UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - KSB
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
Commission file number: 33-38214-D
PURSUIT VENTURE CORPORATION
---------------------------
(Exact name of registrant as specified in its charter)
Delaware 62-1458678
-------- ----------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
1621 Altivo Way, Los Angeles, California 90026
----------------------------------------------
(Address of principal executive offices)
(818) 980-0929
--------------
(Issuer's telephone number, including area code)
Securities registered under Section 12(g) of the Exchange Act
None
--------------------------------------------------
Title of each class
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past twelve 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
Transitional Small Business Disclosure Format (Check one): Yes No X
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or or any amendment to
this Form 10-KSB. _____
State the issuers revenues for its most recent fiscal year. None
State the aggregate market value of the voting stock held by
nonaffiliates of the registrant.
There is no market for the registrant's voting stock
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: Date: December 31, 1997
Common Stock, par value $0.001 per share. Shares outstanding 500,000
<PAGE>
PURSUIT VENTURE CORPORATION
FORM 10-KSB
DECEMBER 31, 1997
INDEX
Part 1 Page
Item 1 Description of Business 3
Item 2 Description of Property 8
Item 3 Legal Proceedings 8
Item 4 Submission of Matters to a Vote of Security Holders 8
Part II
Item 5 Market for Common Equity and Related Stockholder Matters 8
Item 6 Plan of Operation 9
Item 7 Financial Statements 10
Item 8 Changes in and Disagreements with Accountants on Accounting
and Financial Disclosures 19
Part III
Item 9 Directors, Executive Officers, Promoters and Control Persons,
Compliance with Section 16(a) of the Exchange Act 19
Item 10 Executive Compensation 19
Item 11 Security Ownership of Certain Beneficial Owners
and Management 19
Item 12 Certain Relationships and Related Transactions. 20
Part IV
Item 13 Exhibits and Reports on Form 8-K 20
2
<PAGE>
PART I
ITEM 1: DESCRIPTION OF BUSINESS
(a) and (b) Business Development and Business of Issuer
General
Pursuit Venture Corporation (the "Company") is a Delaware corporation
organized on December 7, 1990, for the purpose of identifying and acquiring a
business opportunity which Management believes offers potential long-term
growth. The Company will seek to acquire majority interests in an existing
business or purchase assets which it will use to establish a business.
The Company does not intend to become involved in any business which would
require it to register as a securities broker-dealer under the Securities
Exchange Act of 1934, as an investment advisor under the Investment Advisor's
Act of 1940; or as an investment company under the Investment Company Act of
1940. Except as set forth herein under BUSINESS Forms of Combination,
Management's discretion is otherwise unrestricted and it may participate in any
business which may, in the opinion of Management, meet the business objectives
discussed herein.
Management believes that business opportunities will become available to
the Company due primarily to its status as a publicly-held company, and its
flexibility in structuring and participating in business opportunities. The
Company has no agreement or understanding to acquire or participate in any
business opportunity, nor does it currently have any opportunity under
investigation. Decisions as to which business opportunity to pursue will be made
by Management of the Company, which will in all probability act without the
consent, vote, or approval of the Company's stockholders.
The Company's offices are located at 1621 Altivo Way, Los Angeles,
California 90026. Its telephone number is (818) 980-0929 and telecopier number
is (818) 980-8746.
Business Plan
The Company is a "shell" corporation which proposes to engage in the active
search for a business combination or merger opportunity which, in the opinion of
Management, will enhance stockholder value.
Management believes that business opportunities will become available to
the Company due primarily to its status as a publicly-held company, and its
flexibility in structuring and participating in business opportunities. The
proposed corporate structure of the Company has not been the subject of a
feasibility study or market research nor is Management aware of statistical data
which would support the perceived benefits of a merger or acquisition
transaction for target company stockholders. Therefore, there can be no
assurance that a market exists for such a corporate vehicle. At present, there
are no plans, agreements, understandings, or commitments to acquire or
participate in any business opportunity nor has the Company solicited, received
or considered any proposals regarding a possible combination or merger. Further,
there can be no assurance that the Company will be successful in locating a
suitable entity for a merger or that the Company will be able to consummate a
combination.
