CONFORMED COPY
FORM 10-K SB
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) 15, ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended August 31, 1996
OR
( ) 15, TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 33-37203-D
FI-TEK V, INC.
______________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 84-1148210
______________________________ __________________________________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3127 Ramshorn Drive, Castle Rock, Colorado 80104
_________________________________________________________________________
(Address of principal executive offices) (Zip Code)
(303) 660-1710
_________________________________________________________________________
(Registrant's telephone number, including area code)
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 registrant (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 such shorter
period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for at least the past 90
days.
Yes X 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-K SB or any amendment to this form 10-K SB.
Yes X No
--- ---
As of November 27, 1996, the aggregate value of the 12,752,800 shares
of voting stock held by non-affiliates of the registrant was $127,528.
The number of shares outstanding of the registrant's only class of
common stock, as of November 27, 1996, was 29,977,800.
Registration Statement 33-37513-D, as amended, is incorporated into
Part I of this Report.
Exhibit Index is located at Page 12.
<PAGE>
PART I
ITEM 1. BUSINESS
General
Fi-Tek V, Inc. (the "Registrant" or the "Company") was incorporated
under the laws of the State of Delaware on August 3, 1989, for the primary
purpose of seeking out acquisitions of properties, businesses, or merger
candidates, without limitation as to the nature of the business
operations or geographic area of the acquisition candidate. From
inception through January 24, 1992, the Company's activities were directed
primarily toward the obtaining of capital with which to pursue the
business plan summarized in the preceding sentence.
On January 24, 1992, the Company completed its public offering of
securities, receiving gross proceeds of $172,650 from the sale of 8,632,500
units of the Company's securities, such units (the "Units") consisting of
common stock and common stock purchase warrants (the "Offering"). The
underwriter of the Company's Offering, pursuant to the Underwriting
Agreement, purchased 345,300 shares of the Company's common stock for the
nominal amount of $35.
Pursuant to the Colorado Securities Act, $102,175 of the proceeds
of the Offering was deposited into an escrow account. The funds were to be
released to the Company only upon satisfaction of the condition (the "Escrow
Condition") that at least fifty per cent of the gross proceeds of the
Offering be committed to one or more specific lines of business by no later
than the fourth anniversary of the date of the Company's prospectus. The
Escrow Condition had not been satisfied as of the fourth anniversary, or by
July 10, 1995, and, accordingly, the Company distributed those funds pro
rata to those persons who were owners of the shares of common stock purchased
in the Offering. See "Liquidity and Capital Resources" under Item 6,
Management's Discussion and Analysis of Financial Condition and
Results of Operations, in Part II, below.
After completion of the offering, the Company began the process of
identification and evaluation of prospective acquisition candidates,
which process has included the solicitation of information from a
variety of sources within the general financial community as well as
from contacts established by management. This process is more fully
described in the Company's Prospectus, dated July 10, 1991, which
Prospectus is incorporated herein by this reference. The Company entered
into two letters of intent with acquisition candidate in the third and fourth
quarters of 1995, but the Company subsequently terminated those letters of
intent without having entered into a binding agreement with those candidates.
Employees
The Company has no full time employees. Its executive officers
devote as much time as is necessary to conduct the Company's business.
See "Item 9. Executive Compensation."
ITEM 2. PROPERTIES
The Company has been provided office space in the home of its
President. The Company pays no rent for such space.
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ITEM 3. LEGAL PROCEEDINGS
The Company is not party to any threatened or pending legal
proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year ended August 31, 1996.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The Company's common stock began trading on the NASD's Bulletin Board
during March 1994. According to the only firm currently making a market
in the Company's securities, both the high and low bid during each fiscal
quarter since commencement of trading has remained at $.01 per share of
common stock.
At August 31, 1996, the Company had approximately 65 shareholders of
record. The Company has not paid any dividends on its common stock and
does not expect to pay a cash dividend in the foreseeable future.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Company completed the initial public offering of its securities
in January of 1992, receiving gross proceeds of $172,650 (including
proceeds from the sale of warrants to the underwriter of the offering).
Total costs of the offering amounted to $44,114. The net proceeds of
the offering, therefore, amounted to $128,571.
Pursuant to the Colorado Securities Act and based upon actual and
estimated offering costs, $102,175 of that amount was deposited into escrow.
By law, funds could not be released from the escrow to the Company until such
time as the Company devoted to an identified business an amount equal to or
greater than 50% of the gross proceeds of the common stock purchased in the
offering (the "Shares") upon the second anniversary of the effective date
of the Company's prospectus, unless the escrow was extended by a majority vote
of the holder of those Shares. Pursuant to the terms of the escrow agreement
entered into, the escrow could not, in any event , be extended beyond a
period of four years from the effective date of the Company prospectus
(July 10, 1995).
