<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Fiscal Year Ended December 31, 1997 Commission File No. 0-17772
CORSAIRE, INC.
(F/K/A CORSAIRE SNOWBOARD, INC.)
State of Delaware 55-0672633
- -------------------------------- --------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
62 INDIAN TRACE, SUITE 286, WESTON, FLORIDA 33326
-------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- -------------------- -----------------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.001 per share*
-----------------------------------------
(Title of Stock)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for other 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 No X*
---- ----
(2) Yes No X*
---- ----
The Registrant's revenues for its most recent fiscal year were $0. As
of December 31, 1997, 3,041,859 shares of the Registrant's common stock were
issued and outstanding.
Total No. of Pages: 17
----
* See Financial Statement Footnote 6
<PAGE> 2
CORSAIRE, INC.
(FORMERLY CORSAIRE SNOWBOARD, INC.)
FORM 10-KSB
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Part I
Item 1. Description of Business..........................................................................1
Item 2. Description of Property..........................................................................1
Item 3. Legal Proceedings................................................................................2
Item 4. Submission of Matters to a Vote of Security Holders..............................................2
Part II
Item 5. Market for Common Equity and Related Stockholder Matters.........................................2
Item 6. Management's Discussion and Analysis or Plan of Operation........................................2
Item 7. Financial Statements.............................................................................2
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.......................................................................2
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act.........................................................2
Item 10. Executive Compensation...........................................................................3
Item 11. Security Ownership of Certain Beneficial Owners and Management...................................4
Item 12. Certain Relationships and Related Transactions...................................................4
Item 13. Exhibits and Reports on Form 8-K.................................................................5
</TABLE>
i
<PAGE> 3
PART I
ITEM 1. DESCRIPTION OF BUSINESS
The Registrant is an inactive company. Management has been seeking
opportunities to acquire operating entities, which in its opinion will provide
profitable operations to the Registrant. The Company was incorporated in the
State of Delaware in 1994.
A. CORPORATE HISTORY
In March 1995, Rene Hamouth, now a principal stockholder of the
Company, became its president, in connection with a possible business
transaction involving the Company. At that time it was represented to Mr.
Hamouth by Paul Parshall, then the Company's president and sole director, that
the Company (then known as Acunet Corporation) (i) had been incorporated under
the laws of the State of Delaware in 1987, (ii) had completed a registered
public offering of its common stock in 1988, (iii) had filed reports with the
United States Securities and Exchange Commission (the "SEC") under SEC File No.
0-17772 and Internal Revenue Service (the "IRS") FEIN No. 55-0672633, (iv) had
become dormant in 1990, and (v) had been rehabilitated in 1994.
According to the Forms 10-QSB for the quarters ended March 31, June 30
and September 30, 1994, filed by Mr. Parshall, the Company (i) had its class of
common stock registered under Section 12(g) of the Securities and Exchange Act
of 1934, as amended (the "Exchange Act"), (ii) was dormant, (iii) had no
revenues, no assets and no liabilities and there were "no corporate records or
minutes available to document the activities of the corporation." The Company's
10-KSB for the year ended December 31, 1994, filed by Mr. Parshall and which
contained audited financial statements, disclosed that there were 50,000,000
shares outstanding, 28,986,734 of which had been issued to Worthington Company,
Mr. Parshall's affiliate, "in exchange for payment of filing fees."
Beginning in March 1995, at Mr. Hamouth's direction, the Company's
activities involved the identification and evaluation of potential
merger/acquisition candidates. In March 1995, the Company effected a reverse
one for one hundred stock split which resulted in a reduction of the
outstanding number of shares to 500,000 and also issued an additional 2,689,900
shares through August 1995 to Mr. Hamouth and others for services rendered. As
of December 31, 1995, the Company remained inactive and had 3,189,900 shares
outstanding held by 567 stockholders; there was "only a limited market for the
Company's common stock" (as disclosed in the Company's Form 10-KSB for the year
ended December 31, 1995). The Company continued to seek merger or acquisition
candidates. In August 1995, Mr. Parshall resigned as a director.
The Company continued to file Quarterly Reports on Form 10-QSB for the
quarters ended March 31, June 30, and September 30, 1996 under SEC File No.
0-17772. For the periods covered by these reports, the Company disclosed that
it had been unsuccessful in consummating a merger, acquisition or business
transaction with an operating company; it therefore remained as a shell
company. No other periodic reports had been filed with the SEC. The Company is
in the process of filing all delinquent reports at this time. The Company's
shares traded in the over-the-counter market.
