UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] Annual report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended December 31, 1997
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 (No fee required) for the transition
period from to
Commission file number: 33-24108D
Jutland Enterprises, Inc.
(Name of Small Business Issuer in Its Charter)
Delaware 87-045382
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
268 West 400 South, Suite 300, Salt Lake City, Utah 84101
(Address of Principal Executive Offices) (Zip Code)
(801) 575-8073
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
Title of Each Class Name of each Exchange on Which Registered
Common Stock ($0.001 Par Value) None
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B not contained in this form, and no disclosure will be contained,
to the best of registrant'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 [X ].
The issuer's total consolidated revenues for the year ended December 31, 1997,
were $ 0.
The aggregate market value of the registrant's Common Stock, $.001 par value
(the only class of voting stock), held by non-affiliates was approximately
$1,647.72 based on the average closing bid and asked prices for the Common Stock
on December 31, 1997.
At December 31, 1997, the number of shares outstanding of the registrant's
Common Stock, $.001 par value (the only class of voting stock), was 3,893,943.
<PAGE>
TABLE OF CONTENTS
PAGE
PART I
Item 1. Description of Business..............................................1
Item 2. Description of Property..............................................5
Item 3. Legal Proceedings....................................................5
Item 4. Submission of Matters to a Vote of Security-Holders..................6
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.............6
Item 6. Management's Discussion and Analysis or Plan of Operation............7
Item 7. Financial Statements.................................................8
Item 8. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.................................................9
PART III
Item 9. Directors and Executive Officer......................................9
Item 10. Executive Compensation...............................................9
Item 11. Security Ownership of Certain Beneficial Owners and Management......10
Item 12. Certain Relationships and Related Transactions......................10
Item 13. Exhibits, List and Reports on Form 8-K..............................10
<PAGE>
PART I
This Annual Report contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, which are intended to be
covered by the safe harbors created thereby. Investors are cautioned that all
forward-looking statements involve risks and uncertainty, including without
limitation, the ability of the Company to continue its expansion strategy,
changes in costs of raw materials, labor, and employee benefits, as well as
general market conditions, competition and pricing. Although the Company
believes that the assumptions underlying the forward-looking statements
contained herein are reasonable, any of the assumptions could be inaccurate, and
therefore, there can be no assurance that the forward-looking statements
included in this Annual Report will prove to be accurate. In light of the
significant uncertainties inherent in the forward-looking statements including
herein, the inclusion of such information should not be regarded as are
presentation by the Company or any other person that the objectives and plans of
the Company will be achieved.
ITEM 1. DESCRIPTION OF BUSINESS
As used herein the term "Company" refers to Jutland Enterprises, Inc., a
Delaware corporation and its subsidiaries and predecessors, unless the context
indicates otherwise. The Company was incorporated under the laws of the State of
Delaware on January 11, 1988. The Company's former name was Treat Enterprises,
Inc. The Company has had no operations since September 30, 1993. The Company is
currently a shell company whose purpose will be to acquire operations through an
acquisition or merger.
On March 22, 1999, Hudson Consulting Group, Inc. ("Hudson") entered in a Stock
Purchase Agreement ("Agreement") with Andrew Thorburn. Pursuant to the Agreement
Hudson purchased 2,246,224 shares of the Company common stock for $10,000 cash
on March 24, 1999. Consequently, Hudson has a majority interest in the Company's
shares of common stock. By virtue of Hudson's purchase of 57.7% of the Company's
shares of common stock, Hudson has effective control of the Company.
On April 7, 1999, Hudson filled the vacancies on the board of the Company
pursuant to Delaware General Corporation Law under ss.ss.268(a) and 141(k)
appointing Richard Surber as a director and president and Saundra McFadden as a
director and secretary of Company. Prior to April 7, 1999, the Company was
unable to transact any business because no known officer or director retained
their position with the Company. Both Mr. Surber and Ms. McFadden are also
officers and directors of Hudson.
The Company ceased operations in 1993 and has essentially been dormant since
that time. The Company's management, directors, and officers had either resigned
or abandoned their position. Furthermore, the Company's corporate charter had
been revoked and the Company apparently has not filed any reports with the
Securities and Exchange Commission since the third quarter of 1993.
The Company has since filed the necessary documents to reinstating it's
corporate charter. Hudson intends to assist the Company in settling its debts,
assist the Company in filing and bringing the necessary disclosure documents
current with the Securities and Exchange Commission, and finding suitable
operations for the Company through a merger or acquisition.
Since the Company discontinued its operations it has been dormant. The Company
is now in process of attempting to identify and acquire a favorable business
opportunity. The Company has reviewed and evaluated a number of business
ventures for possible acquisition or participation by the Company. The Company
has not entered into any agreement, nor does it have any commitment or
understanding to enter into or become engaged in a transaction as of the date of
this filing. The Company continues to investigate, review, and evaluate business
opportunities as they become available and will seek to acquire or become
engaged in business opportunities at such time as specific opportunities warrant
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To a large extent, a decision to participate in a specific business opportunity
may be made upon management's analysis regarding the quality of the other firm's
management and personnel, the asset base of such firm or enterprise, the
anticipated acceptability of new products or marketing concepts, the merit of
the firms business plan, and numerous other factors which are difficult, if not
impossible, to analyze through the application of any objective criteria.
