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_______________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended October 31, 1995 Commission File Number 0-24332
THE S.I.N.C.L.A.R.E. GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 23-2743253
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
636 ROSLYN, MONTREAL, CANADA H3Y 2T9
(Address of Principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (514) 990-8141
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $0.001 PAR VALUE
(Title of Class)
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 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. (1). Yes [ ] No [ X ]
(2). 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 or registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB. [X]
State the revenues for its most recent fiscal year: $611,699
As of July 30, 1996, the number of shares outstanding of the Company's common
stock was 14,773,255. As of July 30, 1996, the aggregate market value of the
voting stock of the Company held by non-affiliates was $9,601398.75, based on
14,773,255 shares of common stock outstanding.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
BACKGROUND
The S.I.N.C.L.A.R.E. Group, Inc. ("Sinclare" or the "Company") was organized
under the laws of the State of New York on August 20, 1990 under the name of
Third Lloyd Funding, Inc. and reincorporated in the State of Delaware in
October 1993. In June 1993, the Company completed a public offering of 312,000
shares of common stock resulting in a total net offering of $134,000. The
Company was organized for the purpose of seeking a qualified merger candidate.
Prior to the public offering, the Company conducted no business operations.
Effective August 31, 1993, the Company acquired all of the outstanding stock of
BCO Holding Company, Inc. ("BCO"). Management of BCO controlled and managed
the Company until August 16, 1995, at which time, the Company was reorganized.
On August 16, 1995, management of BCO and certain of the controlling
shareholders assigned 6,917,567 shares of common stock of the Company to
Worldtec Financial Resources Group, Inc. ("Worldtec") in exchange for an
exclusive license to an Internet operating system, known as Federation On Line
Services ("FOL") and certain other considerations. In October, 1995, the
Company acquired all of the rights to the Internet operating system. Since
Worldtec controlled FOL and acquired control of the Company on August 16, 1995,
FOL became the acquiring entity and accounting survivor. Accordingly, the
acquisition of FOL was accounted for as a reverse acquisition, whereby the
historical financial statements contained in the October 31, 1995 financial
statements are those of the acquirer, FOL and not the financial statements of
the legal acquirer, the Company. On December 15, 1995, the Company incorporated
The S.I.N.C.L.A.R.E. Group, Inc. as a wholly owned subsidiary, under the law of
the Province of Quebec (Canada).
On May 3, 1996, the Company incorporated CyberLinx Corporation, as a wholly
owned subsidiary, under the laws of the State of Delaware.
On July 10, 1996, the Company incorporated Internet News Network Corporation,
as a wholly owned subsidiary, under the laws of the State of Delaware.
Unless the context indicates otherwise, all references to the Company includes
the Company and its subsidiaries.
BUSINESS AND PRODUCTS
Except for historical information, matters discussed in this Report regarding
financial results and demand for products and services are forward looking
statements that involve risks and uncertainties, including those related to the
further development of the Company's products and services and market
acceptance of such products and services.
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FINANCIAL SERVICES - FLEXQUOTE(TM) SOFTWARE AND DATABASE. The Company's
business is primarily as a content provider offering its services on Internet
and through print media. The Company acquires, condenses and publishes
accurate, timely, and objective financial and other information on publicly
traded corporations, and markets this information to the financial and
investment communities, as well as to independent investors, in a cost
effective manner. The Company's database, marketed under the name
FlexQuote(TM), covers over 14,000 companies trading on the New York, American,
Nasdaq, Over-the-Counter, and Canadian Stock Exchanges. All reports created by
the Company are derived from information filed by the subject company with the
Securities and Exchange Commission and international regulatory authorities
contained in Annual Reports to shareholders, issued in press releases or
carried in other media reports. Each company's information is updated as soon
as the relevant information becomes available. Pricing and trading volume
information incorporated into the database are updated weekly, and other
fundamental and technical summaries are also updated on an "as needed" basis.
The Company adds value, distinguishes itself from the competition, and serves
its clients through its: (i) FlexQuote(TM) database design which gives users
important insights not available in competitive databases; (ii) Inclusion of
auxiliary information such as earnings estimates, price performance, relative
price performance, summary insider and institutional ownership statistics, and
short interest statistics giving users a complete perspective on most
companies; (iii) Calculation of approximately 20 popular financial ratios,
growth rates, and averages computed for the user's convenience; and (iv)
Displays formats using Internet access providers to transmit financial
information.
The targeted markets for the Company's FlexQuote(TM) database and related
products may include investment managers, investment research departments,
financial planners, investment counselors, investment bankers, banks,
stockbrokers and brokerage firms, traders, libraries, publications,
corporations, law firms, individual investors, and others who have access to
the Internet facility. The Company sells its information through three
channels: (i) Internet access by user subscriptions; (ii) Vendors and value
added clients; and (iii) print media subscriptions including newsstand sales
and advertising.
The Company works in partnership with financial information service vendors.
The financial information service vendors combine data from various real-time
and historical information sources with their own analytic software and data
delivery capability. The Company focuses on developing the highest quality
information. The amount of data presented, its display format, and the
software's analytic capabilities vary depending upon the way each information
provider defines its customers' needs, software capabilities, distribution
technologies and preferred pricing strategies.
The Company derives its revenue from its reference services available on
Internet user terminals and through print media, sales and distribution of its
publication called The New Industrialist...Strictly Canadian(TM).
Additionally, through the publication, the Company attempts to provide
continuity of coverage allowing subscribers to the publication to keep
following public companies in which they have an interest. However, from
time-to-time the companies covered do change. The most common reasons for
deletion of coverage are: (i)
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The company has been acquired in a merger or a leveraged buyout; (ii) The
company has not filed a financial statement with The Securities and Exchange
Commission or other Securities Commission for two or more reporting periods;
(iii) The company has exhibited significant deterioration in its financial
condition; (iv) The company has been deleted from the National Association of
Security Dealers Automatic Quotation System (Nasdaq) and has fewer than three
Market Makers or other exchange; and (v) Other considerations which warrant not
covering the company.