3
<PAGE>
Forms of Combination
The manner in which the Company participates in a business opportunity is
predicated on the nature of the opportunity, the respective needs and desires of
the Company and the promoters of the combination, and the relative negotiating
strength of the Company and such promoters. It is likely that a combination will
take the form of a merger, consolidation, asset acquisition or some other form
of combination. The otargeto entities may include private companies,
partnerships, or sole proprietorships.
In transacting a combination, a significant amount of additional shares of
the Company's Common Stock may be issued. The Company is authorized to issue
5,000,000 shares of Common Stock of which 2,000,000 shares are issued and
outstanding. In the event that a substantial number of shares are issued
pursuant to a transaction, present Management and current stockholders may not
have control of a majority of the voting shares of the Company. Further, as part
of such a transaction, all or a majority of the Company's Management may be
requested to relinquish their positions and new directors and officers may be
appointed without a vote by stockholders. Moreover, no assurance can be given as
to the experience or qualifications of such persons either in the operation of
the activities of the Company or in the operation of the business, asset or
property being combined.
The Company does not propose to restrict its search for combination
opportunities to any particular industry, and may, therefore, engage in
essentially any business. Management contemplates that the Company will seek to
merge with or acquire a target company with either assets or earnings, or both.
The Company has not established a specific level of earnings or assets below
which it would not consider a merger or acquisition with a target company.
The Company intends to obtain, if possible, audited financial statements
for the entity which it acquires. It is expected that audited financials will
help Management to understand the financial position of the company it acquires
and will also help the Company in complying with the financial reporting
requirements of the Securities Exchange Act of 1934, if the acquisition would
fall within the ambit of such law.
It is anticipated that business opportunities will become available to the
Company from various sources, including its Officers and Directors, professional
advisors such as attorneys and accountants, securities broker-dealers, venture
capitalists, members of the financial community, and others who may present
unsolicited proposals. The Company has no plans, understandings, agreements, or
commitments with any individuals other than its Officers and Directors to act as
finders of opportunities for the Company.
Plan of Acquisition
The Officers and Directors of the Company will undertake the analysis of
business opportunities. Management will have unrestricted flexibility in
seeking, analyzing and participating in business opportunities. In its efforts,
Management intends to follow a systematic approach to identify its most suitable
acquisition candidates.
Management intends to concentrate on identifying any number of preliminary
prospects which may be brought to its attention through present associations or
unsolicited. Management will then apply certain broad criteria to the
preliminary prospects. Essentially, this will entail a determination by
Management whether or not the prospects are in an industry which appears
promising and whether or not the prospects themselves have potential within
their own industries.
4
<PAGE>
During this initial screening process, Management will ask and receive
answers to questions framed to provide appropriate threshold information,
depending upon the nature of the prospect's business. Such evaluation is not
expected to be an in-depth analysis of the target company's operations, although
it will encompass a look at most, if not all, of the same areas to be examined
once if and when a target company is selected for an in-depth review. For
example, at this stage, Management may look at a prospect's unaudited balance
sheet. However, when a prospect is selected for an in-depth review, Management
will review the prospect's audited financial statements. Nevertheless,
Management anticipates this evaluation will entail a broad overview of the
business of the target company and should allow a significant percentage of
preliminary prospects to be eliminated from further consideration.
Management will conduct an in depth analysis of five major areas of concern
with respect to the target company as follows:
1. Managerial and Financial Stability. Management will review audited
financial statements of the target company and will also research the background
of each director and member of management of the target company in order to
discern whether the stability of the target company is such that further
negotiations are warranted.
2. Industry Status. Management will research the potential of the target
company's industry. The concern here is whether the industry is in a growth,
stagnant or declining stage.
3. Production of Product. If the target company is a manufacturer,
Management will review whether it has the necessary resources or access to the
necessary resources and supplies to produce a quality product in a timely
manner.
