UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
FORM 1O-KSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) Of THE SECURITIES
EXCHANGE Act OF 1934 (No Fee Required)
For the transition period from ______ to _____
Commission file number: 0-19505
NATIONAL ADVERTISING GROUP INC.
(Name of small business issuer in its charter)
Florida 65-0274107
State or other Jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
P.O. Box 403624, Miami Beach, Florida 33140
(Address of principal executive offices)
Issuer's telephone number: (305) 535-9700
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
NONE NONE
Securities registered pursuant to section 12(g) of the Act:
Common Stock $.001 par value
(Title of Class)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or is (d) of the Securities Exchange Act of1934 during the past
12 months (or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing requirements
for the 90 days. Yes [X] No [ ]
Check if there is no 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 of
information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB. [ ]
The Issuer's revenues for its most recent fiscal year were $0.
The aggregate market value of the voting stock held by non-affiliates was
approximately $0 as of June 3, 1998, based on the closing sale price of
$Nil (not traded as of June 3, 1998).
The number of shares of common stock outstanding as of June 3, 1998, was
10,000,000.
National Advertising Group, Inc.
Form 10-KSB
TABLE OF CONTENTS
PART I Page
ITEM 1. Description of Business 1
ITEM 2. Description of Property 1
ITEM 3. Legal Proceedings 2
ITEM 4. Submission of Matters to a Vote of
Security Holders 2
PART II
ITEM 5. Market for Common Equity
And related Stockholder Matters 2
ITEM 6. Management's Discussion and Analysis
Or Plan of Operation 2
ITEM 7. Financial Statements 2
ITEM 8. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure 3
PART III
ITEM 9. Directors, Executive Officers, Promoters
And Control Persons; Compliance with
Section 16 (a) of the Exchange Act 3
ITEM 10. Executive Compensation 4
ITEM 11. Security Ownership of Certain
Beneficial Owners and Management 5
ITEM 12. Certain Relationships and Related
Transactions 6
ITEM 13. Exhibits and Reports on Form 8-K 7
PART I
ITEM 1. DESCRIPTION OF BUSINESS
General
National Advertising Group, Inc. (the Company), a Florida corporation,
which was formed in July 1991, primarily to engage in the telemarketing
and sale of business or consumer products. As of the date of this report,
the Company has not commenced active business operations. The Company
intends to commence active operations during the next fiscal year, but
there can be no assurance that it will be able to commence such active
operations. The commencement of active Company business operations is
contingent upon the closing on one or more acquisitions which the Company
anticipates considering during the upcoming fiscal year. As of the date of
this report, no definitive agreements have been reached with any business
entity and no target industry has been identified.
Competition
Numerous companies located in South Florida and throughout the United
States will compete vigorously with the Company for target acquisition
candidates. Venture capital companies as well as established corporations
and entities, most of which have greater resources than the Company will
vie for such acquisition candidates.
Personnel
As of June 3, 1998, the Company had only one employee, its President,
Treasurer and Secretary, and a director of the Company, James Chow. If a
business combination is consummated, the Company anticipates hiring a
staff to accommodate such business.
Regulatory Matters
The Company does not yet know what business it will enter as this is
dependent on which target acquisition the Company determines to purchase;
however all industries have generally become increasingly regulated in
recent years. The Company is likely to be subject to the various States,
Federal and local laws, rules, regulations and acts once it commences
active business operations.
ITEM 2. DESCRIPTION OF PROPERTY
The Company currently occupies space for its headquarters in the office of
James Chow and does so without a lease and with no obligation to pay rent.
It is anticipated that upon the closing of a business combination, the
Company will enter into a lease or purchase property from which it will
operate.
1
ITEM 3. LEGAL PROCEEDINGS
No legal proceedings are pending or known to be threatened against the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
In the final quarter of the year, no matters were submitted to a vote of
security holders.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's shares of common stock were not traded during the fiscal year
ended December 31, 1997. The Company does not anticipate the commencement
of a market for its securities until, and unless, a business combination
is consummated. As such, there is no guarantee that the common stock will
commence trading or that any trading will be active.
