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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended March 31, 2000
Commission File No. 33-23429-D
NIGHTINGALE, INC.
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(Exact name of Small Business Issuer as specified in its charter)
Utah 87-044988-8
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(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification Number)
2232 Eastwood Blvd., Ogden, UT 84403
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(Address of principal executive offices)
(801) 479-0742
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Registrant's telephone no., including area code:
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No Change
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Former name, former address, and former fiscal year, if
changed since last report.
Common Stock outstanding at October 2, 2000 - 1,000,000 shares
of $.001 par value Common Stock.
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 No X .
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FORM 10-QSB
FINANCIAL STATEMENTS AND SCHEDULES
NIGHTINGALE, INC.
For the Quarter ended March 31, 2000.
The following financial statements and schedules of the registrant and its
consolidated subsidiaries are submitted herewith:
PART I - FINANCIAL INFORMATION
Page of
Form 10-QSB
Item 1. Financial Statements; --------------
Balance Sheet--March 31, 2000......................................3
Statements of Operations--for the three months
months ended March 31, 2000........................................4
Statements of Cash Flows--for the three months
ended March 31, 2000.............................................5-6
Notes to Financial Statements......................................7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..........................................8
PART II - OTHER INFORMATION
Page
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Item 1. Legal Proceedings 11
Item 2. Changes in the Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Results of Votes of Security Holders 11
Item 5. Other Information 11
Item 6(a).Exhibits 11
Item 6(b).Reports on Form 8-K 11
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NIGHTINGALE, INC.
(A Development Stage Company)
Balance Sheet
March 31, 2000 (Unaudited)
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Assets
Current assets:
Cash $ 506
Restricted cash in escrow 236,056
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Total assets $ 236,562
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Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable and accrued liabilities $ 3,719
Related party payables 226,338
Common stock units subscribed 177,017
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Total current liabilities 407,074
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 (191,112)
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Total stockholders' deficit (170,512)
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Total liabilities and stockholders' deficit $ 236,562
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NIGHTINGALE, INC.
(A Development Stage Company)
Statement of Operations
(Unaudited)
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Three Months Ended Cumulative
March 31, Amounts
------------------------ From
2000 1999 Inception
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Revenue - interest $ 3,118 $ 2,488 $ 100,474
Expenses:
General and administrative expenses 14,378 6,135 291,586
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Loss before income taxes (11,260) (3,647) (191,112)
Income tax expense - - -
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Net loss $ (11,260) $(3,647) $(191,112)
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Net loss per share - basic and diluted $ (.01) $ (.00) $ (.19)
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Weighted average shares - basic
and diluted 1,000,000 1,000,000 1,000,000
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NIGHTINGALE, INC.
(A Development Stage Company)
Statement of Cash Flows
(Unaudited)
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Cumulative
Three Months Ended Amounts
March 31, From
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2000 1999 Inception
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Cash flows from operating activities:
Net loss $ (11,260) $ (3,647) $ (191,112)
Adjustments to reconcile net loss to
net cash used in operating activities:
Amortization - - 1,350
Increase in - accounts payable and
accrued liabilities - 74 3,719
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Net cash used in
operating activities (11,260) (3,573) (186,043)
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Cash flows from investing activities:
Increase in related party payables 14,807 7,356 226,338
Increase in restricted cash in escrow (3,119) (2,488) (236,056)
Increase in notes receivable - related
parties - - (74,282)
Increase in organization costs - - (1,350)
Payment of notes receivable - related
parties - - 74,282
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Net cash provided by
(used in) investing activities 11,688 4,868 (11,068)
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Cash flows from financing activities:
Proceeds from common stock units
subscribed - - 200,000
Proceeds from issuance of stock - - 20,600
Increase in offering costs - - (22,983)
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Net cash provided by
financing activities - - 197,617
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Net increase in cash 428 1,295 506
Cash, beginning of period 78 15 -
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Cash, end of period $ 506 $ 1,310 $ 506
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NIGHTINGALE, INC.
(A Development Stage Company)
Statement of Cash Flows
Continued
(Unaudited)
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Cumulative
Three Months Ended Amounts
March 31, From
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2000 1999 Inception
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Supplemental disclosure of cash flow
information:
Interest paid $ - $ - $ -
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Income taxes paid $ - $ - $ 572
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NIGHTINGALE, INC.
