SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant To Section 13 or 15(d) of the Securities Exchange
Act of 1934
[ ] Transition Report Pursuant to Section 13 or 15(d)of the Securities Exchange
Act of 1934
For The Fiscal year Ended June 30, 1995
Commission File No. 33-18143-D
CORVALLIS, INC.
(Exact name of Registrant as specified in its Charter)
Nevada 87-0449399
(State or other jurisdiction of (I.R.S. Employer
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
Securities Registered Pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on which Registered
None 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 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 [ ]
The aggregate market value of the Registrant's voting stock held by
non-affiliates computed with reference to the bid prices in the over-the-counter
market on September 29, 1995, was approximately $61,000.
As of the date of the filing of this report, the Registrant had outstanding
a total of 1,400,000 shares of its common stock, par value $ 0.001, after giving
effect to a 1-for-5 reverse split completed in August, 1995.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the
Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1) any annual report to security holders; (2) any proxy or
information statement; and (3) any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933.
None.
<PAGE>
TABLE OF CONTENTS
Item Number and Caption Page No.
PART 1
1. Business . . . . . . . . . . . . . . . . . . . . . . . 5
2. Properties . . . . . . . . . . . . . . . . . . . . . . 9
3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . 9
4. Submission of Matters to a Vote of Security Holders . . . . . . 9
PART II
5. Market for Registrant's Common Equity and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . 10
6. Selected Financial Data . . . . . . . . . . . . . . . . .10
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . 11
8. Financial Statements and Supplementary Data . . . . . . . . 12
9. Changes in and Disagreements on Accounting and
Financial Disclosure . . . . . . . . . . . . . . . . . . . . 12
PART III
10. Directors and Executive Officers of the Registrant . . . . . 12
11. Executive Compensation . . . . . . . . . . . . . . . . .14
12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . . . . . . 14
13. Certain Relationships and Related Transactions . . . . . . . 16
<PAGE>
PART IV Page No.
14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . . . . . . 18
15. Signatures . . . . . . . . . . . . . . . . . . . . . 20
<PAGE>
PART I
ITEM 1. BUSINESS
ORGANIZATION AND HISTORY
Corvallis, Inc. (the "Company" or the "Registrant"), was organized under the
laws of the state of Nevada on September 28, 1987, for the purpose of creating a
capital resource fund to seek, investigate, and, if warranted, to acquire or
enter into any suitable business opportunity which management believed had good
business potential. At the time of its organization, no specific business or
business area was contemplated by management.
In July, 1988, the Company completed a public offering of units, each unit
consisting of one share of the Company's common stock, one class A common stock
warrant, and one class B common stock purchase warrant. At the completion of the
offering, the Company had sold a total of 13,140,000 units at an offering price
of $0.01 per unit, resulting in gross proceeds to the Company of $131,400, and
net proceeds of $98,216 after sales commissions and other expenses of the
offering in the amount of $33,184. The Class A and Class B warrants sold in the
offering have expired.
In the end of August, 1989, the Registrant entered into an Asset Purchase
Agreement with DLB Enterprises, Inc., a closely-held Nevada corporation, under
the terms of which the Registrant acquired all of the assets of "Southwest
Awning Systems", a Las Vegas-based enterprise ("Southwest") which had been
engaged in the manufacture and installation of awnings for commercial,
industrial and residential use. Under the terms of the Asset Purchase Agreement,
the Registrant acquired all of the operating assets of Southwest, including
equipment, inventory, customer accounts, tradenames and trademarks and other
assets, in exchange for the issuance of a total of 31,663,334 shares of the
Registrant's restricted common stock to DLB. Concurrently with the transaction
with DLB, the Registrant entered into an agreement with W.A.M. Industries, Inc.
("WAM"), a closely-held Utah corporation which had previously owned Southwest
with DLB in a joint venture, under the terms of which WAM agreed to act as
contractor on all large commercial jobs of the Registrant at a price of cost
plus 10%, and generally agreed to contribute its expertise in the development of
the Registrant's business. In consideration of these undertakings by WAM, the
Company issued to WAM a total of 13,569,995 shares of its restricted common
stock. In connection with these transactions, the Registrant issued a total of
18,093,336 shares of restricted common stock to Whitney O. Cluff and his
affiliates, who were instrumental in facilitating the negotiation and
consummation of the transactions.
The Company attempted to operate the business of Southwest for a period of
approximately four (4) months, at which time operations were discontinued due to
the Company's insufficient operating income and capital to continue operations.