On June 3, 1998, the approximate number of record holders of the common
stock of the Company was 95.
To date, the Company has not paid any dividends on its common stock and
does not expect to pay any dividends in the foreseeable future.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Plan of Operations.
As previously disclosed, the Company had no revenues in any fiscal years.
During the upcoming fiscal year, the Company intends to actively pursue a
business combination through either a merger, a reverse merger, or an
acquisition. Since the Company has no assets, the Company will probably
issue additional stock if it is able to consummate a business combination.
Until such time as a business combination is consummated, the Company will
incur only minor expenses, such as its audit fees, and as such it should
be able to meet its cash requirements for the forthcoming fiscal year.
ITEM 7. FINANCIAL STATEMENTS
Reference is made to the financial statements attached hereto, commencing
on page F-1, which are incorporated by reference.
2
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On February 14, 1997, the company changed its independent certified public
accountants to Dohan and Company, CPA's. Dohan and Company, CPA's audited
the Company's 1995, 1996 and 1997 financial statements after that date.
There were no disagreements with the Company's prior accountant.
PART III
ITEM 9. DIRECTORS, AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The following table sets forth certain information with respect to the
Company's Officers, Directors and key employees:
Name Positions with the Company
James Chow Director, President, Treasurer,
and Secretary
Eric J. Rentz Director
James Chow was appointed as the Company's President, Treasurer and
Secretary on May 22, 1997. Mr. Chow was also elected to the Board of
Directors upon the resignation of Angel Lorie, Jr. on June 16, 1997.
Mr. Chow currently serves as the sole director and is the sole shareholder
of Inter-Global Investments, Incorporated ("Inter-Global"). The primary
business of Inter-Global is financial consulting and investing. Mr. Chow
has been a Certified Public Accountant since 1981. Mr. Chow served from
1996 to 1997 as the Regional Financial Controller to Miramar Hotel &
Investment Co. Ltd., Hong Kong ("Miramar Hotel"). From 1993 to 1996, Mr.
Chow served as the financial controller to Nan Hai Hotel, Shenzen, People's
Republic of China, a hotel managed by Miramar Hotel. From 1992 until 1993,
Mr. Chow served as the assistant Vice President for Finance and Control
for Miramar Hotel. From 1987 until 1992, Mr. Chow served as a senior
auditor for the accounting firm of Miller, Kaplan, Arase & Company, Los
Angeles, California.Eric J. Rentz was appointed to the Company's Board of
Directors on May 22, 1997. Dr. Rentz is a Doctor of Osteopathic Medicine.
Dr. Rentz has served as the medical director for Physical Medicine
Services, P.A. in Hallandale, Florida since 1995. Dr. Rentz served as the
Medical Director of Physical Medicine Division in Dania, Florida from 1994
through 1995. From 1993 through 1995, Dr. Rentz conducted private medical
research in cell membrane permeability in North Miami, Florida.
All directors hold office until the next annual meeting of shareholders of
the Company or until their successors are elected and qualified. Officers
hold office until their successors are chosen and qualified, subject to
earlier removal by the Board of Directors. The Company does not have an
executive, nominating, compensation or audit committee.
3
ITEM 10. EXECUTIVE COMPENSATION
The following summary compensation table sets forth the aggregate
compensation paid to Mr. Angel Lorie, Jr., as the Company's former
president, chief executive officer, and only officer and only employee.
Mr. James Chow received no compensation in 1997. No employment agreement
exists with any individuals. There are no stock options or warrants, or
bonds or profit sharing plans, with respect to any individuals employed by
the company.
SUMMARY COMPENSATION TABLE
Name and Salary Other Restricted
Principal Position Year and Bonus Compensation Stock Awards
Angel L. Lorie, Jr.