ITEM 2. DESCRIPTION OF PROPERTY
None.
<PAGE> 4
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There currently is only a limited market for the Company's common
stock, par value $0.001 (the "Common Stock").
As of December 31, 1997, there were 577 shareholders of record,
holding 3,041,859 shares of the Company's Common Stock.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company has been inactive and has had limited operations. The
Company had no revenues in 1997 and 1996, but incurred expenses in connection
with various corporate matters. Substantially all of the expenses in 1997 and
1996 were satisfied through issuances of Common Stock.
ITEM 7. FINANCIAL STATEMENTS
See index to Financial Statements attached hereto.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Company has engaged the same auditors that prepared the 1995
financial statements, namely Strabala Ramirez & Associates, Certified Public
Accountants, 19762 MacArthur Blvd., Suite 100, Irvine, CA 92612.
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTORS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
(a) Identification of Directors and Executive Officers.
<TABLE>
<CAPTION>
NAME AGE POSITION PERIOD OF SERVICE
---- --- -------- -----------------
<S> <C> <C> <C>
Rene M . Hamouth 48 President/Director March 1995
</TABLE>
2
<PAGE> 5
Information concerning Directors and Executive Officers including
their business experience for at least the past five (5) years, is as follows:
RENE M. HAMOUTH
Mr. Hamouth was appointed a director and president on March 7,1995.
Prior to being appointed to the Company's Board of Directors and beginning in
1983 to date, Mr. Hamouth has acted as a financial consultant to various
private and public companies in both Canada and the United States wherein he
provided assistance in raising capital for these companies. From 1972 to 1982,
he was an account executive for firms which recruited executives for large
corporations.
(b) Compliance with 16(a) of the Exchange Act
The Exchange Act requires all executive officers and directors to
report any changes in the ownership of Common Stock of the Company to the SEC
and the Company. Management's review and representation indicates all reports
that were required to be filed in 1997 were so filed.
ITEM 10. EXECUTIVE COMPENSATION
Summary Compensation Table.
The following table sets forth information for the year ended 1997,
concerning compensation paid to the Company's president/director for services
rendered to the Company during the fiscal year ended December 31, 1997. No
other executive officer's compensation exceeded $100,000 for the year.
<TABLE>
<CAPTION>
Securities Restricted
Fiscal Underlying Stock All Other
Executive Officer Year Salary Bonus Options Awards Compensation
- ----------------- ------ ------ ----- ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Rene M. Hamouth 1997 $0 $0 -- $51,309 --
</TABLE>
The shares of Common Stock received by Hamouth were valued at closing
market value at the contract date. These shares were issued pursuant to
Regulation S of the SEC.
In March 1995, the Company entered into a two year agreement with its
president. The agreement provides that he would assist the Company in the
identification and evaluation of prospective merger and acquisition
opportunities, and arrange for the financing of such acquisitions and/or
mergers.
In accordance with the agreement, the Company issued the president
2,250,000 shares of the Company's Common Stock for work to be performed in
connection with the acquisition of two major companies. Additionally, 1,000,000
shares of common stock were to be issued for each additional acquisition up to a
maximum total issuance of 4,250,00 shares of Common Stock.
3
<PAGE> 6
The 2,250,000 shares issued to the president were 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 SEC (pertaining to offers and sales made outside
the United States by non-U.S. persons). These shares were valued at $.10 per
share, the market value at the contract date.
The Company has no reimbursement, pension, profit sharing or insurance
or medical reimbursement plans covering its officer, or its directors and does
not contemplate implementing any such plan at this time.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
At the close of business on December 31,1997, the Company had 3,041,859
shares of Common Stock outstanding. The table below contains information
concerning each person who is known by the Company to be beneficial owner of
more than five percent of the Company's Common Stock as well as the Company's
sole executive officer and director. To the best of the Company's knowledge, no
other persons are beneficial owners of five percent or more of the Company's
shares.
<TABLE>
<CAPTION>
Name and Address Amount of Percent
of Beneficial Owner Beneficial Ownership of Class
------------------- -------------------- --------
<S> <C> <C>
Rene M. Hammouth 2,250,000 74%
53 Thedford Place
West Valcouver, B.C.
V7S 1 R9
All directors and officers 2,250,000 74%
As a group (one named
above)
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
4
<PAGE> 7
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description
----------- -----------
27 Financial Data Schedule
(b) Report on Form 8-K
None.