(A Development Stage Company)
Notes to Financial Statements
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(1) The unaudited financial statements include the accounts of Nightingale,
Inc. and include all adjustments (consisting of normal recurring items)
which are, in the opinion of management, necessary to present fairly the
financial position as of March 31, 2000 and the results of operations and
changes in financial position for the three month period ended March 31,
2000 and 1999, and cumulative amounts since inception. The results of
operations for the three months ended March 31, 2000 are not necessarily
indicative of the results to be expected for the entire year.
(2) Loss per common share is based on the weighted average number of shares
outstanding during the period.
(3) The Company has been subject to Rule 164-11-1 as promulgated by the State
of Utah, Division of Securities. Such Rule deals with blank check
securities offerings such as the Company's initial public offering. One of
the requirements of Rule 164-11-1 is for the Company to offer a rescission
to its public offering investors at the time the Company locates an
acquisition. Note 3 to these financial statements further describes the
Company's initial public offering and the requirements of Rule 164-11-1. On
September 13, 2000, the Utah Division of Securities waived the Company's
compliance with Rule 164-11-1 subject to the Company's completion of, and
compliance with certain agreed upon undertakings by the Company. One of
such undertakings is to offer the public offering investors a rescission
prior to the time of an acquisition. This rescission would allow investors
the opportunity to be repaid their invested amount in the units originally
purchased. If an investor elects not to rescind, such investor would become
a shareholder of the Company and would be afforded dissenting shareholder
rights in connection with any acquisition subsequently effected by the
Company.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The Company was formed for the purpose of investing in any and all types of
assets, properties and businesses. At the time of its formation, the Company
issued 1,000,000 shares of its Common Stock to its initial shareholders,
together with a 1,000,000 Class "A" Warrants exercisable at $.25 per share and
1,000,000 Class B Warrants exercisable at $.50 per share. On September 28, 1988,
the United States Securities and Exchange Commission granted effectiveness to a
Registration Statement on Form S-18. The Registration Statement was for an
offering of 2,000,000 Units of Common Stock 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 formally closed on October 6, 1989. 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. The Utah Securities Division has recently agreed
to waive compliance with Rule 164-11-1 subject to compliance with certain
conditions.
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 was, and is, 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 this 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 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
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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 cost 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.
A total of 2,000,000 Units of the Company's securities were subscribed for
and gross offering proceeds were $200,000. Net offering proceeds for purposes of
Rule 11.1 were $175,000. Pursuant to Rule 164-11-1, 80% of the net offering
proceeds, or $140,000 was deposited into a Rule 11.1 Escrow Account. The
escrowed amount may not be used by the Company until such time as Rule 164-11-1
is complied with.
Waiver of Rule 164-11-1
On July 31, 2000, the Company's counsel sent a letter to the Utah Securities
Division requesting a waiver of Rule 164-11-1 so far as it applied to the
Company. In lieu of compliance with Rule 164-11-1, the Company undertook to take
the following action:
1. The Company would immediately file a Form 8-K with the SEC describing the
course of action set forth below.
2. The Company would immediately offer a rescission to each of its public
investors. Inasmuch as there are only 41 investors, a number of which are
accredited investors, the rescission offer would be made in compliance
with SEC Rule 506 or Section 4(2) of the Securities Act of 1933, as
amended, as a non-public offering. There are sufficient funds in the Rule
11-1 escrow account to provide a full rescission of the principal amount
invested by the public investors. A Private Rescission Offering Memorandum
would be distributed to each public investor describing the rescission.
3. Any investor electing to rescind would be immediately repaid his or her
investment and would thereafter have no interest in the Company.
4. Any investor electing not to rescind would be issued shares of the
Company's common stock and would have no subsequent rights to rescind.
5. After the rescission is completed, all funds held in the escrow account,
after the payment of funds to rescinding investors, will be delivered to
the Company for its use for general corporate purposes.
