SECURITIES EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1996
Commission file number 33-19196-A
----------
STRATEGIC VENTURES, INC.
(Exact name of registrant as specified in its charter)
Florida 59-2919648
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
3816 West Linebaugh Avenue, Ste. 408, Tampa, Florida 33624
-------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(813) 960-0557
Securities Registered Pursuant to Section 12(b) of the Act: 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 the filing
requirements for at least the past 90 days. Yes No X
--- ---
Indicate by check mark if disclosure of delinquent filers in Response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained to the best of Registrant's knowledge in definitive proxy or
information statements incorporate by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. Yes No X
--- ---
As of December 31, 1996, 4,000,000 shares of common stock were outstanding. The
aggregate market value of the Stock held by non-affiliates of Strategic
Ventures, Inc. was approximately $0 at December 31, 1996.
Transitional Small Business Disclosure Format: Yes No X
--- ---
Documents incorporated by reference: None.
This form 10-KSB consists of 12 pages.
<PAGE>
Part I
Item 1. Business.
Strategic Ventures, Inc., ("the Company") a Florida corporation was
organized in March, 1987, as Sci Tech Ventures, Inc., and successfully completed
its initial public offering in August, 1989. The term "Company" includes the
registrant and its subsidiaries, unless the context indicates otherwise. The
Company raised $109,000 through the sale of 109 units consisting of Ten Thousand
shares of par value $.0001 Common Stock, and Ten Thousand Common Stock Purchase
Warrants to purchase an additional Ten Thousand shares of Common Stock at a
price of $.50 and One Zero Coupon U.S. Treasury-Backed Obligation ("USTBO") with
a maturity value of $1,000. The warrants expired in October 1992.
The Company changed its name to Strategic Ventures, Inc. in May, 1991.
The Company was formed to engage in the identification, evaluation and
investigation of prospective business acquisition candidates, and if believed
warranted, the acquisition of one or more selected businesses, ventures or
enterprises.
Activities
- ----------
During 1996, the Company's business activities involved the search for
investment opportunities in diverse industries such as specialized
pharmaceutical products manufacturer, entertainment and recreational businesses
among others.
The Company investigated several acquisition candidates during fiscal
1996, but did not pursue a merger agreement after completion of due diligence
reviews by the Company's management team. The Company continues to investigate
potential acquisitions on an ongoing basis with a view towards meeting the
listing requirements for NASDAQ.
2
<PAGE>
Regulation and Taxation
- -----------------------
Any securities which the Company issues in exchange for the Common Stock
of a target acquisitions will be "restricted securities" within the meaning of
the Securities Act of 1933 (the "1933 Act"). If the target stockholders elected
to resell such securities, such sale could not proceed unless a registration
statement had been declared effective by the Securities and Exchange Commission
or an exemption from registration was available. As a condition to any merger or
acquisition, it is possible that target company's management may request
registration of the Company's Common Shares to be received by target company
shareholders. In such event, the Company could incur significant related
expenses however, management would likely require the target company to bear
most, if not all, of the cost of any such registration.
The Company intends to structure a merger or acquisition in such a
manner as to minimize federal and state tax consequences for the Company and any
target company.
Competition
- -----------
The Company continues to view itself as an insignificant participant
among the other firms which engage in mergers and acquisitions of
privately-financed concerns. Other competitive firms may have greater financial
and personnel resources and technical expertise than the Company.
Employees and Consultants
- -------------------------
The Company presently has no employees, although its
President/Treasurer, Thomas L. McCrimmon and Vice President/Secretary, Bertram
E. Cutler continue to serve on an as needed basis. These officers devote such
time as necessary to the business affairs of the Company. The Company may also
engage, from time to time, the services of outside consultants to assist it in
the evaluation of prospective target companies and other management matters.
Neither Mr. McCrimmon nor Mr. Cutler receive salaries, however, they are
reimbursed for their expenses incurred in their services as officers. There is
no provision for any additional bonuses or benefits. The Company anticipates
that in the near future it may enter into employment agreements with its
officers. Although Directors do not receive compensation for their services they
may be reimbursed for expenses incurred in attending Board meetings.
The Company has authorized 100,000,000 shares of common stock at
$0.0001 par value. There are 4,000,000 shares of common stock issued and
outstanding as of December 31, 1996.
