SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from ________ to
________
Commission File No. 33-55254-14
PACIFIC FOREST CORPORATION
(Exact name of small business issuer as specified in its charter)
NEVADA 87-0438451
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
73 SOUTH PALM AVENUE, SUITE 223
SARASOTA, FLORIDA 34236
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (941) 957-1009
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year $0
As of January 13, 1998 the aggregate market value of the voting stock held by
non-affiliates of the registrant is approximately $162,500
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding as of January 14, 1998
- ------------------------------------- ----------------------------------
$.001 PAR VALUE CLASS A COMMON STOCK 1,200,000 SHARES
DOCUMENTS INCORPORATED BY REFERENCE :
None
Transitional Small Business Disclosure Format: [ ] Yes [X] No
<PAGE>
PART I
ITEM 1. Business.
The Company was incorporated under the laws of Utah on April 16, 1986
as Zeus Enterprises, Inc. and subsequently reorganized under the laws of Nevada
on December 30, 1993. The Company's reorganization plan was formulated for the
purpose of changing the state of domicile and provided that the Company form a
new corporation in Nevada which acquired all of the contractual obligations,
shareholder rights and identity of the Utah corporation, and then the Utah
corporation was dissolved. The Company is in the developmental stage, and its
operations have been very limited. The Company has been in the process of
investigating potential business ventures which, in the opinion of management,
would provide a source of eventual profit to the Company. On May 31, 1996 the
name was changed to Pacific Forest Corporation.
During June of 1996, the Company acquired a subsidiary in Fiji and intended to
operate in the timber processing industry. However, the necessary capital could
not be raised and the transactions with the Fijian subsidiary were reversed,
effective December 31, 1996.
The Company will continue to try to expand through future acquisitions
and will be extremely limited in its attempts to locate potential business
situations for investigation. The Company plans to continue on a limited basis,
the process of investigating possible merger and acquisition candidates, and
believes that the Company's status as a publicly-held corporation will enhance
its ability to locate such potential business ventures.
Management anticipates that, due to its lack of funds, and the limited
amount of its resources, the Company may be restricted to participation in only
one potential business venture. This lack of diversification should be
considered a substantial risk because it will not permit the Company to offset
potential losses from one venture against gains from another.
The analysis of business opportunities will be undertaken by or under
the supervision of the Company's management, none of whom is a professional
analyst and none of whom have significant general business experience. Among the
factors which management will consider in analyzing potential business
opportunities are the available technical, financial and managerial resources;
working capital and financial requirements; the history of operation, if any;
future prospects; the nature of present and anticipated competition; potential
for further research, development or exploration; growth and expansion
potential; profit potential; the perceived public recognition or acceptance of
products or services; name identification, and other relevant factors.
It is not possible at present to predict the exact manner in which the
Company may participate in future business opportunities. Specific business
opportunities will be reviewed and, based upon such review, the appropriate
legal structure or method of participation will be decided upon by management.
Such structures and methods may include, without limitation, leases, purchase
and sale agreements, license, joint ventures; and may involve merger,
consolidation or reorganization. The Company may act directly or indirectly
through an interest in a partnership, corporation or other form of organization.
However, it is most likely that the Company will acquire a business venture by
involving the issuance of the Company's restricted securities. Such a
reorganization may involve a merger (or combination pursuant to state corporate
statutes, where one of the entities dissolves or is absorbed by the other), or
it may occur as a consolidation, where a new entity is formed and the Company
and such other entity combine assets in the new entity. A reorganization may
also occur, directly or indirectly, through subsidiaries, and there is no
assurance that the Company would be the surviving entity. Any such
reorganization could result in additional dilution to the book value of the
shares and loss of control of a majority of the shares. The Company's present
director may be required to resign in connection with a reorganization.
A reorganization may be structured in such a way as to take advantage
of certain beneficial tax consequences available in business reorganizations, in
accordance with provisions of the Internal Revenue Code of 1986 (as amended).
Pursuant to such a structure, the number of shares held prior to the
reorganization by all of the Company's shareholders might be less than 20% of
the total shares to be outstanding upon completion of the trans action.
Substantial dilution of percentage equity ownership may result to the minority
shareholders, in the discretion of management.
