U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 33-23429-D
NIGHTINGALE, INC.
(Name of Small Business Issuer as specified in its charter)
Utah 87-044988-8
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
2232 Eastwood Blvd. 84403
Ogden, Utah 84403 (Zip Code)
(Address of principal executive offices)
Issuer's telephone number, including area code: (801) 479-0742
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act: None
Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 No .
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of Issuer's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.
The Issuer's revenues for the fiscal year ending December 31, 1995 were
$10,142.
As of the date hereof, there is no public market for the Registrant's
securities. The Registrant has closed its public offering but, pursuant to Rule
164-11-1 as promulgated by the Utah Securities Division, no securities sold in
the public offering have been issued. The number of shares outstanding of the
Registrant's sole class of common stock, as of December 31, 1995, and as of July
2, 1996, is 1,000,000 shares.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
General
Nightingale, Inc. (the Company") was formed for the purpose of investing in
any and all types of assets, properties and businesses. The Company issued
1,000,000 shares of its Common Stock to its officers, directors and others for
the aggregate sum of $20,600. On September 28, 1988, the United States
Securities and Exchange Commission granted effectiveness to a Registration
Statement on Form S-18, filed by the Company. The Registration Statement was for
an offering of 2,000,000 Units of Common Stock and Warrants at $.10 per Unit.
Each Unit consisted of one share of Common Stock, one Class "A" Common Stock
Purchase Warrant and one Class "B" Common Stock Purchase Warrant. The offering
was a "blind pool" or "blank check" offering.
The offering was closed on October 6, 1989. All 2,000,000 Units offered
were subscribed for and a total of $200,000 was deposited into the Company's
Escrow Account. The offering was registered for sale in the State of Utah and
therefore, the Company was and is required to comply with Rule 164-11-1 as
promulgated by the Utah Securities Division. Such Rule prohibits the issuance of
shares, the secondary trading of the Company's securities and the expenditure of
more than 20 percent of the net offering proceeds without first giving
subscribers a rescission offering in connection with an acquisition.
Since the close of its offering, the Company has been attempting to locate
potential business acquisitions ("Potential Business Acquisitions") from
investors, promoters, finders, entrepreneurs or others. A Potential Business
Acquisition may be a concept which has not yet been placed in commercial
operation, which has recently commenced operations and is in need of additional
funds for expansion into new products or markets, or an established business
which may be experiencing financial or operating difficulties and is in need of
the limited additional capital the Company could provide.
In some instances, a Potential Business Acquisition may involve the
acquisition of or merger with a corporation which does not need substantial
additional cash but which desires to establish a public trading market for its
common stock. Some Potential Business Acquisitions may seek to become a public
company through merging with, being acquired by or selling their assets to an
existing public company. There are numerous reasons why an existing
privately-held company would seek to become a public company through a merger or
acquisition rather than doing its own public offering. Such reasons include
avoiding the time delays involved in a public offering; retaining a larger share
of voting control of the publicly-held company; reducing the cost factors
incurred in becoming a public company; and avoiding any dilution requirements
set forth under various states' blue sky laws.
The Company does not propose to restrict its search for Potential Business
Acquisitions to any particular industry or any particular geographic area and
may, therefore, engage in essentially any business to the extent of its limited
resources.
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It is anticipated that knowledge of Potential Business Acquisitions will be
made known to the Company by various sources, including its officers and
directors, shareholders, professional advisors such as attorneys and
accountants, 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 such persons for services rendered in bringing about a
transaction. However, no cash finder's fee or other compensation which may be
paid to such persons for services rendered in bringing about a transaction is
subject to future negotiation between the Company, the entity to be acquired and
the finder.
The Company is not currently a party to any binding agreement to acquire or
merge with any company. The Company's management is continuing to seek suitable
acquisition candidates. However, there can be no assurance that an acquisition
or merger will be effected.
Rule 164-11-1 As Promulgated by the Utah Securities Division
The offering was registered for sale in several states including the State
of Utah. Therefore, the offering and the Company were, and are, subject to Rule
164-11-1 as promulgated by the Utah Securities Division. Rule 164-11-1 is
applicable to offerings in which eighty percent (80%) or more of the net
offering proceeds are not specifically allocated. Following the close of
offerings subject to Rule 164-11-1, a company subject to the Rule is required to
maintain a minimum of eighty percent (80%) of the net offering proceeds in an
escrow account until such time as it can specifically allocate the use of
proceeds. At such time as the offering proceeds can be specifically allocated,
the Company must file additional information with the Utah Securities Division
disclosing the use of proceeds and deliver such information to the investors
purchasing shares in the offering.