The Company continuously expands, enhances and improves the FlexQuote(TM)
database, based on subscriber needs and the market place. Additionally, the
Company engaged in a series of dialogues with current or potential vendors and
customers to determine the market potential, to identify the Company's
perceived strengths and weaknesses, and to research market needs and the
appropriateness of the Company's methodologies and objectives. The results of
this analysis are still being evaluated for future modifications of the
FlexQuote(TM) software design and applications.
The Company has completed development of a historical pricing database to
complement the financial information it has compiled. The pricing database
contains both historical and current information for all issues trading on the
New York and American Stock Exchanges, the Nasdaq stock market, and selected
OTC Bulletin Board Companies and certain international companies. The
FlexQuote(TM) pricing database contains Open, High, Low, Close and Volume
information on a daily basis beginning in 1990, with daily updates occurring
each trading day.
The Company has begun work on expanding its Internet sites to broaden the
Company's ability to sell and service its products directly to end users.
PUBLICATION OF THE NEW INDUSTRIALIST - STRICTLY CANADIAN(TM). The
non-Internet business of the Company consists of selling and distributing a
monthly financial journal known as The New Industrialist - Strictly Canadian
(the "financial journal") pursuant to certain agreements with an independent
third party. The financial journal was first published in February, 1996 and
has continued as a monthly. As a result of the agreements, the Company
acquired a database of financial and other business information on
approximately 4,000 public companies located in Canada as compiled by the
licensor, certain service marks and trademarks of licensor, and certain rights
to a computerized financial recognition system known as Neuropro(TM) for use
with the acquired database. The agreements further provide that the Company is
required to update the database to maintain current financial and other
business information as it relates to publicly traded companies in the United
States and Canada. In addition, the Company is required to pay the licensor a
royalty equal to 15% of the gross profits derived from the publication.
The Neuropro(TM) system consists of a proprietary software program and data
processing application technology and the database is comprised of active
financial information concerning overall market conditions (such as interest
rates, housing stats, book to bill ratios and other indices), general industry
or sector conditions, and technical and fundamental data of a particular
company. The database information is obtained from providers of economic,
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financial and corporate information available to the public, including foreign
and domestic governments, private sector, and public corporations. This
information is published monthly in The New Industrialist - Strictly Canadian
under the "Red Sheet Commentary(TM)" for approximately 4,000 publicly traded
companies in Canada. The Company sells the publication to subscribers at an
annual subscription rate of $35 CDN or at newsstands for $4.00 CDN per issue
and has set a discounted rate to distributors for newsstand sales. In addition
to revenue generated from subscription sales, the Company receives revenues
from general advertisers and from public companies who provide current
corporate information in the publication for a fee.
Internet Network News Corporation ("INN"). In May 29, 1996, the Company
acquired certain rights to a software system and database application known as
Internet News Network. The Company acquired the North American rights to the
software in exchange for 740,000 shares of common stock of the Company. INN
software is currently under development and the Company intends to utilize the
software to provide an interactive financial news service. The new services
will include current and historical financial information of public companies,
such as recent and historical press releases, which can be accessed directly
from the Internet. The Company transferred on May 31, 1996, all rights to the
non-financial reporting functions of INN to Cyberlinx Corporation, its wholly
owned subsidiary.
Other Internet Services. Since August 1995, a segment of the Company's
business consisted of designing Internet home pages and providing related
technical support services for client companies. The Company anticipates that
it will not continue to provide these services in the future. Under a
Technology Transfer Protocol dated May 15, 1996, the Company consolidated and
transferred all non-financial service activities and assets to Cyberlinx
Corporation.
MARKETING AND DISTRIBUTION
In early August 1996, the Company offered its FlexQuote(TM) services for
commercial sale on the Internet to subscribers. Prior to such time, the
Company provided earlier versions of FlexQuote(TM) and segments of the
publication on the Internet without charge. The Company intends to market its
service directly on the Internet to users which have previously visited the
Company's World Wide Web home page or inquired about services.
In addition, the Company intends to expand its FlexQuote(TM) services through
distribution or private branding agreements with other service or equipment
providers and through other agreements. In May 1996, the Company entered into
a licensing agreement with StarTronix International, Inc. ("StarTronix")
pursuant to which the Company will offer access to its FlexQuote(TM) product to
users of StarTronix's proposed Internet phone system. StarTronix's phone
system is a hybrid phone/personal computer which will allow direct Internet
access without the cost and complexities associated with owning a personal
computer. As of July 1996, the Company has not sold any licensed product to
StarTronix, and the Company cannot predict the timing of such sales or the
number of sales through StarTronix, if any. As of July
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1996, the Company has not entered into any other distribution agreements
regarding its FlexQuote(TM) service.
The Company sells its publication directly to individual subscribers on hard
copy and through distributors for newsstand distribution throughout Canada and
in other markets.
FORMATION AND SPIN-OFF OF CYBERLINX CORPORATION
On June 6, 1996, the Board of Directors of Sinclare elected to spin-off
Cyberlinx Corporation ("Cyberlinx") to the Sinclare shareholders. The record
date was set as of June 26, 1996 with the payable date July 29, 1996. A notice
was given to the Nasdaq Stock Market, Inc. on June 13, 1996, declaring that no
ex-dividend date would be given because it was non-transferable. As of this
date, no distribution has been made. Sinclare proposes to make such
distribution within the foreseeable future and to use its best efforts to cause
such distribution to be transferable.