President and 1995 7,380 0 838,000 (1)
Chief Executive 1996 0 0 0
Officer 1997 9,000 0 9,000,000 (2)
All Executives 1995 7,380 0 838,000 (1)
Officers as a 1996 0 0 0
Group (1 person) 1997 9,000 0 9,000,000 (2)
(1) On March 15, 1995, the Company issued 838,000 (as adjusted for reverse
stock split effective as of April 10, 1997) shares of Common Stock to
Florida Atlantic Group, Inc., which is a company controlled by Mr. Lorie,
in exchange for services rendered to the Company and $1,000 in expenses paid.
(2) On May 22, 1997, the Company issued 9,000,000 shares of Common Stock
to Florida Atlantic Group, Inc. in exchange for services rendered by Mr.
Angel Lorie, Jr. to the Company.
The Company's directors do not receive compensation for acting in this
capacity.
The only executive officer was Mr. Angel Lorie, Jr. from 1995 to May 22,
1997. Mr. James Chow became the only executive officer on May 22,1997.
4
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the holdings of Common Stock by each person
who, as of June 3, 1998, held of record, or was known by the Company to own
beneficially mor'e than five percent of the outstanding Common Stock of the
Company, by each Director and Officer of the Company and by all Directors
and Officers of the Company as a group.
Names and Address of Beneficial Owner:
Nature of Beneficial Percentage of Common
Ownership No. of shares Shares Outstanding
Inter-Global Investments,
Incorporated (1)(2) 9,000,000 90.00%
James Chow (1)(2)(3) 9,000,000 90.00%
Magnum Ltd. (4) 500,000 5.00%
Eric J. Rentz (2) 0 0.00%
All Directors and Officers
as a group (1 person) 9,000,000 90.00%
(1) All shares are owned directly unless otherwise indicated. All of Mr.
Chow's shares are owned by Inter-Global Investments, Incorporated, which
is a company controlled by Mr. Chow.
(2) Principal address is P.O. Box 403624, Miami Beach, Florida 33140.
(3) Mr. James Chow is the President, Treasurer, and Secretary of the
Company and is the sole shareholder of Inter-Global Investments,
Incorporated. Mr. Chow is also a Director of the Company.
(4) Principal address is 1221 Brickell Avenue, Suite 907, Miami, Florida 33131.
5
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On August 15, 1993, the Company had issued 650,000 (as adjusted for reverse
split) shares of its common stock to its Chief Executive Officer, Angel L.
Lorie, Jr. The shares were issued to Mr. Lorie in consideration of services
he rendered to the Company and expenses incurred on its behalf.
On September 1, 1994, Mr. Lorie resigned as president of the Company and
his shares were redeemed by the Company. On March 15, 1995, Mr. Lorie was
once again elected as the Company's president and chief executive officer
and the Company then issued 838,000 (as adjusted for reverse split) shares
of Common Stock to Florida Atlantic Group, Inc., ("Florida Atlantic") which
is a company controlled by Mr. Lorie. The shares were issued in
consideration for services provided by Mr. Lorie and expenses paid.
On April 10, 1997, the Company reversed split its outstanding shares of
common stock 1 for 10, thereby reducing the number of shares outstanding to
1,000,000. Subsequent to the reverse split, on April 25, 1997, the Company
issued 9,000,000 shares of common stock to Florida Atlantic in return for
services rendered by Mr. Lorie to the Company. The total outstanding
shares of common stock of the Company increased to 10,000,000.
On May 22, 1997, Inter-Global Investments, Incorporated, a Florida Corporation
("Inter-Global"), purchased from Florida Atlantic 9,000,000 shares of the
Company's common stock for the aggregate purchase price of $85,000 or
approximately $0.01 per share. The source of the consideration paid for
such shares was Inter-Global's working capital. As a result of the stock
purchase, Inter-Global beneficially owns 90.00% of the Company's outstanding
common stock. In connection with the stock purchase the size of the
Company's Board of Directors was increased to two members and Mr. Eric J.
