U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File No. 033-27508-LA
SUN HARBOR FINANCIAL RESOURCES, INC.
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(Name of Small Business Issuer in its Charter)
Delaware 33-0338441
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3211 Emerald Arbor Street, Bakersfield, California 93312
(Address of principle executive office) (Zip Code)
Issuer's telephone number: (661) 588-3839
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 is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year: $0.
The aggregate market value of the voting stock held by non-affiliates
(23,465,200 shares of Common Stock) was $234,652.00 as of June 3, 1996. The
Registrant's Common Stock was not traded on any market in 1997, 1998, or 1999.
The stock price for computation purposes was $0.01, based on the closing sale
price for the Registrant's Common Stock on NASDAQ Bulletin Board on
June 3, 1996. This value is not intended to be a representation as to the
value or worth of the Registrant's shares of Common Stock. The number of
shares of non-affiliates of the Registrant has been calculated by subtracting
shares held by persons affiliated with the Registrant from outstanding shares.
The number of shares outstanding of the Registrant's Common Stock as of
November 10, 1999 was 29,515,200 shares.
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SUN HARBOR FINANCIAL RESOURCES, INC.
INDEX TO ANNUAL REPORT
ON FORM 10-KSB
Page
PART I
Item 1. DESCRIPTION OF BUSINESS & PLAN OF OPERATION . . . . . . . . . . 3
Item 2A. FACTORS THAT MAY AFFECT FUTURE RESULTS . . . . . . . . . . . . . 8
Item 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . 10
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . . 10
PART II
Item 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS . . . . 11
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . 12
Item 7. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . 13
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . . . . . . . 13
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSON;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT . . . . . . . 14
Item 10. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . 17
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 18
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . . . 19
Item 13. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . 19
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PART I
Item 1. DESCRIPTION OF BUSINESS
COMPANY BACKGROUND
Sun Harbor Financial Resources, Inc., a Delaware Corporation ("the Company"),
was incorporated in the State of Delaware on May 3, 1988. Currently, the
Company has no operations and only minimal assets. The Company's Common Stock
has not been traded in any market. The Company is a public "shell"
corporation.
Historically and on August 25, 1988, the Company effectuated a tax free
reorganization ("the Acquisition") under Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended. As a result of the Acquisition, the Company
acquired Sun Harbor Mortgage, Inc., a California Corporation ("SHMI"),
incorporated in the State of California on January 26, 1981, which became a
wholly-owned subsidiary of the Company. SHMI was a financial intermediary and
operates a mortgage banking firm with activities in San Diego , California. In
addition, the Company's second wholly-owned subsidiary, Peninsula Funding
Corporation ("PFC"), was a trustee corporation that SHMI specifies in it's
Deeds of Trust to represent the beneficiary, supervise foreclosure proceedings,
and issue reconveyances. The Company derives reconveyance and trustee fee
revenues through PFC operations. On September 11, 1989 a third wholly-owned
subsidiary, Pacific Empire Escrow, Inc. ("PEEI") was incorporated as a
California corporation. Pacific Empire Escrow, Inc. was intended to be an
independent Escrow company operating in the state of California. However,
Pacific Empire Escrow never became operational, and SHMI formed an Escrow
Department to provide Escrow Services for loans that directly involve SHMI. On
July 27, 1993, Pacific Empire Escrow, Inc. formally amended its Articles of
Incorporation to change its name to Sun Harbor Insurance Services, Inc.
("SHISI"). SHISI offered insurance agency services within San Diego county
during the final two quarters of 1993 and for a portion of the first quarter of
1994. However, as a result of a management decision, SHISI's operations were
terminated in March 1994. In September, 1994 Sun Harbor Insurance Services,
Inc. formally amended its Articles of Incorporation to change its name to Sun
Harbor Leasing, Inc. ("SHLI"). SHLI offers a wide range of leases on
automobiles, aircraft, boats, office equipment, etc. to Lessees in San Diego
and other Southern California counties. SHLI became operational during the
fourth quarter of 1994.
1995 ACTIONS RE: DIVESTITURE
On October 31, 1995, the Company's Board of Directors approved the proposed
sale of the Company's three wholly-owned subsidiaries, Sun Harbor Mortgage,
Inc., Sun Harbor Leasing, Inc., and Peninsula Funding Corporation
(collectively, the "Subsidiaries"). The proposed sale of the Subsidiaries is
subject to the approval of the Company's shareholders for which the Company
will be filing a proxy with the U.S. Securities and Exchange Commission.
The sale was undertaken pursuant to a Board of Director's resolution previously
adopted in May 1995 and after the Board of Directors reviewed the cumulative
history of losses incurred by the Company over the past five years and the
limited profitable business opportunities that the Board of Directors
identified in the Company's mortgage banking business. On this basis, the
Board of Director retained the services of an independent valuation expert
retained to establish the fair market value of the three subsidiaries as of
June 29, 1995.
After review of the valuation opinion received, the Board of Directors voted to
sell the three subsidiaries to David W. Langill, at a selling price of fifteen
thousand dollars in accordance with the terms of the "Stock Purchase Agreement
Between Sun Harbor Financial Resources, Inc. and David W. Langill" (the
"Agreement"). Mr. Langill is a co-founder of the Subsidiaries and a
co-founder, officer, and director of the Company. If the sale of the
Subsidiaries is approved by the Company's shareholders, the Company will have
no remaining operating businesses and its only assets will be certain cash
assets and the Promissory Note (the "Note") that the Company received from
Mr. Langill in exchange for the sale of the Subsidiaries.
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Under the terms of the Agreement, Mr. Langill has agreed to assume all
liabilities, known or unknown, whether asserted or unasserted, whether
liquidated or unliquidated, and whether due or to become due, including and
liability for taxes, office equipment, and other leases, rents, and other
obligations of the Subsidiaries except for certain limited obligations. The
Note bears interest at 8%, with a principal amount of fifteen thousand dollars
and requires a monthly payment of five hundred dollars beginning
January 15, 1996. All unpaid principal and interest is due to the Company in
full no later than June 29, 1998.
As of the date of this Form 10-KSB, the Note is in default and the Company's
officers and directors are evaluating what actions may be taken to obtain
payment of all monies due under the Company.
The "Company", as used herein, refers to the consolidated entity unless
otherwise noted.