On May 3, 1996, the Company formed Cyberlinx Corporation ("Cyberlinx") as a
wholly owned subsidiary. The Company formed the subsidiary as a means of
segregating non-financial Internet services. In May 1996, Cyberlinx acquired
Trackers Sports Network, Inc. ("Trackers"), in exchange for providing $550,000
in development costs associated with the Trackers software. Trackers
maintained certain undeveloped software technology which provides computerized
handicapping information for thoroughbred horse races. On May 7, 1996,
Trackers entered into two Executive Employment Agreements with two unaffiliated
individuals to pay a base salary of $62,500 per year for a period of two years
and an incentive salary equal to half of 1% of the adjusted net profit of
Trackers for the two year period. On a related transaction, the two employees
of the May 7, 1996 Executive Employment Agreement received 250,000 shares each,
$0.001 par value common stock of Cyberlinx in exchange for the transfer of
proprietary software and related source codes for a program called the Daily
Racing Form Reader. The software was developed as a Microsoft Windows
Compliant Application that allows the user to view the Daily Racing Form
Electronic Edition and make it available for downloading from the Daily Racing
Form and other sources globally through the Internet and other channels and
which can be viewed on a computer screen . On May 9, 1996, Cyberlinx sold 30%
of the issued and outstanding shares of Trackers to two unaffiliated third
parties for a total consideration of $500,000. The proceeds were allocated to
software development and other expenditures for Sinclare with limited gain to
Cyberlinx except for the Technology Transfer Protocol.
Cyberlinx has received the Technology Transfer Protocol dated May 15, 1996,
which transfers various protocols, software platforms and related software
systems ("protocols") to allow for Internet compatibility and related
functions. These assets for accounting purposes have been transferred at
nominal cost. These protocols may allow Cyberlinx to develop "seamless"
operating platforms for systems that need Internet accessibility using
proprietary functions. The intent is to use the protocols to enable Cyberlinx
to create new products without the need of supporting further software
development other than supplying dynamic linking, software enhancements and
data to the platforms. Cyberlinx received from Sinclare the exclusive license
to market a computer version of Master of Wars...the Ultimate Contest(TM) and
the
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Master of Wars Federation(TM). The Master of Wars series of games can be
played on a one to one basis or accessed by tournaments to other users. These
products will be offered via Internet and be made part of the Cyberlinx's
Internet Consumer Service Group ("ICSG"). Sinclare also transferred on May 31,
1996, the non-financial reporting functions of the Internet News Network
("INN") to Cyberlinx. INN supplies global networking solutions that provide
Internet connectivity outside of the United States and Canada. INN also
complements Cyberlinx's existing programs and allows integration with external
databases as a means to produce interactive data broadcasting on the world
wide web. These systems may also be used in different configurations by
Sinclare without compensation. However, no negotiations or understanding have
been reached on this matter. INN may be able to supply the applications for
high speed backbone access and may remain a proprietary technology without
restrictions to Cyberlinx.
With the completion of the protocols and proprietary technologies developed or
acquired by Sinclare, the intent by the management of Sinclare was to separate
the two operating companies into differently focused markets. As discussed,
Cyberlinx was formed to consolidate various non- financial services and
processing activities. The software developed for Internet applications have
multiple purposes and can be best utilized if taken into other areas beyond
financial information gathering and processing.
The core business of Sinclare is FlexQuote(TM) and its related activities. The
financial publication division proposes to establish a world wide database for
electronic and print media distribution of its financial journals. Cyberlinx
intends to assist Sinclare in establishing other markets for its FlexQuote(TM)
services. No agreement has been entered into by Cyberlinx to assist Sinclare
in marketing FlexQuote(TM).
As of July 31, 1996, Cyberlinx has three proprietary software systems/platforms
pursuant to an asset transfer from Sinclare. For accounting purposes these
assets shall be booked at no value, but will represent the protocols to
facilitate its business activities on Internet. All of the above stated
protocols will be based on these "operating engines" with the specific
information built upon them to meet the needs of the audience being solicited.
Additional assets include the transfer of the Master of Wars Federation
license, the Win-Line software protocols and related software may enable the
Company to meet its objectives. These assets have been transferred from
Sinclare and carried on the books of Cyberlinx at no cost. No assurance can be
given that the assets transferred from Sinclare to Cyberlinx will prove
commercially successful, nor can Cyberlinx represent that it has sufficient
resources, personnel and experience to make such assets profitable.
On August 3, 1996, Cyberlinx acquired the Internet Preview Channel, Inc.
("IPCI") for 6,000,000 shares of Cyberlinx Corporation common stock, $0.001 par
value. IPCI is a development stage corporation formed to design and market an
Internet television show which will feature video previews on the Internet
using world wide web resources. There is no assurance that such development
can be commercially achieved, nor does Cyberlinx currently have the financial
resources to accomplish IPCI's objectives.
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On August 20, 1996 by corporate resolution, Cyberlinx amended its certificate
of incorporation changing its authorized shares to be issued to 3,000,000 from
30,000,000 shares and changed the par value to $0.01 from $0.001.
On August 22, 1996, Cyberlinx proposed to offer for sale 600,000 shares of
$0.01 par value common stock at $0.25 per share. The sale of securities will
be pursuant to Rule 504 Regulation D of the Securities Act of 1933, as amended.
The proceeds of the sale would be used exclusively by Cyberlinx. No assurance
can be given that such sale will be successful, nor can Cyberlinx represent
that such proceeds will be sufficient to fund Cyberlinx's objectives and
business purposes.
GOVERNMENT REGULATION
The Company does not believe that its business is subject to any governmental
regulation.
LICENSES
The Company licenses certain software, database and financial information from
third party providers.
RESEARCH AND DEVELOPMENT
During fiscal 1995, the Company expended $3,465 in research and development
costs.
COMPETITION
The Company faces competition in Canada and other markets regarding the
publication from publishers of financial information. Substantially all of
these publishers have greater financial, technical personnel resources than the
Company.
In addition, there are numerous companies which provide on-line financial
information, including stock quotes, and software programs which are
competitive to the services provided by the Company. Substantially all of
these companies have greater financial, technical personnel resources than the
Company. However, the Company believes that it can successfully compete in the
market due to the quality of its services and the pricing of its products.
BACKLOG
Due to the nature of the business, the Company does not experience backlogs.
