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, 1997
Commission File No. 33-18143-D
CORVALLIS, INC.
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(Exact name of Registrant as specified in its Charter)
Nevada 87-0449399
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1486 South llth East
Salt Lake City, Utah 84105
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(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number including Area Code:
(801) 487-3893
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Securities Registered Pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on which Registered
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None None
Securities Registered Pursuant to Section 12(g) of the Act:
None
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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 30, 1997, was approximately $73,000.
As of the date of the filing of this report, the Registrant had
outstanding a total of 1,330,009 shares of its common stock, par value $ 0.001,
after giving effect to a 1-for-5 reverse split completed in August, 1995.
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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.
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TABLE OF CONTENTS
Item Number and Caption Page No.
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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 ..................................................11
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................................12
8. Financial Statements and Supplementary Data ..............................13
9. Changes in and Disagreements on Accounting and Financial Disclosure ......13
PART III
10. Directors and Executive Officers of the Registrant .......................14
11. Executive Compensation ...................................................15
12. Security Ownership of Certain Beneficial Owners and Management ...........16
13. Certain Relationships and Related Transactions ...........................18
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PART IV Page No.
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14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K .....................................................20
15. Signatures ..............................................................22
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PART I
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ITEM 1. BUSINESS
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GENERAL
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.
The Company has been inactive for the past several years, and has been
attempting to locate a suitable business to acquire or a corporate enterprise
with which it could enter into a merger or reorganization transaction. The
Company has very limited assets, however, and any such transaction may require
the Company to raise capital or undertake some form of financing. Because of the
Company's extremely limited resources, there can be no assurance the Company
will be able to locate a suitable enterprise for an acquisition or
reorganization or merger transaction on terms which can be achieved by the
Company.
HISTORY
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 (105,120 post-split) 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 issued a total of 506,614
post-split shares to certain parties, including the Registrant's president, in
connection with the Registrant's purchase of certain assets, and undertakings in
the commercial awning business in Las Vegas, Nevada. This enterprise was
unsuccessful and was terminated by the Registrant in the end of 1989 and the
beginning of 1990.
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. These activities were completed in 1995.
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Since the end of 1995, the Company has been seeking a business opportunity
which it could acquire or in which it could become engaged. The Company has
reviewed a number of business opportunities, but has not entered into any
transactions to date.
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
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
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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.
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.
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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
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.
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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.
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ITEM 2. PROPERTIES
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The Company does not hold any properties.
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ITEM 3. LEGAL PROCEEDINGS
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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.
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ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS
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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.
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PART II
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ITEM 5.
MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
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There is currently only a very limited trading market for the Company's
shares of common stock; however, the Company's shares of common stock are
eligible for quotation on the NASD Electronic Board under the symbol "CLOV." The
following sets forth, for the respective periods indicated, the high and low bid
prices of the Company's common stock in the over-the-counter market:
Quarter Ended High Bid Low Bid
- ------------- -------- -------
September 30, 1995 $.25 $.25
December 31, 1995 $.25 $.25
March 31, 1996 $.25 $.25
June 30, 1996 $.25 $.25
September 30, 1996 $.50 $.25
December 31, 1996 $.50 $.50
March 31, 1997 $.50 $.50
June 30, 1997 $.50 $1.25
As of September 30, 1997, the stock was quoted at $.50 bid, no offer.
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 180 holders
of record of the Company's common stock.
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ITEM 6.
SELECTED FINANCIAL DATA
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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, 1996
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1997 1996 1995 1994 1993
---- ---- ---- ---- ----
Revenue $ -0- $ -0- $ -0- $ -0- $ -0- $ -0-
Net Income
(loss) (9,840) (7,535) (7,855) (14,252) (1,335) (183,920)
Net Earnings
(loss)
per share $.007 $.006 -0- -0- -0- $ 0.25
BALANCE SHEET DATA
AS OF JUNE 30,
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1997 1996 1995 1994 1993
---- ---- ---- ---- ----
Total $ 44 $ 333 $ 420 $ 75 $2,196
Assets
Long Term -0- -0- -0- -0- -0-
Liabilities
Current
Liabilities $2,729 1,200 1,150 2,350 4,431
Total
Liabilities $1,200 1,150 2,350 4,431 900
Shareholder's
Equity (2,685) (865) (750) (2,275) (2,235)
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ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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LIQUIDITY AND CAPITAL RESOURCES
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At June 30, 1997, the Company had only $44 in cash, $2,729 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 is engaged in the search for potential
business opportunities for acquisition or involvement by the Company, which
activities are severely limited by the Company's lack of resources. 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.