<PAGE>
At such time, the Company entered into an arrangement with WAM, under the terms
of which WAM assumed the operations of the Registrant and assumed all
outstanding Company liabilities and obligations.
Since January, 1990, the Company has not had any business operations.
Beginning in the last quarter of 1993, the Registrant began efforts to bring
current all of its filings with state and federal agencies, including the U. S.
Securities and Exchange Commission, in order that the Company could proceed to
look for a business opportunity for acquisition or in which the Company could
become engaged.
BUSINESS
The Registrant has not been in business since the end of 1989, and has only
recently undertaken necessary activities to enable it to become engaged in
business operations. The Company plans to seek out, investigate and acquire, or
become engaged in, any business opportunity management believes has good
business potential. No specific business or industry is presently contemplated.
Management anticipates that it will only acquire businesses which have, or
can generate or provide, audited financial statements. However, management
reserves the right to become engaged in a new business venture or a venture in
its infancy, if management determines such venture holds good business
potential.
The Registrant recognizes that because of its extremely limited financial,
management and other resources, the number of quality of suitable potential
business ventures available to it may be extremely limited.
The Company's principal business objective will be to seek long-term growth
potential in the business venture in which it participates, rather than to seek
immediate, short-term earnings. In seeking to attain the Company's business
objective, it will not restrict its search to any particular business or
industry, but may participate in business ventures of essentially any kind or
nature, including, but not limited to, finance, high technology, manufacturing,
natural resources, service, research and development, communications, insurance,
transportation and others. Management's discretion will be unrestricted and it
may participate in any business venture whatsoever, which meets the business
objectives discussed herein. It is emphasized that the business objectives of
the Registrant are extremely general and are not intended to be restrictive upon
the discretion of management.
The Company plans to seek one or more potential business ventures from its
known sources, but will rely heavily on personal contacts of its officers and
directors, as well as indirect associations or contacts between them and other
business and professional people. It is not presently anticipated that the
Company will engage professional firms or individuals specializing in business
acquisitions or reorganizations. However, any individual or firm, exclusive of
the officers, directors and principals of the Company who find a venture in
which the Company becomes engaged, may be properly compensated for their
efforts. In some instances, the Company may publish notices or advertisements
<PAGE>
seeking a potential business venture in financial or trade publications.
The Company will not restrict its search to a venture in any particular
stage of development, but may acquire or become engaged in a venture in its
preliminary or development stage, may participate in a business which is already
in operation, or in a business in various stages of it corporate existence. It
is impossible to predict at this stage the status of any venture in which the
Company may participate, in that the venture may need additional capital, may
desire to have its shares publicly traded, or may seek other perceived
advantages which the Company, as a public company, may offer. In some instances,
the business endeavors may involve the acquisition of or merger or
reorganization with a corporation which does not need substantial additional
capital but which desires to establish a public trading market for it
securities.
Firms which seek the Company's participation in their operations through a
reorganization, asset acquisition, or some other means may desire to do so to
avoid what such firms may deem to be adverse factors related to undertaking a
public offering. Such factors include substantial time requirements and legal
and other costs, along with other conditions or requirements imposed by various
state and federal regulatory agencies.
To a large extent, a decision to participate in a specific business endeavor
may be made upon management's analysis of the quality of the other firm's
management and personnel, the anticipated acceptability of new products,
marketing concepts or services, the merit of technological changes, and numerous
factors which may not be reflected on a balance sheet or operating statement and
are difficult, if not impossible, to analyze through the application of
objective criteria. In many instances, it anticipated that the results of
operation of a specific venture may not be indicative of the potential for the
future because of the requirement to substantially shift marketing approaches,
expand significantly, change product emphasis, change or augment management, and
other factors. Because the Company may participate in business endeavors with
newly organized firms or with firms which are entering a new phase of growth, it
should be emphasized that the Company will incur further risks since management
in may instances will not have proved its abilities or effectiveness, the
eventual market of such firm's product or services will likely not be
established, and the profitability of the firm will be unproved and cannot be
accurately predicted.
The analysis and review of new business ventures will be undertaken by or
under the supervision of the officers and directors, none of whom is a
professional business analyst. No member of managements has any significant
business experience or expertise in any type of business which is likely to be
investigated by the Company. Therefore, management will have to rely on their
common sense and business judgment as well as upon the advice of consultants to
analyze the factors described above. In reviewing prospective business
opportunities, management will consider such matters as the available technical,
financial and managerial resources, the working capital and other financial
requirements, the history of operations, if any; prospects for the future; the
nature of present and expected competition; the quality and experience of
management services available and the depth of management; the potential for
growth and expansion; risk factors; the perceived public recognition or
acceptance of products, services; and other factors.