The Company had not, as of the fourth anniversary of the effective date
of the prospectus (July 10, 1995), entered into any arrangement that would
satisfy the condition to the release of the escrowed funds. Accordingly,
in July 1995, management distributed the escrowed funds to the holders of
Shares on a pro rata basis.
The Company remains in the development stage and, since
inception, has experienced no significant change in liquidity or capital
resources of stockholders' equity other than the receipt of net proceeds
in the amount of $128,571 from its public offering and the distribution of
escrowed funds as described in the preceding paragraph. As of August 31,
1996, the Company has on deposit unrestricted cash and accrued interest of
$4,629 available for use. While management anticipates that these funds
may be sufficient to meet expenses in fiscal 1996 or until a business
combination is consummated, such expenses will probably exceed cash
resources currently available. In such case, the Company expects to
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meet any shortfall by seeking to have expenses deferred until after a
combination shall have been consummated or, in the alternative, by
obtaining additional capital contributions or loans from the Company
founding stockholders.
The Company cannot predict to what extent its liquidity and capital resources
will be further depleted by the operating losses, if any, of the business
entity which the Company eventually acquires.
Results of Operations
During the fiscal year ended August 31, 1996, and since completing its
public offering, the Company has engaged in no significant operations other
than the search for, and identification and evaluation of, possible
acquisition candidates. Other than interest income of $3,848 and $3,092, no
revenues were received by the Company during the fiscal years ended August
31, 1996 and 1995, respectively. Since inception, the Company has earned
interest income of $13,033. No other revenues have been received by the
Company since inception. The Company experienced a net loss of $9,287 and
$11,180, respectively, during the fiscal years ended August 31, 1996 and 1995.
Since inception, the Company has experienced a net loss of $40,281.
For the current fiscal year, the Company anticipates a comparable
net loss owing to expenses associated primarily with compliance with
reporting requirements. The Company anticipated that until a business
combination is completed with an acquisition candidate, it will not generate
revenues other than interest income, and may continue to operate at a
loss after completing a business combination, depending upon the performance
of the acquired business.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
The response to this item is being submitted as a separate section
of this report beginning on page F-1.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There have been no disagreements with the Company's independent
auditors with respect to accounting and financial disclosures.
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PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
Identification of Directors and Executive Officers of the Company
The directors and executive officers currently serving the Company
are as follows:
Name Age Position Held and Tenure
------ ----- --------------------------
Frank L. Kramer 54 President, Director
since July 13, 1990
Ronald J. Miller 53 Secretary, Treasurer, Director
since July 13, 1990
The directors named above will serve until the first annual meeting
of the Company's stockholders. Thereafter, directors will be elected for
one-year terms at the annual stockholders' meeting. Officers will hold
their positions at the pleasure of the board of directors, absent any
employment agreement, of which none currently exist or are contemplated.
There are no family relationships among the officers and directors.
There is no arrangement or understanding between any of the directors or
officers of the Company and any other person pursuant to which any
director or officer was or is to be selected as a director or officer.
The directors and officers will devote their time to the Company's
affairs on an "as needed" basis, which, depending on the circumstances,
could amount to as little as two hours per month, or as much as forty
hours per week, but more than likely will fall within the range of five
to ten hours per month.
Certain Significant Employees
No persons other than the executive officers listed above are
considered to be significant employees.
Business Experience
The following is a brief account of the education and business
experience during at least the past five years of the Company's executive
officers and directors, indicating their principal occupations and
employment during that period, and the names and principal businesses of
the organizations in which such occupations and employment were carried
out.
Biographical Information
Frank L. Kramer.
Mr. Kramer has served as President and as a
director of the Company since July 1990. Since January 1991, Mr. Kramer
has been self-employed as a financial consultant in the Denver, Colorado
area. From 1987 to December 1990, Mr. Kramer was affiliated with New
York Life Insurance Company ("New York Life") as an agent and recruiter.
From 1986 until March of 1987, he was an employee and a director of
Optimum Manufacturing, Inc., a public company engaged in manufacturing in
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Denver, Colorado. From 1981 to late 1987, Mr. Kramer was self-employed
as a private financial consultant in the Denver, Colorado area, assisting
businesses in arranging interim financing for their business operations,
through private and commercial borrowings. He has also been engaged in
the structuring and implementing of private financing for the oil and gas
and commercial real estate industries. Mr. Kramer was affiliated with
New York Life from 1968 through 1981 and was engaged in sales, sales
management and estate planning. He became a Chartered Life Underwriter
in 1972. From 1973 through 1981, he was General Manager of two of New
York Life's general offices. Mr. Kramer has been and is involved in a
number of "blind pool" companies as outlined in the following paragraph.
