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: February 28, 1999
Commission File Number: 0-21099
ZABA INTERNATIONAL, 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 BLVD, SUITE 216
ENGLEWOOD, COLORADO
(Address of principal executive offices)
---------------------------------------
(Former Address of Small Business Issuer)
(303) 741-1118
(Issuer's Telephone Number)
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 February 28, 1999, was 2,407,165 shares.
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS.
The unaudited financial statements for the three month period ended
February 28, 1999, 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
Company's unaudited financial statements and notes thereto included herein. In
connection with, and because it desires to take advantage of, the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995, the Company
cautions readers regarding certain forward looking statements in the following
discussion and elsewhere in this report and in any other statement made by, or
on the behalf of the Company, whether or not in future filings with the
Securities and Exchange Commission. Forward looking statements are statements
not based on historical information and which relate to future operations,
strategies, financial results or other developments. Forward looking statements
are necessarily based upon estimates and assumptions that are inherently subject
to significant business, economic and competitive uncertainties and
contingencies, many of which are beyond the Company's control and many of which,
with respect to future business decisions, are subject to change. These
uncertainties and contingencies can affect actual results and could cause actual
results to differ materially from those expressed in any forward looking
statements made by, or on behalf of, the Company. The Company disclaims any
obligation to update forward looking statements.
OVERVIEW
Zaba International, Inc., f/k/a HA Spinnaker, Inc. (the "Company"), was
incorporated under the laws of the State of Colorado on September 28, 1988.
Effective August 4, 1997, pursuant to a definitive agreement (the "Agreement"),
the Company acquired all of the issued and outstanding securities of Zaba
International Holdings USA, Inc., ("Zaba"), a Nevada corporation. The terms of
the transaction involved the Company undertaking a "reverse stock split",
wherein one share of common stock was issued in exchange for every 12 shares of
common stock issued and outstanding as of the Closing Date and thereafter,
issuing an aggregate of 9,628,660 shares of its "restricted" common stock to the
former shareholders of Zaba in exchange for all of the issued and outstanding
stock of Zaba. Zaba did not survive the transaction. The Company was the
surviving entity. As part of the terms of the aforesaid transaction, the Company
amended its Articles of Incorporation, changing its name to its present name.
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<PAGE>
Subsequently, in June, 1998, and pursuant to the terms of the
Agreement, former management, who had reserved a right to rescind the Agreement,
exercised their respective rights. As a result, former members of management
assumed the positions with the Company which they had resigned upon closing of
the Agreement and the 9,628,660 shares of common stock issued pursuant to the
Agreement were redeemed back to the Company's Treasury. However, the name change
and reverse split referenced above remained in effect.
RESULTS OF OPERATIONS
The Company generated no revenues during the three month period ended
February 28, 1999. 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.
PLAN OF OPERATION
The Company intends to seek to acquire assets or shares of an entity
actively engaged in business, in exchange for its securities. As of the date of
this report, management of the Company has had preliminary discussions with
potential merger or acquisition candidates, but there is no definitive agreement
between the Company and any third party relevant thereto. In the event the
Company does enter into an agreement with such a third party, the Board of
Directors does intend to obtain certain assurances of value of the target entity
assets prior to consummating such a transaction, with further assurances that an
audited financial statement would be provided within sixty days after closing of
such a transaction. Closing documents relative thereto will include
representations that the value of the assets conveyed to or otherwise so
transferred will not materially differ from the representations included in such
closing documents, or the transaction will be voidable.
The Company has no full time employees. The Company's President has
agreed to allocate a portion of his time to the activities of the Company,
without compensation. This officer anticipates that the business plan of the
Company can be implemented by his devoting approximately 20 hours per month to
the
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<PAGE>
business affairs of the Company and, consequently, conflicts of interest may
arise with respect to the limited time commitment by such officer.
Because the Company presently has nominal overhead and/or other
material financial obligations, management of the Company believes that the
Company's short term cash requirements can be satisfied by management injecting
whatever nominal amounts of cash into the Company to cover these incidental
expenses. There are no assurances whatsoever that any additional cash will be
made available to the Company through any means.