4. Acceptance and Potential of Product. Management will review the
acceptance of the target company's product in the market place. Management will
also determine whether or not there is potential for the product to be workable
and to fulfill its intended purpose.
5. Development of Target Company. Management will review the target
company's state of development (examples: start-up stage, established company,
etc.).
The foregoing is an outline of the areas of concern which most often arise
and merit careful scrutiny by Management. Because of the possible varieties of
target companies which may come to the attention of Management, additional
factors will most likely be considered in any given analysis. Also, the
procedures used in such a review are expected to vary depending upon the target
company being analyzed. Management may select a target company for further
negotiations even though the target may not receive a favorable evaluation in
one or more of the five primary areas of concern.
Management expects to enter into further negotiations with various target
company managements following successful conclusion of the initial financial and
evaluation studies. Negotiations with target company management will be expected
to focus on the percentage of the Company which target company stockholders
would acquire in exchange for their shareholdings in the target company.
Depending upon, among other things, the target company's assets and liabilities.
The Company's stockholders will, in all likelihood, hold a lesser
percentage ownership interest in the Company following any merger or
acquisition. The percentage ownership may be subject to significant reduction in
the event the Company acquires a target company with substantial assets. Any
merger or acquisition effected by the Company can be expected to have a
significant dilutive effect on the percentage of shares held by the Company's
stockholders.
5
<PAGE>
Management does not intend to force an active participation in the affairs
of the acquired company. However, Management will evaluate any opportunity
offered for such participation if such participation was a necessary ingredient
of a merger. It is not the intention of Management to seek such participation.
Management will in all likelihood be requested to relinquish any voting control
it may exercise prior to a merger to the present management of the business
which is acquired.
Current Management would clearly not control the surviving company
following such a dilution and will not be in a position to demand an active
participation and therefore would not participate unless invited to do so.
The final stage of any merger or acquisition to be effected by the Company
will require the Company to retain the services of counsel and a qualified
accounting firm in order to properly effect the merger or acquisition. The
Company may be expected to incur significant legal fees and accounting costs
during the final stages of a merger or acquisition. Management intends to retain
legal and accounting services only on an as-needed basis in the latter stages of
a proposed merger or acquisition.
The interests of Management is to increase stockholder value. If successful
all the stockholders, including Management, will benefit. Management's objective
is to issue restricted shares of the Company to acquire a private company which
is a going concern. If Management is requested to sell a portion of its shares,
give away a portion of its shares or cancel a portion of its shares to obtain
such a merger, then Management will face a conflict of interest. Presently,
Management has no plan on how to deal with this conflict and believes no general
plan can be formulated at this time; this may adversely affect the Company's
ability to successfully conclude a subsequent merger or acquisition. Conflict
resolutions will otherwise be handled on a case-by-case basis. If the conflict
cannot be resolved, litigation could therefore occur, which would likely damage
the Company's prospects.
There are no corporate policies, board resolutions or bylaws which deal
with conflicts of interest with respect to the sale of shares of the company's
shares by Management and none are anticipated to be placed into effect.
Management cannot commit at this time as to whether a stockholder will have
the right to vote to complete a merger/acquisition as the nature of the
transaction, and the needs of the candidate will dictate the legal requirements
of the transaction.
In connection with the acquisition of a private business, the Company may
not obtain an independent appraisal of the value of the acquired business. Such
omission by the Company could result in overvaluation or other related errors
which then could adversely effect the price paid by the Company for the private
business. It is probable that an existing stockholder's future share values
would be adversely effected by factors including but not limited to excess
dilution, reduced dividends, if any, and a lack of market for shares.
Should a stockholder wish to challenge the Company in Court to reverse a
merger or otherwise assert damages against the Company's Management for neglect
of fiduciary duties in the construction of a merger or acquisition, the legal
remedy available to that stockholder under state corporate law will most likely
be prohibitively expensive and time consuming.