<PAGE>
Generally, management will attempt to analyze all available factors in the
circumstances and make a determination based upon a composite of available
facts, without reliance upon any single factor as controlling.
The Company is unable to predict the timing as to when it may participate in
any specific business endeavor. It expects, however, that the review of business
opportunities will commence immediately, and that the analysis and selection of
any given venture may take several months or more.
It is anticipated that business opportunities will be available to the
Company from various sources, including its officers and directors and
shareholders and their business associates, professional advisors, securities
broker-dealers, venture capitalists, members of the financial community, and
others who may present unsolicited proposals. In certain circumstances, the
Company may agree to pay a finder's fee or to otherwise compensate investment
banking or other services provided by persons who are unaffiliated with the
Company but who submit a potential business opportunity in which the Company
elects to participate. No such finder's fee or other fees will be paid to any
person who is an officer, director or principal of the Registrant.
The Company may acquire a business venture by conducting a reorganization or
merger involving the issuance of securities of the Company. Due to the
requirements of certain provisions of the Internal Revenue Code, as amended, in
order to obtain certain beneficial tax consequences in such transactions, the
number of shares held by all of the present shareholders of the Company prior to
such transaction, may be substantially less than the total outstanding shares
held by such shareholders in any reorganized entity. The result of any such
reorganization or merger transaction could be additional substantial dilution to
the shareholders of the Company prior to the transaction.
It is anticipated that the investigation of specific business endeavors 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 under
review, the costs theretofore incurred would not be recoverable. Further, even
if an agreement is reached for the participation in a specific business venture,
the failure to consummate that transaction may result in the loss to the Company
of the related costs incurred.
The Company presently has essentially no assets, and does not currently have
any specific assets, properties or businesses in mind for potential acquisition
or involvement by the Company. Further, the Company does not presently have any
particular areas of business or industry in which it intends to look for
business opportunities.
In connection with a business acquisition or transaction, the Company may
need to raise equity or debt to fund such transaction, or to provide the
<PAGE>
business opportunity with necessary operating capital. There is no assurance the
Company will be able to raise capital when needed, or on terms which are
favorable to the Company.
Offices and Employees
The Company presently uses the offices of its Secretary/Treasurer and Vice
President, at no charge. At such time as business operations commence, the
Company may be charged a reasonable amount for its office facilities. The
Company has no employees.
ITEM 2. PROPERTIES
The Company does not hold any properties.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings, and no
such proceedings by or, to the best of its knowledge, against the Company have
been threatened.
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS
No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year covered by this report. In August, 1995, the board of directors and holders
of a majority of the issued and outstanding voting stock of the Company approved
a 1-for-five reverse in the issued and outstanding common stock of the Company.
<PAGE>
PART II
ITEM 5.
MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
The Company's securities were not traded or quoted during the quarter ended
June 30, 1995, and did not trade, nor were such securities quoted, from
approximately October, 1989, until August, 1995. As of September 28, the stock
was quoted at $ .50 bid, no offer. There is currently only a very limited
trading market for the Company's securities.
Since inception, no dividends have been paid on the Company's common stock,
and the Company does not anticipate paying dividends in the foreseeable future.
As of the date of filing this report, there were approximately 65 holders of
record of the Company's common stock.
ITEM 6.
SELECTED FINANCIAL DATA
The following selected financial data of the Company is not covered by an
opinion of a certified public accountant and should be read in conjunction with
the financial statements and related notes thereto.
Income Data
Period from Inception
(September 28, 1987)
For the Year Ended June 30, through June 30, 1995
1995 1994 1993 1992 1991
Revenue $-0- $-0- $-0- $-0- $-0- $-0-
Net Income
(loss) (7,855) (14,252) (1,335) (300) (300) (176,385)
Net Earnings
(loss)
per share -0- -0- -0- -0- -0- $0.06
<PAGE>
Balance Sheet Data
as of June 30,
1995 1994 1993 1992 1991
Total $ 420 $ 75 $2,196 $ -0- $ -0-
Assets
Long Term -0- -0- -0- -0- -0-
Liabilities
Current
Liabilities 1,150 2,350 4,431 900 600
Total
Liabilities 1,150 2,350 4,431 900 600
Shareholder's
Equity (750) (2,275) (2,235) (900) (600)
ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1995, the Company had only $420 in cash, $1,150 in liabilities,
and no other liquid assets or resources.
At present, the Company does not have adequate capital to conduct any
significant operations. The Company will be 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.