LIQUIDITY AND CAPITAL RESOURCES
The Company presently has nominal cash or cash equivalents.
YEAR 2000 DISCLOSURE
Many existing computer programs use only two digits to identify a year
in the date field. These programs were designed and developed without
considering the impact of the upcoming change in the century. If not corrected,
many computer applications could fail or create erroneous results by or at the
Year 2000. As a result, many companies will be required to undertake major
projects to address the Year 2000 issue. Because the Company has nominal assets,
including no personal property such as computers, it is not anticipated that the
Company will incur any negative impact as a result of this potential problem.
However, it is possible that this issue may have an impact on the Company after
the Company successfully consummates a merger or acquisition. Management intends
to address this potential problem with any prospective merger or acquisition
candidate. There can be no assurances that new management of the Company will be
able to avoid a problem in this regard after a merger or acquisition is so
consummated.
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.
ITEM 5. OTHER INFORMATION - NONE.
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<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -
(a) Exhibits
EX-27 Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
three month period ended February 28, 1999.
5
<PAGE>
<TABLE>
Zaba International, Inc.
(A Development Stage Company)
Balance Sheet
- -----------------------------------------------------------------
<CAPTION>
Unaudited Audited
February November
28, 1999 30, 1998
-------- --------
<S> <C> <C>
ASSETS
Current Assets - Cash $ 44 $ 44
-------- --------
TOTAL ASSETS $ 44 $ 44
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Current Liabilities - Accounts Payable 10,196 9,963
-------- --------
Total Current Liabilities 10,196 9,963
-------- --------
Long-Term Liabilities 0 0
-------- --------
TOTAL LIABILITIES 10,196 9,963
-------- --------
SHAREHOLDERS' EQUITY
Preferred Stock, $.001 Par Value
Authorized 100,000,000 Shares;
Issued And Outstanding -0- Shares 0 0
Common Stock, $.0001 Par Value
Authorized 1,000,000,000 Shares;
Issued And Outstanding 2,407,165 Shares 241 241
Capital Paid In Excess Of
Par Value 56,482 56,482
Deficit Accumulated During The
Development Stage (66,875) (66,642)
-------- --------
TOTAL SHAREHOLDERS' EQUITY (10,152) (9,919)
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 44 $ 44
======== ========
The Accompanying Notes Are An Integral Part
of These Unaudited Financial Statements.
</TABLE>
6
<PAGE>
<TABLE>
Zaba International, Inc.
(A Development Stage Company)
Unaudited Statement Of Operations
- -----------------------------------------------------------------
<CAPTION>
September
28, 1988
(Inception)
Three Months Three Months Through
February February February
28, 1999 28, 1998 28, 1999
---------- --------- ----------
<S> <C> <C> <C>
Revenue $ 0 $ 0 $ 0
Operating Expenses:
Amortization 0 0 500
Legal And Accounting 233 6,755 31,618
Office Expense 0 0 2,610
Rent 0 0 7,200
Stock Transfer Fees 0 0 340
Wages 0 0 25,000
---------- --------- ----------
Total Expenses 233 6,755 67,268
---------- --------- ----------
Net (Loss) Before
Other Income (233) (6,755) (67,268)
Other Income - Interest 0 0 393
---------- --------- ----------
Net (Loss) (233) (6,755) (66,875)
========== ========= ==========
Basic (Loss)
Per Common Share ($0.00) ($0.00)
========== =========
Weighted Average Common
Shares Outstanding 2,407,165 2,407,165
========== =========
The Accompanying Notes Are An Integral Part
of These Unaudited Financial Statements.
</TABLE>
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<PAGE>
<TABLE>
Zaba International, Inc.