The Company has in effect no bylaws understandings, agreements or
resolutions which prevent related party transactions. Such bylaws or resolutions
could be changed by Management initiative. No such changes are presently being
considered.
6
<PAGE>
There are no present plans, proposals, or arrangements to sell or issue
additional shares of the Company prior to an acquisition or a merger.
Competition
- -----------
The Company will remain an insignificant participant among the firms which
engage in mergers with and acquisitions of privately-held entities. There are
many established venture capital and financial concerns which have significantly
greater financial and personnel resources and technical expertise than the
Company. In view of the Company's lack of working capital resources and limited
management availability, the Company will continue to be at a significant
competitive disadvantage compared to its competitors.
Regulation and Taxation
- -----------------------
The Company could be subject to regulation under the Investment Company Act
of 1940 in the event the Company obtains and continues to hold a minority
interest in a number of entities. However, Management intends to seek at most
one or two mergers or acquisitions and Management's plan of operation is based
on the Company obtaining a controlling interest in any merger or acquisition
target company and, accordingly, the Company may be required to discontinue any
prospective merger or acquisition of any company in which a controlling interest
will not be obtained.
The Company could also be required to register under the Investment Company
Act of 1940 in the event the Company comes within the definition of an
Investment Company contained in that Act due to its assets consisting
principally of shareholdings held in a number of subsidiaries. Management
intends to seek at most one or two mergers or acquisitions, which transactions
will result in the Company holding only majority interest in subsidiaries.
Any securities which the Company acquires in exchange for its Common Stock
will be orestricted securitieso within the meaning of the Securities Act of 1933
(the o1933 Acto). If the Company elected to resell such securities, such sale
could not proceed unless a Registration Statement had been declared effective by
the Securities and Exchange Commission or an exemption from registration was
available. Section 4(2) of the 1933 Act, which exempts sales of securities not
involving a public offering, would in all likelihood be available since it is
likely that any such sale would be a block sale to a private investor to raise
additional capital. Although Management's plan of operation does not contemplate
resale of securities acquired, in the event such a sale were necessary, the
Company would be required to comply with the provisions of the 1933 Act.
As a condition to a merger or acquisition, it is possible that the target
company's management may request registration of the Company's Common Stock to
be received by target company stockholders. In such event, the Company could
incur significant registration costs. Management intends to require the target
company to bear most, if not all, of the cost of any such registration.
Alternatively, the Company may issue orestricted securitieso to a prospective
target company, which securities may be subsequently registered for sale or sold
in accordance with Rule 144 of the Securities Act of 1933.
The Company intends to structure a merger or acquisition in such a manner
as to minimize federal and state tax consequences to the Company and any target
company.
In the course of a merger or acquisition the Company may undertake, a
substantial amount of attention will be focused upon federal and state tax
consequences to both the Company and the target company. Presently, under the
provisions of federal and various state tax laws, a qualified reorganization
between business entities will generally result in tax-free treatment to the
parties of the reorganization. This generally requires the company to acquire at
least 80% of the combined voting power of the acquired company plus at least 80%
of the total number of shares of all other classes of stock in exchange for the
voting stock of the acquiring company.
7
<PAGE>
While the Company expects to structure any merger or acquisition in a
manner which will minimize federal and state tax consequences to both the
Company and the target company, there is no assurance that such a business
combination will meet the statutory requirements of a re-organization or that
the parties will obtain the intended tax-free treatment upon a transfer of stock
or assets. A non-qualifying reorganization could result in the imposition of
both federal and state taxes which may have a substantial adverse effect on the
Company. Further, there is no assurance that federal and state tax laws may not
be amended in the foreseeable future to preclude the Company, as well as others,
from availing itself of the tax-free treatment presently afforded business
entities engaged in mergers and acquisitions.
As of the date hereof no arrangements for merger or acquisition have been
made.
Employees
The Company is a development stage operation and currently has no employees
other than its sole director and officer. The need for employees and their
availability will be addressed as circumstances warrant.
Property
The Company utilizes the offices of its sole Officer and Director, Mr.