At the time that the additional documentation concerning the use of
proceeds is filed with the Utah Securities Division, Rule 164-11-1 requires that
investors in the offering be given no less than twenty (20) days to ratify or
rescind his or her investment. Investors who elect to rescind the purchase shall
receive a pro rata refund of all available offering proceeds. However, should
enough investors request a refund such that net tangible asset value of the
Company after the refund would be less than $75,000, the Company will offer a
pro rata refund of all unused offering proceeds to investors. Therefore, if
sufficient numbers of investors elect to rescind, it is possible that rescinding
investors will not receive 100% of the amount invested. A company subject to the
Rule is entitled to use a substantial portion of the gross offering proceeds for
underwriting commissions, offering expenses and operating costs regardless of
investors' rescission rights.
Rule 164-11-1 also prohibits the issuance of securities, the delivery of
stock certificates or the secondary trading of the Company's stock until the
offering proceeds have been released to the Company subsequent to the rescission
offering.
The Company is required to file a post-effective amendment to its
Registration Statement on file with the Securities and Exchange Commission
setting forth current information before soliciting shareholders regarding
rights to rescission.
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The Company received a total of $200,000 from the sale of Units of its
securities in its public offering. The Company deposited 80% of the net offering
proceeds, or $140,000, in an escrow account pending compliance with Utah Rule
164-11-1. As of December 31, 1995, a total of $191,442 was held in the Rule
164-11-1 Escrow Account.
Selection of Opportunities
The analysis of new business opportunities has been and will be undertaken
by or under the supervision of the officers and directors of the Company with
assistance from the Company's shareholders, with none of whom is a professional
business analyst or has any previous training or experience in business analysis
or in selecting or hiring business analysts. The Company has, since the date of
the closing of its public offering, considered potential acquisition
transactions with several companies but as of this date has not entered into any
definitive agreement with any party. The Company has unrestricted flexibility in
seeking, analyzing and participating in Potential Business Acquisitions. In its
efforts to analyze potential acquisition targets, the Company will consider the
following kinds of factors:
(a) Potential for growth, indicated by new technology, anticipated market
expansion or new products;
(b) Competitive position as compared to other firms of similar size and
experience within the industry segment as well as within the industry as a
whole;
(c) Strength and diversity of management, either in place or scheduled for
recruitment;
(d) Capital requirements and anticipated availability of required funds to
be provided by the Company or from operations, through the sale of additional
securities, through joint ventures or similar arrangements or from other
sources;
(e) The cost of participation by the Company as compared to the perceived
tangible and intangible values and potentials;
(f) The extent to which the business opportunity can be advanced;
(g) The accessibility of required management expertise, personnel, raw
materials, services, professional assistance and other required items; and
(h) Other relevant factors.
In applying the foregoing criteria, no one of which will be controlling,
management will attempt to analyze all factors and circumstances and make a
determination based upon reasonable investigative measures and available data.
Potentially available business opportunities may occur in many different
industries and at various stages of development, all of which will make the
tasks of comparative investigation and analysis of such business opportunities
extremely difficult and complex. Due to the Company's limited capital available
for investigation and management's limited experience in business analysis, the
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Company may not discover or adequately evaluate adverse facts about the
opportunity to be acquired.
Form of Acquisition
The manner in which the Company participates in an opportunity will depend
upon the nature of the opportunity, the respective needs and desires of the
Company and the promoters of the opportunity, and the relative negotiating
strength of the Company and such promoters.
It is likely that the Company will acquire its participation in a business
opportunity through the issuance of common stock or other securities of the
Company. Although the terms of any such transaction cannot be predicted, it
should be noted that in certain circumstances the criteria for determining
whether or not an acquisition is a so-called "tax free" reorganization under
Section 368(a)(1) of the Internal Revenue Code of 1986, as amended, depends upon
the issuance to the shareholders of the acquired company of at least 80 percent
common stock of the combined entities immediately following the reorganization.
If a transaction were structured to take advantage of these provisions rather
than other "tax free" provisions provided under the Internal Revenue Code, all
prior shareholders would in such circumstances retain 20% or less of the total
issued and outstanding shares. This could result in substantial additional
dilution to the equity of those who were shareholders of the Company prior to
such reorganization.