5
<PAGE> 8
INDEPENDENT AUDITORS' REPORT
TO: The Board of Directors
Net Command Tech, Inc.
(formerly known as Corsaire, Inc. and Corsaire Snowboard, Inc.)
Weston, Florida
We have audited the accompanying balance sheets of Net Command Tech,
Inc. (formerly known as Corsaire, Inc. and Corsaire Snowboard, Inc.), as of
December 31, 1998, 1997 and 1996, and the related statements of operations,
changes in stockholders' equity and cash flows for the years ended December 31,
1998, 1997 and 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit 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 statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Net Command Tech,
Inc. (formerly known as Corsaire, Inc. and Corsaire Snowboard, Inc.) as of
December 31, 1998, 1997 and 1996 and the results of its operations and its cash
flows for the years then ended, in conformity with generally accepted accounting
principles.
As discussed in Note 6 to the financial statements, the Company did not
follow proper procedures for revival and renewal of a dissolved corporation as
required under the laws of the State of Delaware. The Company continued to file
reports and issue stock under the assumed entities' file number.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 7 to the
financial statements, the Company has suffered substantial operating losses and
has accumulated a deficit of $3,515,965 as at December 31, 1998, which raises
substantial doubt about its ability to continue as a going concern. Management
plans regarding these matters also are described in Note 7. The financial
statements do not include any adjustments that might result from outcome of this
uncertainty.
/s/ Strabala, Ramirez & Associates, Inc.
STRABALA, RAMIREZ & ASSOCIATES, INC.
May 6, 1999
7
<PAGE> 9
NET COMMAND TECH, INC.
(FORMERLY KNOWN AS CORSAIRE, INC. AND CORSAIRE SNOWBOARD, INC.)
BALANCE SHEETS
AS OF DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ -- $ 20 $ 35
----------- ----------- -----------
Total current assets -- 20 35
----------- ----------- -----------
Total Assets $ -- $ 20 $ 35
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Total Liabilities $ -- $ -- $ --
----------- ----------- -----------
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value, authorized 25,000,000
shares: 5,784,889, 3,041,859 and 3,041,859
outstanding in 1998, 1997 and 1996, respectively 5,785 3,042 3,042
Paid-in capital 3,510,180 3,076,748 3,076,748
Prepaid stock-based officer compensation -- -- (51,309)
Accumulated deficit (3,515,965) (3,079,770) (3,028,446)
----------- ----------- -----------
Total Stockholders' Equity -- 20 35
----------- ----------- -----------
Total Liabilities and Stockholders' Equity $ -- $ 20 $ 35
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE> 10
NET COMMAND TECH, INC.
(FORMERLY KNOWN AS CORSAIRE, INC. AND CORSAIRE SNOWBOARD, INC.)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Revenues $ -- $ -- $ --
----------- ----------- -----------
Expenses
Officers' compensation -- 51,309 79,941
Consulting services -- -- 522,500
Legal fees and expenses 436,175 -- 149,822
Other general and administrative expenses 20 15 5,000
----------- ----------- -----------
Total expenses 436,195 51,324 757,263
----------- ----------- -----------
Loss before provision for income taxes (436,195) (51,324) (757,263)
Provision for income taxes -- -- --
----------- ----------- -----------
Net loss $ (436,195) $ (51,324) $ (757,263)
=========== =========== ===========
Net loss per share $ (0.09) $ (0.02) $ (0.25)
=========== =========== ===========
Weighted average shares outstanding 4,711,426 3,041,859 3,029,999
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE> 11
NET COMMAND TECH, INC.