<PAGE>
RESULTS OF OPERATIONS
The Company had essentially no operations during the year ended June 30, 1995.
The Company incurred expenses during the year of $7,855 in accounting, legal and
other fees in connection with the Company's continuing efforts to file necessary
periodic reports and to reactivate its business operations.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements are included beginning at page 21.
ITEM 9.
CHANGES IN AND DISAGREEMENTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
NAMES AND TERMS OF OFFICE
The table below sets forth the name, age, and position of each executive
officer and director of the Company.
<PAGE>
Name Age Position Since*
Whitney O. Cluff 45 President and Chairman September, 1989
John Papanikolas 45 Secretary/Treasurer and Director September, 1987
Thomas Mulcock 45 Vice President and Director September, 1994
* Mr. Papanikolas has been an officer and director since inception. Messrs.
Cluff and Papanikolas were elected as officers and directors in connection with
the acquisition by the Company of the operating assets of Southwest Awning
Systems, which business was terminated by the Company in 1990. Mr. Mulcock was
elected an officer and director in January, 1994 in connection with the
Company's effort to reactivate its business. (See "ITEM 1. BUSINESS" and "ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTION").
The term of office of each executive officer and director is one year and
until his successor is elected and qualified.
Set forth below is biographical information for each of the Company's officers
and directors.
Whitney O. Cluff has been privately engaged in a number of ventures during the
past several years, primarily in the real estate area. For the past several
years, until 1994, he was a part-time employee of Delta Airlines. From 1990 to
1993, he was an employee of WAM Enterprises. From 1987 to 1989, he was engaged
as an account executive at Hughes Securities, Inc., a Salt Lake City
broker-dealer firm. For a period of approximately two years prior to that
position, he was employed as a registered representative with R.A. Johnson &
Company, Inc., a Salt Lake City broker-dealer firm. For a period of
approximately three years prior to that position, he was employed by Matthew R.
White Investment Company, a broker-dealer. Mr. Cluff is a licensed real estate
broker in the state of Utah. Since the middle of 1994, Mr. Cluff has been a
director of Digital Scientific, Inc., a closely held corporation engaged in the
development of electronics products.
John G. Papanikolas has been the President and owner of Emissions Xpress, a
Salt Lake City based owner and operator of an automobile emissions testing and
safety inspection centers, since 1993. From 1989 to the present, he has served
as a member of the board of directors of Magna Investment, Ltd., a developer of
shopping centers and real estate in Arizona and Utah. Since 1986, he has been a
director of Foothill Oriental Rugs, Inc., an importer, wholesaler and retailer
of oriental rugs and handmade carpets, located in Salt Lake City, Utah. From
1985 to 1988, he was editor and publisher of Guide Publications 7, Inc., a
publishing firm. From 1979 through 1985, he was owner and operator of Clayton
Oriental Rugs and in 1985 became advertising manager for Zions Oriental Rugs.
From 1989 to 1989, he has worked as a writer and editor for the Salt Lake
Tribune, a major daily newspaper in Salt Lake City. In 1983, Mr. Papanikolas
earned a bachelor's degree in business administration from the University of
Utah and a bachelor's degree in behavioral science from Westminster College.
<PAGE>
Thomas Mulcock has been, since 1972, the owner and operator of Thomas E.
Mulcock Real Estate Appraising Company, a real estate appraisal firm in Salt
Lake City, Utah. Mr. Mulcock is a member of the National Association of
Independent Fee Appraisers, the National Association of Real Estate Boards, and
the Salt Lake Board of Realtors. Mr. Mulcock attended the University of Utah
from 1967 to 1971, but did not receive a degree.
CONTROL PERSONS
Of the total of a 1,400,000 post-split shares of common stock issued and
outstanding, (after giving effect to a 1-for-25 reverse split effectuated in
August, 1994 and a 1-for-5 reverse split effectuated in August, 1995), a total
of 499,687 post-split shares are held by the CPM Group, a group consisting of
the officers and directors, and Mitchell T. Godfrey, M. Don Nelson, and James C.
Lewis. Thus, this group may be considered to be in control of the Company. (See
"Item 12. Security Ownership of Certain Beneficial Owners and Management").