The present shareholders of the Company will likely not have control of a
majority of the voting shares of the Company following a reorganization
transaction. As part of such a transaction, all or a majority of the Company's
directors may resign and new directors may be appointed without any vote by
shareholders.
In the case of an acquisition, the transaction may be accomplished upon the
sole determination of management without any vote or approval by shareholders.
In the case of a statutory merger or consolidation, it will likely be necessary
to call a shareholder's meeting and obtain the approval of the holders of a
majority of the outstanding shares. The necessity of obtaining such shareholder
approval may result in delay and additional expense in the consummation of any
proposed transaction and will also give rise to certain appraisal rights to
dissenting shareholders. Most likely, management will seek to structure any such
transaction so as not to require shareholder approval.
It is anticipated that the investigation of specific business opportunities
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, the
costs theretofore incurred in the related investigation would not be
recoverable. Furthermore, even if an agreement is reached for the participation
in a specific business opportunity, the failure to consummate that transaction
may result in the loss to the Company of the related costs incurred.
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Employees
The Company currently has no employees.
ITEM 2. DESCRIPTION OF PROPERTY
The executive offices of the Company are presently located at 2232 Eastwood
Blvd., Ogden, Utah 84403, the home of the President of the Company. The Company
does not pay rent for the use of such facilities. The Company's executive
offices are sufficient for the present purposes of the Company. Upon the
consummation of an acquisition or merger, the Company's offices will likely be
moved to the principal offices of the company acquired or with which the Company
is merged.
ITEM 3. LEGAL PROCEEDINGS
There are not presently any material pending legal proceedings to which the
Company is a party or of which any of its property or wholly-owned subsidiaries
is subject and no such proceedings are known to the Company to be threatened or
contemplated against it.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No meetings of the Company's shareholders were held during the fiscal year
ending December 31, 1995
PART II
ITEM 5. MARKET FOR THE Company'S COMMON STOCK AND WARRANTS AND RELATED
SECURITY HOLDER MATTERS
Market for Common Stock. There is no public market for the Company's
securities.
Holders. The number of record holders of the Company's common stock as of
December 31, 1995 and September 30, 1996, is 4. Pursuant to Rule 164-11-1 as
adopted by the Utah Securities Division, no securities of the Company were
issued to purchasers of the Units of Company offered in the public offering.
Dividends. The Company has not paid any cash dividends to date and does not
anticipate or contemplate paying dividends in the foreseeable future. It is the
present intention of management to utilize all available funds for the
development of the Company's business.
Warrants. A total of 2,000,000 Units of the Company's Common Stock were
subscribed for in the Company's public offering. Each Unit consisted of one
share of Common Stock, $.001 par value, and one "A" Warrant to purchase one
share of Common Stock at $.25 per share exercisable during a twelve month period
commencing 30 days from the date of the closing of the offering, and ending
twelve months thereafter, and one "B" Warrant to purchase one share of Common
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Stock at $.50 per share exercisable during an eighteen month period commencing
30 days from the date of the close of the offering and ending eighteen months
thereafter. The offering was closed on September 28, 1989. The Warrants have
been extended on several occasions and now expire on December 31, 1996. The
Warrants cannot be exercised unless a current Registration Statement is in
effect, of which there can be no assurance. The Company has the right to call
the Warrants for redemption, in whole or in part, upon 30 days prior written
notice at a price of $.001 per Warrant. If the Warrants are called for
redemption, they may be exercised at any time prior to the close of business on
the day preceding the date fixed for redemption. Any rights to purchase Common
Stock subject to the Warrants will be forfeited to the extent such Warrants are
not exercised prior to such date. The Common Stock and Warrants sold as Units
pursuant to this offering are not transferable separately until the exercise
period commences.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
The Company was formed for the purpose of investing in any and all types of
assets, properties and businesses. The Company issued 1,000,000 shares to its
officers and directors for the aggregate sum of $20,600. On September 28, 1988,
the United States Securities and Exchange Commission granted effectiveness to a
Registration Statement on Form S-18, filed by the Company in the Denver Regional
Office. The Registration Statement was for an offering of 2,000,000 Units of
Common Stock and Warrants to purchase shares of Common Stock, at $.10 per Unit.
The offering was a "blind pool" offering. The Company sold all 2,000,000 Units
offered in its public offering. Inasmuch as the Company is subject to Rule
164-11-1 as promulgated by the Utah Securities Division, the exact net offering
proceeds which will be available to the Company is not presently determinable.