(FORMERLY KNOWN AS CORSAIRE, INC. AND CORSAIRE SNOWBOARD, INC.)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
COMMON STOCK
---------------------------------
ADDITIONAL PREPAID STOCK TOTAL
NUMBER OF PAR PAID-IN ACCUMULATED BASED OFFICER STOCKHOLDERS'
SHARES VALUE CAPITAL DEFICIT COMPENSATION EQUITY
--------- ----- ---------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1995 3,189,900 $ 3,190 $ 2,267,359 $ (2,271,183) $ (131,250) $ (131,884)
1/96 Cancellation of shares (250,000) (250) 250 --
3/96 Contribution from shareholder 11,741 11,741
4/96 Stock issued for professional
services 145,000 145 797,355 797,500
5/96 Cancellation of shares (43,041) (43) 43 --
12/96 Accrued officer compensation 79,941 79,941
Net loss for year (757,263) (757,263)
---------- ------- ----------- ------------ ---------- ----------
BALANCE, December 31, 1996 3,041,859 3,042 3,076,748 (3,028,446) (51,309) 35
12/97 Accrued officer compensation 51,309 51,309
Net loss for year (51,324) (51,324)
---------- ------- ----------- ------------ ---------- ----------
BALANCE, December 31, 1997 3,041,859 3,042 3,076,748 (3,079,770) -- 20
1/98 Stock issued for professional
services 350,000 350 196,525 196,875
6/98 Stock issued for professional
services 2,393,030 2,393 236,907 239,300
Net loss for year (436,195) (436,195)
---------- ------- ----------- ------------ ---------- ----------
BALANCE, December 31, 1998 5,784,889 $ 5,785 $ 3,510,180 $ (3,515,965) $ -- $ --
========== ======= =========== ============ ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE> 12
NET COMMAND TECH, INC.
(FORMERLY KNOWN AS CORSAIRE, INC. AND CORSAIRE SNOWBOARD, INC.)
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
---------- --------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (436,195) $ (51,324) $ (757,263)
Adjustments to reconcile net loss to net
cash used in operating activities
Issuance of common stock for consulting and legal services
and satisfaction of amounts due officer 436,175 51,309 877,441
Changes in assets and liabilities:
Decrease in accounts payable -- -- (137,062)
Decrease in refundable deposit -- -- 5,000
---------- --------- ----------
Net cash used in operations (20) (15) (11,884)
---------- --------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contribution from shareholder -- -- 11,741
---------- --------- ----------
Net cash provided by financing -- -- 11,741
---------- --------- ----------
Net decrease in cash and cash equivalents (20) (15) (143)
Cash and cash equivalents beginning of period 20 35 178
---------- --------- ----------
Cash and cash equivalents end of period $ 0 $ 20 $ 35
========== ========= ==========
Interest and income taxes paid $ -- $ -- $ --
========== ========= ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE> 13
NET COMMAND TECH, INC.
(FORMERLY KNOWN AS CORSAIRE, INC. AND CORSAIRE SNOWBOARD, INC.)
NOTES TO FINANCIAL STATEMENTS
(1) Summary of Significant Accounting Principles.
Net Command Tech, Inc. (formerly known as Corsaire, Inc.) (the
"Company") was incorporated in Delaware in 1994 under the name Acunet
Corporation.
In March 1995, the Company changed its name from Acunet Corporation to
Corsaire Snowboard, Inc. The Company became inactive March 1, 1997 and remained
so until July 15, 1997 when it was revived in Delaware under the name Corsaire,
Inc. The Company changed its name to Net Command Tech, Inc. in May 1999.
The Company's principal business purpose has been the identification
and evaluation of prospective merger and acquisition opportunities.
The Company's shares are traded in the over-the-counter market.
(a) CASH AND CASH EQUIVALENTS.
Cash equivalents consist of short-term, highly liquid
investments that are readily convertible into cash and were purchased with
maturities of less than three months.
(b) CURRENCY TRANSLATION.
The accompanying financial statements are expressed in U.S.
dollars. The Company maintains an office in Fort Lauderdale, Florida and no
longer has operations in Canada. Any expenditures and obligations in Canadian
currency were translated at the exchange rate prevailing when they were
incurred. Assets and liabilities at December 31, 1998, 1997 and 1996, where
applicable, have been translated at the year-end exchange rates. There were no
significant exchange or translation gains or losses during these years.
(c) VALUATION OF SHARES ISSUED FOR SERVICES.
The Company accounts for stock-based compensation at fair
market value, in accordance with SFAS No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123). SFAS 123 establishes a fair value based method of
accounting for stock-based compensation.
(d) BASIC AND DILUTED LOSS PER SHARE.
Net loss per share is determined by dividing net loss by the
weighted average number of common shares outstanding during the year.
12
<PAGE> 14
(e) USE OF 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
the disclosure of contingent assets and liabilities at the date of the financial
statements and that affect revenues and expenses during the period reported.
Estimates are adjusted to reflect actual experience when necessary. Significant
estimates are used to account for fair market value of the Company's common
stock exchanged for services of consultants and professionals.
(f) NEW ACCOUNTING STANDARDS.