ITEM 11. EXECUTIVE COMPENSATION
REMUNERATION DURING FISCAL YEAR
During the fiscal year ended June 30, 1995, no officer or director received
any compensation, except for Whitney O. Cluff, who received restricted common
stock in consideration of services rendered on behalf of the Company. Set forth
below is a summary of the compensation received by officers and directors during
the fiscal year:
CASH COMPENSATION TABLE
NAME OF INDIVIDUAL CAPACITY IN WHICH CASH
OR NUMBER IN GROUP SERVED COMPENSATION
Whitney O. Cluff President, Director $0 in cash (1)
John Papanikolas Secretary/Treasurer, Director $0
Thomas Mulcock Vice President, Director $0
*Mr. Cluff received a total of 143,750 shares of common stock during the fiscal
year in consideration of his efforts on behalf of the Company. (See CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS; Sales, Issuances and Transfers of
Restricted Common Stock).
<PAGE>
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth the name and address, as of the date of the
filing of this report, the approximate number of shares of common stock owned of
record or beneficially by each person who owned of record, or was known by the
Company to own beneficially, more than 5% of the common stock, and the name and
shareholdings of each officer and director, and all officers and directors as a
group:
Amount and Nature of Ownership(1)(3)
Sole Voting Shared Voting
Name of Person and Investment and Investment Percent of
or Group Power Power Class
Principal Shareholders:
CPM Group (2) 499,687 (2) 35.7
1486 South 1100 East
Salt Lake City, Utah 84105
Whitney O. Cluff 166,844 11.9
4751 Ichabod Street
Salt Lake City, Utah 84117 499,687(2) 35.7
John Papanikolas 70,642 5.0
1486 South 1100 East
Salt Lake City, Utah 84105 499,687(2) 35.7
Thomas Mulcock 29,687 2.1
1486 South 1100 East
Salt Lake City, Utah 84105
499,687(2) 35.7
Mitchell T. Godfrey 55,334 4.0
230 North Fork Ray Creek
Townsend, Montana 59644 499,687(2) 35.7
<PAGE>
James C. Lewis 50,418 3.6
505 South Main
Bountiful, Utah 84010 499,687(2) 35.7
M. Don Nelson 45,468 3.2
5122 South Holladay Blvd.
Holladay, Utah 84117 499,687(2) 35.7
Officers and Directors:
Whitney O. Cluff (See above)
John Papanikolas (See above)
Thomas Mulcock (See above)
All Officers and
Directors as a
Group (3 persons): 267,173 19.1
499,687 42.8
(1) Unless otherwise indicated, all shares are owned directly and of record.
(2) These shares are held by a group consisting of Whitney O. Cluff, John
Papanikolas and Thomas Mulcock, officers and directors, and M. Don Nelson,
Mitchell Godfrey and James C. Lewis. These shares are owned equally by such
individuals; therefore, each individual may be deemed to be the beneficial
holder of such shares. (See Item 13. Certain Relationships and Related
Transactions).
(3) All figures give effect to a 1-for-25 reverse split effectuated in
August, 1994, and a 1-for-5 split effectuated in August, 1995.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TERMINATION OF TRANSACTION WITH SOUTHWEST AWNINGS
As discussed under "ITEM 1. BUSINESS - Organization and History", in the end
of August, 1989, the Registrant completed the acquisition of Southwest from DLB
Enterprises, Inc. ("DLB"), then unaffiliated with the Company. In connection
<PAGE>
with this transaction, the Company issued a total of 1,266,533 shares, (as
presently constituted after the reverse split in August, 1994) to DLB; an
additional 542,800 shares to WAM, at that time unaffiliated with the Company;
and 723,733 shares to Whitney O. Cluff and his affiliates, who was then a
shareholder of the Company. In connection with this transaction, two of the then
officers and directors of the Company resigned, and Ken Brown and Marvin
Dobkins, officers of DLB, Rick McKinnon, an officer of WAM, and Whitney O.
Cluff, were elected as new management. John Papanikolas, who was an original
officer and director of the Registrant, remained as a director.
In the end of 1989, and the beginning of 1990, the business of Southwest was
terminated by the Company, and the Company has not conducted any significant
operations since that time, except payment of certain accounts payable. In the
beginning of 1990, WAM assumed all of the operations of Southwest and agreed to
pay all of the Company's outstanding debts. WAM took over the assets of
Southwest, consisting of cash, receivables and fixed assets.
SALES, ISSUANCES AND TRANSFERS OF RESTRICTED STOCK
In the middle and end of 1989, the Company sold a total of 10,113 post split
shares of its restricted common stock in private transactions to a total of four
(4) individuals, including John Papanikolas, an officer and director since
inception, and Thomas Mulcock, an officer and director since January, 1994, at a
price of $.0075 per share, or a total of $9,500. This stock was sold to provide
the Company with necessary operating capital to continue the business of
Southwest, which was ultimately discontinued in the end of 1989.