The gross offering proceeds were $200,000. Pursuant to Rule 164-11-1 the Company
was required to escrow 80% of the net offering proceeds or $140,000 pending
further compliance with the Rule. The Company is required to offer its
subscribers an opportunity to rescind their purchases before such proceeds may
be used. If sufficient subscribers elect to rescind, such that less than $75,000
will remain in the escrow account, all purchases of the Units will be rescinded
and no shares will be issued. In such event, the Company's subscribers will
receive the remaining offering proceeds on a pro-rata basis.
The Plan of Operation of the Company is further described in Item 1 of this
Form 10-KSB.
Liquidity and Capital Resources
Presently, the Company's assets consist solely of a minimal amount of cash
from its initial capitalization less amounts expended for offering costs and
operations to date. As of December 31, 1995, the Company had total assets of
$191,782 which included $191,442 of restricted cash. Therefore, the Company had
essentially no usable cash as of December 31, 1995 and is dependent upon loans
and advances from its management and affiliates to fund its expenses pending the
completion of an merger or acquisition.
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Results of Operations
The Company has not commenced any active operations as of the date hereof,
except for its search for suitable acquisition candidates. The Company's assets
consist primarily of cash, which is on deposit in interest-bearing and
non-interest bearing accounts. The only revenue generated by the Company since
its inception is interest. The Company had interest income of $10,142 for the
year ending December 31, 1995 compared with total interest income of $6,709 for
the year ending December 31, 1994. Total expenses for the year ending December
31, 1995, were $18,273 as compared with $24,787 for the year ending December 31,
1994. The Company's expenses consist primarily of travel expenses and
professional fees incurred in connection with proposed acquisitions. The Company
had a net loss of $8,131 for the year ending December 31, 1995 compared with a
loss of $18,078 for the year ending December 31, 1994.
Inflation
The Company does not believe that inflation will negatively impact its
business plans.
ITEM 7. FINANCIAL STATEMENTS
Index to Financial Statements
Financial Statements
Independent Accountants' Report - 1995
Balance Sheet
December 31, 1995
Statement of Operations
Years ended December 31, 1995 and 1994
Statement of Changes in Stockholders' Deficit
From Inception January 9, 1988 through December 31, 1995
Statement of Cash Flows -
Years ended December 31, 1995 and 1994
Notes to Financial Statements
Financial Statement Schedules
All schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of Nightingale, Inc.
We have audited the accompanying balance sheet of Nightingale, Inc. (a
development stage company) as of December 31, 1995, and the related statements
of operations, stockholders' deficit and cash flows for the two years then ended
and cumulative amounts from January 8, 1988 (date of inception) through December
31, 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Nightingale, Inc. (a
development stage company) as of December 31, 1995, and the results of its
operations and its cash flows for the two years then ended and cumulative
amounts from January 9, 1988 (date of inception) through December 31, 1995, in
conformity with generally accepted accounting principles.
Tanner + Company
Salt Lake City, Utah
March 31, 1996
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NIGHTINGALE, INC.
(A Development Stage Company)
Balance Sheet
December 31, 1995
Assets
Current assets:
Cash $ 340
Restricted cash held in escrow 191,442
Total current assets $ 191,782
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable and accrued liabilities $ 19,706
Advances from related party 89,059
Common stock units subscribed 177,017
Total current liabilities 285,782
Stockholders' deficit:
Common stock - par value $.001 per
share. Authorized 100,000,000
shares; issued and outstanding
1,000,000 shares 1,000
Additional paid-in capital 19,600
Deficit accumulated during the
development stage (114,600)
Total stockholders' deficit (94,000)
Total liabilities and stock-
holders' deficit $ 191,782
See accompanying notes to financial statements.
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NIGHTINGALE, INC.
(A Development Stage Company)
Statement of Operations
NIGHTINGALE, INC.
(A Development Stage Company)
Statement of Operations
Years Ended December 31, 1995 and 1994
and for the Period January 9, 1988 (Date
of Inception) Through December 31, 1995
Cumulative
Amount
From
1995 1994 Inception
Revenues - interest $10,142 6,709 55,704
Expenses:
General and administrative
expenses 18,273 24,787 170,304
Loss before income taxes (8,131) (18,078) (114,600)
Income taxes - - -
Net loss $ (8,131) (18,078) (114,600)
Loss per share $ (.008) (.018) (.118)
Weighted average shares 1 ,000,000 1,000,000 970,781
See accompanying notes to financial statements.