Effective January 1, 1998, Corsaire adopted Statement of Financial
Accounting Standard No. 131, "Disclosures about Segments of an Enterprise and
Related Information" (SFAS 131). SFAS 131 establishes standards for defining
operating segments and for reporting information about operating segments in
financial statements. It also establishes standards for related disclosures
about products, geographic areas, and major customers. The Company's reportable
operating segments did not change as a result of adopting SFAS 131.
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133 "Accounting for Derivative Instruments
and Hedging Activities" (SFAS 133). This statement, which is effective January
1, 2000, requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position, measure those instruments at
fair value and recognize changes in the fair value of derivatives in earnings in
the period of change unless the derivative qualifies as an effective hedge that
offsets certain exposures. This statement is not expected to have a significant
effect on the Company's financial statements.
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5 "Reporting on the Costs of Start-up
Activities." This statement is effective for 1999, but is not expected to have a
significant effect on the Company's financial statements.
(2) Related Party Information.
(a) In January 1994, a company affiliated with the president of the
Company at that time received 289,867 shares of common stock in exchange for
payments of filing fees for the Company.
(b) In March 1995, the Company entered into a two-year agreement with
the president of the Company at that time. The agreement provided that he would
assist the Company in the identification and evaluation of prospective merger
and acquisition opportunities, and arrange for the financing of such
acquisitions and/or mergers. No such merger or acquisition occurred, nor were
any financing arrangements made during that time. In accordance with the
agreement, the Company issued 2,250,000 shares of common stock to the then
president. These 2,250,000 shares were recorded as compensation for the period
through May 30, 1997, and have been prorated and charged to expense accordingly.
These shares have been valued at $.10 per share, the fair market value at the
contract date. The Company did not issue the appropriate Forms 1099 or W-2 at
the time of the transaction.
13
<PAGE> 15
(c) The Company, from time to time, issued 2,743,430 shares in exchange
for services. These shares were valued at $.06 per share (350,000) and $.10 per
share (2,393,030).
(3) Consulting and Legal Services.
In 1996 and 1998, the Company issued common stock to various
individuals, including consultants and the Company's general counsel for legal
services. These shares have been valued at the bid price at the dates of
issuance. Of the 495,000 shares issued, the fair market value of shares of
$522,500 was for consulting services and $471,875 was for legal fees and
expenses.
See 2(c) above.
(4) Provision for Income Taxes.
The Company has had net operating losses during the years ending
December 31, 1996, 1997 and 1998. These losses were predominantly non-cash
exchanges of stock for services which were not reported to the Internal Revenue
Service. As such, they would not be deductible for tax purposes until declared
as compensation by the recipients. Therefore no income tax expense (benefit) has
been recorded by the Company.
(5) Subsequent Events.
On February 19, 1999, Baraka Intracom, Inc., a California corporation,
sold certain assets, consisting primarily of intellectual property, to a
subsidiary of the Company. The price for these assets was $510,000, based on
$10,000 cash and the stipulated value of 50,000 shares of the Company at $10.00
per share. Of this value the purchase agreement allocated $450,000 to the
intellectual property, including software, a license agreement, trademarks and
other property. The remaining $50,000 is consideration for a 5-year
non-competition provision of the agreement.
On February 19, 1999, fifty-one percent (51%) of Modern Telenet Limited
was purchased by the Company. Modern Telenet Limited, a corporation in England
and Wales, was founded on January 13, 1999 and was established with capital of
50,000 British Pounds divided between 24,500 A shares and 25,500 B shares at one
British Pound per share. The Company bought the 25,500 B shares. Additionally,
the Company is obligated under an option agreement to purchase the 24,500 A
shares from the holder of the stock or assignees, at a price that the founder of
Modern Telenet Limited and the Company may agree or, failing agreement, a
formula based on net income of Modern Telenet Limited. The business of this
Company and the technology acquired are known as video streaming which allows a
computer the ability to transmit video and audio signals over the Internet.
14
<PAGE> 16
On February 19, 1999, the Company signed an exclusive distribution
agreement with Modern Telenet Limited, providing for certain specific non-US
Territories.
As part of the acquisition, the Company signed an agreement with a bank
to obtain the release of the security interest granted in the bank's favor over
certain assets of Modern Telenet Limited and Baraka Intracom, Inc. In return,
the Company issued 1,005,000 fully paid shares of common stock to the bank
pursuant to the bank's rights as pledgee and issued an additional 20,000 shares
of common stock to the bank to be held by the bank (or its nominee) absolutely
and beneficially. The bank also received an assignment, by way of security, and
all rights under a put option in respect of the remaining 49% interest (not
owned by the Company) in the share capital of Modern Telenet Limited. Modern
Telenet Limited, along with other entities, are joint guarantors of debts of
certain parties related to the former principal shareholder of Modern Telenet
Limited in the amount of $34,691,800. Finally, in connection with this
transaction the Company issued 1,983,750 shares to an affiliate of the former
principal shareholder of Modern Telenet Limited.