Rentz was appointed to fill the vacancy on the Company's Board of Directors
created by such increase. The Company distributed a Report Pursuant to Rule
14-f-1 of the Securities and Exchange Act of 1934, in connection with a pending
change in the majority of its Board of Directors, to its shareholders on
June 6, 1997. Ten days thereafter, on June 16, 1997, Mr. Angel Lorie, Jr.
resigned as a member of the Board of Directors, and was succeeded by Mr.
James Chow.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits:
(3) Registrant's Articles of Incorporation and by-laws are incorporated by
reference to the Registrant's previous filing with the Commission.
(4) Form of Registrant's Common Stock Certificate is incorporated by reference
to the Registrant's to the Registrant's previous filing with the Commission.
b. Reports on Form 8-K. No reports were filed for the last quarter of the
fiscal year covered by this report.
SIGNATURES
In accordance with the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: June 3, 1998
NATIONAL ADVERTISING GROUP, INC.
By: /s/ James Chow .
James Chow, President
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and
on the dates indicated.
Dated: June 3, 1998
By: /s/ James Chow .
Mr. James Chow
President & Director
8
Dohan and Company, CPA's
7700 North Kendall Drive, Suite 204
Miami, Florida 33156
Report of Independent Certified Public Accountants
Board of Directors
National Advertising Group, Inc.
We have audited the accompanying balance sheets of National Advertising
Group, Inc. (a development stage company) as of December 31, 1997 and 1996,
and the related statements of operations, changes in stockholders' equity,
and cash flows for the years then ended. 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 National Advertising
Group, Inc. (a development stage company) as of December 31, 1997 and 1996,
and the results of its operations, changes in its stockholders' equity and
its cash flows for the years then ended in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 5 to the
financial statements, the Company has suffered losses from operations that
raises substantial doubt about its ability to continued as a going concern.
The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/ Dohan and Company, CPA's
June 8, 1998
Miami, Florida
F-1
NATIONAL ADVERTISING GROUP, INC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
1997 1996
ASSET
Organizational costs $ 70 $ 70
Less accumulated amortization ( 70) ( 70)
Total Asset $ - $ -
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY IN ASSETS)
Liabilities:
Accrued expenses $ 2,000 $ 1,000
Stockholders' Equity:
Common stock, par value $0.001 per share;
10,000,000 shares authorized,
10,000,000 and 939,970 shares issued
and outstanding in 1997 and 1996, respectively 10,000 940
Additional paid-in capital (Note 2) 20,590 15,150
Preferred stock, par value $0.10 per
share; 1,000,000 shares authorized,
no shares issued - -
Deficit accumulated during the
development stage ( 32,590) ( 17,090)
Total Stockholders' Equity (Deficiency in Assets) ( 2,000) ( 1,000)
Total Liabilities and Stockholders' Equity $ - $ -
See accompanying notes.
F-2
NATIONAL ADVERTISING GROUP, INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997 AND 1996
Cumulative during
the
1997 1996 development stage
Revenues $ - $ - $ -
Expenses:
Officer compensation (Note 2) 9,000 24,020
Audit and other fees 6,500 1,000 8,500
Amortization - 10 70
Total expenses 15,500 1,010 32,590
Net loss ($ 15,500) ($ 1,010) ($ 32,590)
Weighted average loss per ($ - ($ -)
share
See accompanying notes.
F-3
NATIONAL ADVERTISING GROUP, INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY IN ASSETS)
YEARS ENDED DECEMBER 31, 1997 AND 1996
Cumulative during
the
1997 1996 development stage
Beginning of year ($ 1,000) $ 10 $ -
Additions
Issuance of common stock
at par value (Note 2) $ 9,000 $ - $ 25,090
Shareholders' contribution
to paid in capital $ 5,500 $ 5,500
(Note 2)
Deductions
Net loss for the year ended
December 31-deficit
accumulated during the
development stage ( 15,500) ( 1,010) ( 32,590)
End of year ( $ 2,000) ($ 1,000) ($ 2,000)
See accompanying notes.