BUSINESS SERVICES PRIOR TO JUNE 30, 1995
Prior to June 30, 1995 and subject to approval of the Company's shareholders,
Company has had three wholly-owned subsidiary corporations, Sun Harbor
Mortgage, Inc. ("SHMI"), Peninsula Funding Corporation ("PFC") and Sun Harbor
Leasing, Inc. ("SHLI"). SHMI, PFC and SHLI are California corporations. SHMI
is a Mortgage Banking and Brokerage firm, PFC is a Trustee corporation and SHLI
offers vehicle leasing services. Through its operating subsidiaries, the
Company had seven business services: (i) Equity Lending; (ii) Loan Servicing;
(iii) Residential Mortgage Banking Services; (iv) Commercial Loan Brokering
Services; (v) Reconveyance and Trustee Fee Services; (vi) Escrow Services; and
(vii) Vehicle Leasing Services.
PLAN OF OPERATION
Since 1995, the Company ceased all operations and remains dormant. The
Company, in accordance with the proxy rules under the Securities Exchange Act
of 1934 and pending the approval of its shareholders, will become a "public
shell" and thereby seek to either merge with or acquire an operating company
with operating history and assets. The Securities and Exchange Commission has
defined and designated these types of companies as "blind pools" and "blank
check" companies.
The primary activity of the Company will likely involve seeking merger or
acquisition candidates with whom it can either merge or acquire. The Company
has not selected any company for acquisition or merger and does not intend to
limit potential acquisition candidates to any particular field or industry, but
does retain the right to limit acquisition or merger candidates, if it so
chooses, to a particular field or industry. The Company's plans are in the
conceptual stage only.
The Company will not restrict its search to any specific business, industry or
geographical location, and the Company may participate in a business venture of
virtually any kind or nature. The discussion of the proposed business under
this caption is purposefully general and is not meant to be restrictive of the
Company's virtually unlimited discretion to search for and enter into potential
business opportunities.
The Company intends to obtain funds in one or more private placements to
finance the operation of any acquired business. Persons purchasing securities
in these placements and other shareholders will likely not have the opportunity
to participate in the decision relating to any acquisition. The Company's
proposed business is sometimes referred to as a "blind pool" because any
investors will entrust their investment monies to the Company's management
before they have a chance to analyze any ultimate use to which their money may
be put. Consequently, the Company's potential success is heavily dependent on
the Company's management, which will have virtually unlimited discretion in
searching for and entering into a business opportunity. There can be no
assurance that the Company will be able to raise any funds in private
placements.
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Management anticipates that it will only participate in one potential business
venture. This lack of diversification should be considered a substantial risk
in investing in the Company because it will not permit the Company to offset
potential losses from one venture against gains from another.
The Company may seek a business opportunity with a firm which only recently
commenced operations, or a developing company in need of additional funds for
expansion into new products or markets, or seeking to develop a new product or
service, or an established business which may be experiencing financial or
operating difficulties and is in the need for additional capital which is
perceived to be easier to raise by a public company. In some instances, a
business opportunity may involve the acquisition 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. The Company may purchase assets
and establish wholly owned subsidiaries in various businesses or purchase
existing businesses as subsidiaries.
The Company anticipates that the selection of a business opportunity in which
to participate will be complex and extremely risky. Because of general
economic conditions, rapid technological advances being made in some
industries, and shortages of available capital, management believes that there
are numerous firms seeking the benefits of a publicly traded corporation. Such
perceived benefits of a publicly traded corporation may include facilitating or
improving the terms on which additional equity financing may be sought,
providing liquidity for the principals of a business, creating a means for
providing incentive stock options or similar benefits to key employees,
providing liquidity (subject to restrictions of applicable statutes) for all
shareholders, and other factors. Potentially available business opportunities
may occur in many different industries and at various stages of development,
all of which will make the task of comparative investigation and analysis of
such business opportunities extremely difficult and complex.
As is customary in the industry, the Company may pay a finder's fee for
locating an acquisition prospect. If any such fee is paid, it will be approved
by the Company's Board of Directors and will be in accordance with the industry
standards. Such fees are customarily between 1% and 5% of the size of the
transaction, based upon a sliding scale of the amount involved. Such fees are
typically in the range of 5% on a 41,000,000 transaction ratably down to 1% in
a $4,000,000 transaction.
The Company has insufficient capital with which to provide the owners of
business opportunities with any significant cash or other assets. However,
management believes the Company will offer owners of business opportunities the
opportunity to acquire a controlling ownership interest in a public company at
substantially less cost than is required to conduct an initial public offering.
The owners of the business opportunities will, however, incur significant
post-merger or acquisition registration costs in the event they wish to
register a portion of their shares for subsequent sale. The Company will also
incur significant legal and accounting costs in connection with the acquisition
of a business opportunity including the costs of preparing post-effective
amendments, Forms 8-K, agreements and related reports and documents,
nevertheless, the officers and directors of the Companies have not conducted
market research and are not aware of statistical data which would support the
perceived benefits of a merger or acquisition transaction for the owners of a
business opportunity.
The company does not intend to make any loans to any prospective merger or
acquisition candidates or to unaffiliated third parties.
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EVALUATION OF OPPORTUNITIES
The analysis of new business opportunities will be undertaken by or under the
supervision of the officers and directors of the Company. Management intends
to concentrate on identifying prospective business opportunities which may be
brought to its attention through present associations with management. In
analyzing prospective business opportunities, management will consider such
matters as the available technical, financial and managerial resources; working
capital and other financial requirements; history of operation, if any;
prospects for the future; 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;
specific risk factors not now foreseeable but which then may be anticipated to
impact the proposed activities of the Company; the potential for growth or
expansion; the potential for profit; the perceived public recognition or
acceptance of products, services or trades; name identification; and other
relevant factors. Officers and directors of each Company will meet personally
with management and key personnel of the firm sponsoring the business
opportunity as part of their investigation. To the extent possible, the
Company intends to utilize written reports and personal investigation to
evaluate the above factors.
The Company will not acquire or merge with any company for which audited
financial statements cannot be obtained. It may be anticipated that any
opportunity in which the Company participates will present certain risks. Many
of these risks cannot be adequately identified prior to selection of the
specific opportunity, and the Company's shareholders must, therefore, depend on
the ability of management to identify and evaluate such risk. In the case of
some of the opportunities available to the Company, it may be anticipated that
the promoters thereof have been unable to develop a going concern or that such
business is in its development stage in that it has not generated significant
revenues from its principal business activities prior to the Company's
participation.
There is a risk, even after the Company's participation in the activity and the
related expenditure of the Company's funds, that the combined enterprises will
still be unable to become a going concern or advance beyond the development
stage. Many of the opportunities may involve new and untested products,
processes, or market strategies which may not succeed. Such risks will be
assumed by the Company and, therefore, its shareholders.