2
<PAGE>
Generally, the issuance of securities in a reorganization transaction
would be undertaken in reliance upon one or more exemptions from the
registration provisions of applicable federal securities laws, including the
exemptions provided for non-public or limited offerings, distributions to
persons resident in only one state and similar exemptions provided by state law.
Shares issued in a reorganization transaction based upon these exemptions would
be considered "restricted" securities under the 1933 Act, and would not be
available for resale for a period of one year, in accordance with Rule 144
promulgated under the 1933 Act. However, the Company might undertake, in
connection with such a reorganization transaction, certain registration
obligations in connection with such securities.
The Company may choose to enter into a venture involving the
acquisition of or merger with a company which does not need substantial
additional capital but desires to establish a public trading market for its
securities. Such a company may desire to consolidate its operations with the
Company through a merger, reorganization, asset acquisition, or other
combination, in order to avoid possible adverse consequences of undertaking its
own public offering. (Such consequences might include expense, time delays, or
loss of voting control.) In the event of such a merger, the Company may be
required to issue significant additional shares, and it may be anticipated that
control over the Company's affairs may be transferred to others. It should also
be noted that this type of business venture might have the effect of depriving
the original minority shareholders of the protection of federal and state
securities laws, which normally affect the process of a company's becoming
publicly held.
It is likely that the investigation and selection of business
opportunities will be complex, time-consuming and extremely risky. However,
management believes that even though the Company will have limited capital, the
fact that its securities will be publicly-held will make it a reasonably
attractive business prospect for other firms.
As part of their investigation of acquisition possibilities, the
Company's management may meet with executive officers of the business and its
personnel; inspect its facilities; obtain independent analysis or verification
of the information provided, and conduct other reasonable measures, to the
extent permitted by the Company's limited resources and management's limited
expertise. Generally, the Company intends to analyze and make a determination
based upon all available information without reliance upon any single factor as
controlling.
In all likelihood, the Company's management will be inexperienced in
the areas in which potential businesses will be investigated and in which the
Company may make an acquisition or investment. Thus, it may become necessary for
the Company to retain consultants or outside professional firms to assist
management in evaluating potential investments, and to hire managers to run or
oversee the operations of its acquisitions or investments. The Company can give
no assurance that it will be able to find suitable consultants or managers. The
Company intends not to employ any of its affiliates, officers, directors or
principal shareholders as consultants. The Company has no policy regarding the
use of consultants, however, if management, in its discretion, determines that
it is in the best interests of the Company, management may seek consultants to
review potential merger or acquisition candidates. It is anticipated that the
total amount of fees paid to any consultant would not exceed $5,000 per
transaction. The fee, it is anticipated, would be paid by the Company or by the
potential target company. There are currently no contracts or agreements between
any consultant and any companies that are searching for companies with which to
merge.
It may be 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. Should a decision thereafter be made not to participate in a
specific business opportunity, it is likely that costs already expended would
not be recoverable. It is also likely, in the event a transaction should
eventually fail to be consummated, for any reason, that the costs incurred by
the Company would not be recoverable. The Company's officers and directors are
entitled to reimbursement for all expenses incurred in their investigation of
possible business ventures on behalf of the Company, and no assurance can be
given that if the Company has available funds they will not be depleted in such
expenses.
In addition to the severe limitations placed upon the Company by virtue
of its limited funded status, the Company will also be limited, in its
investigation of possible acquisitions, by the reporting requirements of the
Securities Exchange Act of 1934, pursuant to which certain information must be
furnished in connection with any significant acquisitions. The Company would be
required to furnish, with respect to any significant acquisition, certified
financial statements for the acquired company, covering one, two or three years
(depending upon the relative size of the acquisition). Consequently, acquisition
prospects which do not have the requisite certified financial
3
<PAGE>
statements, or are unable to obtain them, may be inappropriate for acquisition
under the present reporting requirements of the 1934 Act.
The Company does not intend to take any action which would render it an
investment company under The Investment Companies Act of 1940 (the "1940 Act").
The 1940 Act defines an investment company as one which (1) invests, reinvests
or trades in securities as its primary business, (2) issues face-amount
certificates of the installment type or (3) invests, reinvests, owns, holds or
trades securities or owns or acquires investment securities having a value
exceeding 40 percent of the value of its total assets (exclusive of Government
securities and cash items) on an unconsolidated basis. The above 40 percent
limitation may be exceeded so long as a company is primarily engaged, directly
or through wholly-owned subsidiaries, in a business or businesses other than
that of investing, reinvesting, owning, holding or trading in securities. A
wholly-owned subsidiary is defined as one which is at least 95% owned by the
company.