The Company currently has no commitment or arrangement to participate in a
business and cannot now predict what type of business it may enter into or
acquire. It is emphasized that the business objectives discussed herein are
extremely general and are not intended to restrict the discretion of the
Company's management.
There are no plans or arrangements proposed or under consideration for the
issuance or sale of additional securities by the Company prior to the
identification of an acquisition candidate, except as needed to pay various
professionals who are assisting the Company in locating a business opportunity.
Consequently, management anticipates that it may be able to participate in only
one potential business venture, due primarily to the Company's limited capital.
This lack of diversification should be considered a substantial risk, because it
will not permit the Company to offset potential losses from one venture against
gains from another.
Selection of a Business
The Company anticipates that businesses for possible acquisition will be
referred by various sources, including its officers and directors, professional
advisors, securities broker-dealers, venture capitalists, members of the
financial community, and others who may present unsolicited proposals. The
Company will not engage in any general solicitation or advertising for a
business opportunity, and will rely on personal contacts of its officers and
directors and their affiliates, as well as indirect associations between them
and other business and professional people. By relying on "word of mouth", the
Company may be limited in the number of potential acquisitions it can identify.
While it is not presently anticipated that the Company will engage unaffiliated
professional firms specializing in business acquisitions or reorganizations,
such firms may be retained if management deems it in the best interest of the
Company.
Compensation to a finder or business acquisition firm may take various forms,
including one-time cash payments, payments based on a percentage of revenues or
product sales volume, payments involving issuance of securities (including those
of the Company), or any combination of these or other compensation arrangements.
Consequently, the Company is currently unable to predict the cost of utilizing
such services.
Pursuant to the Financial Consulting Agreement between the Company and Hudson
Consulting Group, Inc. Hudson may be entitled to 10% of the Company's issued and
outstanding shares after reorganization in addition to an undetermined cash to
cover costs, expenses and fees. Hudson is a majority shareholder of the Company
whose officers and directors are the same as the Company's.
The Company will not restrict its search to any particular business, industry,
or geographical location, and management reserves the right to evaluate and
enter into any type of business in any location. The Company may participate in
a newly organized business venture or a more established company entering a new
phase of growth or in need of additional capital to overcome existing financial
problems. Participation in a new business venture entails greater risks since in
many instances management of such a venture will not have proved its ability,
the eventual market of such venture's product or services will likely not be
established, and the profitability of the venture will be unproved and cannot be
predicted accurately. If the Company participates in a more established firm
with existing financial problems, it may be subjected to risk because the
financial resources of the Company may not be adequate to eliminate or reverse
the circumstances leading to such financial problems.
2
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In seeking a business venture, the decision of management will not be controlled
by an attempt to take advantage of any anticipated or perceived appeal of a
specific industry, management group, product, or industry, but will be based on
the business objective of seeking long-term capital appreciation in the real
value of the Company.
The analysis of new businesses will be undertaken by or under the supervision of
the officers and directors. In analyzing prospective businesses, management will
consider, to the extent applicable, the available technical, financial, and
managerial resources; working capital and other prospects for the future; the
nature of present and expected competition; the quality and experience of
management services which may be available and the depth of that management; the
potential for further research, development, or exploration; the potential for
growth and expansion; the potential for profit; the perceived public recognition
or acceptance of products, services, or trade or service marks; name
identification; and other relevant factors. It is anticipated that the results
of operations of a specific firm may not necessarily be indicative of the
potential for the future because of the requirement to substantially shift
marketing approaches, expand significantly, change product emphasis, change or
substantially augment management, and other factors.
The Company will analyze all available factors and make a determination based on
a composite of available facts, without reliance on any single factor. The
period within which the Company may participate in a business cannot be
predicted and will depend on circumstances beyond the Company's control,
including the availability of businesses, the time required for the Company to
complete its investigation and analysis of prospective businesses, the time
required to prepare appropriate documents and agreements providing for the
Company's participation, and other circumstances.
Acquisition of a Business
In implementing a structure for a particular business acquisition, the Company
may become a party to a merger, consolidation, or other reorganization with
another corporation or entity; joint venture; license; purchase and sale of
assets; or purchase and sale of stock, the exact nature of which cannot now be
predicted. Notwithstanding the above, the Company does not intend to participate
in a business through the purchase of minority stock positions. On the
consummation of a transaction, it is likely that the present management and
shareholders of the Company will not be in control of the Company. In addition,
a majority or all of the Company's directors may, as part of the terms of the
acquisition transaction, resign and be replaced by new directors without a vote
of the Company's shareholders.