Patrick C. Brooks. On a month-to-month basis. With effect from July 1, 1998, the
Company pays Mr. Brooks a fee of $500 per month for this usage which includes
the use of telephone, telecopier, computers, office fixtures and fittings, and
secretarial services. Management does not foresee the need for separate offices
until business circumstances dictate otherwise.
ITEM 2: DECSRIPTION OF PROPERTY
None
ITEM 3: LEGAL PROCEEDINGS
None
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5: MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Not applicable - the Company's stock is not traded publicly and no dividends
have been paid.
8
<PAGE>
ITEM 6: PLAN OF OPERATION
During the third quarter of 1998, the Company resumed its efforts to
identify business opportunities consistent with its objectives. However, the
Company's ability to opearte is significantly limited and adversely impacted by
the absence of opereating funds. Against this background, the Company has been
unsuccessful in identifying established and profitable operating companies which
desire a public listing through a 'reverse-mergero.
Additionally, within its sphere of opeartions, the Company competes with a
variety of sources such as investment bankers and venture capitalists which are
capitlized and possess significantly greater management resources. Therefore the
Company's ability to achieve its stated objectives at the current time are, at
best, tenuous. However, Management continues to use all available resources in
its endeavours to successfully complete a business combination.
ITEM 7: FINANCIAL STATEMENTS
See Audited Financial Statements as follows.
THIS SPACE LEFT BLANK INTENTIONALLY
9
<PAGE>
HENRY SCHIFFER, C.P.A.
A PROFESSIONAL CORPORATION
315 S. Beverly Drive, Suite 302
Beverly Hills, California 90212
Tel. (310) 286 6830 Fax. (310) 286 6840
INDEPENDENT AUDITOR'S REPORT
To The Board of Directors and Stockholders
Pursuit Venture Corporation
I have audited the accompanying balance sheets of Pursuit Venture Corporation at
December 31, 1997 and 1996 and the related statements of income, stockholders'
equity and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. My responsibility is to express
an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I 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.
I believe my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material aspects, the financial position of Pursuit Venture Corporation at
December 31, 1997 and 1996 and the results of its operations, stockholders'
equity and cash flows for the years then ended, in conformity with generally
accepted accounting principles.
/s/ Henry Schiffer
- -----------------------------
Henry Schiffer
Certified Public Accountant
July 16, 1998
10
<PAGE>
PURSUIT VENTURE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
ASSETS
Current Assets: 1997 1996
- --------------- ---- ----
Cash and equivalents 0 0
------- -------
Total Assets 0 0
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
- --------------------
Accounts payable and accrued expenses 20,000 13,000
Stockholders' Equity:
- ---------------------
Preferred stock - 1,000,000 shares
authorized; issued and outstanding
none @ $0.01 par value -- --
Common stock - 5,000,000 shares authorized;
issued and outstanding 500,000 shares at
December 31, 1997 and 270,000 shares at 1996
@ $.001 par value (Notes 1 and 2) 500 270
Paid in capital (Note 2) 34,730 34,730
Deficit accumulated during the
development stage (55,230) (48,000)
------- -------
Total Stockholders'Equity (Deficit) (20,000) (13,000)
------- -------
Total Liabilities and Stockholders'Equity 0 0
======= =======
11
<PAGE>
PURSUIT VENTURE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 AND
FOR THE PERIOD FROM INCEPTION (DECEMBER 7, 1990) TO DECEMBER 31, 1997
Year Ended Period from Inception
---------------- (December 7, 1990) to
1997 1996 December 31, 1997
---- ---- -----------------
Revenue: 0 0 0
Operating Expenses:
Expenses incurred in connection
with securities registration 0 0 12,087
Officer and director fees 230 0 230
Amortization of organization costs 0 0 5,000
Professional fees 0 0 5,028
Travel expenses 0 0 1,324
Transfer agent fees 0 0 1,449
Accounting fees 7,000 3,500 20,000
Other expenses 0 0 10,112
Total operating expenses 7,230 3,500 55,230
Net (loss) (7,230) (3,500) (55,230)