In the end of November, 1989, the Company issued a total of 11,200 post-split
shares, to Whitney O. Cluff, as payment for salary and fees owed to Mr. Cluff in
the amount of $10,500.
In December, 1992, WAM transferred to Whitney O. Cluff, all of the 108,557
post-split shares of restricted common stock of the Company issued to WAM in
connection with the Company's acquisition of Southwest, discussed above. This
stock was transferred in exchange for the cancellation of $6,000 owed by WAM to
Mr. Cluff. In January, DLB transferred all of the 245,307 post split shares of
the Company's common stock issued to DLB in connection with the acquisition of
Southwest, in exchange for the payment of $1,500 to DLB.
In January, 1994, the Company authorized the issuance of a total of 54,933
post split shares of restricted common stock to the CPM Group, a group
consisting of Thomas Mulcock, John Papanikolas, and Whitney O. Cluff, officers
and directors, and M. Don Nelson, Mitchell T. Godfrey and James C. Lewis, in
consideration of the contribution by Messrs. Papanikolas, Mulcock, Godfrey and
Nelson of the sum of $2,227 each in cash, and the contribution of time and
services by Messrs. Cluff and Lewis. Such cash and services contributions were
made as part of the Company's efforts to reactivate its business. In connection
with such arrangement, Mr. Cluff has transferred to the CPM Group a total of
370,252 post split shares of restricted common stock held by him or his
affiliates, to be owned jointly by the CPM Group. Each of the individuals named
above has an equal interest in the shares held by the CPM Group. Mr. Cluff has
also agreed to transfer the additional shares held by him or affiliates as
follows: 20,360 shares to Mr. Papanikolas; 20,000 shares to Mr. Lewis; and 8,000
<PAGE>
shares each to Messrs. Nelson and Godfrey, and William L. Mitchell, who served
as an officer for a brief period in 1989 and 1990. (See "Item 12. Security
Ownership of Certain Beneficial Owners and Management").
During the fiscal year ended June 30, 1995, the Company issued a total of
220,000 post split shares of restricted common stock to its officers, directors
and other principal shareholders, described in the paragraph above, in
consideration of approximately $9,000 in monies advanced by such individuals on
behalf of the Company, and services.
In August, 1995, the Company issued a total of 360,000 shares of restricted
common stock to Adrian Wilson, an unrelated third party, for the sum of $18,000.
The purchase price and certificate for such stock, were held in escrow account
pending the Company's review of a possible business reorganization. In December,
the Company elected not to proceed with this transaction, and the escrow was
terminated and all 360,000 shares were cancelled.
None of the transactions described above can be considered to be the result of
arms' length negotiations. All of the share figures described above give effect
to a 1-for-25 reverse split and completed by the Company in August, 1994, and a
1-for-5 reverse split completed in August, 1995.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
The following financial statements and schedules are included immediately
following the signature page to this report.
(a)(1) FINANCIAL STATEMENTS
TITLE PAGE NO.
Independent Accountants' Report of Jones, Jensen
& Company 21
Balance Sheets as of June 30, 1995 and 1994 22
Statement of Operations for the three
years ended June 30, 1995, 1994 and 1993 23
and from inception through June 30, 1995
<PAGE>
Statement of Stockholders' Equity for the
three years ended June 30, 1995, and the
period from inception through June 30, 1995
24
Statement of Cash Flows for the three
years ended June 30, 1995, and
from inception through June 30, 1995 26
Notes to Financial Statements 28
(a)(2). FINANCIAL STATEMENT SCHEDULES
None.
(a)(3). EXHIBITS:
EXHIBIT NO. SEC Reference No. Title of Document Location
1 (3) *Articles of Form 10-K
Incorporation for fiscal
year ended
June, 1989
2 (3) *Bylaws same
*These documents are incorporated herein by reference.
(b) REPORTS ON FORM 8-K
During the fiscal year ended June 30, 1995, the Company filed no reports on
Form 8-K.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has caused this report to
be signed on its behalf by the undersigned, hereunto duly authorized.
REGISTRANT:
CORVALLIS, INC.
Dated: September 29, 1995 By /s/Whitney O. Cluff
Whitney O. Cluff (Principal Executive
Officer)
Dated: September 29, 1995 By /s/John Papanikolas
John Papanikolas (Principal Financial and
Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
Dated: September 29, 1995 By /s/Whitney O. Cluff
Whitney O. Cluff, President and Chairman of
the Board
Dated: September 29, 1995 By /s/Thomas Mulcock
Thomas Mulcock, Vice President and Director
Dated: September 29, 1995 By /s/John Papanikolas
John Papanikolas, Director
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Corvallis, Inc.