RESULTS OF OPERATIONS
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The Company had essentially no operations during the year ended June 30,
1997. The Company incurred expenses during the year of $9,840 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, and in
reviewing a number of possible business opportunities during the fiscal year.
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ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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The financial statements are included beginning at page F-1.
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ITEM 9.
CHANGES IN AND DISAGREEMENTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
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In July, 1997, the Registrant changed its accountants to the firm of
Crouch, Bierwolf and Chisholm, a Salt Lake City, Utah certified public
accounting firm. The former accounting firm, Jones, Jensen & Company, was
dismissed by the Registrant in July, 1997. The decision to change accountants
was approved by the Registrant's board of directors.
The report of the former accounting firm for the past two years did not
contain an adverse opinion or disclaimer of opinion, nor was it qualified or
modified as to uncertainty, audit scope or accounting principles. During the
Registrant's two most recent fiscal years, there were not any disagreements with
the former accounting firm on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure. In addition, the
Registrant has not experienced any other events pertaining to the change of
accountants, which require disclosure under this Item 9 or under Rule 304 of
Regulation S-K, of the Securities Exchange Act of 1934, as amended.
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PART III
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ITEM 10.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
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NAMES AND TERMS OF OFFICE
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The table below sets forth the name, age, and position of each executive
officer and director of the Company.
Name Age Position Since*
---- --- -------- -----
Whitney O. Cluff 47 President and Chairman September, 1989
John Papanikolas 47 Secretary/Treasurer and Director September, 1987
Thomas Mulcock 47 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.
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
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broker in the state of Utah. From the middle of 1994 to the middle of 1995, Mr.
Cluff was 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.
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 1,250,009 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, and its individuals, may be considered to be in control
of the Company. (See "Item 12. Security Ownership of Certain Beneficial Owners
and Management").
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ITEM 11. EXECUTIVE COMPENSATION
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REMUNERATION DURING FISCAL YEAR
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During the fiscal year ended June 30, 1997, 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, described
below. Set forth below is a summary of the compensation received by officers and
directors during the fiscal year:
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CASH COMPENSATION TABLE
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NAME OF INDIVIDUAL CAPACITY IN WHICH CASH
OR NUMBER IN GROUP SERVED COMPENSATION
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Whitney O. Cluff President, Director $0 in cash (1)
John Papanikolas Secretary/Treasurer, Director $0
Thomas Mulcock Vice President, Director $0
- -----
1) During the fiscal year, Mr. Cluff was issued a total of 20,000 shares of
common stock of the Company in consideration of his efforts on behalf of the
Company, valued at approximately $2,000. (See "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS; Sales, Issuances and Transfers of Restricted Common Stock").
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ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
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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:
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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:
Whitney O. Cluff 325,126 24.4 (2)
4751 Ichabod Street -0- -0-
Salt Lake City, Utah 84117
John Papanikolas 213,248 16.0 (2)
1486 South 1100 East -0- -0-
Salt Lake City, Utah 84105
Thomas Mulcock 113,148 8.5 (2)
1486 South 1100 East -0- -0-
Salt Lake City, Utah 84105
Mitchell T. Godfrey 191,340 14.4 (2)
230 North Fork Ray Creek -0- -0-
Townsend, Montana 59644
James C. Lewis 183,699 13.8 (2)
10 West 100 South, Suite 600 -0- -0-
Salt Lake City, Utah 84101
M. Don Nelson 157,999 11.9 (2)
5122 South Holladay Blvd. -0- -0-
Holladay, Utah 84117
Officers and Directors:
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Whitney O. Cluff (See above)
John Papanikolas (See above)
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Thomas Mulcock (See above)
All Officers and
Directors as a
Group (3 persons): 651,522 48.9
-0- -0-
(1) Unless otherwise indicated, all shares are owned directly and of
record.
(2) During the fiscal year, these individuals each received 83,281 shares
distributed from the "CPM Group", a partnership consisting of these individuals.
CPM Group held a total of 499,687 shares, all of which was distributed to the
partners. (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.
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ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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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 approximately $.9375 per share (adjusted for the stock
splits), 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 108,560
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 253,307 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.
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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
shares each to Messrs. Nelson and Godfrey, and William L. Mitchell, who served
as an officer for a brief period in 1989 and 1990. During the fiscal year, the
partners of the CPM Group elected to have the shares held by CPM Group disbursed
to each of them. As a result of such action, a total of 83,281 shares were
transferred from CPM Group to each of the partners. (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.