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NIGHTINGALE, INC.
(A Development Stage Company)
Statement of Stockholders' Deficit
Period January 9, 1988 (Date of Inception)
Through December 31, 1995
Deficit
Accumulated
Common Stock Additional During the
Number of Paid-in Development
Shares Par Value Capital Stage Total
Balance, January 9,
1988 - $ - - - -
Common stock
issued for cash
at $.02 per share 20,000 20 380 - 400
Common stock
issued for services
at $.12 per share 5,000 5 595 - 600
Common stock
issued for cash
at $.02 per share 975,000 975 18,625 - 19,600
Net loss - - - (1,534) (1,534)
Balance, December 31,
1988 1,000,000 1,000 19,600 (1,534) 19,066
Net loss - - - (3,842) (3,842)
Balance, December 31,
1989 1,000,000 1,000 19,600 (5,376) 15,224
Net loss - - - (10,018) (10,018)
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NIGHTINGALE, INC.
(A Development Stage Company)
Statement of Stockholders' Deficit - Continued
Deficit
Accumulated
Common Stock Additional During the
Number of Paid-in Development
Shares Par Value Capital Stage Total
Balance, December 31,
1990 1,000,000 1,000 19,600 (15,394) 5,206
Net loss - - - (1,494) (1,494)
Balance, December 31,
1991 1,000,000 1,000 19,600 (16,888) 3,712
Net loss - - - (25,203) (25,203)
Balance, December 31,
1992 1,000,000 1,000 19,600 (42,091) (21,491)
Net loss - - - (46,300) (46,300)
Balance, December 31,
1993 1,000,000 1,000 19,600 (88,391) (67,791)
Net loss - - - (18,078) (18,078)
Balance, December 31,
1994 1,000,000 1,000 19,600 (106,469) (85,869)
Net loss - - - (8,131) (8,131)
Balance, December 31,
1995 1,000,000 $1,000 19,600 (114,600) (94,000)
See accompanying notes to financial statements.
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NIGHTINGALE, INC.
(A Development Stage Company)
Statement of Cash Flows
Years Ended December 31, 1995 and 1994
and for the Period January 9, 1988
(Date of Inception) Through
December 31, 1995
Cumulative
Amounts
From
1995 1994 Inception
Cash flows from operating activities:
Net loss $ (8,131) (18,078) (114,600)
Adjustments to reconcile net loss to
net cash used in operating activities:
Amortization - 270 1,350
Increase (decrease) in:
Accounts payable and accrued
liabilities 9,780 5,235 19,706
Net cash provided by (used in)
operating activities 1,649 (12,573) (93,544)
Cash flows from investing activities:
Increase in restricted cash held
in escrow (10,142) (6,624) (191,442)
Payment of notes receivable -
related parties - - 74,282
Increase in notes receivable -
related parties - - (74,282)
Increase in organization costs - - (1,350)
Net cash used in
investing activities (10,142) 6,624) (192,792)
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NIGHTINGALE, INC.
(A Development Stage Company)
Statement of Cash Flows - Continued
Cumulative
Amounts
From
1995 1994 Inception
Cash flows from financing activities:
Increase advances from related party 8,401 19,011 89,059
Proceeds from common stock units
subscribed - - 200,000
Increase in offering costs - - (22,983)
Proceeds from issuance of common
stock - - 20,600
Net cash provided by
financing activities 8,401 19,011 286,676
Net increase (decrease) in cash (92) (186) 340
Cash, beginning of period 432 618 -
Cash, end of period $340 432 340
Supplemental disclosure of cash flow information:
Interest paid $ - - -
Income taxes paid $357 15 572
See accompanying notes to financial statements.
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NIGHTINGALE, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 1995
(1) Organization
The Company filed articles of incorporation October 8, 1987 to purchase,
sell and invest in new products, technologies and businesses of any and all
types and kinds. However, the Company was not legally organized until January 9,
1988 (date of inception) when $1,000 of total consideration was paid into the
Company. The Company has not commenced planned principle operations and is
considered a development stage company as defined in SFAS No. 7. The Company
has, at the present time, not paid any dividends and any dividends that may be
paid in the future will depend upon the financial requirements of the Company
and other relevant factors.