-------- -------- --------
Weighted number of shares outstanding 327,500 270,000 327,500
======== ======== ========
Net (loss) per share (.02) (.01) (.17)
======== ======== ========
12
<PAGE>
<TABLE>
<CAPTION>
PURSUIT VENTURE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM INCEPTION (DECEMBER 7, 1990) TO DECEMBER 31, 1997
Deficit
Accumulated
Common Shares During Total
----------------- Paid In Development Stockholders'
Shares Amount Capital Stage Equity
------ ------ ------- ----- ------
<S> <C> <C> <C> <C> <C>
December 7, 1990
Issuance of 270,000 units
(consisting of one share of common
stock and one warrant) for
$0.0185185 cash per unit 270,000 270 4,730 0 5,000
Net loss 0 0 0 (12,368) (12,368)
------- ------- ------- ------- ------
Balance, December 31, 1990 270,000 270 4,730 (12,368) (7,368)
Net loss, year ended
December 31, 1991 0 0 0 (5,877) (5,877)
------- ------- ------- ------- -------
Balance, December 31, 1991 270,000 270 4,730 (18,245) (13,245)
Net loss, year ended
December 31, 1992 0 0 0 (9,391) (9,391)
------- ------- ------- ------- -------
Balance, December 31, 1992 270,000 270 4,730 (27,636) (22,636)
Paid in Capital (note 2)` 0 0 30,000 0 30,000
Net loss, year ended
December 31, 1993 0 0 0 (5,846) (5,846)
------- ------- ------- ------- -------
Balance, December 31, 1993 270,000 270 34,730 (33,482) 1,518
Net loss, year ended
December 31, 1994 0 0 0 (6,600) (6,600)
------- ------- ------- ------- -------
Balance, December 31, 1994 270,000 270 34,730 (40,082) (5,082)
13
<PAGE>
PURSUIT VENTURE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT) (Continued)
FOR THE PERIOD FROM INCEPTION (DECEMBER 7, 1990) TO DECEMBER 31, 1997
Deficit
Accumulated
Common Shares During Total
----------------- Paid In Development Stockholders'
Shares Amount Capital Stage Equity
------ ------ ------- ----- ------
Balance, December 31, 1994 270,000 270 34,730 (40,082) (5,082)
Net loss, year ended
December 31, 1995 0 0 0 (4,418) (4,418)
------- ------- ------- ------- -------
Balance, December 31, 1995 270,000 270 34,730 (44,500) (9,500)
Net loss, year ended
December 31, 1996 0 0 0 (3,500) (3,500)
------- ------- ------- ------- -------
Balance, December 31, 1996 270,000 270 34,730 (48,000) (13,000)
Stock issued for officer
and director fees 230,000 230 0 0 230
Net loss, year ended
December 31, 1997 0 0 0 (7,230) (7,230)
------- ------- ------- ------- -------
Balance, December 31, 1997 500,000 500 34,730 (55,230) (20,000)
======= ======= ======= ====== ======
14
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PURSUIT VENTURE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 AND
FOR THE PERIOD FROM INCEPTION (DECEMBER 7, 1990) TO DECEMBER 31, 1997
Year Ended Period from Inception
---------------- (December 7, 1990) to
1997 1996 December 31, 1997
---- ---- -----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net (loss) (7,230) (3,500) (55,230)
Adjustments to reconcile net (loss) to net
cash (used) by operating activities
Amortization of organization expenses 0 0 5,000
Increase (decrease) in accounts payable
and accrued expenses 7,000 3,500 20,000
NET CASH (USED) BY
OPERATING ACTIVITIES (230) (0) (30,230)
CASH FLOWS FROM INVESTING ACTIVITIES
Organization costs 0 0 (5,000)
CASH PROVIDED FROM
INVESTING ACTIVITIES 0 0 (5,000)
CASH FLOWS FROM
FINANCING ACTIVITIES
Issuance of common stock 0 0 5,000
Common stock issued for services 230 0 230
Paid in capital from shareholders (Note 2) 0 0 30,000
Borrowings of long-term debt,
related party (Note 2) 0 0 0
NET CASH PROVIDED FROM
FINANCING ACTIVITIES 230 0 35,230
NET INCREASE (DECREASE) IN CASH 0 0 0
CASH BALANCE, BEGINNING OF PERIOD 0 0 0
CASH BALANCE, END OF PERIOD 0 0 0
======= ======= =======
15
</TABLE>
<PAGE>
PURSUIT VENTURE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
Note 1 Summary of Significant Accounting Policies
This summary of significant accounting policies of Pursuit Venture
Corporation is presented to assist in understanding the Company's
financial statements. The financial statements and notes are
representations of the Company's management, which is responsible for
their integrity and objectivity. These accounting policies conform to
generally accepted accounting principles and have been consistently
applied in the preparation of the financial statements.
