to Regulation S of the Securities and Exchange
Commission (pertaining to offers and sales made outside the United States
by non United States investors) which requires a holding period of forty
days before they may be traded. These shares have been valued at $.10 per
share, the market value at the contract date. Additional share issuances
pursuant to this agreement will be accounted for at market value at the
date of the related acquisition, as a cost of the acquisition.
4. CONSULTING AND LEGAL SERVICES
In April, 1996, the Company issued common stock, which was registered with
the Securities and Exchange Commission on Form S-8 to various individuals,
including consultants and the company's General Counsel for legal services.
These shares have been valued at the bid price at date of issuance.
CONSULTING LEGAL FEES
SERVICES AND
---------- ---
EXPENSES
- --------
145,000 shares valued at fair
market value at date of issue $ 95,000 $ 50,000
Paid or accrued to others 0 0
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$ 95,000 $ 50,000
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5. PROVISION FOR INCOME TAXES
Deferred tax assets are comprised of the following:
JUNE 30, DECEMBER 31,
1996 1995
----------- -----------
Net operating loss carry forwards $ 52,875 $ 740,327
Deferred tax asset valuation allowance (52,875) (740,327)
----------- -----------
Net deferred tax assets $ 0 $ 0
----------- -----------
The deferred tax asset has been fully reserved by the valuation allowance
since its realization is dependent on future profitable operations, the
probability of which cannot be determined at this time.
Reconciliation of the federal statutory rate to the Company's effective tax
rate is as
follows:
JUNE 30, DECEMBER 31,
1996 1995
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US Federal Statutory rate of Tax 34.00% 34.00%
Operating losses with no current tax
benefit (2.00%) (2.00%)
---------- ------------
Effective tax rate 32.00% 32.00%
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The Company has available at December 31, 1995 and June 30, 1996, for
Federal income tax purposes approximately $2,177,433 and $155,515,
respectively, of unused operating loss carry forwards that may be applied
against future taxable income and which expire in 2010 and 2011,
respectively.
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6. SUBSEQUENT EVENTS
On August 19, 1996, the Company entered into an agreement which was amended
October 9, 1996, to acquire 75% (75 shares) of the outstanding common
shares of Mutual Exchange Canada, Inc. (MEC). The terms of the agreement
call for a non-refundable deposit of $50,000 U.S. upon execution of the
agreement. An additional payment of $450,000 U.S. will be made not later
than 30 days after the completion of the merger. Additional terms state
that within 30 days of the completion date of the merger, Corsaire must
obtain $500,000 U.S. financing through a private placement of Regulations S
shares in the Capital of Corsaire at a price of not less than $2.00 U.S.
per post split stock.
As of November 14, 1996, Mutual Exchange Canada, Inc. Has notified the
Company that it believes the agreement is no longer valid, due to
nonperformance of certain terms and conditions contained in the agreement.
The position of legal counsel and the Company is that there is no basis
for this assertion and the agreement is still valid.
Effective as of April 24, 1996, the Company entered into a settlement and
escrow agreement with a stockholder, whereby 43,041 of his shares of
common stock were canceled and the balance of 35,000 shares of common
stock were transferred to an escrow account. In accordance with the
escrow instructions, beginning May 15, 1996 a maximum of 1,500 shares of
common stock per month will be released from escrow for sale by the
stockholder.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Corsaire Snowboard, Inc. (the "Company") is an inactive company
and has limited operations. The Company expended $2,271,183 in the
year ended December 31, 1995, compared with no expenditures for the
same period in 1994. The increase is attributed to consulting
expenses in connection with the seeking of merger partners.
An additional $155,515 was expended for the period ended June
30, 1996 which was also attributable to legal and consulting
expenses in connection with the seeking of merger partners.
Management has been seeking opportunities to acquire operating
entities, which in the opinion of Management will provide profitable
operations to the Registrant.
As more specifically described in Note 4 to the Company's
financial statements, the Company issued in April, 1996 a total of
145,000 shares of common stock pursuant to a S-8 Registration
Statement for various consulting services and legal services.
It is anticipated that the investigation of specific business
opportunities and the negotiation, drafting and execution of
relevant agreements, disclosure documents and other instruments will
require substantial management time and attention and substantial
costs for accountants, attorneys, and others. If a decision is made
not to participate in a specific business opportunity, the costs
therefore incurred in the related investigation would not be
recoverable. Furthermore, even if an agreement is reached for the
participation in a specific business opportunity, the failure to
consummate that transaction may result in the loss to the Company of
the related costs incurred.
Management is not able to determine the time nor the resources
that will be necessary to complete an acquisition such as is
contemplated. There is no assurance that the Company will be able to
acquire an interest in any such businesses, products or
opportunities that may exist or that any activity of the Company,
even after any acquisition, will be profitable.
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PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: None
(b) Reports on Form 8-K: None
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned thereunto duly
authorized.
CORSAIRE SNOWBOARD, INC.
DATED: February 26, 1997 BY: /s/ RENE M. HAMOUTH
--------------------------------
RENE M. HAMOUTH
President and Chief
Financial Officer
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 178
<SECURITIES> 0
<RECEIVABLES> 5,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,178
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,178
<CURRENT-LIABILITIES> 64,411
<BONDS> 0
0
0
<COMMON> 3,292
<OTHER-SE> (62,525)
<TOTAL-LIABILITY-AND-EQUITY> 5,178
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 155,515
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (155,515)
<INCOME-TAX> 0
<INCOME-CONTINUING> (155,515)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (155,515)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
