U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-QSB
Quarterly Report Under
the Securities Exchange Act of 1934
For Quarter Ended: August 31, 1997
Commission File Number: 0-21099
HA SPINNAKER, INC.
(Exact name of small business issuer as specified in its charter)
Colorado
(State or other jurisdiction of incorporation or organization)
84-1128300
(IRS Employer Identification No.)
5650 Greenwood Plaza, #216
Englewood, Colorado
(Address of principal executive offices)
80111
(Zip Code)
(303) 741-1118
(Issuer's Telephone Number)
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 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
__X__ No ____.
The number of shares of the registrant's only class of common stock issued and
outstanding, as of August 31, 1997, was 28,600,000 shares.
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS.
The unaudited financial statements for the nine month period ended August
31, 1997, are attached hereto.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Financial
Statements and notes thereto included herein.
The Company generated no revenues during the nine month period ending
August 31, 1997. Management of the Company anticipates that the Company will
not generate any significant revenues until the Company accomplishes its
business objective of merging with a nonaffiliated entity or acquiring assets
from the same.
The Company's securities are currently not liquid. There are no market
makers in the Company's securities and it is not anticipated that any market
will develop in the Company's securities until such time as the Company
successfully implements its business plan of engaging in a business opportunity,
either by merger or acquisition of assets. The Company presently has no liquid
financial resources to offer such a candidate and must rely upon an exchange of
its stock to complete such a merger or acquisition.
Because the Company is not required to pay rent or salaries to any of its
officers or directors, management believes that the Company has sufficient funds
to continue operations through the foreseeable future.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS - NONE
ITEM 2. CHANGES IN SECURITIES - NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - NONE.
Effective August 4, 1997, all of the Company's shareholders executed a
unanimous consent authorizing the merger of the Company with Zaba International
Holdings USA, Inc., a Nevada corporation. No proxy was disseminated to the
Company's shareholders and no solicitation by any of the Company's management
was utilized to obtain these consents.
ITEM 5. OTHER INFORMATION - NONE.
2
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -
(a) Exhibits
EX-27 Financial Data Schedule
(b) Reports on Form 8-K
The Registrant filed a Form 8-K dated July 21, 1997, reporting the
execution of a letter of intent on July 11, 1997, with Zaba International
Holdings USA, Inc. ("Zaba"), a privately held Nevada corporation, whereby the
Registrant agreed in principle to acquire all of the issued and outstanding
shares of Zaba in exchange for issuance by the Registrant of 9,628,660
previously unissued "restricted" common stock of the Registrant. A copy of the
letter of intent with Zaba was annexed to the Form 8-K as an Exhibit.
The relevant terms of the transaction required the Company to issue to the
Zaba shareholders an aggregate of 9,628,660 "restricted" common shares,
representing 80% of the Company's then outstanding common stock, in exchange for
all of the issued and outstanding shares of Zaba.
The Registrant subsequently filed a Form 8-K dated August 19, 1997,
reporting that, effective August 4, 1997, the Registrant acquired all of the
issued and outstanding securities of Zaba pursuant to an Agreement and Plan of
Merger (the "Agreement"); the issuance of 9,628,660 "restricted" shares of its
common stock, post a 1 for 12 reverse stock split, to the shareholders of Zaba;
and resignation of the Registrant's directors and appointment of new officers
and directors pursuant thereto. A copy of the Agreement was annexed to the Form
8-K as an Exhibit.
Subsequent thereto, the former management of the Registrant discovered
material inaccuracies in the representations and warranties made by Zaba and
included in the Agreement, and, as a result thereof and pursuant to the terms
of the Agreement, on August 26, 1997, former management provided written notice
to management of Zaba of such deficiencies and directed that Zaba cure such
defects within 20 days thereof or the Agreement would be terminated in
accordance with its terms. Registrant filed a Form 8-K dated August 26, 1997,
relevant thereto.
Subsequent Events
Although the 20 days cure period has elapsed and Zaba has failed to
cure all defects, current management and management of Zaba have, by mutual
agreement, extended the period to cure the defects and are working toward that
end.
However, as of the date of this report, it is the position of
management of the Registrant that the Agreement is not effective and that the
Agreement will not be deemed effective until Zaba cures all such defects, and
that current management remains in control of the Registrant. It is the
understanding of current management that management of Zaba concurs with this
position.
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<PAGE>
H A SPINNAKER, INC.
(A Development Stage Company)
Financial Statements
August 31, 1997
(unaudited)
4
<PAGE>
<TABLE>
H A Spinnaker, Inc.
(A Development Stage Company)
BALANCE SHEET
August 31, 1997
(Unaudited)
<S> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 413
--------
Total current assets 413
--------
TOTAL ASSETS $ 413
========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Total current liabilities -
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $0.0001 par value, 1,000,000,000
share authorized; 28,600,000 shares issued
and outstanding 2,860
Preferred stock, $0.001 par value, 100,000,000
shares authorized; no shares issued and
outstanding -
Additional paid-in capital 45,358
Deficit accumulated during the development stage (47,805)
--------
Total stockholders' equity (deficit) 413
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 413
========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
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5
<PAGE>
<TABLE>
H A Spinnaker, Inc.