SEASONALITY
The Company has not experienced any material seasonality fluctuations in its
business.
ENVIRONMENT
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Compliance with federal, state and local provisions with respect to the
environment has not had a material adverse effect on the Company's capital
expenditures, earnings or competitive position.
EMPLOYEES
As of August 22, 1996, the Company currently employs seven persons full time,
which includes the officers of the Company. In addition, the Company contracts
with a number of consultants to provide a variety of services, including
advertising and marketing services and engineering and technical support
services.
ITEM 2. PROPERTIES
As of October 31, 1995, the corporate headquarters of the Company are located
at 636 Roslyn, Montreal, Canada H3Y 2T9, which comprises approximately 3,000
square feet. A new lease agreement was executed on May 1, 1996 until April 30,
1998 at the rate of $3,500 per month plus applicable taxes. Based on
comparable rental rates, the fees paid by the Company appear reasonable under
the circumstances.
In addition, the Company maintains a U.S. mailing address at: Route 78
Ultraport, P.O. Box 714, Swanton, Vermont 05488 and a Canadian mailing address
at: 5764 Monkland Avenue, Suite 135, Montreal Canada H4A 1E9
ITEM 3. LEGAL PROCEEDINGS
On May 15, 1995, Herman Zuckerman, a former mortgagee of the two condominiums
located in Miami Beach, Florida, which were previously owned by the Company,
commenced an action against the Company and a subsidiary, its former president,
William Handley, and the former lender of the Company in the 11th Judicial
Circuit for Dade County, Florida, Case #95-9833-CA21. The action originates
from the acquisition of the condominiums by the Company from Mr. Handley
pursuant to which the Company issued 250,000 shares of its common stock to
plaintiff in exchange for cancellation of Mr. Handley's mortgage on the
property including recession against the Company and other defendants.
Plaintiff has obtained a default against the Company for failure to file an
answer to the complaint. In July 1996, the Company filed a motion to dismiss
for insufficient service of process. The court has not ruled on the Company's
motion.
In addition, the Company is a defendant in a number of legal actions related to
its subsequent business activities. Management does not believe any of these
actions, individually or collectively, would have material adverse impact on
the Company or its business.
On July 3, 1996, the Company filed a complaint against Herman Zuckerman
("Zuckerman"), William Handley and Bay Front Resorts, Inc. in the Chancery
Court for the State of Delaware. The complaint seeks a declaratory judgment
against the defendants that 1,000,000 shares of the Company's Series A
preferred stock has been retired and/or canceled and are no longer
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issued and outstanding securities of the Company. The defendants have asserted
ownership of the securities contrary to the position of the Company. On July
23, 1996, Zuckerman and Romanik and Lavin, P.A. (Mr. Zuckerman's counsel in the
Florida action described above) filed a complaint against the Company in the
Chancery Court for the State of Delaware. The Complaint seeks a declartory
judgment demanding the issuance of the 1,000,000 shares of Series A preferred
stock and the conversion of the Series A preferred stock to common stock of the
Company, among other demands. At this time, the parties have not initiated
discovery proceedings. Management does not believe any of these actions,
individually or collectively, would have material adverse impact on the Company
or its business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fiscal year ending October 31, 1995, no matters requiring the vote
of security holders were submitted to such parties.
Balance of page intentionally left blank.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The table below sets forth the high and low bid price of the Common Stock
during the fiscal periods indicated, as reported by the National Association of
Securities Dealers, Bulletin Board. Such quotations reflect inter-dealer
prices, without retail mark-up, mark-down, or commissions and may not
necessarily represent actual transactions. There is an absence of an
established public trading market, as the market for the Common Stock is
limited, sporadic and highly volatile. Such absence might have an effect upon
the high and low prices as reported. The market for the Company's common stock
was established in August 1994, subsequent to the date, there was no
established market for the Company's common stock.
<TABLE>
<CAPTION>
Low Bid High Bid
------- --------
<S> <C> <C>
1994
- ----
4th Quarter......................... $0.75 $1.37
1995
- ----
1st Quarter......................... $1.12 $1.37
2nd Quarter......................... $0.63 $1.37
3rd Quarter......................... $0.38 $0.66
4th Quarter......................... $0.06 $0.63
1996
- ----
1st Quarter......................... $0.06 $0.85
2nd Quarter......................... $0.38 $3.19
3rd Quarter......................... $1.25 $3.25
</TABLE>
As of July 30, 1996 the number of record holders of the Company's Common Stock
within the United States is 308 (including broker-dealers and others who act as
fiduciaries) and such holders represent less than 25.5% of the total issued and
outstanding shares of Common Stock of the Company.
Although there are no restrictions on the Company's ability to declare or pay
dividends, the Company has not declared or paid dividend on its Common Stock
since inception.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
Basis of Presentation. The Company was reorganized on or about August 16, 1995
when Worldtec Financial Resources Group, Inc. ("Worldtec") acquired control of
the Company by receiving 6,917,567 shares of common stock of the Company in
exchange for an exclusive license to an operating system known as Federation
On-Line Services ("FOL") and certain other considerations. The basis of the
August 16, 1995 agreement became the foundation of the Company being
reorganized as an Internet content provider. Through a series of acquisitions
and further internal developments the Company was able to expand its software
capabilities which eventually became the FlexQuote software and database
applications, discussed in Item 1. under Business and Products. The most
significant of these agreements was the Assignment of Database Agreement, dated
December 29, 1995, between the Company and The New Industrialist Company ("New
Industrialist"). Under the terms of that agreement The New Industrialist
agreed to create and supply a proprietary database of all Canadian companies
traded on an exchange or regulated for public distribution in Canada. The
database consisted of corporate listings, symbols, exchange, or location of
issuer, markets makers, and/or specialists, historical prices, and volume for
periods greater than two years and other financial information. With this
database and the transfer by The New Industrialist to the Company of
proprietary software and processing applications, the Company has access to the
International Financial Data Retrievable System and Neuro-Technology Pattern
Recognition Application Software. Additionally, the Company was able to
utilize the developing financial database to publish a financial journal. On
January 1, 1996, the Company, through its division Federation On-Line Services,
entered into a Licensing Agreement to publish The New Industrialist...Strictly
Canadian(TM). Under the agreement the Company agreed to pay The New
Industrialist a royalty based on fifteen percent (15%) of gross profits earned
from the publication. Publishing commenced February 1996 and continued as a
monthly from that period.