In connection with the Company's acquisition of a business, the present
shareholders of the Company, including officers and directors, may, as a
negotiated element of the acquisition, sell a portion or all of the Company's
Common Stock held by them at a significant premium over their original
investment in the Company. As a result of such sales, affiliates of the entity
participating in the business reorganization with the Company would acquire a
higher percentage of equity ownership in the Company. Although the Company's
present majority shareholder did not acquire their shares of Common Stock with a
view towards any subsequent sale in connection with a business reorganization,
it is not unusual for affiliates of the entity participating in the
reorganization to negotiate to purchase shares held by the present shareholders
in order to reduce the amount of shares held by persons no longer affiliated
with the Company and thereby reduce the potential adverse impact on the public
market in the Company's common stock that could result from substantial sales of
such shares after the business reorganization. Public investors will not receive
any portion of the premium that may be paid in the foregoing circumstances.
Furthermore, the Company's shareholders may not be afforded an opportunity to
approve or consent to any particular stock buy-out transaction.
In the event sales of shares by present shareholders of the Company, including
officers and directors, is a negotiated element of a future acquisition, a
conflict of interest may arise because directors will be negotiating for the
acquisition on behalf of the Company and for sale of their shares for their own
respective accounts.
3
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Where a business opportunity is well suited for acquisition by the Company, but
affiliates of the business opportunity impose a condition that management sell
their shares at a price which is unacceptable to them, management may not
sacrifice their financial interest for the Company to complete the transaction.
Where the business opportunity is not well suited, but the price offered
management for their shares management will be tempted to effect the acquisition
to realize a substantial gain on their shares in the Company. Management has not
adopted any policy for resolving the foregoing potential conflicts, should they
arise, and does not intend to obtain an independent appraisal to determine
whether any price that may be offered for their shares is fair. Stockholders
must rely, instead, on the obligation of management to fulfill its fiduciary
duty under state law to act in the best interests of the Company and its
stockholders.
It is anticipated that any securities issued in any such reorganization would be
issued in reliance on exemptions from registration under applicable federal and
state securities laws. In some circumstances, however, as a negotiated element
of the transaction, the Company may agree to register such securities either at
the time the transaction is consummated, under certain conditions, or at
specified times thereafter. Although the terms of such registration rights and
the number of securities, if any, which may be registered cannot be predicted,
it may be expected that registration of securities by the Company in these
circumstances would entail substantial expense to the Company.
The issuance of substantial additional securities and their potential sale into
any trading market which may develop in the Company's securities may have a
depressive effect on such market.
While the actual terms of a transaction to which the Company may be a party
cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to structure the acquisition as a so-called
"tax-free" event under sections 351 or 368(a) of the Internal Revenue Code of
1986, (the "Code"). In order to obtain tax-free treatment under section 351 of
the Code, it would be necessary for the owners of the acquired business to own
80% or more of the voting stock of the surviving entity. In such event, the
shareholders of the Company would retain less than 20% of the issued and
outstanding shares of the surviving entity. Section 368(a)(1) of the Code
provides for tax- free treatment of certain business reorganizations between
corporate entities where one corporation is merged with or acquires the
securities or assets of another corporation. Generally, the Company will be the
acquiring corporation in such a business reorganization, and the tax-free status
of the transaction will not depend on the issuance of any specific amount of the
Company's voting securities. It is not uncommon, however, that as a negotiated
element of a transaction completed in reliance on section 368, the acquiring
corporation issue securities in such an amount that the shareholders of the
acquired corporation will hold 50% or more of the voting stock of the surviving
entity. Consequently, there is a substantial possibility that the shareholders
of the Company immediately prior to the transaction would retain less than 50%
of the issued and outstanding shares of the surviving entity. Therefore,
regardless of the form of the business acquisition, it may be anticipated that
stockholders immediately prior to the transaction will experience a significant
reduction in their percentage of ownership in the Company.
Notwithstanding the fact that the Company would be technically the acquiring
entity in the foregoing circumstances, generally accepted accounting principles
will ordinarily require that such transaction be accounted for as if the Company
had been acquired by the other entity owning the business and, therefore, will
not permit a write-up in the carrying value of the assets of the other company.
The manner in which the Company participates in a business will depend on the
nature of the business, the respective needs and desires of the Company and
other parties, the management of the business, and the relative negotiating
strength of the Company and such other management.
The Company will participate in a business only after the negotiation and
execution of appropriate written agreements. Although the terms of such
agreements cannot be predicted, generally such agreements will require specific
representations and warranties by all of the parties thereto, will specify
certain events of
4
<PAGE>
default, will detail the terms of closing and the conditions which must be
satisfied by each of the parties prior to such closing, will outline the manner
of bearing costs if the transaction is not closed, will set forth remedies on
default, and will include miscellaneous other terms.
Operation of Business After Acquisition
The Company's operation following its acquisition of a business will be
dependent on the nature of the business and the interest acquired. The Company
is unable to predict whether the Company will be in control of the business or
whether present management will be in control of the Company following the
acquisition. It may be expected that the business will present various risks,
which cannot be predicted at the present time.