(a) Organization and Business Activities:
The Company was incorporated on December 7, 1990 under the laws
of the State of Delaware.
The Company's principal purpose is to seek out business
opportunities, including acquisitions, that the Board of
Directors, in its discretion, believes to be a potential for long
term growth.
Upon incorporation, the Company issued 270,000 shares of its
common stock and 270,000 warrants to Fountain Colony Holding
Corporation (formerly known as Argyle Funding, Incorporated)
hereinafter oFountaino as its sole stockholder. Upon issuance of
the shares, Fountain contributed $5,000 to the capital of the
Company and advanced funds of $30,000 to the Company (see note
2). Fountain created the Company for the express purpose of
distributing its ounitso to the shareholders of Fountain in order
to create a publicly-owned company to acquire a privately-held
business which, in the opinion of management, has the potential
for growth and profit. Each ounito consists of one share of
common stock, $0.001 par value, and one warrant to purchase an
additional share of common stock of the Company at an exercise
price of $10 per share. During 1992, Fountain distributed 257,844
ounitso (and cash of $1,216 in lieu of units in certain
instances) to the stockholders of Fountain based on their
respective pro-rata ownership of Fountain. The warrants were
never exercised and expired November 30, 1992.
The Company is currently in the development stage. The Company
has not as yet commenced any operations or identified any
potential acquisition opportunities. There is no assurance that
the Company will be able to acquire a satisfactory business on
terms favorable to the Company or profitably operate any business
so acquired.
(b) Organization costs:
Organization costs consist of accounting and legal fees and are
being amortized over a 60-month period.
(c) Fiscal Year:
The Company operates on a calendar year basis.
16
<PAGE>
PURSUIT VENTURE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
Note 1 Summary of Significant Accounting Policies (continued)
(d) Basis of Operation:
The Company prepares its financial statements and federal income
taxes on the accrual basis of accounting.
Note 2 Note due to Related Party
The Company had an unsecured note payable to Fountain in the amount of
$30,000. The note accrued interest at 10% per annum. In 1993 the
shareholders of Fountain elected to cancel the note and all accrued
interest and provide the funds to the Company as additional paid-in
capital. The Company reversed all accrued interest payable to Fountain
as an offset to expenses in 1993.
Note 3 Capital Structure
The Company's Articles of Incorporation authorized two classes of
stock; preferred and common. Preferred stock authorized; 1,000,000
shares at a par value of $.01. There are no issued and outstanding
preferred shares. The terms, conditions, preferences and provisions of
the preferred stock have not, as of this date, been established, but
rather will be established by the Company's Board of Directors.
The Company has 5,000,000 shares of common stock authorized at a par
value of $.001. There are 500,000 shares issued and outstanding.
During 1997 the Company issued 230,000 shares of common stock to its
sole officer and director for services provided to the Company his
sole capacity as the Company's board member, President, Chief
Financial Officer and Secretary.
Note 4 Income Taxes
At December 31, 1997, the Company has a federal operating loss
carryforward of $55,230 for financial accounting and federal income
tax purposes. Utilization of the net operating loss in any taxable
year during the carryforward period may be subject to an annual
limitation due to the ownership change limitations imposed by the tax
law.
The net operating losses will expire at various dates commencing in
the year 2005 through 2012.
The deferred tax asset consists of the future benefit of net operating
loss carryforwards. A valuation allowance limits the recognition of
the benefit of deferred tax assets until realization is reasonable
assured by future profitability.
The following is a summary of deferred taxes:
Deferred asset $ 8,000
Valuation allowance (8,000)
-------
0
=======
17
<PAGE>
PURSUIT VENTURE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
Note 5 Options & Warrants
The Company has not adopted a stock option plan. There are no warrants
issued or outstanding.
Note 6 Commitments
The Company has been provided minimal office space at no charge.
18
<PAGE>
ITEM 8: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 9: DIRECTORS, EXECUTIVE OFFICERS,PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
MANAGEMENT
The following sets forth information concerning the Directors and Officers
of the Company:
Name Age Positions
---- --- ---------
Patrick C. Brooks 52 Director, President, Chief Financial
Officer and Secretary
The following sets forth certain biographical information pertaining to the
Directors and Officers of the Company:
Patrick C. Brooks
Mr. Brooks was appointed sole officer and director of the Company in August
1997.
Since 1988 Mr. Brooks has served as President of Home Indemnity
Incorporated, a company he founded. Formerly, he served as Chairman and
President of Bio-Dental Technologies Corporation, a publicly-held company traded
on the NASDAQ Stock Exchange. Additionally, he served as joint principal and
owner of Thunderbird Securities Corporation and Meridian Securities, Inc., both
companies being securities-broker dealers licensed by the Securities and
Exchange Commission and the N.A.S.D.
From 1987 to 1990, Mr. Brooks was the promoter and sponsor of three
publicly-held Business Investment Companies. In the fifteen years prior to 1987
he served in the casualty insurance industry in successively advancing
underwriting positions with major European and American insurance companies.
ITEM 10: EXECUTIVE COMPENSATION
The Company issued 230,000 shares of its Common Stock to Mr. Brooks in lieu
of cash compensation for the services he provided to the Company as of December
17, 1997. Mr. Brooks serves as sole Director, President, Chief Financial Officer
and Secretary of the Company. Future compensation to the Directors and or
Offices will be decided by the Board of Directors. Such transactions will not be
conducted at arm's length.
ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding ownership of the
Company's Common Stock by each person known by the Company to be the beneficial
owner of more than 10% of the outstanding Common Stock, by each director and by
each executive officer of the Company. All shares are held beneficially and of
record, and each recorded stockholder has sole voting, investment and
dispositive power.
19
<PAGE>
Shares
Beneficially Percentage of
Name Owned Shares Owned
- ---- ----- ------------
Patrick C. Brooks (1) 230,000 11.5
Directors and Officers as a Group 230,000 11.5
- ----------
(1) Director and/or Officer of the Company
ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 17, 1997, the Company issued 230,000 shares of its Common
Stock, par value $.001, to its sole director and officer as compensation in lieu
of a salary for the performance of his duties as a director and an officer of
the Company. This transaction was not conducted in arm's length transaction.
PART IV
ITEM 13: EXHIBITS AND REPORTS ON FORM 8-K
Report on Form 8-K dated December 17, 1997
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereto
duly authorized.
PURSUIT VENTURE CORPORATION
/s/ Patrick C. Brooks
---------------------------------
Patrick C. Brooks
Director, President and Secretary
Date: July 16, 1998
21
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S 10-K, DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> DEC-31-1997 DEC-31-1996
<CASH> 0 0
<SECURITIES> 0 0
<RECEIVABLES> 0 0
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<PP&E> 0 0
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0 0
0 0
<COMMON> 35,230 35,000
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<NET-INCOME> (7,230) (3,500)
<EPS-PRIMARY> (.02) (.01)
<EPS-DILUTED> (.02) (.01)
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