(2) Significant Accounting Principles
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments with a maturity of three months or less to be
cash equivalents.
Organization costs
Costs relating to the organization of the Company have been capitalized and
are amortized over 60 months on a straight-line method.
Income (Loss) Per Common Share
Income (loss) per share of common stock is calculated based on the weighted
average number of shares outstanding during the period. The stock warrants were
excluded from the calculation since they would be antidilutive.
Use of Estimates in the Preparation of Financial Statements
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.
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Concentration of Credit Risk
The Company maintains its cash in bank deposit accounts which, at times,
may exceed federally insured limits. The Company has not experienced any losses
in such account and believes it is not exposed to any significant credit risk on
cash and cash equivalents.
(3) Common Stock Units Subscribed and Restricted Cash
The Company has closed but not completed a public offering on Form S-18 in
accordance with the Securities Act of 1933 of 2,000,000 units as of September,
1989. Each unit consists of one share of the Company's common stock, one "A"
warrant and one "B" warrant. Each "A" warrant allows the holder to purchase one
share of the Company's common stock at a price of $.25 per share of common stock
beginning thirty days after the close of this offering. Each "B" warrant allows
the holder to purchase one share of the Company's common stock at a price of
$.50 per share beginning thirty days after the close of this offering. During
1995, the Company extended the expiration date of both the "A" warrants and "B"
warrants to December 31, 1996. Under terms of the offering, the Company placed
in escrow $140,000 which approximated 80% of the net offering proceeds. The cash
will remain in escrow until the Company can specifically allocate the use of the
proceeds. At the time of the allocation of the proceeds a post-effective
amendment will be filed. At the time of the post-effective amendment, the
investors in the common stock units must be given twenty days to ratify or
rescind their investment. Investors who choose to rescind their investment will
receive a pro rata refund of all offering proceeds. However, should enough
investors request a refund such that the net tangible asset value of the Company
after the refund would be less than seventy-five thousand dollars ($75,000) the
Company shall make a pro rata refund of all unused offering proceeds to
investors. The shares were sold for $.10 per share.
(4) Related Party Transactions
The Company has entered into an oral agreement with its president providing
for the use of a portion of his home as a temporary office for the Company until
such time as the Company needs additional facilities. The Company will not pay
rent for the use of such facilities.
The Company received advances from officers, stockholders and entities they
control. As of December 31, 1995 $89,059 was due to related parties with no
repayment terms and interest at 10%. Accrued interest due to related parties
totaled $18,470 at December 31, 1995.
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NIGHTINGALE, INC.
(A Development Stage Company)
Notes to Financial Statements - Continued
(5) Income Taxes
The difference between income taxes at statutory rates for 1995 and 1994
and the amount presented in the financial statements is the increase in the tax
valuation allowance of approximately $5,000, which offsets the income tax
benefit of the operating loss.
Deferred tax assets at December 31, 1995 is as follows:
1995 1994
Operating loss carry forwards $ 32,000 30,000
Valuation allowance (32,000) (30,000)
$ - -
The Company has net operating loss carry forwards of approximately $115,000
which expire in the years 2002 through 2008. The amount of net operating loss
carry forward that can be used in any one year will be limited by the applicable
tax laws which are in effect at the time such carry forward can be utilized and
any significant changes in the ownership of the Company.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Company has not experienced any disagreement with its accountants.
18
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS OF THE
COMPANY; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
A. Identification of Directors and Executive Officers
The following individuals are the current officers and directors of the
Company and will serve for one year or until their respective successors are
elected and qualified. They are:
Name Age Position
William Grilz 37 President/Chairman of the
Board of Directors
Michael Hendry 44 Director
David Knudson 36 Secretary/Treasurer/Director
William Grilz. Mr. Grilz has been a Secondary School teacher in Ogden, Utah
since 1981. He has been assistant marketing and promotion director of Weber
State College in Ogden, Utah since 1985. Mr. Grilz earned his Bachelor of
Science Degree in Physical Education from Weber State College in 1981, and his
Master's Degree in Education from Utah State University in 1986. He received his
K-12 Administration Degree in1996 from Utah State University.
Michael Hendry. Mr. Hendry is, and has been since 1979, the President of
Mountain View Title & Escrow Co., a privately held firm located in Ogden, Utah.