Results of Operations.
For the fiscal year of 1995, the Company had revenue from continuing operations
of $611,699 and incurred costs and expenses for such operations of $314,400,
resulting in a profit after provision for income tax of $178,299. Based on the
weighted average shares outstanding as of October 31, 1995, the Company earned
$0.014 per share.
Since Worldtec controlled FOL and acquired control of the Company on August 16,
1995, FOL became the acquiring entity and accounting survivor. Accordingly,
the acquisition of FOL was accounted for as a reverse acquisition, whereby the
historical financial statements contained in the October 31, 1995 financial
statements are those of the acquirer, FOL and not the financial statements of
the legal acquirer, the Company. The operations of the Company reflect the
activities of FOL from January 18, 1995 (inception) through August 15, 1995
and the combined operations from August 16, 1995 through October 31, 1995.
Revenue was generated from four (4) primary sources most of which are
associated with the Company's operating division Federation On-Line Services
("FOL"). The four sources were: (1) Internet Websites and related service
development work; (2) Subscriptions and marketing of financial
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journals; (3) Database services; (4) Advertising and others. With the proposed
distribution of Cyberlinx Corporation to the Company's shareholders (See: Page
6), revenue sources 1 and 3 should not be significant in the future and the
Company will depend exclusively on its FlexQuote system and publishing
activities.
Liquidity and Capital.
In June 1993, the Company completed its initial public offering, which
generated net proceeds of approximately $134,000. In September 1993, the
Company sold 372,000 shares of common stock at $1.00 per share for total
proceeds of $372,000. In March 1994, the Company issued approximately 83,550
shares of common stock to a group of approximately 90 employees in
consideration of the satisfaction of past wages. By virtue of the possible
integration of the number of individuals who purchased the Company's stock in
March 1994 with the individuals who purchased in the September 1993 private
placement, it is possible that the sale of all such shares may not have
constituted a valid exempt transaction under the federal securities laws. It
is also possible that the private placement of September 1993 could be
integrated with the prior issuance's of common stock. Accordingly, rescission
rights may extend to the shares of common stock issued by the Company. As a
result, such purchasers may claim damages against the Company equal to the
deficiency, if any, between the market price of the stock, if sold, and the
purchase price. Current management was not party to the transactions or
events.
On August 16, 1995, the Company entered into an agreement with North Factor
Funding Corporation ("North Factor") whereby North Factor purchased 1,893,750
shares of common stock for $123,093.75. The proceeds received were added to
the general working capital of the Company.
On November 27, 1995, the Company entered into Preferred Stock Purchase
Agreement, wherein 1,300,000 shares of Series A $1.00 Convertible Preferred
Stock and 1,100,000 shares of Series B $2.50 Convertible Preferred Stock were
exchanged for exclusive rights to sell and service software known as Federation
On-Line Membership Kit for Windows, version 1.1. Such software has not been
marketed and the Company and may elect to write-off the product and will be
charged to operations. However, no decision has been made on the matter since
the Company is still evaluating its options. On February 7, 1996, the Company
by authorization from the Board of Directors approved a 20 for 1 reverse split
of the two series of Preferred Stock, Series A and Series B and to allow a
conversion into Common Stock on a one to one basis.
On May 3, 1996, the Company incorporated Cyberlinx Corporation and subsequently
transferred all non-financial service assets, related software, and other
activities. Included in the transfer was Internet News Network software for
non-financial applications. Under a Technology Transfer Protocol dated May 15,
1996, the Company transferred the Cyberlinx software platforms and related
software systems used for Internet compatibility and related functions. On
June 6, 1996, the Company's Board of Directors approved the 100 percent stock
distribution (spin-off) of the Cyberlinx Corporation to the Sinclare
shareholders. To date the distribution has not been made. The Company is
using its best efforts to cause the Cyberlinx distribution. Upon the
distribution of Cyberlinx to the Sinclare shareholders,
13
<PAGE> 14
Cyberlinx' assets and liabilities will not be included in the financial
statements of the Company.
On May 29, 1996, the Company entered into an agreement with Surja Establishment
to acquire Internet News Network software ("INN") for 740,000 shares of the
Company's $0.001 par value common stock. INN possesses a proprietary software
application relating to network, wired or wireless, communications systems and
direct mobile wired and or wireless access to transmit Internet signals and or
feeds. The acquisition of the software enables the Company to complete the
engineering aspect of the FlexQuote system and allowed for its connectivity to
the Internet. Cyberlinx was a party to the May 29, 1996 agreement since the
intent was for Cyberlinx to receive the non-financial service applications.
Transfer to Cyberlinx of the INN proprietary software for non-financial
applications was made on May 29, 1996.
ITEM 7. FINANCIAL STATEMENTS
For Period Ending October 31, 1995
<TABLE>
<S> <C>
Report of Independent Public Accountant F-1
Balance Sheet F-2
Statement of Operations F-3
Statement of Cash Flows F-6
Statement of Stockholders' Equity F-7
Notes To Financial Statements F-9
</TABLE>
ITEM 8. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
Balance of page intentionally left blank.
14
<PAGE> 15
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE'S WITH SECTION 16(A) OF THE EXCHANGE ACT
As of October 31, 1995 ("Reporting Date")
The following table set forth certain information concerning directors and
executive officers of the Company as of the Reporting Date.