Neither the Company nor any of its officers or directors are registered
as investment advisers under the Investment Advisers Act of 1940 (the "Advisers
Act"), and so there is no authority to pursue any course of business or
activities which would render the Company or its management "investment
advisers" as defined in the Advisers Act. Management believes that registration
under the Advisers Act is not required and that certain exemptions are
available, including the exemptions for persons who may render advice to a
limited number of other persons and who may advise other persons located in one
state only.
The Company expects to encounter intense competition in its efforts to
locate suitable business opportunities in which to engage. The primary
competition for desirable investments may come from other small companies
organized and funded for similar purposes, from small business development
corporations and from public and private venture capital organizations. As the
Company has limited funds and other resources, it can fairly be said that nearly
all of the competing entities will have significantly greater experience,
resources, facilities, contacts and managerial expertise than the Company and
will, consequently, be in a better position than the Company to obtain access
to, and to engage in, business opportunities. Due to its limited funds, the
Company may not be in a position to compete with larger and more experienced
entities for business opportunities which are low-risk. Business opportunities
in which the Company may ultimately participate are likely to be highly risky
and extremely speculative.
ITEM 2. Properties.
The Company owns no properties and utilizes space on a rent-free basis
in the office of its President. This arrangement is expected to continue until
such time as the Company becomes involved in a business venture which
necessitates its relocation, as to which no assurances can be given. The Company
has no agreements with respect to the maintenance or future acquisition of
office facilities, however, if a successful merger/acquisition is negotiated, it
is anticipated that the office of the Company will be moved to that of the
acquired company.
ITEM 3. Legal Proceedings.
Not Applicable.
ITEM 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to the Company's security holders for a vote
during the fiscal year ending December 31, 1997.
PART II
ITEM 5. Market for Registrant's Common Equity and Related Stockholders Matters.
The Company's common stock is traded over the counter on the NASD
Bulletin Board under the symbol PFSS. There was no market value for the
Company's common stock until the fourth quarter of 1995, at which time the low
bid and the high bid was $.50 per share. During 1996, the stock's price ranged
from a low of $.375 to a high of $6.375. During 1997 the stock's price ranged
from a low of $.06 to a high of $.37. The reported bids for the
4
<PAGE>
Company's common stock reflect inter-dealer prices, without retail mark-up,
mark-down or commission, and may not represent actual transactions. The latest
price in January was a bid of $.25 and ask of $.62.
As of December, 1997, there were 697 record holders of the Company's
common stock. The Company has not previously declared or paid any dividends on
its common stock and does not anticipate declaring any dividends in the
foreseeable future.
ITEM 6. Management's Discussion and Analysis of Financial Condition and Results
of Operation.
Current assets at December 31, 1997 were $0 as compared to net current
assets at December 31, 1996 of $39. The decrease in current assets was due to a
decrease in cash of $39 related to bank service charges.
Net loss for the year was $3,814 which consisted of general and
administrative expenses.
The Company has not received any income as of the year ended December
31, 1997, and has had limited operational history. All risks inherent in new and
inexperienced enterprises are inherent in the Company's business.
The Company has not made a formal study of the economic potential of any
venture.
The Company will continue to try to expand through acquisitions and
will be extremely limited in its attempts to locate potential business
situations for investigation. The Company plans to continue on a limited basis,
the process of investigating possible merger and acquisition candidates, and
believes that the Company's status as a publicly-held corporation will enhance
its ability to locate such potential business ventures.
Management anticipates that due to the limited amount of its resources,
the Company may be restricted to participation in only one potential business
venture. This lack of diversification should be considered a substantial risk
because it will not permit the Company to offset potential losses from one
venture against gains from another.
ITEM 7. Financial Statements and Supplementary Data.
See Item 13.
ITEM 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not Applicable.
PART III
ITEM 9. Directors, Executive Officers, Promoters and Control Persons,
Compliance With Section 16(a) of the Exchange Act.
The following table shows the positions held by the Company's officer and
director. The director was appointed in February, 1997 and will serve until the
next annual meeting of the Company's stockholders, and until his successors have
been elected and have qualified. The officer was appointed to his position, and
continues in such position, at the discretion of the director.
Name Age Position
Roger Tichenor 34 President, Director
Roger Tichenor has been the President and sole Director of the Company
since February 24, 1997. Mr. Tichenor is currently President of a private
consulting company, Phoenix Capital, Inc. He is engaged in providing advice and
counsel to small private companies that are seeking to go public. Mr. Tichenor
provides consulting and strategy to public companies concerning business and
financial plans, negotiating with potential merger and acquisition candidates
and introductions into the financial community.
Mr. Tichenor is 34 years of age and has been involved in the securities
business since 1987. He began in the business as a registered representative and
eventually became Branch Manager of a Chicago based stock and commodity firm. In
1993 he resigned his licenses to pursue his current endeavors.
5
<PAGE>
ITEM 10. Executive Compensation.
The Company has made no arrangements for the remuneration of its
officer and director, except that he will be entitled to receive reimbursement
for actual, demonstrable out-of-pocket expenses, including travel expenses if
any, made on the Company's behalf in the investigation of business
opportunities. No remuneration has been paid to the Company's officer or
director prior to the filing of this form. There are no agreements or
understandings with respect to the amount or remuneration that the officer and
director is expected to receive in the future. Management takes no salaries from
the Company and does not anticipate receiving any salaries in the foreseeable
future. No present prediction or representation can be made as to the
compensation or other remuneration which may ultimately be paid to the Company's
management, since upon the successful consummation of a business opportunity,
substantial changes may occur in the structure of the Company and its
management. At such time, contracts may be negotiated with new management
requiring the payment of annual salaries or other forms of compensation which
cannot presently be anticipated. Use of the term "new management" is not
intended to preclude the possibility that the present officer or director of the
Company might be elected to serve in the same or similar capacities upon the
Company's decision to participate in one or more business opportunities.
ITEM 11. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth, as of December 31, 1997, information
regarding the beneficial ownership of shares by each person known by the Company
to own five percent or more of the outstanding shares, by the director and by
the officer and director as a group.
<TABLE>
<CAPTION>
Name and address Amount of Percent
Title of class of beneficial owner beneficial ownership of class
<S> <C> <C>
Common Stock Roger Tichenor 450,000 37.50%
73 South Palm Avenue, Suite 223
Sarasota, Florida 34236
Common Stock Steve Guarino 100,000 8.34%
73 South Palm Avenue, Suite 223
Sarasota, Florida 34236
Common Stock All Officers and
Directors as a Group (1 person) 450,000 37.50%
</TABLE>
ITEM 12. Certain Relationships and Related Transactions.
No officer, director, nominee for election as a director, or associate of
such officer, director or nominee is or has been in debt to the Company during
the last fiscal year. However, the Company's officer, director and major
shareholder, have made an oral undertaking to make loans to the Company in
amounts sufficient to enable it to satisfy its reporting requirements and other
obligations incumbent on it as a public company, and to commence, on a limited
basis, the process of investigating possible merger and acquisition candidates.
The Company's status as a publicly-held corporation may enhance its ability to
locate potential business ventures. The loans will be interest free and are
intended to be repaid at a future date, if or when the Company shall have
received sufficient funds through any business acquisition. The loans are
intended to provide for the payment of filing fees, professional fees, printing
and copying fees and other miscellaneous fees.
PART IV
ITEM 13. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
Financial Statements and Financial Statement Schedules.
Financial Statements - December 31, 1997, 1996 and 1995
Exhibit 27
Financial Data Summary
Reports on Form 8-K.
None.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PACIFIC FOREST CORPORATION
Date: January 22, 1998 By: /s/ Roger Tichenor
------------------------- -----------------------
Roger Tichenor, President and Director
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: January 22, 1998 By: /s/ Roger Tichenor
-------------------------- -----------------------
Roger Tichenor, President and Director
7
<PAGE>
Supplemental Information to be Furnished With Reports Filed Pursuant to
Section 15(d) of the Act by Registrants Which Have Not Registered Securities
Pursuant to Section 12 of the Act
No annual report or proxy material has been sent to security holders for
the fiscal year ending December 31, 1997, nor is any such report or proxy
material to be furnished to security holders subsequent to the filing of the
annual report of this Form.
8
<PAGE>
SMITH & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
MEMBERS OF: CRANDALL BUILDING SUITE 700
AMERICAN INSTITUTE OF 10 WEST 100 SOUTH
CERTIFIED PUBLIC ACCOUNTANTS SALT LAKE CITY, UTAH 84101
UTAH ASSOCIATION OF TELEPHONE: (801) 575-8297
CERTIFIED PUBLIC ACCOUNTANTS FACSIMILE: (801) 575-8306
- -------------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Pacific Forest Corporation (A Development Stage Company)
We have audited the accompanying balance sheets of Pacific Forest Corporation (a
development stage company) as of December 31, 1997 and 1996, and the related
statements of operations, changes in stockholders' equity (deficit), and cash
flows for the years ended December 31, 1997, 1996, and 1995 and for the period
of April 16, 1986 (date of inception) to December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those 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 Pacific Forest Corporation (a
development stage company) as of December 31, 1997 and 1996 and the results of
its operations, changes in stockholders' equity (deficit) and its cash flows for
the years ended December 31, 1997, 1996, and 1995 and for the period of April
16, 1986 (date of inception) to December 31, 1997 in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements
at December 31, 1997 the Company has an accumulated deficit of $57,000. The
Company has suffered losses and has a substantial need for working capital. This
raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are described in Note 5 to the
financial statements. The accompanying financial statements do not include any
adjustments that may result from the outcome of this uncertainty.
/s/ Smith & Company
CERTIFIED PUBLIC ACCOUNTANTS
Salt Lake City, Utah
January 13, 1998
F-1
<PAGE>
PACIFIC FOREST CORPORATION
(A Development Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
1997 1996
----------------- -----------------
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash in bank $ 0 $ 39
----------------- -----------------
TOTAL CURRENT ASSETS 0 39
OTHER ASSETS
Organization costs (Note 1) 0 0
----------------- -----------------
0 0
----------------- -----------------
$ 0 $ 39
================= =================
LIABILITIES & EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 0 $ 1,225
----------------- -----------------
TOTAL CURRENT LIABILITIES 0 1,225
STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock $.001 par value:
Authorized - 100,000,000 shares
Issued and outstanding
1,200,000 shares (1,100,000 at 12-31-96) 1,200 1,100
Additional paid-in capital 55,800 50,900
Deficit accumulated during
the development stage (57,000) (53,186)
----------------- -----------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 0 (1,186)
----------------- -----------------
$ 0 $ 39
================= =================
</TABLE>
See Notes to Financial Statements.
F-2
<PAGE>
PACIFIC FOREST CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
4/16/86
(Date of
Year Ended December 31, inception) to
1997 1996 1995 12/31/97
------------ ----------- ----------- --------------
<S> <C> <C> <C> <C>
Net sales $ 0 $ 0 $ 0 $ 0
Cost of sales 0 0 0 0
------------ ----------- ----------- --------------
GROSS PROFIT 0 0 0 0
General & administrative
expenses 3,814 51,186 0 57,000
------------ ----------- ----------- --------------
NET LOSS $ (3,814) $ (51,186) $ 0 $ (57,000)
============ =========== =========== ==============
Net income (loss) per weighted
average share $ (.00) $ (.05) $ .00
============ =========== ===========
Weighted average number of
common shares used to compute
net income (loss) per weighted
average share 1,120,833 1,100,000 1,000,000
============ =========== ===========
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE>
PACIFIC FOREST CORPORATION
(A Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During
Par Value $0.001 Paid-in Development
Shares Amount Capital Stage
------------- ------------- ----------------- ------------------
<S> <C> <C> <C> <C>
Balances at 4/16/86 (Date of inception) 0 $ 0 $ 0 $ 0
Issuance of common stock (restricted) at
$.002 per share at 4/16/86 1,000,000 1,000 1,000
Net loss for period (1,950)
------------- ------------- ----------------- ------------------
Balances at 12/31/86 1,000,000 1,000 1,000 (1,950)
Net loss for year (10)
------------- ------------- ----------------- ------------------
Balances at 12/31/87 1,000,000 1,000 1,000 (1,960)
Net loss for year (10)
------------- ------------- ----------------- ------------------
Balances at 12/31/88 1,000,000 1,000 1,000 (1,970)
Net loss for year (10)
------------- ------------- ----------------- ------------------
Balances at 12/31/89 1,000,000 1,000 1,000 (1,980)
Net loss for year (10)
------------- ------------- ----------------- ------------------
Balances at 12/31/90 1,000,000 1,000 1,000 (1,990)
Net loss for year (10)
------------- ------------- ----------------- ------------------
Balances at 12/31/91 1,000,000 1,000 1,000 (2,000)
Net income for year 0
------------- ------------- ----------------- ------------------
Balances at 12/31/92 1,000,000 1,000 1,000 (2,000)
Net income for year 0
------------- ------------- ----------------- ------------------
Balances at 12/31/93 1,000,000 1,000 1,000 (2,000)
Net income for year 0
------------- ------------- ----------------- ------------------
Balances at 12/31/94 1,000,000 1,000 1,000 (2,000)
Issuance of common stock (restricted)
at $.50 per share at 9/12/95 100,000 100 49,900
Net income for year 0
------------- ------------- ----------------- ------------------
Balances at 12/31/95 1,100,000 1,100 50,900 (2,000)
Issuance of common stock (Regulation S) at $.9796
per share to acquire subsidiary at 6/28/96 (1) 100,000 100 97,860
Issuance of common stock (Regulation S) at $8.73
per share to retire debt of subsidiary at 6/28/96(2) 45,000 45 392,857
Issuance of common stock (Regulation S) at $10.00
per share to acquire subsidiary at 8/23/96 (3) 200,000 200 1,999,800
Stock canceled (1) (Note 6) (100,000) (100) (97,860)
Stock canceled (2) (Note 6) (45,000) (45) (392,857)
Stock canceled (3) (Note 6) (200,000) (200) (1,999,800)
Net loss for year (51,186)
------------- ------------- ----------------- ------------------
Balances at 12/31/96 1,100,000 1,100 50,900 (53,186)
Issuance of common stock to officer at $.05 per
share to retire debt at 10/12/97 100,000 100 4,900
Net loss for year (3,814)
------------- ------------- ----------------- ------------------
Balances at 12/31/97 1,200,000 $ 1,200 $ 55,800 $ (57,000)
============= ============= ================= ==================
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE>
PACIFIC FOREST CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
4/16/86
(Date of
Year Ended December 31, inception) to
1997 1996 1995 12/31/97
-------------- -------------- -------------- ---------------
OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net income (loss) $ (3,814) $ (51,186) $ 0 $ (57,000)
Adjustments to reconcile net
income (loss) to cash used by
operating activities:
Amortization 0 0 0 50
Changes in liabilities:
Accounts payable (1,225) 1,225 0 0
-------------- -------------- -------------- --------------
NET CASH USED BY
OPERATING ACTIVITIES (5,039) (49,961) 0 (56,950)
INVESTING ACTIVITIES
Organization costs 0 0 0 (50)
-------------- -------------- -------------- --------------
NET CASH USED BY
INVESTING ACTIVITIES 0 0 0 (50)
FINANCING ACTIVITIES
Proceeds from sale of
common stock 5,000 0 50,000 57,000
-------------- -------------- -------------- --------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 5,000 0 50,000 57,000
-------------- -------------- -------------- --------------
INCREASE (DECREASE) IN
CASH AND CASH
EQUIVALENTS (39) (49,961) 50,000 0
Cash and cash equivalents
at beginning of year 39 50,000 0 0
-------------- -------------- -------------- --------------
CASH & CASH EQUIVALENTS
AT END OF YEAR $ 0 $ 39 $ 50,000 $ 0
============== ============== ============== ==============
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE>
PACIFIC FOREST CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Accounting Methods:
The Company recognizes income and expenses based on the accrual
method of accounting.
Dividend Policy:
The Company has not yet adopted any policy regarding payment of
dividends.
Organization Costs:
The Company amortized its organization costs over a five year
period.
Cash and Cash Equivalents:
For financial statement purposes, the Company considers all highly
liquid investments with an original maturity of three months or
less when purchased to be cash equivalents.
Estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the
reported amount of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Income Taxes:
The Company records the income tax effect of transactions in the
same year that the transactions enter into the determination of
income, regardless of when the transactions are recognized for tax
purposes. Tax credits are recorded in the year realized. Since the
Company has not yet realized income as of the date of this report,
no provision for income taxes has been made.
In February, 1992, the Financial Accounting Standards Board
adopted Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes, which supersedes substantially all
existing authoritative literature for accounting for income taxes
and requires deferred tax balances to be adjusted to reflect the
tax rates in effect when those amounts are expected to become
payable or refundable. The Statement was applied in the Company's
financial statements for the fiscal year commencing January 1,
1993.
At December 31, 1997 a deferred tax asset has not been recorded
due to the Company's lack of operations to provide income to use
the net operating loss carryover of $57,000 which expires as
follows:
<TABLE>
<CAPTION>
Year Ended Expires Amount
-------------------------------------- ------------------------------- --------------
<S> <C> <C> <C>
December 31, 1986 December 31, 2001 $ 1,950
December 31, 1987 December 31, 2002 10
December 31, 1988 December 31, 2003 10
December 31, 1989 December 31, 2004 10
December 31, 1990 December 31, 2005 10
December 31, 1991 December 31, 2006 10
December 31, 1996 December 31, 2011 51,186
December 31, 1997 December 31, 2012 3,814
--------------
$ 57,000
==============
</TABLE>
A change in control of the Company and a lack of continuity of
operations may reduce or limit the amount of the net operating
loss than can be used in future years.
NOTE 2: DEVELOPMENT STAGE COMPANY
The Company was incorporated under the laws of the State of Utah
on April 16, 1986 as Zeus Enterprises, Inc. and has been in the
development stage since incorporation. On December 30, 1993, the
Company was dissolved as a Utah corporation and reincorporated as
a Nevada corporation. On May 31, 1996, the name was changed to
Pacific Forest Corporation. The Company is currently looking for
business opportunities.
F-6
<PAGE>
PACIFIC FOREST CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1997 and 1996
NOTE 3: CAPITALIZATION
On the date of incorporation, the Company sold 1,000,000 shares of
its common stock for $2,000 cash for an average consideration of
$.002 per share. On September 12, 1995, the Company sold an
additional 100,000 shares of its common stock for $50,000 cash for
an average consideration of $.50 per share. On October 12, 1997
the Company issued 100,000 shares at $.05 per share to retire debt
owed to its officer. The Company's authorized stock includes
100,000,000 shares of common stock at $.001 par value.
NOTE 4: RELATED PARTY TRANSACTIONS
The Company neither owns or leases any real property. Office
services are provided, without charge, by current management. Such
costs are immaterial to the financial statements, and,
accordingly, have not been reflected therein. The officer and
director of the Company is involved in other business activities
and may, in the future, become involved in other business
opportunities. If a specific business opportunity becomes
available, such person may face a conflict in selecting between
the Company and his other business interests. The Company has not
formulated a policy for the resolution of such conflicts. During
1997, the President forgave $2,621 of expenses paid on behalf of
the Company. The forgiveness is reflected as a reduction of
general and administrative expenses.
NOTE 5: GOING CONCERN
The financial statements are presented on the basis that the
Company is a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of
business over a reasonable length of time. At December 31, 1997,
the Company has a loss from operations for 1997 of $3,814 and an
accumulated deficit of $57,000.
Management feels that loans from related parties will provide
sufficient working capital to allow the Company to continue as a
going concern.
NOTE 6: ACQUISITION AND DISPOSITION OF SUBSIDIARY
On June 28, 1996, the Company issued 100,000 shares of Regulation
S common stock to acquire 67% of Pacific Forest (Fiji) Limited
("Fiji"). On August 23, 1996, 200,000 shares of Regulation S
common stock were issued to acquire the remaining 33% of Fiji. The
Company intended to operate a timber milling operation in Fiji
through the subsidiary. By December 31, 1996, it was evident that
the Company would not succeed in obtaining the necessary capital
to properly fund the Fiji operations. Accordingly, all
transactions related to the subsidiary were canceled, effective
December 31, 1996. The financial statements for 1996 do not
reflect any activities of the former subsidiary. Audited financial
information for the former subsidiary is not available and
management believes the activities are not meaningful as the
operations no longer relate to the Company.
F-7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Pacific Forest Corporation December 31, 1997 financial statements and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000866678
<NAME> PACIFIC FOREST CORPORATION
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1,200
<OTHER-SE> (1,200)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,814
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,814)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,814)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,814)
<EPS-PRIMARY> (.00)
<EPS-DILUTED> (.00)
</TABLE>