During the fiscal year ended June 30, 1996, the Company issued a total of
105,000 shares of its restricted common stock to an Whitney O. Cluff, an officer
and director, for services and $2,000 in cash; an additional 40,000 shares to
James C. Lewis for services rendered on behalf of the Company; and an additional
65,000 shares to M. Don Nelson and Mitchell T. Godfrey for the sum of $1,625 in
cash. During the fiscal year ended June 30, 1997, the Company issued a total of
80,000 shares or restricted common stock to the following persons for the
consideration indicated: M. Don Nelson - 10,000 shares for $1,000; Mitchell T.
Godfrey - 20,000 for $2,000 cash; John Papanikolas - 20,000 shares for $2,000
cash; James C. Lewis - 1,000 shares for services; and Whitney O. Cluff - 2,000
shares for services.
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.
19
<PAGE>
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 F-3
Balance Sheets as of June 30, 1997 and 1996 F-4
Statement of Operations for the three
years ended June 30, 1997, 1996 and 1995 F-5
and from inception through June 30, 1997
Statement of Stockholders' Equity for the
three years ended June 30, 1997, and the
period from inception through June 30, 1997 F-6
Statement of Cash Flows for the three
years ended June 30, 1997, and
from inception through June 30, 1997 F-9
Notes to Financial Statement F-10
(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
20
<PAGE>
2 (3) *Bylaws same
*These documents are incorporated herein by reference.
(b) REPORTS ON FORM 8-K
During the fiscal year ended June 30, 1997, the Company filed no reports on
Form 8-K.
21
<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: October 2, 1997 By /s/Whitney O. Cluff
-----------------------------------------------
Whitney O. Cluff (Principal Executive Officer)
Dated: October 2, 1997 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: October 2, 1997 By /s/Whitney O. Cluff
-----------------------------------------------
Whitney O. Cluff, President and Chairman of the
Board
Dated: October 2, 1997 By/s/Thomas Mulcock
-----------------------------------------------
Thomas Mulcock, Vice President and Director
Dated: October 2, 1997 By/s/John Papanikolas
-----------------------------------------------
John Papanikolas, Director
22
<PAGE>
Corvallis, Inc.
(a Development Stage Company)
Financial Statements
June 30, 1997 and 1996
<PAGE>
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 . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . 10
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
Corvallis, Inc.
We have audited the accompanying balance sheets of Corvallis, Inc. (a
Development Stage Company) for the year ended June 30, 1997 and the related
statements of operations, stockholders' equity and cash flows for the year then
ended and from inception of the development stage on September 28, 1987 through
June 30, 1997. 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. The financial statements of Corvallis,
Inc. as of June 30, 1996, were audited by other auditors whose report dated
August 14,1996, expressed an unqualified opinion on those statements.
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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Corvallis, Inc. (a Development
Stage Company) as of June 30 1997 and the results of its operations and cash
flows for the year then ended and from inception of the development stage on
September 28, 1997 through June 30, 1997 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 5 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 plan in regard to
these matters are also described in Note 5. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/Couch, Bierwolf & Chisholm
Salt Lake City, Utah
August 15, 1997
<PAGE>
Corvallis, Inc.
(a Development Stage Company)
Balance Sheets
Assets
June 30
----------------------
1997 1996
-------- --------
Current assets
Cash $ 44 $ 335
--------- ---------
Total Assets $ 44 $ 335
========= =========
Liabilities and Stockholders' Equity
Liabilities
Accounts payable $ 2,205 $ 1,200
Accounts Payable-related party (Note 6) 524 --
--------- ---------
Total liabilities 2,729 1,200
--------- ---------
Stockholders' Equity
Common Stock, authorized
200,000,000 shares of $.001 par value,
issued and outstanding 1,330,009 shares
and 1,250,000 shares issued and outstanding 1,330 1,250
Additional Paid-in Capital 189,745 181,805
Deficit Accumulated During the
Development Stage (193,760) (183,920)
--------- ---------
Total Stockholders' Equity (2,685) (865)
--------- ---------
Total Liabilities and Stockholders' Equity $ 44 $ 335
========= =========
The accompanying notes are an integral part of these financial statements
4
<PAGE>
<TABLE>
Corvallis, Inc.