3
<PAGE>
Item 2. Properties
The Company maintains it's corporate office at 3816 West Linebaugh
Avenue, Suite 408, Tampa, Florida 33624 under an informal arrangement with the
Company's President. This space is deemed adequate for the foreseeable future.
Item 3. Legal Proceedings
The Company is not a party to any pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters have been submitted to a vote of security holders.
PART II
Item 5. Market Common Equity and Related Stockholder Matters.
The outstanding registered securities of Strategic Ventures, Inc.
were not traded in any quotation medium maintained by members of the National
Association of Securities Dealers, Inc. during the year 1996.
Common Stock Common Stock
1996 Bid High Bid Low
- --------------------------------------------------------------------------------
1st Quarter $ 0 $ 0
2nd Quarter $ 0 $ 0
3rd Quarter $ 0 $ 0
4th Quarter $ 0 $ 0
Common Stock Common Stock
1995 Bid High Bid Low
- --------------------------------------------------------------------------------
1st Quarter $ 0 $ 0
2nd Quarter $ 0 $ 0
3rd Quarter $ 0 $ 0
4th Quarter $ 0 $ 0
Since the closing of the Company's Initial Public Offering the Company's
shares traded over the counter by market makers for a period in 1989 - 90. Share
prices have not been quoted since then. Quotations, when made, represent only
prices between dealers and do not include retail markups, markdowns or
commissions and accordingly, may not represent actual transactions. The Company
estimates that as of December 31, 1996, there are approximately 402 stockholders
holding shares in their name and an unknown number of shares held in the name of
securities broker/dealers.
4
<PAGE>
No dividends have been declared or paid by the Company and presently
intends to retain all future earnings, if any, to finance the expansion and
development of its business.
Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Financial Condition
- -------------------
During fiscal year 1996, the Company continued to be a development stage
entity and had no sales or revenues.
Liquidity and Capital Assets.
- -----------------------------
The Company's primary source of liquidity since inception has been from
funds raised from its initial public stock offering which were fully expended in
1991. During fiscal 1996, cash requirements have been minimal due to the minimal
present level of operations. The Company anticipates it will rely in part, upon
the operating profits of its principal subsidiary activities, to contribute
toward its day to day working capital needs.
The Company's cash and cash on deposit position remained at $0 at
December 31, 1995 and as of December 31, 1996. The Company anticipates it may
obtain additional equity capital through the placement of shares of capital
stock on a private basis to suitable and sophisticated investors to fund any
further operations. No assurance can be given that further resources will be
accessible to the Company on favorable terms or at all.
Results of Operations - 1996 as Compared to 1995
- ------------------------------------------------
Expenses during 1996 consisted of accounting expenses and miscellaneous.
The Company anticipates operating costs will continue during the next fiscal
year due to acquisition investigation costs and company maintenance expenses. As
of December 31, 1996, the Company has no material commitments for capital
expenditures.
The Company has no ongoing operations, no assets, and no income.
In 1996 the company incurred a total of $1,874 in operating expenses
and in 1995 had incurred $1,360 in operating expenses. The company had no
revenue in 1996 and no revenue in 1995.
The Company lost ($1,874) on operations in 1996 as opposed to a loss of
($1,360) on operations in 1995.
5
<PAGE>
Results of Operations - 1995 as Compared to 1994
- ------------------------------------------------
In 1995 the company incurred a total of $1,360 in operating expenses
and in 1994 had incurred $1,910 in operating expenses. The company had no
revenue in 1995 and no revenue in 1994.
The Company lost ($1,360) on operations in 1995 as opposed to a loss of
($1,910) on operations in 1994.
Item 7. Financial Statements and Supplemental Data.
See attached Financial Statements F-1 through F-11
Item 8. Disagreements on Accounting and Financial Disclosure.
In connection with audits of two most recent fiscal years and any
interim period preceding resignation, no disagreements exist with any former
accountant on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope of procedure, which disagreements if not
resolved to the satisfaction of the former accountant would have caused him to
make reference in connection with his report to the subject matter of the
disagreement(s).
The principal accountants' reports on the financial statements for any
of the past two years contained no adverse opinion or a disclaimer of opinion
nor was qualified as to uncertainty, audit scope, or accounting principles
except for the "going concern" qualification.
PART III
Item 9. Directors and Executive Officers of the Registrant.