Governmental Regulation
It is impossible to predict the government regulation, if any, to which the
Company may be subject until it has acquired an interest in a business. The use
of assets and/or conduct of businesses which the Company may acquire could
subject it to environmental, public health and safety, land use, trade, or other
governmental regulations and state or local taxation. In selecting a business in
which to acquire an interest, management will endeavor to ascertain, to the
extent of the limited resources of the Company, the effects of such government
regulation on the prospective business of the Company. In certain circumstances,
however, such as the acquisition of an interest in a new or start-up business
activity, it may not be possible to predict with any degree of accuracy the
impact of government regulation. The inability to ascertain the effect of
government regulation on a prospective business activity will make the
acquisition of an interest in such business a higher risk.
Competition
The Company will be involved in intense competition with other business
entities, many of which will have a competitive edge over the Company by virtue
of their stronger financial resources and prior experience in business. There is
no assurance that the Company will be successful in obtaining suitable
investments.
Employees
The Company is a development stage company and currently has no employees.
Executive officers, who are not compensated for their time contributed to the
Company, will devote only such time to the affairs of the Company as they deem
appropriate, which is estimated to be approximately 20 hours per month per
person. Management of the Company expects to use consultants, attorneys, and
accountants as necessary, and does not anticipate a need to engage any full-time
employees so long as it is seeking and evaluating businesses. The need for
employees and their availability will be addressed in connection with a decision
whether or not to acquire or participate in a specific business industry.
ITEM 2. DESCRIPTION OF PROPERTY
The Company owns no real property. The Company currently uses the offices,
office equipment and support staff of Hudson Consulting Group, Inc. at 268 West
400 South, Suite 300, Salt Lake City, Utah 84101. The Company currently no
written lease agreement.
5
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ITEM 3. LEGAL PROCEEDINGS
Cynthia M. Maleski, Insurance Commissioner of the Commonwealth of Pennsylvania
v. Jutland Enterprises, Inc. On July 5, 1994 Maleski, in her capacity as
statutory liquidator of Corporate Life Insurance Company, filed an action
against the Company in the Commonwealth Court of Pennsylvania No. 294 M.D. 1994.
That court entered a Default Judgment on December 28, 1994 against the Company
in the amount of $300,000 plus 10% interest from October 8, 1993, plus
attorney's fees and costs. On May 8, 1995, a suit was filed in the Superior
Court of New Jersey, Somerset County, Docket NO. SOM-L-871-95 seeking to enforce
the Pennsylvania judgment. On June 7, 1996 judgment was granted by the New
Jersey court in the amount of $398,884.36 plus costs and attorney's fees.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the fiscal year covered by this Report to a vote
of security holders, and therefore, this item is inapplicable.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is quoted on the Electronic Bulletin Board under the
symbol, JUTL. Trading in the common stock in the over-the-counter market has
been limited and sporadic and the quotations set forth below are not necessarily
indicative of actual market conditions. Further, these prices reflect
inter-dealer prices without retail mark-up, mark-down, or commission, and may
not necessarily reflect actual transactions. The high and low bid prices for the
common stock for each quarter of the fiscal years ended December 31, 1996 and
1997 are as follows:
Quarter High Low
------- ---- ---
1996 First Not Available Not Available
- ----
Second Not Available Not Available
Third Not Available Not Available
Fourth $.001 $.001
Quarter High Low
------- ---- ---
1997 First Not Available Not Available
- ----
Second Not Available Not Available
Third Not Available Not Available
Fourth $.001 $.001
In November, 1999, the number of holders of record of the Company's common stock
was 291. No cash dividends were paid during the fiscal years December 31, 1997
and 1996.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
During the next 12 months, the Company intends to locate an operating business
through an acquisition or merger. The Company will also attempt to settle all
remaining liabilities at a substantial discount through funds that insiders may
provide.
Results of Operations
The Company recorded $0 in sales for the fiscal years ending December 31, 1997
and 1996. The Company has had no operations since 1993.
Losses
Net losses for the year ended December 31, 1997 were $43,032 compared to $47,496
for the year ended December 31, 1996. The losses were attributable to interest
expenses accruing on a judgement against the Company.
The Company expects to continue to incur losses until such time as it acquires
profitable operations.
Expenses
The Company had interest expenses of $43,032 for the year ended December 31,
1997 and $38,196 for the comparable period in 1996. The Company had no
significant expenses other than interest expenses accruing as a result of
non-payment of a debt owed by the Company during the year ended 1997.
Impact of Inflation
The Company believes that inflation may have a negligible effect on future
operations. The Company believes that it may be able to offset inflationary
increases in the cost of sales by increasing sales and improving operating
efficiencies.