The Company will not restrict its search for any specific kind of business, but
may acquire a venture which is in its preliminary or development stage, which
is already in operation, or in essentially any stage of its corporate life. It
is currently impossible to predict the status of any business in which the
Company may become engaged, in that such business may need additional capital,
may merely desire to have its shares publicly traded, or may seek other
perceived advantages which the Company may offer.
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ACQUISITION OF OPPORTUNITIES
In implementing a structure for a particular business acquisition, the company
may become a party to a merger, consolidation, reorganization, joint venture,
franchise or licensing agreement with another corporation or entity. It may
also purchase stock or assets of an existing business. On the consummation of
a transaction, it is possible 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 officers and directors may, as part of the terms of the
acquisition transaction, resign and be replaced by new officers and directors
without a vote of the Company's shareholders.
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 this transaction, the Company may agree to register such securities
either at the time the transaction is consummated, under certain conditions, or
at a specified time thereafter. The issuance of substantial additional
securities and their potential sale into any trading market which may develop
in the Company's Common Stock 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 avoid the creation of a taxable event and
thereby structure the acquisition in a so called "tax-free" reorganization
under Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the
"Code"). In order to obtain tax free treatment under the Code, it may 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, including investors in this offering, would retain less than 20% of
the issued and outstanding shares of the surviving entity, which could result
in significant dilution in the equity of such shareholders.
As part of the Company's investigation, officers and directors of the Company
will meet personally with management and key personnel, may visit and inspect
material facilities, obtain independent analysis or verification of certain
information provided, check reference of management and key personnel, and take
other reasonable investigative measures, to the extent of the Company's limited
financial resources and management expertise.
The manner in which each Company participates in an opportunity will depend on
the nature of the opportunity, the respective needs and desires of the Company
and other parties, the management of the opportunity, and the relative
negotiating strength of the Company and such other management.
With respect to any mergers or acquisitions, negotiations with target company
management will be expected to focus on the percentage of the Company which
target company shareholders would acquire in exchange for their shareholdings
in the target company. Depending upon, among other things, the target
company's assets and liabilities, the Company's shareholders will in all
likelihood hold a lesser percentage ownership interest in the Company following
any merger or acquisition. The percentage ownership may be subject to
significant reduction in the event the Company acquires a target company with
substantial assets. Any merger or acquisition effected by the Company can be
expected to have a significant dilative effect on the percentage of shares held
by the Company's then shareholders, including purchasers in this offering.
(See "Factors That May affect Future Results").
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The Company will not have sufficient funds (unless it is able to raise funds in
a private placement) to undertake any significant development, marketing and
manufacturing of any products which may be acquired. Accordingly, following
the acquisition of any such product, the Company will, in all likelihood be
required to either seek debt or equity financing or obtain funding from third
parties, in exchange for which the Company would probably be required to give
up a substantial portion of its interest in any acquired product. There is no
assurance that the Company will be able either to obtain additional financing
or interest third parties in providing funding for the further development,
marketing and manufacturing of any products acquired.
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 therefore incurred in the related investigation would not be recoverable.
Furthermore, even if an agreement is reached for the participation in a
specific business incurred.
EMPLOYEES
The Company has a total of two employees, the Company's President and the
Company's Secretary each of whom serves without compensation.
ITEM 2A. FACTORS THAT MAY AFFECT FUTURE RESULTS
1. NEW COMPANY: No Revenues from Operation; Risk of Loss. The Company faces
all of the risks inherent in a new business, coupled with the risks involved
with a blind pool/blank check company. Since the Company, subject to
shareholder approval, has sold its existing businesses, there is no information
at this time upon which to base an assumption that its plans will either
materialize or prove successful. There can be no assurance that any of the
Company's business activities will result in any operating revenues or profits.
Investors should be aware that they may lose all or substantially all of their
investment.
2. NO FULL-TIME EMPLOYEES. The Company has no full-time employees and
management and none of its officers devote their full time to the Company's
proposed business affairs. None of the officers or directors receives a
salary, but are reimbursed for any expenses they may incur in the activities of
the Company. Due to the fact that no salaries are paid to officers of the
Company and that members of management are engaged in activities outside the
operation of the Company, the ability and speed for the Company to effect a
merger or acquisition may be significantly impaired.
3. RELIANCE UPON OFFICERS; LIMITED TIME TO DEVOTE TO COMPANY BUSINESS. The
Company is dependent upon the personal efforts and abilities of its President
and Chairman, Peter H. Norman and the Company's Secretary, Lisa Norman each of
whom devotes only limited time to the affairs of the Company. The officers and
directors of the Company have certain business experience but have limited
experience in acquisition or merger activities. The officers and directors
have not agreed to expend any specific amount of time on behalf of the Company,
but will devote such time as necessary to identify and consummate a merger or
acquisition.
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4. LIMITED FINANCIAL RESOURCES AND NEED FOR ADDITIONAL FINANCING. The
Company's financial resources are minimal. The Company needs to obtain
additional financing from the sale of the Company's Common Stock, Debt, or some
combination thereof in order to undertake further business plans. The
Company's ability to operate as a going concern is contingent upon its receipt
of additional financing through private placements or by loans. The Company's
business may require additional funds in the future. There can be no assurance
that if additional funds are required they will be available, or, if available,
that they can be obtained on terms satisfactory to Management. In the event
the Company elects to issue stock to raise additional capital, any rights or
privileges attached to such stock may either (i) dilute the percentage of
ownership of the already issued common shares or (ii) dilute the value of such
shares. No rights or privileges have been assigned to the stock and any such
rights and privileges will be at the total discretion of the Board of Directors
of the Company. There can be no guarantee that the Company will be able to
obtain additional financing, or if successful, that it will be able to do so on
terms that are reasonable in light of current market conditions.
5. LOSS OF TRADING MARKET FOR COMMON STOCK. The Company's Common Stock is no
longer traded (OTC) on the Electronic Bulletin Board and there can be no
assurance that the Company's Common Stock will ever again trade in any market.
The Company has only limited financial resources and there can be no assurance
that the Company will obtain funds, at a reasonable cost, in order to enable
the Company to complete and maintain accurate and complete filings needed under
the Securities Exchange Act of 1934, to comply with state securities laws with
respect to non-issuer transactions, and otherwise maintain the Company. Even if
a market does develop, it may not be sustained.