Name Age Position Held
- ---- --- -------------
Thomas L. McCrimmon 53 President/Treasurer
Director
Bertram E. Cutler 70 Vice President/Secretary
Director
Thomas L. McCrimmon (age 53) President, Treasurer and Director. Mr. McCrimmon
- -------------------
has served the Company since its inception in march, 1987. Mr. McCrimmon has
been involved in merger and acquisition work, S.E.C. and management consulting
to private and public companies from 1976 through 1983 as the founder and owner
of Bay Business Consultants a business brokerage and consulting firm. Mr.
6
<PAGE>
McCrimmon has been the President and founder of Florida Hi-Tech Capital, Inc.,
Tampa Florida a privately held financial management consulting firm since 1984
to present. From 1988 - April 2, 1990 Mr. McCrimmon was President of Paragon
Acquisitions Group, Inc. a public company which acquired 100% interest in Sun Up
Foods, Inc., Benton, Kentucky a processor of citrus juice concentrate for resale
to dairies nationwide. Mr. McCrimmon was President (1988 - March, 1991) of
Baystar Capital, Inc. a public shell company which merged with American Clinical
Laboratories, Tampa, FL.
Bertram E. Cutler (age 70) Vice President, Secretary and Director. Mr. Cutler
- -----------------
has served the Company since March 1987. Mr. Cutler devotes as much time as
necessary to the business of the Company and assists Mr. McCrimmon in the day to
day operations of the Company, ongoing negotiations with regard to proposed
mergers and other management matters. Mr. Cutler is a licensed insurance agent
and from 1985 to present has served as President of C.D.R.I., Inc. a firm
specializing in marketing programs of the securities and insurance industries.
Previously, Mr. Cutler was co-founder and a consultant to Career Development
Corporation, an executive search firm with offices in Atlanta and Washington,
D.C. (1972-1985).
Directors of the Company hold office until the next annual meeting of the
shareholders and until their successors have been elected and qualified.
Officers of the Company are elected by the Board of Directors at the first
meeting after each annual meeting of the Company shareholders and hold office
until their death, or until they shall resign or have been removed from office.
Item 10. Executive Compensation.
No officer receives any salary, however, they may be reimbursed for
their expenses incurred in their service to the Company. There is no provision
for any additional benefits or additional bonuses, however, bonuses may be
granted to any or all officers at the discretion of the Board of Directors.
Although Directors do not receive compensation for their services as Directors
as such, Directors may be reimbursed for expenses incurred in attending Board
meetings.
7
<PAGE>
SUMMARY COMPENSATION TABLE OF EXECUTIVES
Annual Compensation Awards
Name and Year Salary Bonus Other Annual Restricted Securities
Principal ($) ($) Compensation Stock Underlying
Position ($) Award(s) Options/SARS
($) (#)
Thomas 1994 0 0 0 0 0
McCrimmon,
President
---------------------------------------------------------------------
1995 0 0 0 0 0
---------------------------------------------------------------------
1996 0 0 0 0 0
================================================================================
Bart 1994 0 0 0 0 0
Cutler,
Secretary
---------------------------------------------------------------------
1995 0 0 0 0 0
---------------------------------------------------------------------
1996 0 0 0 0 0
Option/SAR Grants Table (None)
Aggregated Option/SAR Exercises in Last Fiscal Year an FY-End Option/
SAR value (None)
Long Term Incentive Plans - Awards in Last Fiscal Year (None)
DIRECTOR COMPENSATION FOR LAST FISCAL YEAR
------------------------------------------
(Except for compensation of officers who are also Directors which Compensation
is listed in Summary Compensation Table of Executives)
Cash Compensation Security Grants
Name Annual Meeting Consulting Number of Number of
Retainer Fees ($) Fees/Other Shares (#) Securities
Fees ($) Fees ($) Underlying
Options/SARS
(#)
A. Director 0 0 0 0 0
Thomas McCrimmon
B. Director 0 0 0 0 0
Bert Cutler
8
<PAGE>
Item 11. Security Ownership of Management and Others.
The following tabulates holdings of Common Shares of the Strategic
Ventures, Inc. as of the date of this Report, held of record by all Directors,
Officers and Shareholders holding 5% or more of the outstanding shares
individually and as a group.
Name and Address Amount of Beneficial Percent of Class
of Beneficial owner Ownership
- -----------------------------------------------------------------------
Thomas L. McCrimmon 1,660,000 41.5%
3816 West Linebaugh #408
Tampa, FL 33624
Bertram Cutler (1) 485,000 12.1%
3816 West Linebaugh #408
Tampa, FL 33624
Lucille Kluzinski 250,000 6.6%
c/o 6520 Government Dr.