F-4
NATIONAL ADVERTISING GROUP, INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997 AND 1996
Cumulative during
the
1997 1996 development stage
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss ( $ 15,500) ( $ 1,010) ( $ 32,590)
Adjustment to reconcile net loss
to net cash used by operating
activities:
Issuance of common stock for
services 9,00 - 25,090
Amortization 10 70
Increase in accrued expenses 1,000 1,000 2,000
Net cash used by
operating activities (5,500) - ( 5,430)
Cash flow from investing - - ( 70)
activities
Cash flow from financing activities
Shareholders' contribution to
paid in capital 5,500 5,500
Net increase in cash - - -
Cash beginning of year - - -
Cash end of year $ - $ - $ -
Supplemental disclosure:
During 1997, the Company reverse split its outstanding shares of common
stock 1 for 10. Subsequent to the split the Company issued 9,000,000
shares of common stock at $0.001 par value.
See accompanying notes.
F-5
NATIONAL ADVERTISING GROUP, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activity
National Advertising Group, Inc. (the Company) was organized under the laws
of the State of Florida on July 25, 1991. The Company is a development stage
entity, which has not yet commenced business operations. The Company intends
to acquire an operating entity, however, it has not yet targeted an
acquisition.
Loss Per Share
Loss per share is based on the weighted average shares outstanding during
the periods.
Organizational Costs
Organizational costs consist of expenditures incurred in the formation of the
Company. These costs are being amortized ratably over a period of sixty
months.
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 disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE 2. COMMON STOCK
On March 15, 1995, the Company issued 838,000 (as adjusted for reverse split
effective as of April 10, 1997) common shares in exchange for services
rendered to the Company by its President, and expenses paid by Florida
Atlantic Group, Inc. Also, in May 1997, the Company issued 60,030 to Florida
Atlantic Group, Inc. in exchange for expenses paid by the Company's President
in the amount of $1,000. The President of the Company controls Florida
Atlantic Group, Inc.
On April 10, 1997, the Company reversed split its outstanding shares of
common stock 1 for 10, thereby reducing the number of shares outstanding to
1,000,000.
Subsequent to the reverse split, the Company issued 9,000,000 to Florida
Atlantic Group, Inc. on May 22, 1997 for services, bringing the number of
shares outstanding to 10,000,000. On the same date, Florida Atlantic Group,
Inc. sold 9,000,000 shares of the Company's common stock to Inter-Global
Investments, Inc.
F-6
NATIONAL ADVERTISING GROUP, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 3. INCOME TAXES
The Company has not recorded a provision for income taxes in the
accompanying financial statements because of a lack of certainty of the
realization of the benefit from the net operating losses incurred for tax
reporting purposes.
At December 31, 1997, the Company has a net operating loss carryover of
approximately $32,590, less a valuation allowance of the same amount.
There was an ownership change in the Company during the year, as defined in
Section 382 of the Internal Revenue Code. These changes will materially
limit the Company's net operating loss carry forward based upon the change in
control.
NOTE 4. RELATED PARTY TRANSACTIONS
On March 15, 1995, the Company issued 838,000 common shares in exchange for
services rendered to the Company by its President, and expenses paid by
Florida Atlantic Group, Inc. The President of the Company controls Florida
Atlantic Group, Inc.
In May 1997, the Company issued a total of 9,060,030 common shares to Florida
Atlantic Group, Inc. in exchange for services rendered to the Company by its
President, and expenses paid by the President and Florida Atlantic Group, Inc.
(See Note 2).
NOTE 5. GOING CONCERN
As shown in the accompanying financial statements, the Company has an
accumulated deficit of $32,590 as of December 31, 1997. As a result the
Company has a deficiency in assets. The management of the Company intends to
actively pursue a business combination through a merger, a reverse merger, or
an acquisition. The financial statements do not include any adjustments that
might be necessary should the Company be unable to continue as a going
concern.
F-7