<TABLE>
<CAPTION>
Name Age Director Since Position
- ---- --- -------------- --------
<S> <C> <C> <C>
Gerald Gallagher 42 1995 President,
Secretary/Treasurer
</TABLE>
Gerald Gallagher - Mr. Gallagher had been President, Chief Executive Officer
and Secretary of the Company since October 26, 1995 and before that date was
Secretary/Treasurer since August 16, 1995. Prior to that time Mr. Gallagher
was Financial Controller of Sportscene Restaurants, Inc. of Montreal, Canada
since 1987 until 1995.
As of July 1, 1996 by Board of Directors resolution the following table sets
forth information concerning Executive Officers and Consultants of the Company.
<TABLE>
<CAPTION>
Name Age Director Since Position
- ---- --- -------------- --------
<S> <C> <C> <C>
Larry I. Shapiro1 50 - President
Gerald Gallagher2 42 1995 Vice President
Finance/Secretary
Richard Mischook3 29 - Vice President
Information Systems
</TABLE>
__________________
1 On July 12, 1996, Mr. Shapiro commenced his duties as a salaried employee
earning $60,000 per year plus bonuses to be granted by discretion of the Board
of Directors and was granted an option by the Company to purchase 50,000
shares of the Company s Common Stock at $1.25 a share. The option is for a
period of two years and is exercisable within 30 days notice.
2 On July 12, 1996, the Company agreed to remunerate Mr. Gallagher as of
September 1, 1996 with a salary of $45,000 per year plus bonuses to be granted
by discretion of the Board of Directors.
3 Mr. Mischook is a salaried employee earning $20,800 per year plus bonuses to
be granted by discretion of the Board of Directors. His duties are Vice
President of Information Systems and applications coordinator. On July 12,
1996, Mr. Mischook was granted a two year option to purchase 20,000 shares of
the Company s common stock at $1.25 per share.
15
<PAGE> 16
<TABLE>
<S> <C> <C> <C>
Roxanne Bensason4 36 - Vice President
Marketing
Helen Fradkin5 49 - Assistant-Secretary/
Treasurer
Chris Bota6 44 - Consultant
Dion Loya7 24 - Consultant
</TABLE>
ITEM 10. EXECUTIVE COMPENSATION
The compensation for all directors and officers individually, and as a group,
for services rendered to the Company for the fiscal year ended October 31, 1995
was as follows:
__________________________________
4 On July 12, 1996, the Compnay agreed to remunerate Ms. Bensason as of
September 15, 1996 with a salary of $50,000 per year plus bonuses to be
granted by discretion of the Board of Directors . Her duties are Vice
President of Marketing in charge of market development, media sales and
advertising. On July 12, 1996, Ms. Bensason was granted a two year option to
purchase 20,000 shares of the Company s common stock at $1.25 per share. The
Company agreed to pay Ms. Bensason her remuneration directly to a management
company not affiliated to Sinclare.
5 Ms. Fradkin is a salaried employee earning $31,000 per year plus bonuses to
be granted by discretion of the Board of Directors. Her duties are Assistant
Secretary/Treasurer and responsible for internal review of the books and
records. On July 12, 1996, Ms. Fradkin was granted a two year option to
purchase 20,000 shares of the Company s common stock at $1.25 per share.
6 Mr. Bota is a project consultant , paid $1,000 USD per week not including
accountable expenses. On July 12, 1996, Mr. Bota s management company was
granted a two year option to purchase 20,000 shares of the Company s common
stock at $1.25 per share. The Company has agreed to pay Mr. Bota s
remuneration directly to a management company not affiliated to Sinclare. Mr.
Bota at this time holds 170,000 shares of Sinclare Common Stock and his
management company at this time holds 116,000 shares of Sinclare Common Stock.
7 Mr. Loy is assistant project consultant, paid $400 per week not including
accountable expenses. On July 12, 1996, Mr. Loy was granted a two year option
to purchase 10,000 shares of the Companys common stock at $1.25 per share.
16
<PAGE> 17
Summary Compensation
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------- ----------------------
Awards Payouts
------ -------
Name and
Principal Restr. Options
Position Year Salary Bonus Other Stock SARS LTIP Other
- -------- ---- ------ ----- ----- ----- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gerald Gallagher 1995 -0- -0- -0- -0- (1) -0- -0-
President,
Secretary/ Treasurer
and Director
- -------------------------
</TABLE>
Note (1) - On September 15, 1995, the Company granted Mr. Gallagher a stock
option for a period of 24 months to purchase 50,000 shares of Company common
stock, $0.001 par value at the bid price on the date of the option,
representing $0.06 per share. The option was granted in lieu of compensation
with the provision that the option will be terminated at any time upon 60 days
written notice if Mr. Gallagher 's employment is terminated for cause.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company has no knowledge of any specific arrangement which would effect the
control of the Company.
The following table will identify, as of October 31, 1995, the number and
percentage of outstanding shares of Common Stock owned by (i) each person known
to the Company who own more than five percent of the outstanding common stock,
(ii) each officer and director of the Company, and (iii) officers and directors
of the Company as a group:
<TABLE>
<CAPTION>
Title Name and Address Amount and Nature(1) Percent(2)
of Class of Beneficial Owner Beneficial Ownership of Class
- -------- ------------------- -------------------- --------
<S> <C> <C> <C>
Common X-Factor Financial 9,000,000 shares 60.9%
Stock Resources, Inc.
400-615 Mount Pleasant Rd.