(a Development Stage Company)
Statements of Operations
<CAPTION>
Cumulative
For the years ended June 30, Total
----------------------------------------- Since
1997 1996 1995 Inception
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ -- $ -- $ -- $ --
Expenses:
Consulting fees 2,000 1,395 3,425 9,047
Legal 2,200 3,200 1,400 9,627
Accounting 2,015 1,983 1,175 9,948
General & Administrative 3,625 957 1,855 8,384
----------- ----------- ----------- -----------
Total Expenses 9,840 7,535 7,855 37,006
----------- ----------- ----------- -----------
Net loss before discontinued operations $ (9,840) $ (7,535) $ (7,855) $ (37,006)
----------- ----------- ----------- -----------
Loss on disposed of operations -- -- -- (156,754)
----------- ----------- ----------- -----------
Net Loss $ (9,840) $ (7,535) $ (7,855) $ (193,760)
=========== =========== =========== ===========
Net Loss Per Share $ (.007) $ (.006) $ (.008) $ (.248)
=========== =========== =========== ===========
Weighted average shares outstanding 1,306,994 1,104,301 910,000 779,687
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
5
<PAGE>
<TABLE>
Corvallis, Inc.
(a Development Stage Company)
Statement of Stockholders' Equity
<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)
Capital contributed by
extinguishment of
stockholders' payable -- -- 1,150 --
Issuance of common stock for
extinguishment of stockholders'
payable at $0.05 per share in
September, 1995 20,000 20 980 --
Issuance of common stock for
extinguishment of stockholders'
payable at $0.025 per share in
March, 1996 130,000 130 3,120 --
Issuance of common stock for
services rendered at $0.025
per share in March, 1996 80,000 80 1,920 --
Fractional shares from reverse
stock split 7 -- -- --
Net loss for the year ended
June 30, 1996 -- -- -- (7,535)
--------- --------- --------- ---------
Balance, June 30, 1996 1,250,009 1,250 181,805 (183,920)
Shares issued for cash in
October 1996 60,000 60 5,940 --
Issuance of common stock for
services rendered at $0.025 per
share in October 1996 20,000 20 2,000 --
Net Loss for the year ended
June 30,1997 -- -- -- (9,840)
--------- --------- --------- ---------
Balance June 30, 1997 1,330,009 $ 1,330 $ 189,745 $(193,760)
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements
6
<PAGE>
<TABLE>
Corvallis, Inc.
(a Development Stage Company)
Statement of Stockholders' Equity
<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 (154,278)
Issuance of common stock for
extinguishment of stockholders'
payable at $0.2587 per share 54,936 55 14,157 --
Net loss for the year ended
June 30, 1994 -- -- -- (14,252)
--------- --------- --------- ---------
Balance, June 30, 1994 800,002 800 165,455 (168,530)
Issuance of common stock for
extinguishment of stockholders'
payable at $0.04 per share in
March, 1995 85,000 85 3,315 --
Issuance of common stock for
extinguishment of stockholders'
payable at $0.05 per share in
March, 1995 60,000 60 2,940 --
Issuances of common stock for
services rendered at $.04 per
share 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>
The accompanying notes are an integral part of these financial statements
7
<PAGE>
<TABLE>
Corvallis, Inc.
(a Development Stage Company)
Statement of Stockholders' Equity
<CAPTION>
Deficit
Accumulated
Additional During the
Common Stock paid-in Development
Shares Amount Capital Stage
-------- --------- ----------- ------------
<S> <C> <C> <C> <C>
Balance at inception -- $ -- $ -- $ --
Issuance of common stock
at inception at $0.1875 per share 112,000 112 20,888 --
Issuance of common stock in
July, 1988 at $1.25 per share,
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 and services in
August, 1989 506,613 507 18,801 --
Issuance of common stock
in private placement at $0.9375
per share in November, 1989 21,333 21 19,979 --
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, 1990 -- -- -- (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>
The accompanying notes are an integral part of these financial statements
8
<PAGE>
<TABLE>
Corvallis, Inc.