The Company has assigned a nominal value to the assets purchased in
this acquisition. The Company intends to appraise the intellectual property and
assign an appropriate value as a result of the appraisal.
On April 26, 1999, the Company entered into an agreement, subsequently
amended in May, to acquire the issued and outstanding common stock of Satellite
Access Systems, Inc. ("SAS"), a privately held Florida corporation with its
principal place of business in St. Petersburg, Florida, in exchange for
2,352,942 shares of common stock. This transaction is conditioned upon the
completion of due diligence by the Company of SAS's intellectual property, no
later than June 10, 1999. SAS is involved in the development of ultra high speed
satellite and Internet communications software and protocols for the world wide
transmission of voice, data and video signals.
(6) Status of Entity.
During the course of preparing the delinquent Forms 10-QSB and Forms
10-KSB for the period December 1, 1996 through December 31, 1998 and the 10-QSB
for the quarter ended March 31, 1999, present management uncovered the
following:
(i) that the State of Delaware requires that the revival and renewal of a
Certificate of Incorporation of an administratively dissolved
corporation be effectuated through the execution and filing of a
certificate on the authority of those who were the directors of the
corporation at the time of its expiration;
(ii) that the prior management's president (Paul L. Parshall) apparently did
not file such a certificate, but instead filed an original Certificate
of Incorporation under the same name as the dormant corporation which
was to have been revived (Acunet Corporation) and continued to file
reports with the SEC under the SEC file number of the non-revived
company;
15
<PAGE> 17
(iii) that the prior president had, on other occasions, incorporated new
companies with the same name as dissolved (or dormant) companies that
had common stock registered under Section 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), continued to
file reports under the non-revived companies' file number, and in the
process, issued a significant amount of shares in these companies to
himself; and
(iv) that in September 1996, the Company's prior president until March,
1995, had been enjoined by the United States District Court, Utah (SEC
v. Axiom Securities Solutions, Inc. and Paul L. Parshall, Civil Action
No. 2-96CV-08245J) from violating the anti-fraud provisions of the
federal securities laws and was barred from serving as an officer or
director of a company filing reports with the SEC. In addition, in
September 1996, he was the subject of administrative proceedings before
the SEC barring him from participating in penny stock offerings and
association with a broker/dealer, investment company, investment
advisor, transfer agent or municipal securities dealer.
The Company, validly existing as a corporation under Delaware law,
while continuing to report under SEC File No. 0-17772, has determined to file a
Form 10-SB covering its common stock in order to properly register its common
stock under the Exchange Act and correct the existing deficiency.
(7) Going Concern.
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplate continuation of
the Company as a going concern. However, the Company has sustained substantial
operating losses in the current year. In addition, the Company has used
substantial amounts of working capital in its operations. On December 31, 1998,
the Company had an accumulated deficit of $3,515,965.
In view of these matters, the ability of the Company to continue its
operations is dependent upon its ability to meet its financing requirements, and
the success of its future operations. Management believes that actions presently
being taken to fulfill the Company's financing requirements will provide the
opportunity for the Company to continue as a going concern.
(8) Contingent liabilities.
Subsequent to the year end, a complaint was filed in the state court
and the Company has received unfiled complaints seeking ordinary and punitive
damages from the Company from various parties. Management, in consultation with
its legal counsel, believes that these claims are without merit; therefore, the
likelihood of an unfavorable outcome is remote and will not affect the Company's
financial position.
16
<PAGE> 18
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CORSAIRE, INC.
Date: May 24, 1999 By: /s/ Rene M. Hamouth
--------------------------------------
Rene M. Hamouth
President and Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Registrant and in the capacities and
on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Rene M. Hamouth Chairman of the Board May 24, 1999
- --------------------------- Chief Operating Officer
Treasurer (Principal
Financial and Accounting
Officer), Secretary
17
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 20
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 20
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 3,042
<OTHER-SE> 3,076,748
<TOTAL-LIABILITY-AND-EQUITY> 20
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (51,324)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (51,324)
<INCOME-TAX> 0
<INCOME-CONTINUING> (51,324)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (51,324)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
