<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For Quarter Ended: March 31, 1996 Commission File No. 33-18143-D
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Transition Period From: To:
Commission File No.
CORVALLIS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 87-0449399
--------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1486 South 11th East
Salt Lake City, Utah 84105
------------------------- -------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (801) 487-3893
----------------
Not applicable
--------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report.
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 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 [ ]
APPLICABLE ONLY TO CORPORATION ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date. As of the date of
filing of this report, the Registrant had a total of 1,040,002 shares of common
stock issued and outstanding, after giving effect to a 1-for-25 reverse split
completed in August, 1994, and a 1-for-5 reverse split in August, 1995.
<PAGE> 2
C O N T E N T S
Independent Auditors' Report . . . . . . . . . . . . . . . . 3
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . 4
Statements of Operations . . . . . . . . . . . . . . . . . . 5
Statements of Stockholders' Equity . . . . . . . . . . . . . 6
Statements of Cash Flows . . . . . . . . . . . . . . . . . . 8
Notes to the Financial Statements . . . . . . . . . . . . . 9
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
April 13, 1996
The Board of Directors
Corvallis, Inc.
Salt Lake City, Utah
The accompanying balance sheets of Corvallis, Inc. (a development stage
company) as of March 31, 1996 and the related statements of operations, stock-
holders' equity, and cash flows for the three months and nine months then ended
and for the three months and nine months ended March 31, 1995 and from incep-
tion on September 28, 1987 through March 31, 1996 were not audited by us and,
accordingly, we do not express an opinion on them. The accompanying balance
sheet of Corvallis, Inc. as of June 30, 1995 was audited by us and we
expressed an unqualified opinion on it in our report dated July 31, 1995.
Jones, Jensen & Company
<PAGE> 4
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
In the opinion of the Registrant, the following unaudited financial
statements contain all adjustments, consisting of only normal recurring
adjustments, necessary to present fairly the financial position of the Company
as of March 31, 1996, and the results of its operations and changes in its
financial position for the nine months ended March 31, 1996, and March 31,
1995, respectively, and from inception on September 28, 1987 through March
31, 1996. The results of its operations for such interim periods are not
necessarily indicative of the results to be expected for the entire year.
CORVALLIS, INC.
(A Development Stage Company)
Financial Statements
March 31, 1996 and June 30, 1995
CORVALLIS, INC.
(A Development Stage Company)
Balance Sheets
<TABLE>
ASSETS
<CAPTION>
March 31, June 30,
1996 1995
(Unaudited) (Audited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 610 $ 420
----------- ---------
Total Current Assets 610 420
----------- ---------
TOTAL ASSETS $ 610 $ 420
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 400 $ -
Stockholders' payable (Note 7) 1,425 1,150
----------- ----------
Total Current Liabilities 1,825 1,150
----------- ----------
STOCKHOLDERS' EQUITY
Common stock authorized 200,000,000
shares at $0.001 par value; 1,040,002 and
1,020,002 shares issued and outstanding 1,040 1,020
Additional paid-in capital 176,765 174,635
Deficit accumulated during
the development stage (179,020) (176,385)
----------- -----------
Total Stockholders' Equity (1,215) (730)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 610 $ 420
=========== ===========
</TABLE>
<PAGE> 5
CORVALLIS, INC.
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
From
Inception on
September 28,
For the Three Months For the Nine Months 1987 Through
Ended March 31, Ended March 31, March 31,
1996 1995 1996 1995 1996
<S> <C> <C> <C> <C> <C>
REVENUE $ - $ - $ - $ - $ -
EXPENSES
Consulting fees - 1,825 - 1,825 5,652
Legal - - - - 4,220
Accounting 825 - 2,025 950 7,975
Other 15 117 45 151 3,272
Transfer fees 405 358 565 1,020 1,147
Total Expenses 1,245 2,300 2,635 3,946 22,266
LOSS BEFORE
DISCONTINUED
OPERATIONS (1,245) (2,300) (2,635) (3,946) (22,266) )
LOSS ON
DISCONTINUED
OPERATIONS - - - - (156,754)
NET LOSS $(1,245) $(2,300) $ (2,635) $(3,946) $ (179,020)
WEIGHTED AVERAGE
LOSS PER SHARE $ (0.00) $ (0.00) $ (0.00) $ (0.00) $ (0.26)
</TABLE>
<PAGE> 6
CORVALLIS, INC.