6. LIMITED FACILITIES AND LOCATION. The Company presently maintains initial
principal offices at the offices of its President. The office space is
supplied at no cost. The Company pays its own charges for long distance
telephone calls and other miscellaneous secretarial, photocopying and similar
expenses.
7. LACK OF REVENUES AND DEVELOPMENT STAGE COMPANY. The Company faces all of
the risks inherent in a new business. There is no information at this time
upon which to base an assumption that its plans will either materialize or
prove successful. There can be no assurance that any of the Company's business
activities will result in any operating revenues or profits. Investors should
be aware that they may lose all or substantially all of their investment.
8. LACK OF DIVIDENDS. The company has not paid dividends and does not
contemplate paying dividends in the foreseeable future.
9. COMPETITION. The Company is an insignificant participant among firms which
engage in business combinations with, or financing of, development stage
enterprises. There are many established management and financial consulting
companies and venture capital firms which have significantly greater financial
and personnel resources, technical expertise and experience than the Company.
In view of the Company's limited financial resources and management
availability, the Company will continue to be at significant competitive
disadvantage vis-avis the Company's competitors.
10. REGULATION & TAXES. The Investment Company Act of 1940 defines an
"investment company" as an issuer which is or holds itself out as being engaged
primarily in the business of investing, reinvesting or trading of securities.
While the Company does not intend to engage in such activities, the Company
could become subject to regulation under the Investment Company Act of 1940 in
the event the Company obtains or continues to hold a minority interest in a
number of development stage enterprises. The Company could be expected to
incur significant registration and compliance costs if required to register
under the Investment Company Act of 1940. Accordingly, management will
continue to review the Company's activities from time to time with a view
toward reducing the likelihood the Company could be classified as an
"investment company." The Company intends to structure a merger or acquisition
in such manner as to minimize Federal and State tax consequences to the Company
and to any target company.
11. POSSIBLE RULE 144 STOCK SALES. A total of 28,470,000 shares of the
Company's outstanding Common Stock are "restricted securities" and may be sold
only in compliance with Rule 144 adopted under the Securities Act of 1933 or
other applicable exemptions from registration. Rule 144 provides that a person
holding restricted securities for a period of one year may thereafter sell in
brokerage transactions, an amount not exceeding in any three month period the
greater of either (i) 1% of the Company's outstanding Common Stock, or (ii) the
average weekly trading volume during a period of four calendar weeks immediate
preceding any sale. Persons who are not affiliated with the Company and who
have held their restricted securities for at least three years are not subject
to the volume limitation. Possible or actual sales of the Company's Common
Stock by present shareholders under Rule 144 may have a depressive effect on
the price of the Company's Common Stock in any market which may develop.
12. RISKS OF LOW PRICED STOCKS. Limited and sporadic trading for the Company's
Common Stock currently exists in the over-the-counter market in the so-called
"pink sheets," or the NASD's "Electronic Bulletin Board." Consequently, a
shareholder may find it more difficult to dispose of, or to obtain accurate
quotations as to the price of, the Company's securities. In the absence of a
security being quoted on NASDAQ, or the Company having $2,000,000 in net
tangible assets, trading in the Common Stock is covered by Rule 3a51-1
promulgated under the Securities Exchange Act of 1934 for non-NASDAQ and
non-exchange listed securities. Under such rule, broker/dealers who recommend
such securities to persons other than established customers and accredited
investors (generally institutions with assets in excess of $5,000,000 or
individuals with net worth in excess of $1,000,000 or an annual income
exceeding $200,000 or $300,000 jointly with their spouse) must make a special
written suitability determination for the purchaser and receive the purchaser's
written agreement to a transaction prior to sale.
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Securities are also exempt from this rule if the market price is at least $5.00
per share, or for warrants, if the warrants have an exercise price of at least
$5.00 per share. The Securities Enforcement and Penny Stock Reform Act of 1990
requires additional disclosure related to the market for penny stocks and for
trades in any stock defined as a penny stock. The Commission has recently
adopted regulations under such Act which define a penny stock to be any NASDAQ
or non-NASDAQ equity security that has a market price or exercise price of less
than $5.00 per share and allow for the enforcement against violators of the
proposed rules.
In addition, unless exempt, the rules require the delivery, prior to any
transaction involving a penny stock, of a disclosure schedule prepared by the
Commission explaining important concepts involving the penny stock market, the
nature of such market, terms used in such market, the broker/dealer's duties to
the customer, a toll-free telephone number for inquiries about the
broker/dealer's disciplinary history, and the customer's rights and remedies in
case of fraud or abuse in the sale.
Disclosure also must be made about commissions payable to both the
broker/dealer and the registered representative, current quotations for the
securities, and if the broker/dealer is the sole market-maker, the
broker/dealer must disclose this fact and its control over the market.
Finally, monthly statements must be sent disclosing recent price information
for the penny stock held in the account and information on the limited market
in penny stocks. While many NASDAQ stocks are covered by the proposed
definition of penny stock, transactions in NASDAQ stock are exempt from all but
the sole market-maker provision for (i) issuers who have $2,000,000 in tangible
assets ($5,000,000 if the issuer has not been in continuous operation for three
years), (ii) transactions in which the customer is an institutional accredited
investor and (iii) transactions that are not recommended by the broker/dealer.
In addition, transactions in a NASDAQ security directly with the NASDAQ
market-maker for such securities, are subject only to the sole market-maker
disclosure, and the disclosure with regard to commissions to be paid to the
broker/dealer and the registered representatives.
Finally, all NASDAQ securities are exempt if NASDAQ raised its requirements for
continued listing so that any issuer with less then $2,000,000 in net tangible
assets or stockholder's equity would be subject to delisting. These criteria
are more stringent than the proposed increased in NASDAQ's maintenance
requirements.
The Company's securities are subject to the above rules on penny stocks and the
market liquidity for the Company's securities could be severely affected by
limiting the ability of broker/dealers to sell the Company's securities.
Item 2. PROPERTIES
EXECUTIVE OFFICES
The Company's current offices at 3211 Emerald Arbor Street, Bakersfield,
California 93312 are provided rent-free by the Company's President,
Peter H. Norman.
Item 3. LEGAL PROCEEDINGS
The Company is not currently the subject of any existing litigation.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The last meeting of the Company's shareholders was held on May 18, 1989. There
were no matters submitted to a vote of shareholders during the fiscal year
ending December 31, 1997.