Suite One
New Port Richey, FL 34654
- --------------------------
All Officers and Directors 2,395,000 59.8%
as a Group (2 Persons)
(1) Includes 40,000 shares held by Mr. Cutler's children over which Mr. Cutler
has sole voting and investment power.
Family Relationships
--------------------
There are no family relationships among any of the company's officers
and directors.
Involvement in Certain Legal Proceedings
----------------------------------------
During the past five years there have been no filing of petitions under
the federal bankruptcy laws, or any state insolvency laws, by or against any
partnership in which any director or executive officer of Registrant was a
general partner or executive officer at the time or within two years before the
time of such a filing.
No director or executive officer of Registrant has, during the past five
years, been convicted in a criminal proceeding or is the named subject of a
pending criminal proceeding (excluding traffic violations and other minor
offenses).
9
<PAGE>
During the past five years no director or executive officer of
Registrant has been the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated by any court of competent
jurisdiction permanently or temporarily enjoining him from or otherwise limited
in his involvement in any type of business, securities or banking activities.
During the past five years no director or executive officer of
Registrant has been found by a court of competent jurisdiction in a civil
action, nor by the Securities and Exchange Commission nor the Commodity Futures
Trading Commission to have violated any federal or state securities or
commodities law, which judgment or finding has not been subsequently reversed,
suspended or vacated.
Compliance with Section 16(a) of the Exchange Act.
--------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's directors and officers and any persons who own more
than ten percent of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Directors, officers and greater than ten-percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) report files.
The company believes that during the period from December 31, 1995 through
December 31, 1996, there were no filing requirements applicable to its officers,
directors and greater-than-ten-percent shareholders due to the Company's
non-reporting status.
Item 12. Certain Relationships and Related Transactions.
In December of 1993, the Company canceled 500,000 shares of common stock
issued to a former director for services. The Company canceled the shares due to
the fact that the director did not fulfill the duties and render the services
for which the Company had compensated that director. The Company is in
possession of the shares and has issued a stop transfer order. However, the
shares have not been duly endorsed. The Company does not expect to have a
problem in completing the cancellation of the shares. For financial statement
purposes, the shares have been treated as being canceled.
Notes Payable
-------------
The Company's president personally assumed virtually all of the notes
payable of the Company. These notes amounted to $147,552. The remaining notes
payable of $20,000 and $5,000 were converted to common shares which were issued
to the note holders.
10
<PAGE>
PART IV
Item 13. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following exhibits and financial statement schedules are filed as
exhibits to this Report:
1. Financial Statements of the Registrant are included under Item 8 hereof.
2. Financial Statement Schedules - None
3. Exhibits:
Exhibit # Description Location
- -----------------------------------------------------------
3(a) Articles of Incorporation *Exhibits to Registration
Statement filed by
Registrant on Form S-18
3(b) Bylaws of Registrant *Exhibits to Registration
Statement filed by
Registrant on Form S-18
4(a) Form of Stock Certificate *Exhibits filed as part of
Registration Statement of
Registrant filed on Form S-18
4(b) Form of Warrant Certificate *Exhibits filed as part of
Registration Statement
of Registrant filed on
Form S-18
10 None None
22 Subsidiary Companies None
* Incorporated by reference to Registration Statement #33-19196A.
(b) Reports of Form 8-K. There were no reports on Form 8-K for the twelve month
period ended December, 1996.
(c) Proxy Statements. There were no proxy statements or annual reports sent to
stockholders during the period covered herein.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
city of Tampa, State of Florida on this 15th day of
January, 1999.
Strategic Ventures, Inc.
by:/S/Thomas L. McCrimmon, President
Thomas L. McCrimmon, President
Pursuant to the requirements of Section 13 or 15(d) 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.
Signature Title Date
- --------- ----- ----
/s/Thomas L. McCrimmon President
Thomas L. McCrimmon Treasurer
Chief Financial
Officer, Director
/s/Bertram E Cutler Vice President
Bertram E. Cutler Secretary, Director
12
<PAGE>
STRATEGIC VENTURES, INC.
(a development stage company)
FINANCIAL STATEMENTS
December 31, 1997 and 1996
<PAGE>
ALESSANDRI & ALESSANDRI, PA
INDEPENDENT AUDITORS'REPORT
Strategic Ventures, Inc.