(A Development Stage Company)
Statements of Stockholders' Equity
From Inception on September 28, 1987 to March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the
---------------------- Paid-in Development
Shares Amount Capital Stage
<S> <C> <C> <C> <C>
Balance at inception - $ - $ - $ -
Issuance of common stock at
inception at $.0015 per share 112,000 112 20,888 -
Issuance of common stock in
July 1988 at $.01, less deferred
offering costs offset against
paid-in capital 105,120 105 91,630 -
Net loss from inception to
June 30, 1989 - - - (19,673)
Balance, June 30, 1989 217,120 217 112,518 (19,673)
--------- -------- ---------- ------------
Issuance of common stock for
fixed assets in August 1989 506,613 507 18,801 -
Issuance of common stock in
private placement at $.0075
in November 1989 21,333 21 19,999 -
Net loss for the year ended
June 30, 1990 - - - (132,670)
-------- ---------- ------------ ------------
Balance, June 30, 1990 745,066 745 151,298 (152,343)
Net loss for the year ended
June 30, 1991 - - - (300)
-------- ---------- ------------ ------------
Balance, June 30, 1991 745,066 745 151,298 (152,643)
Net loss for the year ended
June 30, 1992 - - - (300)
-------- ----------- ------------ ------------
Balance, June 30, 1992 745,066 $ 745 $151,298 $ (152,943)
-------- ----------- ------------ ------------
</TABLE>
<PAGE> 7
CORVALLIS, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Continued)
From Inception on September 28, 1987 to March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Stage
<S> <C> <C> <C> <C>
Balance, June 30, 1992 745,066 $ 745 $ 151,298 $ (152,943)
Net loss for the year ended
June 30, 1993 - - - (1,335)
Balance, June 30, 1993 745,066 745 151,298 (154,298)
Issuance of common stock for
extinguishment of stockholders'
payable at $.002 (Note 7) 54,934 55 14,157 -
Net loss for the year ended
June 30, 1995 - - - (14,252)
Balance, June 30, 1995 800,000 800 165,455 (168,530)
Issuance of common stock for
extinguishment of stockholders'
payable at $.008 in March 1995 85,000 85 3,315 -
Issuance of common stock for
extinguishment of stockholders'
payable at $.01 in March 1995 60,000 60 2,940 -
Issuance of common stock for
services rendered at $.008
in March 1995 75,000 75 2,925 -
Net loss for the year ended
June 30, 1995 - - - (7,855)
Balance, June 30, 1995 1,020,002 $ 1,020 $ 174,635 $ (176,385)
</TABLE>
<PAGE> 8
CORVALLIS, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Continued)
From Inception on September 28, 1987 to March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Stage
<S> <C> <C> <C> <C>
Balance, June 30, 1995 1,020,002 $ 1,020 $ 174,635 $ (176,385)
Issuance of common stock for
cash at $.005 per share in
August 1995 20,000 20 980 -
Contribution of account payable
stockholder to additional
paid-in capital, as additional
consideration for stock issued
in March 1995 - - 1,150 -
Net loss for the period ended
March 31, 1996 - - - (2,635)
Balance, March 31, 1996 1,040,002 1,040 $ 176,765 $ (179,020)
</TABLE>
<PAGE> 9
CORVALLIS, Inc.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
From
Inception on
September 28,
For the Three Months For the Nine Months 1987 Through
Ended March 31, Ended March 31, March 31,
1996 1995 1996 1995 1996
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $(1,245) $(2,300) $(2,635) $(3,946) $ (21,841)
Discontinued operations - - - - (156,754)
Issuance of common stock for
fixed assets - - - - 19,308
Debt converted to additional
paid-in capital - - - - 1,150
Issuance of stock for services
rendered and settlement of debt - 1,825 - 1,825 23,612
Increase (decrease) in accounts
payable 1,825 (4,075) 1,825 (2,350) 1,400
Net Cash Provided (Used)
by Operating Activities 580 (4,550) (810) (4,471) (133,125) )
CASH FLOWS FROM INVESTING
ACTIVITIES - - - - -
CASH FLOWS FROM FINANCING
ACTIVITIES
Sale of common stock - 4,575 1,000 4,575 133,735
Net Cash Provided (Used)
by Financing Activities - 4,575 1,000 4,575 133,735
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 580 25 190 104 610
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 30 154 420 75 -
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 610 $ 179 $ 610 $ 179 $ 610
</TABLE>
<PAGE> 10
CORVALLIS, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
From
Inception on
For the For the September 28,
Three Months Nine Months 987 Through
Ended March 31, Ended March 31, March 31,
1996 1995 1996 1995 1996
<S> <C> <C> <C> <C> <C>
CASH PAID FOR
Income Taxes $- $- $- $- $ -
Interest $- $- $- $- $ -
NON CASH FINANCING ACTIVITIES
Issuance of common stock
for equipment $- $- $- $- $ 19,308
Issuance of common stock
for stockholders' payable $ - $- $- $ - $ 18,787
</TABLE>
CORVALLIS, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 1996 and June 30, 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The Financial Statements presented are those of Corvallis, Inc., a
development stage company. The Company was incorporated in the state of
Nevada on September 28, 1987. The Company was incorporated 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.
b. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting. The Company elected a June 30th fiscal year end.
c. Loss Per Share
The computations of loss per share of common stock are based on the
weighted average number of shares outstanding at the date of the financial
statements.
d. Deferred Stock Offering Costs
In connection with the public offering of the Company's common stock,
(see Note 2), all costs were accumulated as deferred charges. The
deferred charges were offset against proceeds received from the stock
offering.
e. Provision for Taxes
At March 31, 1996, the Company has net operating loss carryforwards of
approximately $172,000 that may be offset against future taxable income
through 2009. No tax benefit has been reported in the financial
statements, because the Company believes there is a 50% or greater
chance the carryforwards will expire unused. Accordingly, the
potential tax benefits of the loss carryforwards will be offset by a
valuation allowance of the same amount.
f. Cash
For purposes of the Statement of Cash Flows, the Company considers all
highly liquid investments with an original maturity of three months or
less to be cash equivalents.
CORVALLIS, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 1996 and June 30, 1995
NOTE 2 - PUBLIC OFFERING OF UNITS
The Company made a public offering of 800,000 units. Each unit consists
of one (1) share of its previously authorized but unissued common stock
and two (2) warrants. The Warrant A is exercisable at $.03 for a period
of six (6) months commencing six (6) months from the effective date of
the offering. The Warrant B is exercisable at $.06 for a period of one
(1) year commencing one (1) year from the effective date of the
offering. Both warrants were separately transferrable immediately on
issuance. This offering was registered on Form S-18 in accordance with
the Securities Act of 1933. An offering price of $.01 per unit was
arbitrarily determined by the Company and the underwriter. The offering
was conducted by the underwriter on a "400,000 Unit minimum, 800,000
Unit maximum" basis. As of June 30, 1988, the Company had sold 443,600
units having a gross subscription price of $110,900. This allowed the
Company to "break escrow" and all but $1,600 of the funds were
transferred from the escrow account to the general checking. On July
20, 1988 the Company completed its public offering. A total of 525,600
units were sold having a gross subscription price of $131,400.
Deferred offering costs totaling $39,665 were offset against additional
paid-in capital.
NOTE 3 - ASSET PURCHASE AGREEMENT
On approximately September 2, 1989, the Company had completed the terms
of an Asset Purchase Agreement with DLB Enterprises, Inc., a closely-held
Nevada corporation ("DLB"), providing for the acquisition by the Company
of all of the operating assets of Southwest, a Las Vegas-based enterprise
which had been engaged in the manufacture and installation of awnings for
commercial, industrial and residential use for approximately the past
fourteen (14) months. Southwest was previously a joint enterprise owned
and operated in Las Vegas by DLB and WAM Industries, Inc. ("WAM"), a Salt
Lake City-based corporation which had been engaged in the awning business
for several years.
Under the terms of the Asset Purchase Agreement, the Company acquired all
of the operating assets of Southwest, including equipment, inventory,
customer accounts, tradenames and trademarks and other assets in exchange
for the issuance to DLB of a total of 1,266,533 shares of the Company's
restricted common stock. Concurrently, the Company also entered into a
separate agreement with WAM under the terms of which WAM agreed to act
as contractor on all large commercial jobs of the Company at a price of
cost plus 10% and generally agreed to contribute its expertise in the
development of the Company's business, in consideration of which the
Company had issued to WAM a total of 542,800 shares of its restricted
common stock. In connection with these transactions, the Company
issued a total of 723,733 shares of restricted common stock to Whitney
O. Cluff and certain of his business associates who were instrumental
in facilitating the negotiation and consummation of the transactions.
The assets were subsequently written off, see Note 6.
CORVALLIS, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 1996 and June 30, 1995
NOTE 4 - PRIVATE PLACEMENT
On November 22, 1989, the Company issued 106,667 common shares at a price
of $.0075. The Board of Directors issued to Whitney Cluff shares for
monies he used on behalf of the Company.
NOTE 5 - DISCONTINUED OPERATIONS
The Company, on January 1, 1990, decided to discontinue its operations.