- 10 -
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<PAGE>
PART II
Item 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS
The Company's Common Stock is traded on the NASDAQ Bulletin Board. The
Company's Common Stock was not traded in any market known by the Company during
1997, 1998, or 1999. The following table reflects the high and low prices of
the Company's Common Stock for the two years ended December 31, 1995, the last
full year for which there existed any trading in the Company's Common Stock.
1994 High ($) Low ($)
1st Quarter 0.01 0.01
2nd Quarter 0.01 0.01
3rd Quarter 0.02 0.01
4th Quarter 0.02 0.01
1995
1st Quarter 0.02 0.01
2nd Quarter 0.02 0.01
3rd Quarter 0.01 0.01
4th Quarter 0.01 0.01
Since 1995, the Company's Common Stock has not traded in any market and there
can be no assurance that the Company's Common Stock will ever regain any
tradability in any securities market.
The Company has followed the policy of reinvesting earnings in the business
and, consequently, has not paid any cash dividends. At the present time, no
change in this policy is under consideration by the Board of Directors. The
payment of cash dividends in the future will be determined by the Board of
Directors in light of conditions then existing, including the Company's
earnings, financial requirements and condition, opportunities for reinvesting
earnings, business conditions and other factors. The number of shareholders of
record of Common Stock on May 18, 2000 was approximately 729.
- 11 -
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<PAGE>
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
From the Company's incorporation in 1988 to June 30, 1995, the Company offered
mortgage banking and brokering, loan servicing and trustee services.
During this period, Company's revenues were derived from its various business
activities. Origination fee income was derived by virtue of the Company's
equity loan program, residential mortgage banking service and commercial loan
brokering service. Servicing income was derived from the Company's loan
servicing activity. Reconveyance and foreclosure fees were derived by the
Company's trustee. Escrow fees were derived from the Company's Escrow
activities. And leasing fees and income were derived from the Company's
vehicle leasing activities which represent a combination of lease servicing
fees and origination fees.
The Company also derived revenue from interest obtained from borrower payments
on promissory notes secured by Deeds of Trust that were owned by the Company.
RESULTS OF OPERATIONS
Total Revenues for the year ended December 31, 1997 was $0. Selling, general,
and administrative expenses totaled $10,970. This resulted in Total Operating
Expenses of $10,970 since the Company had no outstanding operations or
activities in 1997.
The Company did record $3,300 in Interest Income in 1997.
As a result, the Company recorded a Net Loss of ($7,670) in 1997 which compares
to a Net Loss of ($165,212) in 1996. The Company's Loss Per Share in 1997 was
($0.00026) which compares to a Loss Per Share of $(0.0056) in 1996. The amount
of the Net Loss Per Share recorded in 1997 was less than the Net Loss Per Share
in 1997 due to the lack of any investment losses recorded in 1997.
LIQUIDITY AND CAPITAL RESOURCES
There are several components which affect the Company's ability to meet its
financial needs, including funds generated from operations, levels of accounts
receivable, capital expenditures, short-term borrowing capacity and the ability
to obtain long-term capital on reasonable terms. For the year ended
December 31, 1997, the Company experienced a cash flow from Operating
Activities of ($425). After an advance from the Company's officers of $12,746,
the net cash flow from Financing Activities was $12,746, the Company recorded a
net increase in cash for 1997 of $4,651. In 1997, the Company was dependent
upon the ability of the Company's President, Peter H. Norman, to provide funds
to the Company
To assist the Company in 1996, the Company issued the Company's President,
Peter H. Norman, an unsecured note payable in the amount of $25,000 at an
interest rate of three percent. The funds provided the Company under this note
payable have been used by the Company to pay certain expenses relating to
maintaining the Company's existence. In addition, the Company's President,
Peter H. Norman, advanced the sum of $12,746 to the Company in 1997.
IMPACT OF INFLATION
Inflation has not had a significant effect on the Company's operation during
the three years ending December 31, 1997.
- 12 -
===============================================================================
<PAGE>
Item 7. FINANCIAL STATEMENTS
The financial statements and related financial information required to be filed
hereunder are indexed on page 20 of this report and are incorporated herein by
reference.
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On June 13, 1996 the Company was informed that Cashuk, Wiseman and Goldberg was
resigning as the Company's auditor. The Company has had no disagreements of
any type with Cashuk, Wiseman and Goldberg at any time since inception of its
engagement of Cashuk, Wiseman and Goldberg in April 1988. However, the Company
has appointed Lawrence P. Rub, CPA as its auditor.
- 13 -
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<PAGE>
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSON; COMPLIANCE WITH
SECTION 16(a) OF THE EXCHANGE ACT
DIRECTORS AND EXECUTIVE OFFICERS
The names and ages of the Directors and Executive Officers of the Company are
as follows:
Name Age Position Since
Peter H. Norman 60 Chairman, President, & CEO 04-18-95
Lisa Norman 60 Secretary, Treasurer, & Director 10-05-95
Allison Gilbert 70 Director 06-10-90
David W. Langill 39 Director 05-20-88
Paul N. Gray 83 Director 04-12-92
The Directors serve until the next annual meeting of shareholders or until
their successors are elected.
Peter H. Norman was elected Chairman of the Board, President, and Chief
Executive Officer of the Company since October 5, 1995 and was elected a
Director on April 18, 1995. From 1993 to the present, Mr. Norman has been
President of the Ancona Group, Ltd., a public company traded on the Electronic
Bulletin Board (OTC). From 1992 to the present, Mr. Norman has been President
of American Tree Farms, Inc. From 1992 to the present, Mr. Norman has been
President of Great Life, Inc. From 1991 to the present, Mr. Norman has been
President of American Home Alliance Industries, Ltd., a public company traded
on the Electronic Bulletin Boards (OTC) and its subsidiary, American Home
Alliance, Inc., a real estate and construction company of Bakersfield,
California. From 1990 to the present, Mr. Norman has been President of Summit
Fine Arts and President of Valparaiso Industries. Mr. Norman is also the
husband of Lisa Norman, the Company's Secretary, Treasurer, and Director.
Lisa Norman was elected Secretary, Treasurer, and Director of the Company on
October 5, 1995. From 1993 to the present, Ms. Norman has been Vice President,
Secretary, and Treasurer of American Home Alliance, Inc., a real estate and
construction company of Bakersfield, California. From 1993 to the present, Ms.