(A Development Stage Company)
Unaudited Statement Of Cash Flows
- ------------------------------------------------------------------------
<CAPTION>
September
28, 1988
Three Months Three Months (Inception)
Ended Ended Through
February February February
28, 1999 28, 1998 28, 1999
-------- -------- --------
<S> <C> <C> <C>
Net (Loss) $ (233) $ (6,755) $(66,875)
Plus Items Not Affecting Cash Flow:
Amortization 0 0 500
Expenses Paid By Shareholder 0 0 32,977
Stock Issued For Services 0 0 2,000
Increase (Decrease) In
Accounts Payable 233 6,755 10,196
-------- -------- --------
Net Cash Flows From Operations 0 0 (21,202)
-------- -------- --------
Cash Flows From Investing Activities:
(Increase) in Organization Costs 0 0 (500)
-------- -------- --------
Net Cash Flows From Investing 0 0 (500)
-------- -------- --------
Cash Flows From Financing Activities:
Cash Contributions From Shareholder 0 0 9,646
Issuance of Common Stock 0 0 12,100
-------- -------- --------
Cash Flows From Financing 0 0 21,746
-------- -------- --------
Net Increase (Decrease) In Cash 0 0 44
Cash At Beginning Of Period 44 88 0
-------- -------- --------
Cash At End Of Period $ 44 $ 88 $ 44
======== ======== ========
Summary Of Non-Cash Investing And Financing Activities:
Expenses Paid By Shareholder On
Behalf Of Company $ 0 $ 0 $ 32,977
======== ======== ========
Stock Issued For Services $ 0 $ 0 $ 2,000
======== ======== ========
The Accompanying Notes Are An Integral Part
of These Unaudited Financial Statements.
</TABLE>
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<PAGE>
<TABLE>
Zaba International, Inc.
(A Development Stage Company)
Unaudited Statement Of Shareholders' Equity
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
(Deficit)
Accumulated
Number Of Number Of Capital Paid Stock During The
Common Preferred Common In Excess Of Subscriptions Development
Shares Shares Stock Par Value Receivable Stage Total
---------- --------- ------ ------------ ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance At
September 28, 1988 *,** 0 0 $ 0 $ 0 $ 0 $ 0 $ 0
September 28, 1988, Stock
Issued for Services at
$.0012 per share 1,666,666 0 167 1,833 - - 2,000
Net (Loss) November
30, 1988 - - - - - (4,825) (4,825)
---------- --------- ------ ------------ ---------- -------- --------
Balance At November
30, 1988 1,666,666 0 $ 167 $ 1,833 0 $ (4,825) $ (2,825)
November 1, 1989, Stock
Issued for cash at
$.0112 per share 591,667 0 59 6,941 (100) - 6,900
November 1, 1989, Stock
Issued for cash at
$.04 per share 125,000 0 13 4,987 (5,000) - 0
Net (Loss) November
30, 1989 - - - - - (16,900) (16,900)
---------- --------- ------ ------------ ---------- -------- --------
Balance at November
30, 1989 2,383,333 0 $ 239 $ 13,761 $ (5,100) $(21,725) $(12,825)
Stock Subscriptions
Received - - - - 5,100 - 5,100
Related Party Debt
Forgiveness - - - 25,972 - - 25,972
Net (Loss) November
30, 1990 - - - - - (17,265) (17,265)
---------- --------- ------ ------------ ---------- -------- --------
Balance at November
30, 1990 2,383,333 0 $ 239 $ 39,733 $ 0 $(38,990) $ 982
Net (Loss) November
30, 1991 - - - - - (907) (907)
---------- --------- ------ ------------ ---------- -------- --------
Balance at November
30, 1991 2,383,333 0 $ 239 $ 39,733 $ 0 $(39,897) $ 75
Net (Loss) November
30, 1992 - - - - - (100) (100)
---------- --------- ------ ------------ ---------- -------- --------
Balance at November
30, 1992 2,383,333 0 $ 239 $ 39,733 $ 0 $(39,997) $ (25)
Net (Loss) November
30, 1993 - - - - - (75) (75)
---------- --------- ------ ------------ ---------- -------- --------
Balance at November
30, 1993 2,383,333 0 $ 239 $ 39,733 $ 0 $(40,072) $ (100)
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<PAGE>
<CAPTION>
(Deficit)
Accumulated
Number Of Number Of Capital Paid Stock During The
Common Preferred Common In Excess Of Subscriptions Development
Shares Shares Stock Par Value Receivable Stage Total
---------- --------- ------ ------------ ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net (Loss) November
30, 1994 - - - - - (525) (525)