Tampa, Florida
We have audited the accompanying balance sheets of Strategic Ventures,
Inc. (a development stage company) as of December 31, 1997 and 1996, and the
related statements of operations, stockholders' equity, and cash flows for the
three years ended December 31, 1997, and for the cumulative period from
inception (March 19, 1987) to December 31, 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 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 Strategic Ventures,
Inc. as of December 31, 1997 and 1996, and the results of its operations and
its cash flows for the three years ended December 31, 1997 and for the
cumulative period from inception (March 19,1987) to December 31, 1997 in
conformity with generally accepted accounting principles.
During the aforementioned periods Strategic Ventures, Inc., ("Company")
has not conducted operations, nor does it have any products or services. The
notes (Note 1) to the financial statements of the Company describe that the
Company was formed for the purpose of making an offering of securities (common
stock and warrants) to the public. Management used the proceeds from the public
offering to seek interests in one or more businesses which management believed
would result in a profit to the Company. As of November 1998, a business had
not been acquired, and additional external financing may be required.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As shown in the financial
statements, the Company incurred a net loss of $ 2 ,742 during the year ended
December 31, 1997, and as of that date had a negative net worth of $2,220. The
Company is not aware of any alternate sources of capital to meet its'
obligations. These conditions raise substantial doubt about the Company's
ability to acquire an interest in a business, and its' ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
November 30, 1998
ACCOUNTANTS & CONSULTANTS
5121 EHRLICH ROAD Suite 106 - B Tampa, Florida 33624
(813) 969-1995 - FAX (813) 960-2740
Member: American Institute of Certified Public Accountants
/Division of CPA Firms - Member Ronda Institute of
Certified Public Accountants
<PAGE>
STRATEGIC VENTURES, INC.
(a development stage company)
BALANCE SHEETS
ASSETS
December 31, December 31,
1997 1996
-----------------------
Total Assets None None
=======================
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 2,220 $ 2,504
-----------------------------
Total liabilities 2,220 2,504
-----------------------------
Stockholders' Equity
Preferred Stock - 25,000,000 shares
authorized; $.Ol par
value; non-designated;
none issued
Stockholders' Equity:
Common stock - $.0001 par value;
100,000,000 shares
authorized; shares
issued and outstanding
4,000,000 in 1997 and 1996 400 400
Paid-in capital 310,920 307,894
Retained Earnings (Deficit) (313,540) (310,798)
-----------------------------
Total Stockholders' Equity (2,220) (2,504)
-----------------------------
Total Liabilities & Stockholder's Equity $0 $0
=============================
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
STRATEGIC VENTURES, INC.
(a development stage company)
STATEMENT OF OPERATIONS
For the period from inception ( March 19, 1987) to
December 31, 1997, and the years ended
December 31, 1997, 1996, and 1995
<S> <C> <C> <C> <C>
Cumulative from
Year Ended Date of inception
December 31, to December 31
1997 1996 1995 1997
--------------------------------------------------
REVENUES: None None None None
--------------------------------------------------
OPERATING EXPENSES:
Acquisition Investigation $ 200,779
Office Rent & Telephone 15,197
Legal & Accounting $ 950 $ 750 $ 880 14,431
Licenses & Filing Fees 3,513
Office Supplies 6,437
Advertising 278
Consulting 16,750
Travel & Entertainment 8,198
Depreciation 542
Transfer Agent 1,792 1,054 330 5,366
Miscellaneous 150 7,593
--------------------------------------------------
Total Operating Expenses 2,742 1,804 1,360 279,084
--------------------------------------------------
OTHER (INCOME) EXPENSE:
Interest Income (4,813)
Interest Expense 70 39,169
--------------------------------------------------
Total Other (Income) Expense 0 70 0 34,356
--------------------------------------------------
NET LOSS & DEFICIT
ACCUMULATED DURING
THE DEVELOPMENT STAGE
BEFORE OTHER ITEMS (2,742) (1,874) (1,360) (313,440)
EQUITY IN EARNINGS (LOSS)
OF INVESTMENT . (250)
GAIN ON SALE OF INVESTMENT 150
--------------------------------------------------
NET LOSS & DEFICIT ACCUMULATED
DURING THE
DEVELOPMENT STAGE $ (2,742) $ (1,874) $ (1,360) $(313,540)
===================================================
NET LOSS PER SHARE $ 0.000 $ 0.000 $ 0.000
======================================
WEIGHTED AVERAGE NUMBER
OF SHARES 4,000,000 4,000,000 4,000,000
======================================
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
STRATEGIC VENTURES, INC.