Toronto, Ontario, Canada
M4S 3C5
Common North Factor Funding 1,893,750 shares 12.8%
Stock Corporation
Place du Canada, Suite 2270
Montreal, Quebec H3B 2N2
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
1. On August 16, 1995, the Company entered into a Common Stock Purchase
Agreement with Worldtec Financial Resources, Inc. ("Worldtec"), The Gray Hill
Trust, Peter
17
<PAGE> 18
J. Buccieri and Joseph Tarsia (collectively the "Sellers") and Salvatore L.
Pelullo ("Pelullo"). Pursuant to the August 16, 1995 agreement, Worldtec
acquired 6,916,567 shares of the Company's common stock from the Sellers in
consideration of the delivery by the Company of general releases in favor of
the Sellers. In addition, Worldtec delivered its written guarantee of the
payment and satisfaction of certain liabilities of the Company totaling
$154,877.54. The shares acquired by Worldtec after consummation of the August
16, 1995 agreement represented 62% of the Company's 11,120,921 total issued and
outstanding shares of common stock. Subsequently, Worldtec returned 2,916,567
shares such stock to the Treasury of the Company. Additionally, the agreement
directed Pelullo to receive from the Company, 100% of the issued and
outstanding shares of common stock of Empire Management Group, Ltd. ("Empire")
in consideration of Pelullo's delivery of a general release releasing the
Company from any and all claims which Pelullo may possess against the Company,
including but not limited to all accrued compensation due him pursuant to his
employment agreement with the Company. Pelullo and Empire further agreed to
indemnify the Company from and against any and all claims and liability from
Empire's approximately $543,000 in unsecured debt and tax obligations. The
August 16, 1995 agreement also required that Worldtec deliver to the Company an
exclusive license regarding an Internet computer system known as Federation
On-Line Services in exchange for the issuance of 5,000,000 shares of the
Company's common stock.
2. On August 16, 1995, the Company sold to North Factor Funding
Corporation ("North Factor"), 1,893,750 shares of the Company's common stock
for $123,093.75. North Factor is a Canadian corporation owned exclusively by
Chris Bota, a Canadian citizen who is also a current project consultant of the
Company. North Factor is no longer the beneficial owner of such shares.
3. On September 15, 1995, the Company entered into a Management Agreement
with Gerald Gallagher, whereby Mr. Gallagher was granted an option for a two
year period to purchase 50,000 shares of the Company's common stock at $0.06
per share, representing the bid price as of the above referenced date. Under
the terms of the Management Agreement, Mr. Gallagher received the option in
lieu of direct salary compensation and providing that he remains employed with
the Company for 24 months. At present, Mr. Gallagher is Vice-President of
Finance/Secretary and Director of the Company. Mr. Gallagher's wife, Maria
Gallagher receives compensation of $400 a week from the Company, acting as Mr.
Gallagher's part time secretary.
4. On October 27, 1995, the Company issued 170,000 shares of the
Company's common stock for the rights and assets of Federation On-Line Services
("FOL"). FOL owned and operated a proprietary system to access Internet and
manage data and related software configurations to transmit financial
information. Since Worldtec controlled FOL and acquired control of the
Company on August 16, 1995, FOL became the acquiring entity and accounting
survivor. Accordingly, the acquisition of FOL was accounted for as a reverse
acquisition, whereby the historical financial statements contained in the
October 31, 1995 financial statements are those of the acquirer, FOL and not
the financial statements of the legal acquirer, the Company. The operations of
the Company reflect the activities of FOL from
18
<PAGE> 19
January 18, 1995 (inception) through August 15, 1995 and the combined
operations from August 16, 1995 through October 31, 1995.
5. On November 21, 1995, the Company entered into an agreement to obtain
the database and supporting software from the New Industrialist for the United
States public companies in exchange for 40% of the net profits generated from
the database. In addition, on November 28, 1995, a license agreement related to
the publication of The New Industrialist - Strictly Canadian, requires the
Company to pay licensor a royalty of 15% of the gross profits from the
publication. The first issue commercial issue was published in February, 1996.
6. On November 27, 1995, the Company entered into a Preferred Stock
Purchase Agreement with Federation On Line International, LLC ("Federation"), a
company not affiliated with Federation On-Line Services, a division of the
Company. Under the terms of the agreement, Federation received 1,300,000
shares of Class A $1.00 convertible preferred stock, $0.001 par value and
1,100,000 of Class B $2.50 convertible preferred stock, $0.001 par value. On
February 7, 1996, it was authorized that the preferred shareholders of record
as of February 29, 1996 shall be entitled to receive common shares representing
the 20 for 1 reverse split of preferred shares and the conversion of the
post-preferred shares into 1 share of the Company's $0.001 par value common
stock. Payable date of the common shares was set as of June 1, 1996. The
issuance of the common shares has been deferred until a later date.
7. On November 28, 1995, the Company entered into an agreement with Mr.
Daniel H. Luciano, Attorney at Law, to perform certain legal services on behalf
of the Company and to receive as part of compensation $ 2,000 and 100,000
shares $0.001 par value common stock. Mr. Luciano acknowledged that the common
stock was restricted and to the extent each certificate carried the appropriate
legend. Additionally, the Company agreed that Mr. Luciano shall be entitled to
register the common stock under form S-8 (or such shares can otherwise be
included in any registration statement filed by the Company) or receive the
shares pursuant to Rule 701 of the Securities Act 0f 1993, as amended.
8. On February 15, 1996, the Company entered into an agreement with
9029-4455 Quebec Inc., a corporation owned by Chris Bota, a consultant to the
Company, whereby the Company issued 100,000 shares of the Company's common
stock, $0.001 par value in exchange for services to be provided. Under
agreement, the shares received were in lieu of technical services to integrate
the Company's various systems, platforms and protocols relating to Internet
access, applications and other Internet services. As of June 15, 1996, the
terms of the agreement were fulfilled.
9. On May 29, 1996, the Company entered into an agreement with Surja
Establishment ("Surja"), a foreign corporation, whereby the Company issued
740,000 shares of the Company's common stock, $0.001 par value in exchange for
the Internet News Network ("INN") rights and titles to North America of a
proprietary software relating to network, wired or wireless, communication
systems and direct mobile wired and/or wireless access to transmit Internet
signals and/or feeds.
19
<PAGE> 20
10. On June 15, 1996, the Company formalized a final agreement with Surja
Establishment ("Surja"), a foreign corporation, whereby the Company will pay a
royalty based upon a fixed schedule, in exchange for rights to certain
technology fundamental to allow the FlexQuote system to provide its data to
other FlexQuote Global System Licensees, relating to network, wired or
wireless, communication systems and direct mobile wired and/or wireless access
to Internet signals and/or feeds.