Norman has been Vice President, Secretary, and Treasurer of Ancona Group, Ltd.,
a public company traded on the Electronic Bulletin Board (OTC). From 1992 to
the present, Ms. Norman has been Vice President, Secretary, and Treasurer of
American Tree Farms, Inc. and Vice President, Secretary, and Treasurer of Great
Life, Inc. From 1991 to the present, Ms. Norman has been Vice President,
Secretary, and Treasurer of American Home Alliance Industries, Ltd., a public
company traded on the Electronic Bulletin Board (OTC) and its subsidiary,
American Home Alliance, Inc., a real estate and construction company. From
1990 to the present, Ms. Norman has been Vice President, Secretary, and
Treasurer of Summit Fine Arts and Vice President, Secretary, and Treasurer of
Valparaiso Industries. From 1978 to 1994, Ms. Norman was Vice President and
Secretary of Victorian Mortgage of Mission Veijo and San Clemente, California.
From 1978 to 1994 she was Vice President and Secretary-Treasurer of Peter
Norman and Associates, a private investment company. From 1969 to 1978, Ms.
Norman was Assistant to the President and CEO of Rocca Finanz AG, Glarus,
Switzerland. From 1967 to 1969 she was Executive Secretary and Translator for
Booz, Allen, Hamilton Management Consultants in Dusseldorf, Germany. From 1963
to 1967 she was Executive Secretary to the Personnel Manager of American
Celanese Corporation at various locations throughout Europe. Ms. Norman is the
wife of Peter H. Norman, the Company's Chairman, President, and CEO.
- 14 -
===============================================================================
<PAGE>
Allison Gilbert has been a Director of the Company since June 12, 1990. Mr.
Gilbert is now retired. Prior to retirement, he was a College Administrator
and Professor at Mira Costa College in Oceanside, California, and had been
involved in the field of education since 1953. Highlights of Mr. Gilbert's
career included being chosen as Community College Dean of the Year in the State
of California, and as High School Football Coach of the Year in San Diego
County. Mr. Gilbert played baseball in the Detroit Tiger organization after
receiving his discharge from the United States Marine Corps.
David W. Langill has been a Director of the Company since May 20, 1988. From
January 1987 to the present, he has been Executive Vice President of SHMI. In
this capacity, he generally administers the Company's Equity Loan program, and
specifically locates investors to fund these Equity Loans. He is also
responsible for SHMI loan servicing and loan tracking, and for all Peninsula
Funding Corporation activities. Mr. Langill maintains the Company's Trust
Accounts, supervises payroll, personnel, accounting and bookkeeping, and
reports to the State of California Department of Real Estate, Department of
Corporations, Franchise Tax Board and the US Internal Revenue Service. He
generally functions as the Company's Comptroller. From July 1985 to January
1987, Mr. Langill was a Loan Officer for Sundstrom Mortgage Company, Inc. of
San Diego, California. In this capacity, he was responsible for the
processing, underwriting packaging and brokering of commercial, industrial and
multi-family loans. In 1985, he was Task Force Member at Bankers Funding
Corporation (now Goldome Realty) in Newport Beach, California. His duties
included paying taxes of FHA/VA and conventional residential loans in fifteen
states, problem solving of serviced loans, tracking of problem loans serviced
by the company, and segregating loans for the foreclosure department. Prior to
this, Mr. Langill was Research Assistant of Marcus and Millichap Real Estate in
Long Beach, California. His responsibilities included researching multi-family
commercial and industrial properties, primarily focusing on rental rates,
tenant mixes, rent per square foot, demographics, loan-to-values, construction
breakdowns and property profit and loss statements. he also tracked buyers and
sellers by price range and suitability. Mr. Langill holds a Bachelor of Science
Degree in Business Administration from California State University at Long
Beach, California. He also holds a California Real Estate Brokers License.
Paul N. Gray has been a director of the Company since April 20, 1992. He is
the President of Universal Technology International, located in Milpitas,
California, a company engaged in the sale of various weapon systems to Korea,
Taiwan, Japan, Singapore, Malaysia and other Asian countries. Prior to forming
UTI, Mr. Gray was Director of Foreign Military Sales for Litton Industries, and
lived in Tokyo for eight years. Mr. Gray retired from the United States Navy
after serving honorably in WWII, Korea and Vietnam, being awarded numerous
medals and citations including the Distinguished Service Medal, Silver Star,
Bronze Star, 2 Purple Hearts, etc. Upon graduation from the U.S. Naval
Academy, Mr. Gray was assigned to the battleship U.S.S. South Dakota where he
participated in the battles of Santa Cruz and Guadalcanal. Upon returning to
the United States in 1942, he underwent flight training and was subsequently
returned to the Pacific as a dive bomber pilot, being involved in the invasion
of Guam and Saipan. He was flying from the carrier U.S.S. Lexington when WWII
ended. During the Korean war, he was the Commanding Officer of Attack Squadron
54, based on the U.S.S. Essex. After completing the National War College in
1968, Mr. Gray was assigned to Vietnam as Commander of the River Patrol Force
based in the Mekong Delta. He also has been the Commanding Officer of the
Naval Air Station at New Orleans, the Attack Carrier U.S.S. Kearsarge and the
Fleet Base at Yokosuka, Japan. Mr. Gray is a graduate of the U.S. Naval
Academy, the national War College and the Naval Postgraduate School. He holds
a Masters Degree in International Economics from George Washington University
and a Masters of Business Administration from National University of San Diego.
Mr. Gray is currently retired from the U.S. Navy and is also a member of CIRA,
the Central Intelligence Agency Retired Association.
- 15 -
===============================================================================
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors, executive officers and persons who own more
than 10% of the Company's Common Stock (collectively "Covered Persons") to file
initial reports of ownership (Form 3) and reports of changes in ownership of
Common Stock (Forms 4 and Forms 5) with the Securities and Exchange Commission
(the "Commission") as well as the Company and any exchange upon which the
Company's Common Stock is listed.
The Company is required to identify Covered Persons that the Company knows have
failed to file or filed late Section 16(a) reports during the previous fiscal
year. To the Company's knowledge, the following Covered Persons during the
fiscal year ended December 31, 1997 failed to file on a timely basis reports
required by Section 16(a) of the Exchange Act:
Number of Reports Not Filed on a
Name Position Timely Basis(1)
----------------- -------------------- ---------------------------------
Peter H. Norman President, Chairman None
of the Board, CEO
Lisa Norman Secretary, Treasurer,
Director None
Allison Gilbert Director None
David W. Langill Director None
Paul N. Gray Director None
--------------------------------
(1) To the Company's knowledge, based solely on information furnished to the
Company by such persons in the fiscal year ended December 31, 1997.