(a development stage company)
STATEMENTS OF STOCKHOLDERS'EQUITY
For the period since inception (March 19, 1987)
to December 31, 1997
<S> <C> <C> <C> <C>
Common stock Paid- in
Shares $ Capital Deficit
-----------------------------------------------
Proceeds from
Issuance of Stock 250,000 $ 25 $ 4,900
Issuance of
Common Shares 750,000 75
-----------------------------------------------
Balance, December
31, 1987 1,000,000 100 4,900
Net Income (Loss) $ (2,020)
-----------------------------------------------
Balance, December
31, 1988 1,000,000 100 4,900 (2,020)
Proceeds from
Issuance of Stock 1,090,000 109 59,420
Net Income (Loss) (13,582)
-----------------------------------------------
Balance, December
31, 1989 2,090,000 209 64,320 (15,602)
Issuance of Common
Stock for Services 70,000 7 243
Net Income (Loss) (20,891)
-----------------------------------------------
Balance, December
31, 1990 2,160,000 216 64,563 (36,493)
Issuance of Common
Stock for Services 700,000 70 7,850
Cancellation of
Common Shares (100,000) (10) (10)
Net Income (Loss) (222,513)
-----------------------------------------------
Balance, December
31, 1991 2,760,000 276 72,403 (259,006)
Issuance of Common
Stock for Services 750,000 75 2,750
Net Income (Loss) (27,194)
-----------------------------------------------
Balance, December
31, 1992 3,510,000 351 75,153 (286,200)
Issuance of Common
Stock for Services 700,000 70 2,590
Issuance of Common
Stock for Note Payments 70,000 7 24,993
Cancellation of
Common Shares (500,000) (50)
Assumption of Notes
Payable by Related Party 201,826
Net Income (Loss) (19,454)
-----------------------------------------------
Balance, December
31, 1993 3,780,000 378 304,562 (305,654)
Income from Common
Shares for Services 220,000 22 803
Contribution to Capital 769
Net Income (Loss) (1,910)
-----------------------------------------------
Balance, December
31, 1994 4,000,000 400 306,134 (307,564)
Net Income (Loss) (1,360)
-----------------------------------------------
Balance, December
31, 1995 4,000,000 400 306,134
Contribution to Capital 1,760
Net Income (Loss) (1,874)
-----------------------------------------------
Balance, December
31, 1996 4,000,000 400 307,894 (310,798)
Contribution to Capital 3,026
Net Income (Loss) (2,742)
-----------------------------------------------
Balance, December
31, 1997 4,000,000 $400 $310,920 $(313,540)
===============================================
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STRATEGIC VENTURES, INC.
(a development stage company)
STATEMENT OF CASH FLOWS
For the period from inception (March 19, 1987) to
December 31, 1997, and the years ended
December 31, 1997, 1996, and 1995
Cumulative from
Years Ended date of inception
December 31, to December 31,
1997 1996 1995 1997
<S> <C> <C> <C> <C>
Cash Flows from (to) Operations:
Net loss $(2,742) $(1,874) $(1,360) $(313,540)
Adjustments to Reconcile Net
Income to Net Cash
Provided by Operating
Activities - Depreciation 541
Increase (Decrease) In:
Investment 250
Accounts Receivable 1,732
Accounts Payable & Accruals (284) 114 1,360 (12,283)
----------------------------------------
Net Cash From (To)
Operating Activities (3,026) (1,760) 0 (323,300)
----------------------------------------
CASH FLOWS FROM (TO)
INVESTING ACTIVITIES:
Purchase of Equipment (541)
Loans to Affiliates (1,732)
Purchase of Stock (250)
Assumption of Notes Payable (147,552)
----------------------------------------
Net Cash From (To)
Investing Activities 0 0 0 (150,075)
----------------------------------------
CASH FLOWS FROM (TO)
FINANCING ACTIVITIES:
Proceeds from Issuance of
Common Stock (net of
offering costs) 75,504
Proceeds from Stockholder &
Related Party Notes Payable 174,055
Principal Payments on Stockholder & Related
Party Notes (12,000)
Conversion & Assumption of
Notes Payable to Common Stock 229,436
Contribution to Capital 3,026 1,760 6,380
----------------------------------------
Net Cash From (To)
Financing Activities: 3,026 1,760 0 473,375
----------------------------------------
INCREASE (DECREASE): CASH &
CASH EQUIVALENTS 0 0 0 0
CASH & CASH EQUIVALENTS,
December 31,1996 0 0 0 0
----------------------------------------
CASH & CASH EQUIVALENTS,
December 31,1997 $ 0 $ 0 $ 0 $ 0
Supplemental Disclosures of
Cash Flow Information:
Interest Expense for 1996 $ 70
</TABLE>
Supplemental Schedule of NonCash Investing & Financing Activities:
During 1993, a major shareholder assumed all of the outstanding debt of the
Company, totaling approximately $202,000. Other shareholders accepted shares of
the Company's common stock in payment of amounts owed to diem, which amounted
to approximately $25,000. Although these items represent noncash items, their
affect is reflected in the cumulative column above for analysis purposes.