(A Development Stage Company)
STATEMENTS OF LOSS AND ACCUMULATED DEFICIT
(Unaudited)
<CAPTION>
For the For the For the For the
Period Three Three Nine Nine
September months months months months
28, 1988 ended ended ended ended
(Inception) August 31, August 31, August 31, August 31,
to August 31, 1997 1996 1997 1997
1997
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
REVENUES
Investment income $ 393 $ - $ - $ - $ -
EXPENSES
Office expenses 2,137 - - 2,137 -
Wages 25,000 - - - -
Rent 7,200 - - - -
Legal and accounting 13,361 416 (393) 1,455 (393)
Amortization 500 - - - -
----------- ----------- ----------- ----------- -----------
Total expenses 48,198 416 (393) 3,592 (393)
----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) (47,805) (416) 393 (3,592) 393
Accumulated deficit
Balance, beginning
of period - (47,389) (43,344) (44,213) (43,344)
----------- ----------- ----------- ----------- -----------
Balance, end of
period $ (47,805) $ (47,805) $ (42,951) (47,805) (42,951)
=========== =========== =========== =========== ===========
NET LOSS PER SHARE $ (NIL) $ (NIL) $ (NIL) $ (NIL) $ (NIL)
=========== =========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 28,600,000 28,600,000 28,600,000 28,600,000 28,600,000
=========== =========== =========== ===========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
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6
<PAGE>
<TABLE>
H A Spinnaker, Inc.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
For the For the
Period Nine Nine
September months months
28, 1988 ended ended
(Inception) August 31, August 31,
to May 31, 1997 1996
1997
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $ (47,805) $ (3,592) $ 393
Adjustments to reconcile net loss
to net cash used by operating
activities:
Amortization 500 - -
Rent 2,918 - -
Wages 23,054 - -
Stock for services 2,000 - -
Changes in:
Current liabilities - (4,141) (393)
--------- --------- ---------
Net cash provided (used)
by operating activities (19,333) (7,733) -
CASH FLOWS FROM
INVESTING ACTIVITIES
Increase in organization costs (500) - -
--------- --------- ---------
Net cash used by investing
activities (500) - -
CASH FLOWS FROM
FINANCING ACTIVITIES
Expenses paid by shareholder 8,146 8,146
Issuance of common stock 12,100 - -
--------- --------- ---------
Net cash provided by financing
activities 20,246 8,146 -
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 413 413 -
CASH AND CASH EQUIVALENTS
BEGINNING OF PERIOD - - -
--------- --------- ---------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 413 $ 413 $ -
========= ========= =========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
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<PAGE>
H A Spinnaker, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Management's representation of interim financial information
------------------------------------------------------------
The accompanying financial statements have been prepared by H.A.
Spinnaker, Inc. without audit pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted as allowed by such
rules and regulations, and management believes that the disclosures
are adequate to make the information presented not misleading.
These financial statements include all of the adjustments which,
in the opinion of management, are necessary to a fair presentation
of financial position and results of operations. All such
adjustments are of a normal and recurring nature. These financial
statements should be read in conjunction with the audited financial
statements at November 30, 1996.
2. Acquisition and Disposition of Assets
-------------------------------------
Effective July 11, 1997, HA Spinnaker, Inc. (the "Company") entered
into a letter of intent with Zaba International Holdings USA, Inc.
("Zaba"), a privately held Nevada corporation, whereby the Company
has agreed in principle to acquire all of the issued and
outstanding shares of Zaba in exchange for issuance by the Company
of previously unissued "restricted" common stock 9,628,660 shares
after a 1 for 12 reverse split.
Subsequent to the date of the anticipated merger, former management
discovered material inaccuracy in the representations and
warranties made by Zaba and included in the applicable Agreement.
Pursuant to the terms of said Agreement, management of the
Registrant has provided notice of these deficiencies to the
management of Zaba. As a result, management has been granted
twenty (20) days from the date of notification (August 26, 1997)
to cure any and all defects. Failure of Zaba to properly cure
within the 20 day period shall cause the Agreement to be
terminated in accordance with its terms. Although the twenty
days have elapsed, the parties are continuing negotiations and
the Agreement may be consummated in the future. However, at this
time it is the position of management that the relevant Agreement
is not effective as of the date of these financial statements.
It is further the position of management that the aforesaid
Agreement will not be deemed effective until Zaba does cure and
that current management remains in control of the Registrant.
It is the understanding of management that management of Zaba
concurs with this position.
4
8
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
H A SPINNAKER, INC.
(Registrant)
Dated: October 8, 1997
By: s/Gregory W. Skufca
Gregory W. Skufca,
President
9
<PAGE>
H A SPINNAKER, INC.
Exhibit Index to Quarterly Report on Form 10-QSB
For the Quarter Ended August 31, 1997
EXHIBITS Page No.
EX-27 Financial Data Schedule. . . . . . . . . . . . . . . . . .11
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENT FOR THE QUARTER ENDED AUGUST 31, 1997, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> AUG-31-1997
<CASH> 413
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 413
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 413
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 2,860
<OTHER-SE> (2,447)
<TOTAL-LIABILITY-AND-EQUITY> 413
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 416
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (416)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (416)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