- 16 -
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<PAGE>
Item 10. EXECUTIVE COMPENSATION
The following table shows for the fiscal years ended December 31, 1996, 1994,
and 1993 the cash compensation paid by the Company as well as certain other
compensation paid or accrued for the year, to the Chief Executive Officer and
the executive officers of the Company whose aggregate compensation was more
than $100,000 for such fiscal year (the "Named Executive Officers").
Summary Compensation Table
Long-Term
Annual Compensation Comp. Awards
----------------------------- ------------
Shares
Name and Fiscal Other Underlying
Principal Position Year Salary Bonus Compensation Options (#)
------------------ ---- ------ ----- ------------ -----------
Peter H. Norman 1997 $0 $0 * --
Chairman of the Board,
President & CEO
Lisa Norman 1997 $0 $0 * --
Secretary, Treasurer,
& Director
--------------------------------
* The dollar value of compensation, perquisites, and other personal benefits
was less than the reporting thresholds established by the Securities and
Exchange Commission for all of the Company's officers and directors during the
1995, 1996, and 1997 period. No officer received any compensation under stock
plans during 1996 and 1997. No director's fees were paid during 1995, 1996,
and 1997.
- 17 -
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<PAGE>
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding beneficial ownership as of
December 31, 1997 of the Company's Common Stock, by any person who is known to
the Company to be the beneficial owner of more than 5% of the Company's voting
securities and by each Director and by Officers and Directors of the Company as
a group. The Company has only one class of common stock. The percentages
shown below are computed based on 29,515,200 shares of the Company's Common
Stock outstanding as of December 31, 1997.
Number of Percentage
Name and Address shares of class
Norman Family Trust................ 6,000,000(1) 20.33%
3211 Emerald Arbor Street
Bakersfield, California 93312
Allison Gilbert.................... 50,000 .17%
3211 Emerald Arbor Street
Bakersfield, California 93312
David W. Langill................... 0 0%
3211 Emerald Arbor Street
Bakersfield, California 93312
Paul N. Gray....................... 0 0%
3211 Emerald Arbor Street
Bakersfield, California 93312
All Officers and
Directors as a Group (5 persons)... 6,050,000 20.50%
International Credit Bureau, Inc... 3,250,000 11.01%
5001 East Commercenter Drive, #245
Bakersfield, California 93309
--------------------------------
(1) The Norman Family Trust is a trust in which Peter H. Norman and Lisa
Norman, both company officers and directors, are trustees. Peter H. Norman is
the husband of Lisa Norman.
- 18 -
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<PAGE>
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 18, 1995, the Company's Board of Directors approved the sale of
16,000,000 shares of the Company's Common Stock for an investment of $40,000 in
the Company. Of the 16,000,000 shares, 6,000,000 shares were acquired by the
Norman Family Trust.
On October 1, 1995, the Company's Board of Directors rescinded a stock option
for 200,000 shares previously granted to Allison Gilbert and in exchange for
Mr. Gilbert's cancellation of the stock option, issued 50,000 shares of the
Company's Common Stock to him. These shares were valued at $0.01 per share.
On October 31, 1995, the Company's Board of Directors approved the "Business
Valuation Report," dated June 30, 1995 prepared by Economic Dispute Resolution
in connection with the valuation of the Company's three subsidiaries, Sun
Harbor Mortgage, Inc., Sun Harbor Leasing, Inc., and Peninsula Funding
Corporation. The Board of Directors also approved the terms of a Stock
Purchase Agreement and the proposed sale of the Company's three subsidiaries,
Sun Harbor Mortgage, Inc., Sun Harbor Leasing, Inc., and Peninsula Funding
Corporation to David W. Langill in exchange for David W. Langill's issuance, to
this Company, of a secured promissory note in the amount of Fifteen Thousand
Dollars ($15,000).
In 1996 the Company's President, Peter H. Norman, advanced the sum of $25,000
to the Company and the Company issued to Mr. Norman a $25,000 unsecured
promissory note which carries a 3% interest rate. The promissory note has no
maturity date and is payable upon demand.
In 1997, the Company's President, Peter H. Norman, advanced the sum of $12,746
to the Company as an Advance from a Company Officer.
Item 13. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS (a)(1) Financial Statements. Reference is made to the Index to
Financial Statements of the Company on page 20 of this
report.
Reports on Form 8-K
None.
Exhibit No. Description of Exhibit
----------- ----------------------------------
27 Financial Data Schedule
- 19 -
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<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Lawrence P. Rub
Certified Public Accountants
1128 Cardiff Ave. Suite 401 Los Angeles, Ca. 90035 (310) 859-9014
28570 Marguerite Pkwy Suite 225 Mission Viego, Ca. 92692
3130 Ellerslie Ct., Glenwood Md. 21738 (410)489-5354
June 21, 1999
Sun Harbor Financial Resources, Inc.
3211 Emerald Arbor St.
Bakersfield, Ca. 93312-8801
To the Board of Directors;
We have audited the balance sheet of Sun Harbor Financial Resources, Inc. as of
December 31, 1997 and the related statements of income and cash flows for the
year ending December 31, 1997. These financial statements are the
responsibility of the Corporation Management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit 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 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 Sun Harbor Financial
Resources, Inc. at December 31, 1997, and the results of their operations and
their cash flow for the year ending December 31, 1997 in conformity with
generally accepted accounting principles.
/s/ Lawrence P. Rub
Lawrence P. Rub
- 20 -
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<PAGE>
<TABLE>
SUN HARBOR FINANCIAL RESOURCES, INC.
BALANCE SHEETS
ASSETS
<CAPTION>
December 31,
1997 1996
--------- ----------
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents $ 146 (4,505)
Receivables 3,300 0
Prepaid Expenses 0 0
Investment 0 0
--------- ----------
Total Current Assets 3,446 (4,505)
OTHER ASSETS
Furniture and Equipment 750 825
Notes Receivable 15,000 15,000
--------- ----------
Total Other Assets 15,750 15,825
--------- ----------
TOTAL ASSETS $ 19,196 11,320
========= ==========
<F1>
The accompanying notes are an integral part of these statements.
</TABLE>
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<PAGE>
<TABLE>
SUN HARBOR FINANCIAL RESOURCES, INC.