(A Development Stage Company)
Salt Lake City, Utah
We have audited the accompanying balance sheets of Corvallis, Inc., (a
development stage company), as of June 30, 1995 and 1994 and the related
statements of operations, stockholders' equity (deficit), and cash flows for
the years ended June 30, 1995, 1994 and 1993 and for the period from
inception on September 28, 1987 through June 30, 1995. 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 audits.
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 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 Corvallis, Inc. as of
June 30, 1995 and 1994, and the results of its operations and its cash flows
for the years ended June 30, 1995, 1994 and 1993 and for the period from
inception on September 28, 1987 through June 30, 1995 in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 6 to the
financial statements, the Company is a development stage company with no
significant operating results to date. These conditions raise substantial
doubt about its ability to continue as a going concern. Management's plans
in regard to these matters are also described in Note 6. The financial
statements do not include any adjustments that might result from the outcome
of this uncertainty.
Jones, Jensen & Company
July 31, 1995
<PAGE>
CORVALLIS, INC.
(A Development Stage Company)
Balance Sheets
ASSETS
June 30,
1995 1994
CURRENT ASSETS
Cash $ 420 $ 75
Total Current Assets 420 75
TOTAL ASSETS $ 420 $ 75
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Stockholders' payable (Note 7) $ 1,150 $2,350
Total Current Liabilities 1,150 2,350
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock; authorized 200,000,000
common shares at $0.001 par value;
5,100,010 and 4,000,010 shares issued
and outstanding, respectively 5,100 4,000
Additional paid-in capital 170,555 162,255
Deficit accumulated during the
development stage (176,385) (168,530)
Total Stockholders'
Equity (Deficit) (730) (2,275)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ 420 $ 75
The accompanying notes are an intergral part of these financial statements
<PAGE>
CORVALLIS, INC.
(A Development Stage Company)
Statements of Operations
From
Inception On
September 28,
1987 Through
For the Years Ended June 30, June 30,
1995 1994 1993 1995
REVENUE $ - $ - $ - $ -
EXPENSES
Consulting fees 3,425 2,227 - 5,652
Legal 1,400 2,827 - 4,227
Accounting 1,175 4,775 - 5,950
Other 1,855 1,947 - 3,802
Total Expenses 7,855 11,776 - 19,631
LOSS FROM
OPERATIONS (7,855) (11,776) - (19,631)
LOSS ON DISCONTINUED
OPERATIONS - (2,476) (1,335) (156,754)
NET LOSS $(7,855) $(14,252) $(1,335) $(176,385)
WEIGHTED AVERAGE
LOSS PER SHARE $ (0.00) $ (0.00) $ (0.00) $ (0.06)
Weighted average
number of shares
outstanding 4,550,000 3,862,672 3,725,334 3,205,867
The accompanying notes are an integreal part of these financial statements
<PAGE>
CORVALLIS, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
From inception on September 28, 1987 to June 30, 1995
Deficit
Accumulated
Additional
During the
Common Stock Paid-in Development
Shares Amount Capital Stage
Balance at inception - $ - $ - $ -
Issuance of common stock
at inception at $.0375
per share 560,000 560 20,440 -
Issuance of common stock
in July 1988 at $.25,
less deferred offering
costs offset against
paid-in capital 525,600 526 91,209 -
Net loss from inception
to June 30, 1989 - - - (19,673)
Balance, June 30, 1989 1,085,600 1,086 111,649 (19,673)
Issuance of common stock
for fixed assets in
August 1989 2,533,067 2,533 16,775 -
Issuance of common stock
in private placement at
$.1875 in November 1989 106,667 107 19,893 -
Net loss for the year
ended June 30, 1990 - - - (132,670)
Balance, June 30, 1990 3,725,334 3,726 148,317 (152,343)
Net loss for the year
ended June 30, 1991 - - - (300)
Balance, June 30, 1991 3,725,334 3,726 148,317 (152,643)
Net loss for the year
ended June 30, 1992 - - - (300)
Balance, June 30, 1992 3,725,334 3,726 148,317 (152,943)
Net loss for the year
ended June 30, 1993 - - - (1,335)
Balance, June 30, 1993 3,725,334 $ 3,726 $ 148,317 $ (154,278)
The accompanying notes are an integral part of these financial statements
<PAGE>
CORVALLIS, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
From inception on September 28, 1987 to June 30, 1995
Deficit
Accumulated
Additional
During the
Common Stock Paid-in Development
Shares Amount Capital Stage
Balance, June 30, 1993 3,725,334 $3,726 $148,317 $(154,278)
Issuance of common stock for
extinguishment of stockholders'
payable at $.0517 274,676 274 13,938 -
Net loss for the year ended
June 30, 1994 - - - (14,252)
Balance, June 30, 1994 4,000,010 4,000 162,255 (168,530)
Issuance of common stock for
extinguishment of stockholders'
payable at $.008 in March 1995 425,000 425 2,975 -
Issuance of common stock for
extinguishment of stockholders'
payable at $.01 in March 1995 300,000 300 2,700 -
Issuance of common stock for
services rendered at $.008
in March 1995 375,000 375 2,625 -
Net loss for the year ended
June 30, 1995 - - - (7,855)
Balance, June 30, 1995 5,100,010 $5,100 $170,555 $(176,385)
The accompanying notes are an integral part of these financial statements
<PAGE>
CORVALLIS, INC.