Balance of page intentionally left blank.
20
<PAGE> 21
ITEM 13. EXHIBITS AND REPORTS ON 8-K
(a) Exhibit No.
13.1 Certificate of Incorporation and Certificate of Amendment of
Cyberlinx Corporation, previously filed.
13.2 Certificate of Incorporation of Internet News Network
Corporation, previously filed.
13.3 Certificate of Incorporation of The S.I.N.C.L.A.R.E. Group,
Inc. (Canada), previously filed.
13.4 Common Stock Purchase Agreement dated August 16, 1995,
previously filed as exhibit to Form 8-K of the Company dated
September 21, 1995
13.5 Assignment of Licensing Agreement dated August 24, 1995,
previously filed as exhibit to Form 8-K of the Company dated
September 21, 1995
13.6 Management Agreement dated September 15, 1995, previously
filed.
13.7 Common Stock Purchase Agreement dated October 26, 1995.
Previously filed as exhibit to Form 8-K of the Company dated
December 5, 1995
13.8 Assignment of Interest Agreement dated November 14, 1995,
previously filed as exhibit to Form 8-K of the Company dated
December 5, 1995 and the corresponding Licensing Agreement
dated May 31, 1995, previously filed as exhibit to Form 8-K of
the Company dated September 31, 1995
13.9 Licensing and Management Agreement dated November 21, 1995,
previously filed.
13.10 Preferred Stock Agreement with a corresponding Licensing
Agreement dated November 27, 1995, previously filed as exhibit
to Form 8-K of the Company dated December 5, 1995
13.11 Common Stock Purchase Agreement dated November 27, 1995.
Previously filed as exhibit to Form 8-K of the Company dated
December 5, 1995
13.12 Agreement for Legal Services dated November 28, 1995,
previously filed.
13.13 Licensing Agreement dated November 28, 1995, previously filed.
21
<PAGE> 22
13.14 Assignment Agreement dated December 29, 1995, including
Assignment of Database dated December 29, 1995, and the Bill
of Sale for Proprietary Software and Processing Applications
dated December 29, 1995, previously filed.
13.15 Rescission Agreement dated January 11, 1996, canceled and
rescinded the Common Stock Purchase Agreement dated November
27, 1995, previously filed.
13.16 Consulting Agreement dated February 15, 1996, previously filed.
13.17 Financial Public Relations Agreement dated April 4, 1996,
previously filed.
13.18 Common Stock Purchase Agreement dated May 1, 1996 - Cyberlinx
Corporation, previously filed.
13.19 Common Stock Purchase Agreement (Tradewind Investment Limited)
dated May 9, 1996 - Cyberlinx Corporation and Company,
previously filed.
13.20 Common Stock Purchase Agreement (Kaltar S.A.) dated May 9,
1996 - Cyberlinx Corporation and Company, previously filed.
13.21 Common Stock Purchase Agreement dated May 15, 1996 -
Cyberlinx Corporation, previously filed.
13.22 Technology Transfer Protocol Agreement dated May 15, 1996 -
Cyberlinx Corporation, previously filed.
13.23 Common Stock Purchase and Licensing Agreement dated May 29,
1996 - Cyberlinx Corporation and the Company, previously filed.
13.24 Common Stock Purchase Agreement dated June 12, 1996,
previously filed.
13.25 Licensing Agreement dated July 9, 1996 - Cyberlinx
Corporation, previously filed.
13.26 Licensing Agreement dated July 30, 1996. 13.28 - Surja
Establishment and the Company, previously filed.
13.27 Assets Sales Agreement dated August 3, 1996 - Cyberlinx
Corporation, previously filed.
(b) Reports on Form 8-K.
13.28 Form 8-K dated November 8, 1994, previously filed.
13.29 Form 8-K dated January 26, 1995 for reporting event of January
20, 1995, previously filed.
22
<PAGE> 23
13.30 Form 8-K dated April 20, 1995 for the reporting event of April
24, 1995, previously filed.
13.31 Form 8-K dated July 19, 1995 for the reporting event of July
12, 1995, previously filed.
13.32 Form 8-K dated August 3, 1995 for the reporting event of July
31, 1995, previously filed.
13.33 Form 8-K dated September 21, 1995 for the reporting event of
August 16, 1995, previously filed.
13.34 Form 8-K dated December 5, 1995 for the reporting event of
October 26, 1995, previously filed.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
(Registrant) The S.I.N.C.L.A.R.E. GROUP, INC.
GERALD GALLAGHER
- -------------------------- Date: August 28, 1996
Gerald Gallagher
Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the
registrant and in the capacities and on the dates indicated.
GERALD GALLAGHER
- -------------------------- Date: August 28, 1996
Gerald Gallagher
Chief Financial Officer
and Director
23
<PAGE> 24
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
The S.I.N.C.L.A.R.E. Group, Inc.
Montreal, Canada
We have audited the accompanying balance sheet of The S.I.N.C.L.A.R.E. Group,
Inc. as of October 31, 1995, and the related statements of operations,
stockholders' equity and cash flows of the Accounting Survivor for the period
January 18, 1995 (inception) through October 31, 1995 and stockholder's equity
of the Legal Acquirer for the period November 1, 1994 through August 15, 1995.
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 audit.
We conducted our audit 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 audit provides 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 The S.I.N.C.L.A.R.E. Group,
Inc. as of October 31, 1995, and the results of its operations and cash flows
for the period January 18, 1995 (inception) through October 31, 1995, in
conformity with generally accepted accounting principles.
COGEN SKLAR LLP
Bala Cynwyd, Pennsylvania
August 27, 1996
- F1 -
<PAGE> 25
THE S.I.N.C.L.A.R.E. GROUP, INC.
BALANCE SHEET
OCTOBER 31, 1995
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS