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Mr. Kramer served as president and a director from 1984 to 1987 of
Fi-Tek Corp., a "blind pool" company headquartered in Aurora, Colorado,
which completed an offering of securities in 1986. In 1987, Fi-Tek Corp.
acquired Boston Technology, Inc. and moved its operations to Cambridge,
Massachusetts. From May 1987 to November 1988, Mr. Kramer served as
president, treasurer and the chairman of the board of Fi-Tek II, Inc., a
"blind pool" company headquartered in Aurora, Colorado, which completed
an offering of securities in July 1988. In October 1988, Fi-Tek II,
Inc., acquired On Line Communications, Inc. and moved its operations to
San Jose, California. The company subsequently changed its name to On
Line Network, Inc. and has since ceased operations. Mr. Kramer also
served, commencing in November 1988, as the president, treasurer and a
director of Fi-Tek III, Inc., a Delaware-chartered "blind pool"
corporation which completed an offering of securities in September 1989,
and which in August 1990 acquired Videoconferencing Systems, Inc., a
Norcross, Georgia-based company. Effective as of the date of
acquisition, Mr. Kramer resigned as president and treasurer, but retained
his position on the board of directors. The Company has since changed
its name to VSI Enterprises, Inc. and Mr. Kramer resigned his position as
director on July 15, 1991. From February 1987 until December 1989, he
was also the treasurer and a director of Bluestone Capital Corp., a
Colorado "blind pool" corporation which completed an offering of
securities in November 1988 and which moved its operations to Braintree,
Massachusetts after acquiring Dialogue, Inc. in December 1989. The
company has since ceased operations. Mr. Kramer also served as an
officer and director of Catalina Capital Corp. ("Catalina"), a Delaware-
chartered "blind pool" corporation which completed a public offering of
its securities in April 1991 and which moved its operations to
Scottsdale, Arizona after acquiring Explore Technology, Inc. ("Explore")
in August 1992. Mr. Kramer resigned all positions with Catalina upon the
closing of the acquisition of Explore. Explore has since changed its
name to Instant Video Technology, Inc. Mr. Kramer also served as
president, treasurer and a director of Fi-Tek IV, Inc., a Delaware-
chartered "blind pool" corporation which completed an offering of
securities in September 1990. During December 1992, Fi-Tek IV
completed a reverse acquisition (stock-for-stock exchange) of DBS
Network, Inc., a Mill Valley, California-based company, which
through its equity ownership of another entity, held an interest in a
permit granted by the Federal Communications Commission for launch and
operation of direct broadcast satellites and is otherwise engaged in the
automated meter reading business for public utilities from satellites.
Fi-Tek IV has since changed its name to DBS Industries, Inc. The interest
in the permit has recently been swapped for common stock in EchoStar
Communications, a company traded on the NASDAQ. For approximately
a one-month period in October 1990, Mr. Kramer served as a director of
Power Capital, Inc. (now known as 1st National Film Corp.),
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a "blind pool" company which completed a public offering of its
securities in November 1989. Mr. Kramer is also an officer and director
of three other "blind pool" companies, Fi-Tek VI, Inc., Fi-Tek VII, Inc. and
Harbour Capital Corp. Fi-Tek VI, Inc. completed a "blind pool" public offering
of its securities in January 1992, and Fi-Tek VII, Inc. completed a
"blind pool" public offering of its securities in October 1992. Harbour
Capital Corp. completed a "blind pool" public offering of its securities in
October 1993.
Mr. Kramer obtained a B.S. Degree in Business Administration from
Louisiana State University in 1964.
Ronald J. Miller.
Mr. Miller is the Secretary, Treasurer and a
director of the Company. He currently devotes the majority of his time
and attention to his personal investments and to other "blind pool"
companies in which he holds one or more positions as officer, director, or
principal shareholder as described below. Mr. Miller served as secretary
and director of Fi-Tek III, Inc., from inception until August 1990, when
Fi-Tek III, Inc. acquired Videoconferencing Systems, Inc. Mr. Miller
served from inception until December 1993 as a director of Fi-Tek IV,
Inc., and has served since inception as secretary, treasurer, and
director of Fi-Tek VI, Inc. and Fi-Tek VII, Inc. See biography of Mr.
Kramer for more information with respect to each of these development
stage companies. From March 11, 1988 through the present time, Mr.
Miller has served as president, treasurer and sole director of The
Phoenix Companies , Inc., which is based in Denver, Colorado and
incorporated under the laws of the State of Delaware. The Phoenix
Companies, Inc. was formed to "spin-off" publicly held subsidiaries as
acquisition candidates of private companies and business opportunities.
The Phoenix Companies, Inc. completed a public offering of its securities
in June 1990. The Company currently has no business operations. Since
February 1989, Mr. Miller has served as chief executive officer, secretary,
and a director of DataMerge, Inc., a Delaware-chartered company which has
developed and is currently marketing a financing sources database software
product. From June 1985 until October 26, 1990, Mr. Miller served as a
director of Power Capital, Inc. ("Power Capital"), a "blind pool"
company which completed a public offering of its securities on November 9, 1989.
In October 1990, Power Capital acquired 1st National Film Corp., a
California corporation engaged in the business of acquiring and then
distributing completed feature films for family viewing, and changed its name
to 1st National Film Corp. Effective as of the acquisition, Mr. Miller
resigned as a director, and as secretary and treasurer, having held the
latter two positions since October 1, 1990. Mr. Miller also served from
April 1987 to May 1990 as a director of Boston Technology, Inc. (formerly
Fi-Tek Corp.), a Delaware corporation, based in Cambridge, Massachusetts,
which is involved in the design, manufacture and marketing of voice
processing systems. See biography of Mr. Kramer for more information on the
history of Fi-Tek Corp. From 1978 to July 31, 1991, Mr. Miller was a partner
in the Denver, Colorado law firm of Pred and Miller. Pred and Miller acted as
counsel to the Company in connection with its offering of securities, but
that firm dissolved as of July 31, 1991 when Mr. Miller decided to
withdraw from the practice of law. From 1968 to 1978, Mr. Miller was
engaged in the private practice of law in Denver, Colorado, as an
associate and a partner in two different law firms. Since 1975, Mr.
Miller has specialized his practice in the areas of securities, corporate
and real estate law, and more recently until he withdrew from practice,
limited his practice to corporate and securities laws, and mergers and
acquisitions. Pred and Miller acted as general corporate and securities
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counsel for a number of small public companies, and acted as securities
counsel for numerous "blind pool" companies, both during their formation
and initial public offering, and in the negotiations and acquisition of
business opportunities.
Mr. Miller received a B.A. Degree from Simpson College in 1965, and
Juris Doctor degree (magna cum laude) from the University of Denver
College of Law in 1968.
ITEM 10. EXECUTIVE COMPENSATION
(a) Cash Compensation
Since inception, no executive officer of the Company has received
cash compensation other than reimbursement of expenses incurred on behalf
of the Company, except that (i) Mr. Kramer, the Company's President,
received $3,000 of salary during the 1993 fiscal year and (ii) a law firm
of which Mr. Miller, the Company's Secretary and Treasurer, was a partner
until the firm dissolved in July 1991, has received a total of $9,500 for
legal services performed since inception. See "Item 12. Certain
Relationships and Related Transactions."
(b) Compensation Pursuant to Plans
None.
(c) Other Compensation
None.
(d) Compensation of Directors
None.
(e) Termination of Employment and Change of Control
Arrangements
None.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) & (b) Security Ownership of Certain Beneficial Owners
and Management
As of August 31, 1996, the persons listed in the table set forth
below were known by the Company to own or control beneficially more than
five percent of its outstanding common stock, par value $.00001 per
share, its only class of outstanding securities.
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Name and Address of Number of Shares Percentage
Beneficial Owner Owner Beneficially of Class
- ------------------- -------------------- ------------
*Frank L. Kramer 6,150,000 21%
3127 Ramshorn Drive
Castle Rock, CO 80104
*Ronald J. Miller 6,500,000(1) 22%
300 High Street
Denver, CO 80218
Maurice LaFlamme 4,250,000 15%
49 Bay View Drive North
Jamestown, RI 02835
*All directors and 12,650,000 43%
executive officers
(2 people)
(1) Includes 100,000 shares held in an individual retirement account
for the benefit of Mr. Miller's spouse, in which shares Mr. Miller
disclaims all beneficial interest.
(c) Changes in Control
The Company knows of no arrangement or understanding the operation
of which may at a subsequent date result in a change of control of the
Company.
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ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since inception, the Company has sold to its officers, directors and
others in a private placement a total of 21,000,000 shares of Common
Stock for a total of $18,000 or an average of $.0009 per share.
Certificates evidencing the Common Stock issued by the Company to these
persons have all been stamped with a restrictive legend, and are subject
to stop transfer orders by the Company. No officer, director, promoter,
or affiliate of the Company has or proposes to have any direct or
indirect material interest in any asset proposed to be acquired by the
Company through security holdings, contracts, options, or otherwise.
The Company has paid Pred and Miller, of which Ronald J. Miller, the
Company's Secretary, Treasurer and a director, was a partner until the
firm dissolved in July 1991, a total of $9,500 in fees for legal work
performed in connection with the Company's public offering. The Company
has paid to Frank L. Kramer a total salary of $3,000 for services
rendered in his capacity as President of the Company.
The Company does not have any pension, profit-sharing, stock option,
stock bonus, or other benefit plans. Such plans may be adopted in the
future at the discretion of the Board of Directors.
The Company presently maintains its offices at the home of its
President, for which it pays no rent, and for which it does not
anticipate paying rent in the future. The Company anticipates that
following the consummation of a business combination with an acquisition
candidate, the Company's office will be moved, but cannot predict future
office or facility arrangements with officers, directors or affiliates of
the Company.
The Company may enter into an agreement with an acquisition
candidate requiring the sale of all or a portion of the Common Stock held
by the Company's current stockholders to the acquisition candidate or
principals thereof, or to other individuals or business entities, or
requiring some other form of payment to the Company's current
stockholders, or requiring the future employment of specified officers
and payment of salaries to them. It is more likely than not that any
sale of stock of the Company's current stockholders to an acquisition
candidate would be at a price substantially higher than that originally
paid by such stockholders. As a condition to closing an acquisition, the
acquisition candidate may require that additional funds be raised for use
by the surviving entity, which may involve the purchase of shares of
Common Stock of the Company that are "restricted" (as defined by Rule 144
of the Securities Act of 1933) for a price which may be less than that
paid by investors in the public offering. Any payment to current
stockholders or purchase of stock by current stockholders in the context
of an acquisition involving the Company would be determined entirely by
the largely unforeseeable terms of a future agreement with an
unidentified business entity.
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There have been since inception no transactions, or series of
transactions, nor are there any currently proposed transactions, or
series of the same to which the Company is a party, in which the amount
involved exceeds $60,000 and in which to the knowledge of the Company any
director, executive officer, nominee, five percent shareholder or any
member of the immediate family of the foregoing persons have or will have
a direct or indirect material interest.
PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENT AND SCHEDULES AND REPORTS ON
FORM 8-K
(a) Financial Statements and Schedules
The following Financial Statements are filed as part of this report:
Independent Auditor's Report of Comiskey & Company F-1
Balance Sheet F-2
Statements of Operations and Accumulated Deficit F-3
Statement of Stockholders' Equity F-4-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7-9
(b) Reports on Form 8-K
None.
(c) Exhibits
The following Exhibits are filed with this report:
Name of Exhibit
(3.1) Certificate of Incorporation, incorporated by reference
to Registration Statement No. 33-37513-D, effective
April 14, 1992
(3.2) Bylaws, incorporated by reference to Registration
Statement No. 33-37513-D, effective April 14, 1992
(4.1) Rights of Stockholders (included in 3.1 and 3.2 above)
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
Annual Report on Form 10-K SB to be signed on its behalf by the undersigned,
duly authorized.
Date: October 11, 1996 FI-TEK V, INC.
By: /s/ Frank L. Kramer
-------------------
Frank L. Kramer, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons, which include
the Principal Executive Officer, the Principal Financial Officer and a
majority of the Board of Directors on behalf of the Registrant and in the
capacities and on the dates indicated.
Name Title Date
---------------------- ------------------- --------------
/s/ Frank L. Kramer
Frank L. Kramer President, Director, and
Principal Executive Officer October 11, 1996
/s/ Ronald J. Miller
Ronald J. Miller Treasurer, Secretary,
Director and Principal
Financial Officer October 11, 1996
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 materials have been sent to security holders.
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INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders of
Fi-Tek V, Inc.
We have audited the accompanying balance sheet of Fi-Tek V, Inc. (a
development stage company) as of August 31, 1996, and the related
statements of loss and accumulated deficit, stockholders' equity, and
cash flows for the two years ended August 31, 1996, and for the period from
inception (August 3, 1989) to August 31, 1996. 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 Fi-Tek VI,
Inc. as of August 31, 1996, and the results of its operations and its cash
flows for each of the two years ended August 31, 1996 and for the period
from inception (August 3, 1989) to August 31, 1996 in conformity with
generally accepted accounting principles.
Aurora, Colorado
October 28, 1996
COMISKEY & COMPANY
PROFESSIONAL CORPORATION
F-1
<PAGE>
Fi-Tek V, Inc.
(A Development Stage Company)
BALANCE SHEET
August 31, 1996
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 4,610
Accrued Interest 19
----------
Total current assets 4,629
----------
TOTAL ASSETS $ 4,629
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 49
Accounts payable - related party 465
----------
Total current liabilities 514
STOCKHOLDERS' EQUITY
Common stock, $0.00001 par value;
300,000,000 shares authorized;
29,977,800 shares issued and
outstanding at August 31, 1996. 300
Preferred stock, $0.00001 par value;
20,000,000 shares authorized; no shares
issued and outstanding -
Additional paid-in capital 44,096
Deficit accumulated during the
development stage (40,281)
----------
Total stockholders' equity 4,115
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,629
==========
The accompanying notes are an integral part
of the financial statements
F-2
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Fi-Tek V, Inc.
(A Development Stage Company)
STATEMENTS OF LOSS AND ACCUMULATED DEFICIT
Period
August 3, 1989
(Inception) For the year
to June 30, ended June 30,
1996 1996 1995
------------- ---------- ----------
REVENUES
Investment income $ 13,033 $ 208 $ 3,848
---------- -------- --------
EXPENSES
General & administrative 52,568 9,495 14,987
Amortization 746 - 41
---------- -------- --------
Total expenses 53,314 9,495 15,028
---------- -------- --------
NET LOSS (40,281) (9,287) (11,180)
Accumulated deficit
Balance, beginning of period - (30,994) (19,814)
---------- -------- --------
Balance, end of period $ (40,281) $ (40,281) $ (30,994)
========== ======== ========
NET LOSS PER SHARE $ (NIL) $ (NIL) $ (NIL)
========== ======== ========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 24,433,864 29,977,800 29,977,800
========== ========== ==========
The accompanying notes are an integral part
of the financial statements
F-3
<PAGE>
Fi-Tek V, Inc.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period from inception (August 3, 1989) to August 31, 1996
<TABLE>
<S> <C> <C> <C> <C> <C>
Deficit
Common stock accumulated Total
------------------ Additional during the stock-
Number of paid-in developments holders
shares Amount capital stage equity
---------- -------- ----------- ------------ ---------
Common stock issued
for cash, August
18, 1989 at
$0.0001 per share 4,000,000 $ 40 $ 460 $ - $ 500
---------- -------- ----------- ------------ ---------
Balance
August 31, 1989 4,000,000 40 460 - 500
Common stock issued
for cash:
July 13, 1990 at
$0.003 per share 1,000,000 $ 10 $ 2,990 $ - $ 3,000
July 20, 1990 at
$0.0003 per share 4,000,000 $ 40 $ 1,260 $ - $ 1,300
July 23, 1990 at
$0.0003 per share 4,500,000 $ 45 $ 1,390 $ - $ 1,435
July 24, 1990 at
$0.003 per share 115,000 $ 1 $ 344 $ - $ 345
July 26 1990 at
$0.003 per share 400,000 $ 4 $ 1,196 $ - $ 1,200
July 30, 1990 at
$0.003 per share 1,000,000 $ 10 $ 2,990 $ - $ 3,000
August 2, 1990 at
$0.003 per share 985,000 $ 10 $ 2,945 $ - $ 2,955
August 7, 1990 at
$0.0003 per share 1,000,000 $ 10 $ 255 $ - $ 265
August 17, 1990 at
$0.001 per share 4,000,000 $ 40 $ 3,960 $ - $ 4,000
---------- -------- ----------- ------------ ---------
21,000,000 210 17,790 - 18,000
Net loss for the
year ended
August 31, 1990 - - - (303) (303)
---------- ------- ---------- ----------- --------
Balances,
August 31, 1990 21,000,000 210 17,790 (303) 17,697
Net loss for the
year ended
August 31, 1991 - - - (3,025) (3,025)
---------- ------- ---------- ----------- --------
Balances,
August 31, 1991 21,000,000 210 17,790 (3,328) 14,672
Common stock issued
on closing of public
offering, January
24, 1992 at
$0.02 per share 8,632,500 $ 87 $ 172,564 $ - $ 172,651
</TABLE>
(Continued on page F-5)
The accompanying notes are an integral part
of the financial statements
F-4
<PAGE>
Fi-Tek V, Inc.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period from inception (August 3, 1989) to August 31, 1996
<TABLE>
<S> <C> <C> <C> <C> <C>
Deficit
Common stock accumulated Total
------------------ Additional during the stock-
Number of paid-in developments holders
shares Amount capital stage equity
---------- -------- ----------- ------------ ---------
Common stock issued
on closing of public
offering, January
24, 1992 at
$0.0001 per share 345,300 $ 3 $ 31 $ - $ 34
Deferred offering costs - - (44,114) - (44,114)
Net loss for the
year ended
August 31, 1992 - - - (8,539) (8,539)
---------- ------- ---------- ----------- --------
Balances,
August 31, 1992 29,977,800 300 146,271 (11,867) 134,704
Net loss for the
year ended
August 31, 1993 - - - (4,801) (4,801)
---------- ------- ---------- ----------- --------
Balances,
August 31, 1993 29,977,800 300 146,271 (16,668) 129,903
Net loss for the
year ended
August 31, 1994 - - - (3,146) (3,146)
---------- ------- ---------- ----------- --------
Balances,
August 31, 1994 29,977,800 300 146,271 (19,814) 126,757
Refund of investors'
monies held
in escrow - - (102,175) - (102,175)
Net loss for the
year ended
August 31, 1995 - - - (8,416) (8,416)
---------- ------- ---------- ----------- --------
Balances,
August 31, 1995 29,977,800 300 44,096 (28,230) 16,166
Net loss for the
year ended
August 31, 1996 - - - (9,287) (9,287)
---------- ------- ---------- ----------- --------
Balances,
August 31, 1996 29,977,800 $ 300 $ 44,096 $ (37,517) $ 6,879
========== ======= ========== =========== ========
</TABLE>
The accompanying notes are an integral part
of the financial statements
F-5
<PAGE>
Fi-Tek V, Inc.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Period
August 3, 1989
(Inception) For the year
to August 31, ended August 31,
1996 1996 1995
------------- ---------- ----------
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $ (40,281) $ (9,287) $ (11,180)
Adjustments to reconcile
net loss to net cash used
in operating activities:
Amortization 745 - 41
Decrease (increase) in
accrued interest (19) (6) 49
Increase (decrease) in
accounts payable 49 (389) (467)
Increase (decrease) in
accounts payable -
related party 465 (35) 66
---------- -------- --------
Net cash used by
operating activities (39,041) (9,717) (11,491)
CASH FLOWS FROM
INVESTING ACTIVITIES
Increase in organization costs (745) - -
---------- -------- --------
Net cash used by
investing activities (745) - -
CASH FLOWS FROM
FINANCING ACTIVITIES
Issuance of common stock 190,685 - -
Deferred offering costs paid (44,114) - -
Statutory escrow contribution (102,175) - -
---------- -------- --------
Net cash provided by
financing activities 44,396 - -
---------- -------- --------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 4,610 (9,717) (11,491)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD - 14,327 25,818
---------- -------- --------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 4,610 $ 4,610 $ 14,327
========== ======== ========
The accompanying notes are an integral part
of the financial statements
F-6
<PAGE>
Fi-Tek V, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 1996
1. Summary of Significant Accounting Policies
------------------------------------------
Development Stage Company
Fi-Tek V, Inc. (the "Company") was incorporated under the laws of the
State of Delaware on August 3, 1989. Its office is located at the office
of its President at 3127 Ramshorn Drive, Castle Rock, Colorado 80104.
The Company is a new enterprise in the development stage as defined by
Statement No. 7 of the Financial Accounting Standards Board and has not
engaged in any business other than organizational efforts, raising
capital, and investigating business opportunities. It has no full-time
employees and owns no real property. The Company intends to seek out and
take advantage of business opportunities that may have potential for
profit and, to that end, intends to acquire properties or businesses, or
a controlling interest therein. Management of the Company will have
virtually unlimited discretion in determining the business activities in
which the Company might engage.
The Company currently does not own any properties or an interest in any
business. Moreover, it has not identified any properties or business
opportunities that it shall seek to acquire, has no understanding or
arrangement to acquire any properties or business interests, and has not
identified any specific geographical area, industry, or type of business
in which it intends to operate.
Accounting Method
The Company records income and expense on the accrual method.
Fiscal Year
The Company has selected a August 31 fiscal year end.
Organization Costs
Organization costs are amortized over a 60-month period using the
straight-line method.
Deferred Offering Costs
Costs associated with the public offering have been charged to the
proceeds of the offering.
Loss Per Share
Loss per share was computed using the weighted average number of shares
outstanding during the period. Shares issued to insiders in anticipation
of a public offering have been accounted for as outstanding since
inception.
Statement of Cash Flows
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with an original maturity date
of three months or less to be cash equivalents.
Use of Estimates
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires the Company's
management to make estimates and assumptions that effect the amounts
reported in these financial statements and accompanying notes. Actual
results could differ from those estimates.
F-7
<PAGE>
Fi-Tek V, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 1996
2. Stockholders' Equity
--------------------
Issuance of Common Stock
The Company's Certificate of Incorporation authorizes the issuance of
300,000,000 shares of common stock with a par value of $0.00001 per share.
Each record holder of common stock is entitled to one vote for each share held
on all matters properly submitted to the stockholder for their vote.
Cumulative voting for the election of directors is not permitted by the
Certificate of Incorporation.
Preferred Stock
The Company's Certificate of Incorporation authorizes issuance of 20,000,000
shares of preferred stock with a par value of $0.00001 per share. The Board
of Directors of the Company is authorized to issue preferred stock from time
to time in series and is further authorized to establish such series, to fix
and determine the variations in the relative rights and preferences as
between the series, and to allow for the conversion of preferred stock into
common stock. No preferred stock has been issued by the Company.
Public Offering
On January 24, 1992, the Company completed its initial public offering
after selling 8,632,500 units. Each unit consists of one share of common
stock, one Class A warrant, and one Class B warrant. Each Class A
warrant and each Class B warrant will be exercisable for one share of
common stock at a price of $0.12 per share and $0.20 per share,
respectively, any time through July 10, 1997 and may be transferred
separately from the common stock. The Company may redeem the warrants at
a price of $0.0001 per warrant upon 30 days' written notice, reduce the
exercise price, or indefinitely extend the exercise period of the
warrants. At August 31, 1996, no warrants have been exercised.
The Company received net proceeds from the offering of $128,571 after
deducting offering costs of $44,114.
Included in the proceeds the Company received from the offering is $34
from the underwriter for 345,300 shares of the Company's common stock at
$0.0001 per share.
3. Restricted Cash
---------------
The Colorado Securities Act, effective July 1, 1990, provides that where less
than 75 percent of the net proceeds from the sale of securities are committed
for the use in one or more specific lines of business, 80 percent of the net
proceeds received by the issuer shall be placed in escrow until (i) an amount
equal to at least 50 percent of the gross proceeds of the offering is
committed for use in one or more specific lines of business, and (ii) notice
of the proposed release has of the escrowed funds has been on file with the
Colorado Division of Securities for at least nine days. In compliance, the
Company has escrowed $102,175 of investor monies.
Under Colorado law, the escrowed funds are to be distributed upon the second
anniversary of the date of the public offering, unless the escrow is extended
by a vote of the public shareholders. The escrow may not, in any case be
extended beyond the fourth anniversary of the date of the offering.
Accordingly, effective July 28, 1995, the fourth anniversary of the date of
the Company's prospectus, the Company refunded $102,175 to those holders of
record of the securities sold pursuant to the offering on a pro rata basis
based on the number of shares held as of July 10, 1995.
F-8
<PAGE>
- -8
<PAGE>
4. Related Party Transactions
--------------------------
The Company maintains its offices at the home of its President for which it
pays no rent, and for which it does not anticipate paying rent in the future.
The Company paid Pred & Miller, its former securities counsel $3,782 for
expenses and services rendered through August 31, 1991 in connection with he
public offering of the Company's common stock. During July 1991, the law
firm of Pred and Miller was dissolved and the Company retained the law firm
of Heather Zane Anderson, P.C. for which the Company incurred $1,909 and
$405 for legal services provided during the fiscal years 1996 and 1995,
respectively. Heather Zane Anderson is a shareholder of the Company.
In the event the Company successfully completes the acquisition of a
business opportunity, the Board of Directors may award a finder's fee to an
officer or affiliate of the Company, or to a third party, if the acquisition
is originated due to his or her efforts. The cash portion of this fee, in
the aggregate, if paid to officers of affiliates, will not exceed 10% of the
gross proceeds of the offering, and may be less.
Effective January 1, 1994, the Company has agreed to pay its
secretary/treasurer $25 per month for bookkeeping services. During the
years ended August 31, 1996 and 1995, the Company incurred expenses for this
purpose of $300 and $300, respectively.
As of August 31, 1996, the Company's officers and directors own and control
12,975,000 shares of the Company's common stock, representing approximately
43% of the Company's issued and outstanding common stock.
5. Income Taxes
------------
The Company has Federal net operating loss carryforwards of approximately
$40,000 expiring between 2008 and 2012. The tax benefit of these net
operating losses, which totals approximately $6,000, has been offset by a
full allowance for realization. This carryforward may be limited upon
the consummation of a business combination under IRC Section 381. For
the year ended August 31, 1996 the valuation allowance increased
by $1,875.
F-9
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AND STATEMENTS OF LOSS AND ACCUMULATED DEFICIT AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10KSB FOR THE YEAR
ENDED AUGUST 31, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<CASH> 4610
<SECURITIES> 0
<RECEIVABLES> 19
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4629
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 4610
<CURRENT-LIABILITIES> 514
<BONDS> 0
0
0
<COMMON> 300
<OTHER-SE> 3815
<TOTAL-LIABILITY-AND-EQUITY> 4629
<SALES> 0
<TOTAL-REVENUES> 208
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9495
<LOSS-PROVISION> (9287)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (9287)
<INCOME-TAX> 0
<INCOME-CONTINUING> (9287)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9287)
<EPS-PRIMARY> (0.001)
<EPS-DILUTED> (0.001)
</TABLE>