The Company did not have significant operating income and felt it could
not continue. Therefore, the Company entered into an agreement with WAM
Industries in which WAM took over the operations of the Company and paid
its outstanding debts, and in consideration, WAM Industries was given all
of its assets. The assets consisted of all cash, receivables and fixed
assets. The Company has not had any operations since that date except for
some incidental expenditures to keep the Company on active status with
the State and stock transfer agents.
NOTE 6 - 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 does not have significant cash or
other material assets, nor does it have an established source of revenues
sufficient to cover its operating costs and to allow it to continue as a
going concern. It is the intent of the Company to seek a merger with an
existing, operating company.
NOTE 7 - STOCKHOLDERS' PAYABLE AND OFFICERS' PAYABLE
Some stockholders of the Company have paid expenses on behalf of the
Company. In the past the amounts paid on behalf of the Company have been
repaid to the stockholders when monies were available, or the stock-
holders have converted the amounts owed to them into equity.
NOTE 8 - REVERSE STOCK SPLIT
On July 21, 1994, during a special meeting of shareholders, a motion was
approved authorizing a reverse split of the issued and outstanding common
stock of the Company with one new share being issued for every twenty-
five (25) shares previously held. All reference to shares outstanding
and earnings per share have been adjusted to reflect the effects of the
stock split on a retroactive basis.
On August 22, 1995 a meeting was held whereby the shareholders approved a
motion authorizing an additional reverse split of the issued and
outstanding common stock of the Company at a rate of 1 share for every 5
shares outstanding. This reduced the outstanding shares to 1,040,002.
All references to shares outstanding and earnings per share have been
restated to reflect the effects of the stock split on a retro active
basis.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MATERIAL CHANGES IN FINANCIAL CONDITION
The Registrant has been essentially inactive since January, 1990. The
Registrant's financial condition has not changed materially since the year
ended June 30, 1994. However, during the fiscal year ended June 30, 1995,
the Registrant incurred $7,855 in expenses in connection with the Registrant's
efforts to reactivate its operations. An additional $2,635 in such expenses
were incurred during the three fiscal quarters ended March 31, 1996, as
compared to a total of $3,946 in legal, accounting, consulting and other
expenses for the comparable three fiscal quarters ended March 31, 1995.
The Registrant's financial condition has not changed materially since
the year ended June 30, 1991, or since January, 1990. Since January, 1990,
the Registrant has had essentially no assets and no revenue or losses from
operations, except losses of $1,335, $14,252, and $7,855, respectively, for
the fiscal years ended June 30, 1993, 1994 and 1995, resulting from from
legal, accounting, consulting and other expenses incurred by the Registrant in
connection with its efforts to file necessary periodic reports and reactivate
operations, decribed above.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
As indicated above, the Company has had essentially no operations
since January 1990. The Registrant had no operations, and no revenue during
the quarters ended March 31, 1996 and March 31, 1995. The Registrant had
a loss of $1,245 for the three months ended March 31, 1996, as compared to
a loss of $2,300 for the three months ended March 31, 1995. Such losses are
attributable to expenses incurred in connection with the Company's efforts to
update and maintain its accounting, legal matters and quarterly filings.
The Registrant had not filed any reports on Form 10-Q or Form 10-K
from September 1989 until the second quarter of 1994, when new
management undertook efforts to reactivate the Registrant and bring it current
in its filing requirements. However, as indicated, the financial condition
of the Registrant has not changed materially since January 1990, except for
the contribution of cash and services by officers, directors and certain
shareholders in exchange for stock, for the purpose of reactivating the
Company.
At present, the Company does not have adequate capital to conduct
any significant operations. The Company intends to become engaged
immediately in the search for potential business opportunities for acquisition
or involvement by the Company. Management believes that any business
venture in which the Company becomes involved will be made by issuing
shares of the Company's authorized but unissued common stock. It is
anticipated that the Company's liquidity, capital resources and financial
statements will be significantly different subsequent to the consummation of
any such transaction.
PART 2. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings and, to the best
of its knowledge, no such action by or against the registrant has been
threatened.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
quarter ended March 31, 1996.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
None.
(b) Reports on Form 8-K. During the quarter ended December 31,
1994, no reports on Form 8-K were filed by the Registrant.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORVALLIS, INC.
(Registrant)
Date: May 14, 1996 By /s/Whitney O. Cluff
Whitney O. Cluff,
President and Chief Executive Officer
Date: By John Papanikolas, Principal
Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 610
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 610
<CURRENT-LIABILITIES> 1,825
<BONDS> 0
0
0
<COMMON> 1,040
<OTHER-SE> (2,255)
<TOTAL-LIABILITY-AND-EQUITY> 610
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,635
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,635)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,635)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,685)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