(a Development Stage Company)
Statement of Cash Flows
<CAPTION>
September
28, 1987
For the years ended, June 30, (inception)
--------------------------------------- to June 30,
1997 1996 1995 1997
------------- ------------ ------------ -----------
Cash Flows form Operating
Activities:
<S> <C> <C> <C> <C>
Net loss $ (9,840) $ (7,535) $ (7,855) $(193,760)
Discontinued operations -- -- -- 19,308
Non-cash services rendered
and expenses paid by
stockholders' 2,020 6,250 9,400 28,857
Increase (decrease) in
current liabilities 1,529 1,200 (1,200) 2,729
--------- --------- --------- ---------
Net Cash Provided (Used)
by Operating Activities (6,291) (85) 345 (142,866)
--------- --------- --------- ---------
Cash Flows from Investment
Activities: -- -- -- --
--------- --------- --------- ---------
Cash Flows from Financing
Activities:
Issuance of common stock 6,000 -- -- 142,910
--------- --------- --------- ---------
Net Cash Provided by
Financing Activities 6,000 -- -- 142,910
--------- --------- --------- ---------
Net increase (decrease) in cash (291) (85) 345 44
Cash, beginning of year 335 420 75 --
-------- --------- --------- ---------
Cash, end of year $ 44 $ 335 $ 420 44
========= ========= ========= =========
Cash, paid during the year for:
Interest $ -- $ -- $ -- $ --
Income taxes $ -- $ -- $ -- $ --
</TABLE>
The accompanying notes are an integral part of these financial statements
9
<PAGE>
Corvallis, Inc.
(a Development Stage Company)
Notes to the Financial Statements
June 30, 1997 and 1996
NOTE 1 - Summary of Significant Accounting Policies
a. Organization
The financial statements presented are those of Corvallis, Inc., a
development stage stage company. 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. Net Loss Per Share
The computation of net loss per share of common stock is 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 Income Taxes
The Company accounts for income taxes using Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." Under
Statement 109, the liability method is used in accounting for
income taxes.
At June 30, 1997 the Company had net operating loss carryforwards
of approximately $193,000 that may be offset against future
taxable income through 2012. No provision for income taxes has
been made due to these net operating loss carryforwards. The tax
benefit of the net operating loss carryforwards is offset by a
valuation allowance of the same amount due to the uncertainty that
the carryforwards will be used before they expire.
Utilization of the net operating losses may be subject to a
substantial annual limitation due to the "change in ownership"
provisions of the Internal Revenue Code of 1986 and similar state
provisions. The annual limitation may result in the expiration of
net operating losses before utilization.
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.
The accompanying notes are an integral part of these financial statements
10
<PAGE>
Corvallis, Inc.
(A Development Stage Company)
Notes to the Financial Statements
June 30, 1997 and 1996
NOTE 1 - Summary Of Significant Accounting Policies (Continued)
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 considered
immaterial. Accordingly, no benefit has been recorded.
h. 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 disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
NOTE 2 - Public Offering
In 1988 the Company completed a public offering which was
registered on Forms S-18 in accordance with the Securities Act of
1933. A total of 105,120 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
In September 1989, the Company completed the terms of an Asset
Purchase Agreement with DLB Enterprises, Inc. (DLB"), a
closely-held Nevada corporation, 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 253,306 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 issued to WAM a
total of 108,560 shares of its restricted common stock. In
connection with these transactions, the Company issued a total of
144,747 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
4).
The accompanying notes are an integral part of these financial statements
11
<PAGE>
Corvallis, Inc.
(A Development Stage Company)
Notes to the Financial Statements
June 30, 1997 and 1996
NOTE 4 -Discontinued Operations
The Company, on January 1, 1990, decided to discontinue its operations.
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 exchanges.
NOTE 5 - 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, the stockholders are committed to cover all operating and
other costs until sufficient revenues are generated.
NOTE 6 - Stockholders' Payable
Whitney Cluff an officer and shareholder of the Company has paid all
expenses on behalf of the Company. The amount un-reimbursed of $524 is
non-interest bearing and will be repaid to the stockholder when monies
are available or will be converted to equity.
NOTE 7 - 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.
On August 22, 1995 the shareholders of the Company approved a motion
authorizing an additional reverse split of the issued and outstanding
common stock of the company on a 1-for-5 basis. All references to
shares outstanding and net loss per share have been adjusted to reflect
the effects of these stock splits on a retroactive basis.
The accompanying notes are an integral part of these financial statements
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 44
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 44
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 44
<CURRENT-LIABILITIES> 2729
<BONDS> 0
0
0
<COMMON> 1330009
<OTHER-SE> (2645)
<TOTAL-LIABILITY-AND-EQUITY> 44
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9840
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (9840)
<INCOME-TAX> 0
<INCOME-CONTINUING> (9840)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9840)
<EPS-PRIMARY> (.007)
<EPS-DILUTED> (.007)
</TABLE>