See Notes to Financial Statements.
<PAGE>
STRATEGIC VENTURES, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
NOTE I ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION - Strategic Ventures, Inc. ("Company") was organized as a Florida
corporation on March 19, 1987. A statement of income (loss) is presented.
However, the Company has had no operating revenues and expenses, except
expenses for acquisition investigation administration.
Presently, the Company is in the development stage, and activities include the
arranging of an offering of common stock and warrants to the public, which was
accomplished in 1989. The Company intends to acquire interests in various
business opportunities, which in the opinion of management will provide a
profit to the Company. Presently, the Company has had no operations, planned
products, or services, and additional external financing may be required to
acquire the business interests.
DEFERRED SECURITIES OFFERING EXPENSES - The Company incurred $5,709 of costs
directly related to its public offering. Such amount was offset in 1989 against
the proceeds from the public offering.
CASH FLOWS - For the purposes of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to be
cash equivalents.
EARNINGS (LOSS) PER SHARE - Earnings (loss) per share are based on the weighted
average number of common shares outstanding during the period starting from the
date of inception. All insider stock issued is deemed to have been issued on
that date for all periods presented.
INCOME TAXES - The provision (benefit) for income taxes, if any, is based on
the pre-tax earnings (loss) reported in the financial statements, adjusted for
transactions that may never enter into the computation of income taxes payable.
A deferred tax liability or asset is recognized for the estimated future tax
effect attributable to temporary differences in the recognition of income and
expenses for financial statement and income tax purposes.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
NOTE 2 PUBLIC OFFERING
The Company offered 250 units to the public at an offering price of $1,000 per
unit. Each unit consisted of 10,000 shares of the Company's common stock, and
10,000 warrants, each entitling the warrant holder to purchase one share of the
Company's common stock at $0.50 each, and a U.S. Treasury-backed Zero Coupon
Obligation. Each U.S. Treasury-backed Zero Coupon Obligation will be purchased
from the
<PAGE>
offering proceeds at an estimated cost of $200 by the underwriter of the
proposed public offering, in the name of the unit holder. The offering was on a
best efforts basis and resulted in the issuance of 1,090,000 common shares.
NOTE 3 INCOME TAXES
The Company has incurred losses to date and as a result no provision for income
taxes has been made.
On December 31, 1997 the Company had $313,540 of accumulated loss carry
forwards. In addition, the Company had deferred tax assets of approximately
$111,000 as a result of the loss carryforwards, against which a valuation
allowance of $111,000 has been recognized due to the uncertainty with respect
to recoverability of the deferred tax asset. Due to the absence of operations,
certain portions of the accumulated net operating loss may not be immediately
deductible.
The net operating losses expire as shown below.
2003 $ 2,020 2008 $19,454
2004 $ 13,582 2009 $ 1,910
2005 $ 20,891 2010 $ 1,360
2006 $222,516 2011 $ 1,871
2007 $ 27,194 2012 $ 2,742
NOTE 4 RELATED PARTY TRANSACTIONS:
The Company uses certain office space, telephones, and related facilities of
its president under an informal arrangement.
NOTE 5 PREFERRED AND COMMON STOCK
PREFERRED STOCK
The Company has authorized 25,000,000 shares of preferred stock at $0.01 par
value. The stock is non-designated and none of the shares has been issued.
COMMONSTOCK
The Company has authorized 100,000,000 shares of common stock at $0.0001 par
value. There are 4,000,000 shares of common stock issued and outstanding as of
December 31, 1997.
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
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