(A Development Stage Company)
Statements of Cash Flows
From
Inception On
September 28,
1987 Through
For the Years Ended June 30, June 30,
1995 1994 1993 1995
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss from operations $(7,855) $(14,252) $ (1,335) $(176,385)
Discontinued operations - - - 19,308
Stock issued for services
and for relief of debt 9,400 14,212 - 23,612
Increase (decrease) in
current liabilities (1,200) (2,081) 3,531 1,150
Net Cash Provided
(Used) by Operating
Activities 345 (2,121) 2,196 (132,315)
CASH FLOWS FROM
INVESTING ACTIVITIES - - - -
CASH FLOWS FROM
FINANCING ACTIVITIES
Issuance of common stock - - - 132,735
Net Cash Provided (Used)
by Financing Activities - - - 132,735
NET INCREASE (DECREASE)
IN CASH 345 (2,121) 2,196 420
CASH AT BEGINNING OF YEAR 75 2,196 - -
CASH AT END OF YEAR $ 420 $ 75 $ 2,196 $ 420
CASH PAID DURING
THE YEAR FOR
Interest $ - $ - $ - $ -
Income taxes $ - $ - $ - $ -
The accompnaying notes are an integral part of these financial statements
<PAGE>
CORVALLIS, INC.
(A Development Stage Company)
Statements of Cash Flows (Continued)
From
Inception On
September 28,
1987 Through
For the Years Ended June 30, June 30,
1995 1994 1993 1995
NON-CASH FINANCING
ACTIVITIES
Issuance of common stock
for fixed assets $ - $ - $ - $ 19,308
Issuance of common stock
for extinguishment of
stockholders' payable $ 6,400 $14,212 $ - $ 20,612
Issuance of common stock
for services rendered $ 3,000 $ - $ - $ 3,000
The accompanying notes are an integral part of these financial statements
<PAGE>
CORVALLIS, INC.
(A Development Stage Company)
Notes to the Financial Statements
June 30, 1995 and 1994
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. The Company has not presently identified a specific business
area or direction that it will follow. Therefore, no principal
operations have yet begun.
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. Taxes on Income
Effective for fiscal year 1992, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes"
(SFAS No. 109). Under the provisions of SFAS No. 109, the Company
elected not to restate prior years and has determined that the
cumulative effect of this accounting change is immaterial. The Company
has a net operating loss carryover of approximately $175,000 which
begins to expire in 2004.
f. Statement of Cash Flows
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.
g. Office Space
A director of the Company provides office space in his home for the
Company. The space is used primarily by the director for his personal
affairs. The value to the Company is minimal. Accordingly, no benefit
has been recorded.
<PAGE>
CORVALLIS, INC.
(A Development Stage Company)
Notes to the Financial Statements
June 30, 1995 and 1994
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 was exercisable at $.75 for a period of six
(6) months commencing six (6) months from the effective date of the
offering. The Warrant B was exercisable at $1.50 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 $.25 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 has 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 723,734 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 5.
<PAGE>
CORVALLIS, INC.
(A Development Stage Company)
Notes to the Financial Statements
June 30, 1995 and 1994
NOTE 4 - PRIVATE PLACEMENT
On November 22, 1989, the Company issued 106,667 common shares at a
price of $.1875. The Board of Directors issued to Whitney Cluff shares
for monies he expended 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.
Currently, management is committed to cover all operating and other
costs until sufficient revenues are generated.
NOTE 7 - STOCKHOLDERS' PAYABLE
Somestockholders of the Company have paid expenses on behalf of the
Company. The amount paid on behalf of the Company is non-interest
bearing and will be repaid to the stockholders when monies are
available.
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.
<PAGE>