From 1976 to 1979, Mr. Hendry was a title searcher and examiner at Western
States Title, located in Salt Lake City, Utah. Mr. Hendry earned a Bachelor's
degree from Utah State University where he majored in marketing. He has been the
president of the Utah Land Title Association since 1987. The Utah Land Title
Association is a title industry non-profit association.
David Knudson. Mr. Knudson has worked as a business consultant since 1985.
He earned his B.S. Degree in Finance from Weber State College in 1984 and a B.S.
Degree in Information Systems and Technologies at Weber State University in
1995. He has been an officer and director of several small publicly-held
"blind-pool" companies. Mr. Knudson is also employed as an adjunct professor and
from 1992 to 1995 was employed as a computer information systems consultant at
Weber State University.
B. Significant Employees and Promoters. There are no significant employees
of the Company. Shareholder Mark A. Scharmann may be deemed a promoter of the
Company. Mr. Scharmann has been a private investor and business consultant since
1981. Mr. Scharmann became involved in the consulting business following his
compilation and editing in 1980 of a publication called Digest of Stocks Listed
19
<PAGE>
on the Intermountain Stock Exchange. In 1981 he compiled and edited an 800 page
publication called the OTC Penny Stock Digest. Mr. Scharmann has rendered
consulting services to public and private companies regarding reverse
acquisition transactions and other matters. Mr. Scharmann was vice president of
OTC Communications, Inc. from March 1984 to January 1987. From 1982 to 1995, he
was the president of Royal Oak Resources Corporation. Mr. Scharmann is the
President of Norvex, Inc., a blank check company. Mr. Scharmann has assisted the
Company in looking for and analyzing potential acquisitions. Mr. Scharmann has
been an officer and director of several blind pool companies.
C. Family Relationships. None.
D. Other: Involvement in Certain Legal Proceedings
There have been no events under any bankruptcy act, no criminal proceedings
and no judgments or injunctions material to the evaluation of the ability and
integrity of any director or executive officer during the past five years.
E. Compliance with Section 16(a).
The Company is not subject to Section 16 of the Exchange Act.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth the aggregate cash compensation paid by the
Company for services rendered during the last three years to the Company's Chief
Executive Officer.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Other All Other
Position Year Salary Bonus sation($) Stock Award($) SAR's (#) Payouts($) Compensation($)
William Grilz 1995 $1,124 $ -0- $ -0- $-0- -0- -0- -0
President, CEO 1994 $-0- $ -0- $ -0- $-0- -0- -0- -0
and Chairman 1993 $580 $ -0- $ -0- -0- -0- -0- -0-
</TABLE>
No options, stock appreciation rights or long-term incentive plan awards
were issued or granted to the Company's chief executive officer during the
fiscal years ended December 31, 1995, 1994 and 1993. As of December 31, 1995,
the end of the Company's last fiscal year, the Company's management owned no
options or stock appreciation rights. Accordingly, no tables relating to such
20
<PAGE>
items have been included in this Item 10. However, an option was issued to
another officers/director of the Company. (See Item 11, footnote 2, page 22).
Each officer and director will be paid a maximum of $20 per hour for actual
hours devoted to the Company's business, estimated not to exceed an aggregate of
$5,000 per year for all officers as a group. Officers and directors will be
reimbursed for actual out-of-pocket expenses incurred on behalf of the Company.
It is currently estimated that officer and director compensation will not exceed
the rate of $5,000 per year for all officers and directors as a group, until
such time as the Company may require full or extensive time commitments from any
officer or director. Except as noted above, the Company has no agreement or
understanding, express or implied, with any officer or director or any other
person regarding employment with the Company or compensation for services. For
the year ended December 31, 1995, the Company has paid no compensation to
management or outside consultants for services rendered to the Company.
The Company has no retirement, pension, profit sharing or insurance or
medical reimbursement plans covering its officers and directors and does not
contemplate implementing any such plan at this time.