Liquidity and Capital Resources
The Company had a net working capital deficiency of $470,350 as of December 31,
1997, as a result of non payment of a judgment against the Company. The Company
intends to make an effort to settle the judgement at a substantial discount. The
Company anticipates that insiders will contribute sufficient funds to settle the
debt, if the debt can settled for less than $.10 on the dollar.
However, there is no guarantee that the plaintiff in this matter will agree to
settle the debt or that any of the Company's insiders will agree to contribute
or loan the Company sufficient funds to settle the debt. See Part I, Item 3,
Legal Proceeding on page 5 for more information on the judgement.
The Company had no operations for the years ended December 31, 1997 and 1996,
consequently there were no cash flows generated for these periods.
Cash flow generated from investing activities was $0 for the year ended December
31, 1997 and $0 for the year ended December 31, 1996.
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Year 2000 Implications
Many current installed computer systems and software may be coded to accept only
two-digit entries in the date code field and cannot distinguish 21st century
dates from 20th century dates. As a result, many software and computer systems
may need to be upgraded or replaced. Because the Company currently has no
operations and no computer systems, the Company does not anticipate that the
year 2000 will have any significant effect on the Company. However, the Company
is relying on consultants and other professional in the preparation of its
financials which includes the use of equipment, software and content, including
non-information technology systems, such as security systems, building equipment
and systems with embedded micro-controllers that may not be Year 2000 compliant.
The Company has taken steps to analyze its technical relationships and ensure
that its third party consultants and other professional the Company depends on
are also compliant. These include but are not limited to its relationship with
Hudson Consulting Group, Inc., its accountants and attorneys. The Company has
received verification that Hudson Consulting Group, Inc. is compliant. Not all
of the Company's third party distributors have given adequate assurances that
they are or are not compliant and therefore may or may not experience problems
relating to the Year 2000 issues.
Failure of third-party equipment, software or content to operate properly with
regard to the Year 2000 issue could require the Company to incur unanticipated
expenses to remedy problems, which could have a material adverse effect on its
financial condition.
Year 2000 Contingency Plan
No contingency plan is in place due to the fact that the Company has no
operations which would justify such a plan.
ITEM 7. FINANCIAL STATEMENTS
The Company's financial statements for the fiscal year ended December 31, 1997
are attached hereto as pages F-1 through F-10.
[Remainder of this page intentionally left blank]
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JUTLAND ENTERPRISES, INC.
TABLE OF CONTENTS
DECEMBER 31, 1997 and 1996
INDEPENDENT AUDITORS' REPORT.................................................F-2
FINANCIAL STATEMENTS:
Balance Sheets...............................................................F-3
Statements of Income and Expenses ...........................................F-4
Statements of Shareholders' Equity ..........................................F-5
Statements of Cash Flows ....................................................F-6
NOTES TO FINANCIAL STATEMENTS ...............................................F-7
F-1
<PAGE>
Sellers & Associates P.C. (801) 621-8128
- -------------------------
3785 Harrison Blvd., Suite 101 - Ogden, Utah 84403 Fax (801) 627-1639
Independent Auditors' Report
----------------------------
To: Board of Directors
JUTLAND ENTERPRISES, INC.
Salt Lake City, Utah
We have audited the accompanying balance sheets of JUTLAND ENTERPRISES, INC., as
of December 31, 1997 and 1996 and the related statements of operations,
shareholders' equity (deficit), and cash flows for each of the two years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. 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 our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to in the first paragraph
above present fairly, in all material respects, the financial position of
JUTLAND ENTERPRISES, INC. as of December 31, 1997 and 1996, and the results of
its operations and cash flows for each of the two years then ended in conformity
with generally accepted accounting principles.
The accompanying financial statements have been presented assuming the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company disposed of all its assets and has not transacted
business for several years, which raises substantial doubt about 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.
/s/ Sellers & Associates, P.C.
Sellers & Associates, P.C.
October 18, 1999
F-2
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JUTLAND ENTERPRISES, INC
Balance Sheets
Years Ending December 31,1997 and 1996
ASSETS
1997 1996
------ ------
Current Assets $ - $ -
---------- ----------
Total Assets $ - $ -
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Judgement Payable $ 473,350 $ 430,318
---------- ----------
Total Current Liabilities 473,350 430,318
Long-Term Liabilities - -
---------- ----------
Total Liabilities $ 473,350 $ 430,318
---------- ----------
Contingencies - -
Shareholder's Equity (Deficit)
Preferred Stock, $0.001 par value, authorized
5,000,000 shares, none issued and outstanding. - -
Common Stock, $0.001 par value, authorized
50,000,000 shares, 3,893,943 issued and
outstanding as of December 31, 1997 and 1996. 3,894 3,894
Additional Paid-In Capital - -
Retained Earnings (Deficit) (477,244) (434,212)
---------- ----------
Net Shareholders' Equity (Deficit) (473,350) (430,318)
Total Liabilities and Shareholders' Equity (Deficit) $ - $ -
========== ==========
See Notes to Financial Statements
F-3
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JUTLAND ENTERPRISES, INC.
Statements of Income and Expenses
For the Years Ended December 31, 1997 and 1996
1997 1996
------ ------
Revenues $ - $ -
Interest Expense 43,032 38,996
---------- ----------
Other Costs 8,500
Net Income (Loss) Before Income Taxes (43,032) (47,496)
Provision for Income Taxes
Net Income (Loss) $ (43,032) $ (47,496)
========== ==========
Earnings (Loss) per Share $ (.01) $ (.01)
========== ==========
Weighted Average Shares Outstanding During the Period 3,893,943 3,893,943
========== ==========
See Notes to Financial Statements
F-4
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JUTLAND ENTERPRISES, INC.
Statements of Shareholders' Equity
For the Years Ended December 31, 1997 and 1996
<TABLE>
<S> <C> <C> <C> <C> <C>
Additional Accumulated
Preferred Stock Common Stock Paid-In-Capital (Deficit) Total
Shares Amount Shares Amount
Balance of December 31,1995 - $ - 3,893,943 $ 3,894 $ - $ (386,716) $(382,822)
Net(Loss) for the year ended
December 31, 1996 (47,496) (47,496)
------- ---------
Balance as of December 31, 1996 - - 3,893,943 3,894 - (434,212) (430,318)
Net (Loss) for the year ended
December 31, 1997 (43,032) (43,032)
Balance as of December 31, 1997 - $ - 3,893,943 $ 3,894 $ - $ (477,244) $(473,350)
======= =========== =========== ======== =========== =========== ==========
</TABLE>
See Notes to Financial Statements
F-5
<PAGE>
JUTLAND ENTERPRISES, INC.
Statements of Cash Flows
For the Years Ended December 31, 1997 and 1996
1997 1996
------ ------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ (43,032) $ (47,496)
---------- ----------
Adjustments to reconcile Net Income to Cash Flows
from Operating Activities
Increase in Judgement Payable 43,032 47,496
---------- ----------
Total Adjustments 43,032 47,496
---------- ----------
Net Cash Provided (Used) by Financing Activities - -
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Net Cash (Used) by Investing Activities - -
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net Cash Provided (Used) by Financing Activities - -
---------- ----------
Increase in Cash and Cash Equivalents - -
Cash at the Beginning of the Year - -
---------- ----------
Cash at End of the Year $ - $ -
========== ==========
SUPPLEMENTARY CASH FLOW INFORMATION
Interest Paid With Cash $ - $ -
========== ==========
See Notes to Financial Statements
F-6
<PAGE>
JUTLAND ENTERPRISES, INC.
Notes to Financial Statements
December 31, 1997 and 1996
NOTE 1 - Summary of Significant Accounting Policies
------------------------------------------
Basis of Presentation
- ---------------------
Jutland Enterprises, Inc. prepares its books and records on the accrual basis
for financial reporting. The accompanying financial statements represent the
transactions for the fiscal years ending December 31, 1997 and 1996.
Business Activity
- -----------------
The Company incorporated January 11, 1988 under the laws of the State of
Delaware, under the name of Jutland Enterprises, Inc. On September 28, 1989 it
amended its articles of incorporation and changed its name to Treats
Enterprises, Inc. On November 19, 1992 its name was changed back to Jutland
Enterprises, Inc.
The Company is authorized to issue up to 50,000,000 shares of common stock, par
value $0.001 and 5,000,000 shares of preferred stock, par value $.001.
Property and Equipment
- ----------------------
Property and equipment are valued at cost. The Company presently has no property
and equipment. Upon the sale or retirement of property and equipment the related
cost and accumulated depreciation are eliminated from the accounts and the
resulting gain or loss is recorded. Repairs and maintenance expenditures that do
not extend the useful lives are included in expense during the period they are
incurred.
Use of Accounting Estimates
- ---------------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Impairment of Long-Lived Assets
- -------------------------------
It is the Company's policy to periodically evaluate the economic recover ability
of all of its long-lived assets. In accordance with that policy, when the
Company determines that an asset has been impaired, it recognizes the loss on
the basis of the discounted future cash flows expected from the asset.
Fair Value of Financial Instruments
- -----------------------------------
The methods and assumptions used to estimate the fair value of each class of
financial instrument are as follows:
F-7
<PAGE>
JUTLAND ENTERPRISES, INC.
Notes to Financial Statements
December 31, 1997 and 1996
NOTE 1 - Summary of Significant Accounting Policies - continued
------------------------------------------------------
Cash and cash equivalents, receivables, accounts and judgements payable, due to
shareholder: The carrying amounts approximate fair value because of the short
maturity of these instruments.
Revenue Recognition
- -------------------
Revenue is recognized from sales and services when they are performed.
Income Taxes
- ------------
The Company has adopted the provisions of statements of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," which incorporates the use of
the asset and liability approach of accounting for income taxes. The asset and
liability approach requires the recognition of deferred tax assets and liability
for the expected future consequences of temporary differences between the
financial reporting basis and tax basis of assets and liabilities.
The Company has not filed income tax returns for several years. With the prior
net operating losses carried forward , management is of the opinion little or no
income taxes are due.
In March 1999 the Company underwent an ownership change as defined in Section
382 of the Internal Revenue Code. Consequently, management believes the net
operating loss carry forwards are lost. Therefore, no recognition of any net
operating loss carry forwards are reflected in these financial statements.
Statement of Cash Flows
- -----------------------
For purpose of the statement of cash flows, the Company considers all highly
liquid investments with a maturity of three months or less to be cash
equivalents.
Net Income (Loss) Per Share
- ---------------------------
Primary net income or (loss) per share is computed by dividing net income or
(loss) by the weighted average number of common shares outstanding.
NOTE 2 - Liabilities and Judgements
--------------------------
Management has reconstructed the financial position of the Company. Management
has concluded that the Company has no assets. Management also researched and
sought to identify any liabilities and judgements the Company may owe. The
management determined that a judgement in the amount of $398,384 plus interest
and other costs is the only liability that the Company has accrued.. The
judgement was obtained by the Insurance Commissioner of Pennsylvania on June 7,
1996 by a New Jersey Amount due on judgement is:
December 31, 1997 $473,350
December 31, 1996 $430,318
F-8
<PAGE>
JUTLAND ENTERPRISES, INC.
Notes to Financial Statements
December 31, 1997 and 1996
NOTE 3 - Contingencies
-------------
Management strived to identify any and all liabilities due by the Company. The
only identifiable liability management located is a judgement as discussed in
Note 2 - Liabilities and Judgements. However, previous management thought there
may be additional liabilities not to exceed $100,000, but was not able to
identify anything about them.
No additional liabilities were found as a result of management's search.
Consequently, no other debt besides the judgement as noted in Note 2 is
recognized on the financial statements, even though others may surface later
on.. Management is of the opinion, that the statute of limitations would bar the
collection of any unknown debts from being collected from the Company.
NOTE 4 - Reclassification of Shareholders' Equity
----------------------------------------
The Company restructured its equity section of the balance sheet as approved by
the Board of Directors in September, 1999.
Management reduced preferred stock to zero, as it could not identify or verify
any outstanding preferred stock. Additional paid in capital was offset against
retained earnings (deficit).
The Company also canceled 4,000,000 shares of treasury stock as part of the
restructuring of equity. All reclassifications are retroactively reported in the
financial statements as of December 31, 1996.
NOTE 5 - Common Stock
------------
As of December 31, 1997 there are 3,893,393 shares issued and outstanding. Of
this amount, 876,244 shares are free trading whereas 3,017,149 shares remain
restricted subject to Rule 144 of the Securities Act of 1933. See also Note 4.
NOTE 6 - Going Concern Considerations
----------------------------
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of the
Company as a going concern. However, the Company has no business operations and
presently has no assets and has not transacted business for several years.
This raises substantial doubt about the Company's ability to continue as a going
concern. Unless the Company receives additional funding from the generation of
revenues, issuance of stock, or borrowing, the Company's ability to continue as
a going concern is uncertain. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
F-9
<PAGE>
JUTLAND ENTERPRISES, INC.
Notes to Financial Statements
December 31, 1997 and 1996
NOTE 7 - Year 2000 Considerations
------------------------
Presently the Company has no business operations. Consequently, year 2000
considerations are insignificant and pose no threat to the business or
continuation of the Company.
NOTE 8 - Subsequent Events
-----------------
On March 23, 1999, the major shareholders, along with some others, sold their
interests in the Company to Hudson Consulting Group, Inc. (Hudson). Hudson now
effectively owns over 50% ownership in the Company. Hudson's officers and
directors are the same as the Company's. See also note 4.
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY]
F-10
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no changes in accountants or disagreements between the Company and
its accountants.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Name Age Position(s) and Office(s)
- ---- --- -------------------------
Richard Surber 26 President and Director
Saundra McFadden 55 Vice President, Secretary and Director
Richard Surber was appointed as the Company's president and director on April 7,
1999. Since 1991, Mr. Surber has been a professional consultant for various
public and private companies. Mr. Surber is a graduate of the University of Utah
College of Law where he obtained his Juris Doctorate. Mr. Surber also obtained a
Bachelors of Science degree in Finance from the University of Utah School of
Business. Mr. Surber is also a director of several other public and private
corporations.
Saundra McFadden was appointed as the Company's Vice President, Secretary and
Director on April 7, 1999. Ms. McFadden attended UCLA and has an extensive
background in film and television both as an actress and production executive
encompassing over 30 productions. Ms. McFadden was head of NBC Corporate Events
West Coast, following which she ran her own business handling national accounts
for Fortune 500 companies such as Seagrams, Mutual of New York, Paramount
Studios, Warner Lambert, Computer Associates and more.