BALANCE SHEETS (CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
<CAPTION>
December 31,
1997 1996
--------- ----------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts Payable $ 2,000 $ 1,000
Accrued Expenses 1,863 63
--------- ----------
Total Current Liabilities 3,863 1,063
LONG TERM DEBTS 37,746 25,000
--------- ----------
TOTAL LIABILITIES 41,609 26,063
STOCKHOLDERS' EQUITY
Common Stock par value $.01
Authorized 30,000,000 Shares
Issued and Outstanding
29,515,200 Shares of Common Stock 295,152 295,152
Preferred Stock par value $.01
Authorized 5,000,000 Shares
Issued and Outstanding
34,000 Shares of Preferred Stock 340 340
Addtional Paid In Capital (92,378) (92,378)
Retained Earnings (Deficit) (225,527) (217,857)
--------- ----------
Total Stockholders' Equity (22,413) (14,743)
--------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 19,196 $ 11,320
========= ==========
<F1>
The accompanying notes are an integral part of these statements.
</TABLE>
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<PAGE>
<TABLE>
SUN HARBOR FINANCIAL RESOURCES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
Year Ended
December 31,
---------------------
1997 1996
--------- ---------
<S> <C> <C>
REVENUE
Servicing and Interest Income $ 3,300 $ 27
--------- ---------
Total Revenue 3,300 27
OPERATING EXPENSES
General, Administrative and Selling 10,970 28,202
Investments 0 137,010
--------- ---------
Total Expenses 10,970 165,212
--------- ---------
INCOME (LOSS) BEFORE TAXES
Income Taxes (Credit) 0 0
--------- ---------
NET INCOME (LOSS) $ (7,670) (165,212)
========= =========
LOSS PER SHARE $ (.00026) $ (.00560)
========= =========
<F1>
The accompanying notes are an integral part of these statements.
</TABLE>
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<PAGE><TABLE>
SUN HARBOR FINANCIAL RESOURCES, INC.
STATEMENT OF CASH FLOWS
<CAPTION>
Year Ended
December 31,
-----------------------
1997 1996
---------- ----------
<S> <C> <C>
Cash flow from operating activities:
Net loss $ (7,670) $ (165,212)
Adjustments to reconcile net loss used
in operating activities:
Depreciation and amortization 75 75
Loss on disposal of assets 0 137,037
Changes in current assets and liabilities:
(Increase) decrease in receivables (3,300) 0
(Increase) decrease in other current assets 0 0
(Increase) decrease in prepaid expenses 0 0
Increase (decrease) in accrued expenses 750 (2,936)
Increase (decrease) in other current
liabilities 2,050 1,000
Increase (decrease) in deferred income taxes 0 0
(Additions) reductions to security deposits 0 0
Other 0 (900)
---------- ----------
Net cash used by operating activities 134,276
Cash flows from investing activities:
Purchase of investment 0 (117,151)
Purchase of fixed assets 0 0
Proceeds from sale of fixed assets 0 0
Net change to notes receivable 0 0
---------- ----------
Net cash provided by investing activities 0 (117,151)
Cash flows from financing activities:
Principal payments on long-term debt 0 0
Proceeds from long-term debt 12,746 25,000
Proceeds from issuance of common and
preferred stock 0 0
Redemption of preferred stock 0 0
Purchase of treasury stock 0 0
Reduction of additional paid-in capital 0 (17,628)
---------- ----------
Net cash used by financing activities 12,746 161,210
---------- ----------
Decrease in cash and cash equivalents 4,651 13,123
Cash and cash equivalents at beginning of year (4,505) (17,628)
---------- ----------
Cash and cash equivalents at end of year $ 146 $ (4,505)
========== ==========
Supplemental disclosures of cash flow information:
Interest paid $ 0 $ 0
Income taxes paid $ 0 $ 0
Non-cash investing and financing activities
<F1>
The accompanying notes are an integral part of these statements.
</TABLE>
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<PAGE>
SUN HARBOR FINANCIAL RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE I: SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING PRINCIPLES
1. Sun Harbor Financial Resources, Inc. was incorporated under the
laws of the state of Delaware on May 3, 1988. The Company has adopted a
December 31 calendar year for reporting requirements. The books of Sun Harbor
Financial Resources, Inc. are maintained on the accrual basis of accounting.
2. Fixed assets are depreciated or amortized using the straight-line
method over their useful lives.
3. The tax returns for Sun Harbor Financial Resources are being
prepared on the accrual basis with an adjustment for the allowances for market
value for marketable securities and investments in 1996.
NOTE II: ORGANIZATION COSTS
Organization costs are being amortized over a period of 12 years
using the straight line method.
NOTE III: INCOME TAXES
Sun Harbor Financial Resources, Inc. is a Delaware Corporation and
is subject to certain minimum taxes in the state of Delaware. In 1996 Sun
Harbor Financial Resources applied and was approved to operate in the state of
California and is subject to certain minimum taxes in California as well.
There is currently a net operating loss for Federal income tax purposes and
state income tax purposes.
NOTE IV: ALLOWANCE FOR MARKETABLE SECURITIES & INVESTMENTS
Sun Harbor Financial Resources, Inc. which are being stated at the
lower of cost or market. At the date of issue of these
financial statement the SEC placed a hold on the trading of the Marketable
Securities in Alliance Industries. The investment in other stock have no
current market value. Management estimates that there will be some future
value to the securities and stocks.
NOTE V: NOTES PAYABLE
There is currently only one note payable to Peter Norman for $25,000
unsecured with an interested rate of 3% payable on demand. Interest on this
note has a balance as of December 31, 1997 total $813.
NOTE VI: NOTES RECEIVABLE
There is currently only one note receivable form David W. Langill
for $15,000 for the sale of the wholly owned subsidiaries sold in 1995.
There has been no payment of this note as of the date of issuance of these
financial statements. Interest for 1996 and 1997 has all been accrued in 1997
totaling $3,300. Payments are due to start on January 15, 1998 at $500 per
month until the note is paid in full principle and interest.
Note VII: ADVANCES FROM OFFICERS
Peter Norman has advanced to Sun Harbor Financial Resources, funds
to continue its operation during 1997. These advances are considered to be
long term loans with no implied interest for 1997.
- 25 -
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<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.
SUN HARBOR FINANCIAL RESOURCES, INC.
-------------------------------------
(Registrant)
By: /S/ Peter H. Norman
--------------------------------
Peter H. Norman, Chairman & President
Date: June 6, 2000
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.
By: /S/ Peter H. Norman
---------------------
Peter H. Norman, President
Date: June 6, 2000
By: /S/ Lisa Norman
---------------------
Lisa Norman, Secretary, Treasurer & Director
Date: June 6, 2000
By: /S/ David W. Langill
---------------------
David W. Langill, Director
Date: June 6, 2000
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