No advances have been made or are contemplated by the Company to any of its
officers or directors.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
A. Security Ownership of Certain Beneficial Owners
The following persons are known to the Company to be the beneficial owner
of more than 5 percent of the Company's voting stock as of September 30 1996:
Number of
Shares
Name Owned Percent
William Grilz(1)(2) 125,000 12.50%
2232 Eastwood Blvd.
Ogden, UT 84403
President/Director
21
<PAGE>
Number of
Shares
Name Owned Percent
Michael Hendry(1)(2) 200,000 20.00%
1862 East 1900 North
Layton, UT 84040
Director
David Knudson (1)(3) -0- 0%
2331 East 1200 North
Layton, UT 84040
Secretary/Director
Mark Scharmann(2) 625,000 62.50%
1661 Lakeview Circle
Ogden, UT 84403
A. O. Headman, Jr.(2) 50,000 5.00%
960 Northcliffe Drive
Salt Lake City, UT 84103
ALL OFFICERS AND DIRECTORS
AS A GROUP (3 INDIVIDUALS) 325,000 32.500%
ALL SHAREHOLDERS AS A 1,000,000 100.00%
GROUP
(1) These individuals are the officers and directors of the Company and may
be deemed "parents" and "promoters" of the Company as those terms are defined in
the Rules and Regulations promulgated under the Securities Act of 1933, as
amended.
(2) There are currently 1,000,000 shares of the Company's common stock
issued and outstanding. In addition to the shares owned by the above-listed
shareholders, such shareholders each own one Class "A" Warrant and one Class "B"
Warrant for each share of common stock owned. The Class "A" Warrants are
exercisable at $.25 per shares and the Class "B"Warrants are exercisable at $.50
per share Although these warrants are currently exercisable, there is no market
for the Company's common stock and therefore, there is no current value to such
Warrants and it is unlikely that they will be exercised until and unless there
is a public market.
(3) The Company has granted Mr. Knudson an option to purchase 100,000
shares of the Company's common stock at a price of $.10 per share. Such option
expires December 31, 1997.
22
<PAGE>
All shares are held beneficially and of record and each record shareholder
has sole voting and investment power. The Company sold 2,000,000 Units of its
securities in its public offering. However, pursuant to Rule 11.1 as adopted by
the Utah Securities Division, none of such Units have been issued. (See "Item 1
- - Business.")
B. Security Ownership of Management. See Item 11(a) above.
C. Changes in Control. No changes in control of the Company are currently
contemplated, except as described in Item 1. The Company is seeking mergers or
acquisitions which, when consummated, will result in a change of control of the
management of the Company as well as a change in the voting control of the
outstanding securities of the Company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Since 1993, the Company has borrowed money from Troika Capital Investment,
Inc. As of December 31, 1995, the amount due Troika Capital Investment, Inc. for
principal and interest was $107,529.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits.
3.1 Certificate of Incorporation - incorporated by reference to Exhibit 3.1
to Registration Statement on Form S-18 (SEC File No. 33-23429-D)
3.2 Bylaws - incorporated by reference to Exhibit 3.2 to Registration
Statement on Form S-18 (SEC File No. 33-23429-D).
B. Form 8-K. In December 1995 the Company filed a Form 8-K in connection
with the extension of the exercise period of its Class "A" and Class "B" Common
Stock Purchase Warrants to December 31, 1996.
23
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Company
caused this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
NIGHTINGALE, INC.
By /s/ William Grilz
William Grilz
Principal Executive Officer
By /s/ David Knudson
David Knudson
Secretary/Treasurer
Principal Financial Officer
Dated: September 30, 1996
Pursuant to the requirements of the Securities Act of 1934, this Disclosure
Statement has been signed by the following persons in the capacities and on the
dates indicated:
Signature Title Date
/s/ William Grilz President September 30, 1996
William Grilz and Director
/s/ Michael Hendry Director September 30, 1996
Michael Hendry
/s/ David Knudson Secretary/Treasurer September 30, 1996
David Knudson and Director
24
[ARTICLE] 5
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NIGHTINGALE,
INC'S DECEMBER 31, 1995 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
<TABLE>
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] DEC-31-1995
[PERIOD-END] SEPT-30-1996
[CASH] 340
[SECURITIES] 0
[RECEIVABLES] 0
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 191,782
[PP&E] 0
[DEPRECIATION] 0
[TOTAL-ASSETS] 191,782
[CURRENT-LIABILITIES] 285,782
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 1,000,000
[OTHER-SE] 0
[TOTAL-LIABILITY-AND-EQUITY] 191,782
[SALES] 0
[TOTAL-REVENUES] 10,142
[CGS] 0
[TOTAL-COSTS] 18,273
[OTHER-EXPENSES] 0
[LOSS-PROVISION] (8,131)
[INTEREST-EXPENSE] 0
[INCOME-PRETAX] 0
[INCOME-TAX] 357
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 340
[EPS-PRIMARY] (.00)
[EPS-DILUTED] (.00)
</TABLE>