---------- --------- ------ ------------ ---------- -------- --------
Balance at November
30, 1994 2,383,333 0 $ 239 $ 39,733 $ 0 $(40,597) $ (625)
Net (Loss) November
30, 1995 - - - - - (2,747) (2,747)
---------- --------- ------ ------------ ---------- -------- --------
Balance at November
30, 1995 2,383,333 0 $ 239 $ 39,733 $ 0 $(43,344) $ (3,372)
Net (Loss) November
30, 1996 - - - - - (869) (869)
---------- --------- ------ ------------ ---------- -------- --------
Balance at November
30, 1996 2,383,333 0 $ 239 $ 39,733 $ 0 $(44,213) $ (4,241)
October 1997 for Services
Valued At $.03 Per Share 23,832 - 2 713 - - 715
Contribution to Equity - - - 8,146 - - 8,146
Net (Loss) November
30, 1997 - - - - - (7,622) (7,622)
---------- --------- ------ ------------ ---------- -------- --------
Balance at November
30, 1997 2,407,165 0 $ 241 $ 48,592 $ 0 $(51,835) $ (3,002)
Contribution to Equity - - - 7,890 - - 7,890
Net (Loss) November
30, 1998 - - - - - (14,807) (14,807)
---------- --------- ------ ------------ ---------- -------- --------
Balance at November
30, 1998 2,407,165 0 $ 241 $ 56,482 $ 0 $(66,642) $ (9,919)
Net Loss at February
28, 1999 - - - - - (233) (233)
---------- --------- ------ ------------ ---------- -------- --------
Balance at February
28, 1999 2,407,165 0 $ 241 $ 56,482 $ 0 $(66,875) $(10,152)
========== ========= ====== ============ ========== ======== ========
* Restated to reflect a 12 to 1 reverse split.
** Restated to reflect subsequent rescission of prior merger.
The Accompanying Notes Are An Integral Part
of These Unaudited Financial Statements.
</TABLE>
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Zaba International, Inc.
Notes to Unaudited Financial Statements
For The Three Month Period Ended February 28, 1999
- ----------------------------------------------
Note 1 - Unaudited Financial Information
- ----------------------------------------
The unaudited financial information included for the three month interim period
ended February 28, 1999 was taken from the books and records without audit.
However, such information reflects all adjustments (consisting only of normal
recurring adjustments, which are of the opinion of management, necessary to
reflect properly the results of interim periods presented). The results of
operations for the three month period ended February 28, 1999 are not
necessarily indicative of the results expected for the fiscal year ended
November 30, 1999.
Note 2 - Financial Statements
- -----------------------------
Management has elected to omit substantially all footnotes relating to the
condensed financial statements of the Company included in the report. For a
complete set of footnotes, reference is made to the Company's Annual Report on
Form 10-KSB for the year ended November 30, 1998 as filed with the Securities
and Exchange Commission and the audited financial statements included therein.
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<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.
ZABA INTERNATIONAL, INC.
(Registrant)
Dated: July 2, 1999
By: s/Gregory W. Skufca
-----------------------------------
Gregory W. Skufca, President
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ZABA INTERNATIONAL, INC.
EXHIBIT INDEX TO QUARTERLY REPORT ON FORM 10-QSB
FOR THE QUARTER ENDED FEBRUARY 28, 1999
EXHIBITS Page No.
EX-27 Financial Data Schedule..............................................14
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS FOR THE THREE MONTH PERIOD ENDED FEBRUARY 28,
1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1999
<PERIOD-END> FEB-28-1999
<CASH> 44
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 44
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 44
<CURRENT-LIABILITIES> 10,196
<BONDS> 0
0
0
<COMMON> 241
<OTHER-SE> (10,393)
<TOTAL-LIABILITY-AND-EQUITY> 44
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 233
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (233)
<INCOME-TAX> 0
<INCOME-CONTINUING> (233)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (233)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