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6. At such time as the Company locates an acquisition transaction, it will
prepare and distribute to its stockholders a proxy statement describing
the acquisition transaction. Although the Company is not subject to the
SEC Proxy Rules, it would substantially utilize the disclosure
requirements of the Proxy Rules in connection with such proxy statement
7. Regardless of the structure of the acquisition, each of the Company's
stockholders would be granted dissenting stockholder appraisal rights as
provided for in the Utah Revised Business Corporations Act, provided
however, the amount to be paid to dissenting shareholders would not be
less than the amount invested by such dissenting shareholders.
Accordingly, public investors would have two opportunities to receive back
their investment.
8. Management of the Company would vote their shares for or against an
acquisition proposal in the same ratio as non-management shares are voted.
This would allow the public shareholders to determine whether a particular
acquisition is affected.
9. Prior to the completion of an acquisition, no public market for the
Company's common stock would be developed through the efforts of the
Company or its management.
10. The Company would, prior to the completion of an acquisition, continue
to file reports with the SEC pursuant to Section 15(d) of the
Securities Exchange Act, as amended.
On September 13, 2000, the Utah Securities Division notified the Company that
it was willing to waive compliance with Rule 164-11-1 if the Company complied
with the actions listed above. The Utah Securities Division also required the
Company to provide it with a copy of the rescission offering before it is
forwarded to the Company's subscribers.
The Company anticipates that it will commence work on this process prior to
the end of the current fiscal year.
Liquidity and Capital Resources. Presently, the Company's assets consist
solely of a minimal amount of cash from its initial capitalization and from the
sale of stock in its public offering. As of March 31, 2000, the Company had
unrestricted cash of $506 and restricted cash in the Rule 164-11-1 Escrow
Account of $236,056. As of December 31, 1999, the Company had unrestricted cash
of $78 and escrowed cash of $232,937. The Company's total liabilities amounted
to $407,074 as of March 31, 2000, of which $177,017 was attributed to common
stock Units subscribed. The Company's total liabilities amounted to $392,267 as
of December 31, 1999, of which $177,017 was attributed to common stock units
subscribed. The Company presently has no other resources. The Company is
presently seeking potential acquisitions of private companies, technologies, or
product distribution rights. Management
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believes that any acquisition will be made by issuing shares of the Company's
authorized but unissued common stock. The Company's liquidity, capital
resources, and financial statements will be significantly different subsequent
to the consummation of any acquisition. The Company's operating expenses have
been covered by advances from affiliates in recent months. However, there can be
no assurance that the Company's affiliates will continue to fund operating costs
in the future.
The Company has been required to borrow funds from its affiliates in order to
fund its general and administrative costs. As of March 31, 2000, such affiliates
had loaned $226,338 to the Company which has been used to fund the Company's
legal fees, accounting fees, filing fees, travel expenses and other
administrative costs. The Company must continue to borrow funds in order to fund
its costs of operations until such time, if ever, it effects a merger or
acquisition transaction. There can be no assurance that the Company will be able
to borrow additional funds from such affiliates or from any other persons. If
the Company is not able to borrow additional funds as needed, it will not be
able to fund its costs of operations.
Results of Operations. The Company has not commenced any operations except
for the preliminary investigation of potential acquisitions. The Company's
assets, consisting primarily of cash, is on deposit in various interest bearing
and non-interest bearing accounts pending the consummation of any acquisition.
For the three months ended March 31, 2000, the Company had revenues of $3,118
expenses of $14,378 and a net loss of $11,260. For the three months ended March
31, 1999, the Company had revenues of $2,488 expenses of $6,135 and a net loss
of $3,647. The Company will likely not have any revenues except for interest
unless and until it is able to close an acquisition or merger transaction.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings. To the best knowledge of the officers and
directors, neither the Company nor any of its officers and
directors are party to any legal proceeding or litigation.
The officers and directors know of no such litigation being
threatened or contemplated.
Item 2. Changes in the Rights of the Company's Security Holders. None.
Item 3. Defaults by the Company on its Senior Securities. None.
Item 4. Submission of Matters to Vote of Security Holders. None.
Item 5. Other Information. None.
Item 6(a). Exhibits. None.
Item 6(b). Reports on Form 8-K. None.
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SIGNATURE
In accordance with the requirements of the Exchange Act, the Company has
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
Dated: November 6, 2000 NIGHTINGALE, INC.
By /s/ William Grilz
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William Grilz
President
Principal Financial Officer
Principal Executive Officer
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