Compliance with Section 16(a) of the Exchange Act
- -------------------------------------------------
Based solely upon a review of Forms 3, 4 and 5 furnished to the Company, the
Company is not aware of any person who at any time during the fiscal year ended
December 31, 1997 was a director, officer, or beneficial owner of more than ten
percent of the Common Stock of the Company, and who failed to file, on a timely
basis, reports required by Section 16(a) of the Securities Exchange Act of 1934
during such fiscal year.
ITEM 10. EXECUTIVE COMPENSATION
Executive Compensation
- ----------------------
No compensation in excess of $100,000 was awarded to, earned by, or paid to any
executive officer of the Company during the years 1997 and 1996. The following
table and the accompanying notes provide summary information for each of the
last three fiscal years concerning cash and non-cash compensation paid or
accrued by Richard Surber, the Company's chief executive officer for the past
three years.
Compensation of Directors
- -------------------------
The Company's directors are not currently compensated.
9
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the ownership of
the Company's Common Stock as of November 2, 1999, with respect to: (i) each
person known to the Company to be the beneficial owner of more than five percent
of the Company's Common Stock; (ii) all directors; and (iii) directors and
executive officers of the Company as a group. The notes accompanying the
information in the table below are necessary for a complete understanding of the
figures provided below. November 2, 1999, there were 3,893,943 shares of Common
Stock issued and outstanding.
<TABLE>
<S> <C> <C> <C>
Amount and Nature of
Title of Class Name and Address of Beneficial Beneficial Ownership Percent of Class
-------------- -------------------------------- -------------------- ----------------
Owner
-----
Common Stock Saundra McFadden 0 0.00
($0.001 par value) 268 West 400 South ,Suite 300
Salt Lake City, Utah 84101
Common Stock Richard Surber, President1 0 0.00
($0.001 par value) 268 West 400 South, Suite 306
Salt Lake City, Utah 84101
Common Stock Hudson Consulting Group, Inc. 2,246,224 57.7%
($0.001) par value 268 West 400 South, Suite 300
Salt Lake City, Utah 84101
Common Stock Directors and Executive 2,246,224 57.7%
($0.001) par value Officers as a Group
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. Exhibits required to be attached by Item 601 of Regulation S-B are
listed in the Index to Exhibits beginning on page 13 of this Form 10-KSB, which
is incorporated herein by reference.
(b) Reports on Form 8-K. No report on Form 8K have been filed during the periods
covered by this Form 10-KSB.
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY]
- --------
1 Richard Surber may be deemed a beneficial owner of 2,246,224 shares of the
Company's common stock by virtue of his position as an officer and director of
Hudson Consulting Group, Inc.
10
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, this 5th day of November 1999.
Jutland Enterprises, Inc.
/s/ Richard Surber
----------------------------------------
Richard Surber, President and Director
In accordance with the Exchange Act, 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/ Richard Surber President and Director November 5, 1999
- ----------------------
Richard Surber
/s/ Saundra McFadden Vice President, Secretary and Director November 5, 1999
- ----------------------
Saundra Mc Fadden
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY]
11
<PAGE>
INDEX TO EXHIBITS
EXHIBIT PAGE
NO. NO. DESCRIPTION
3(i) * Articles of Incorporation of the Company (incorporated herein
by reference from Company's Form S-18 as filed with the
Securities and Exchange Commission on December 6, 1988 ).
3(ii) * Bylaws of the Company, as amended (incorporated herein by
reference from of the Company's Form S-18 as filed with the
Securities and Exchange Commission on December 6, 1988 ).
4(a) * Form of certificate evidencing shares of "Common Stock" in
the Company (incorporated from Exhibit 4(a) to the Company's
Form S-18 as filed with the Securities and Exchange Commission
on December 6, 1988).
27 13 Financial Data Schedule "CE"
12
<PAGE>
Financial Data Schedule
MULTIPLIER 1
CURRENCY U.S. Dollars
PERIOD-TYPE 12 Months
FISCAL-YEAR-END Dec 31, 1997
PERIOD-END Dec 31, 1997
EXCHANGE-RATE 1
CASH 0
SECURITIES 0
RECEIVABLES 0
ALLOWANCES 0
INVENTORY 0
CURRENT-ASSETS 0
PP&E 0
DEPRECIATION 0
TOTAL-ASSETS 0
CURRENT-LIABILITIES 473,350
BONDS 0
PREFERRED-MANDATORY 0
PREFERRED 0
COMMON 3,894
OTHER-SE 477,244
TOTAL-LIABILITY-AND EQUITY 0
SALES 0
TOTAL-REVENUES 0
CGS 0
TOTAL-COSTS 0
OTHER-EXPENSES 0
LOSS PROVISION 0
INTEREST-EXPENSE 43,032
INCOME-PRETAX 0
INCOME-TAX 0
INCOME-CONTINUING 0
DISCONTINUE 0
EXTRAORDINARY 0
CHANGES 0
NET-INCOME (43,032)
EPS-PRIMARY (.01)
EPS-DILUTED (.01)
- -------------------------------------------- -------------------------
13
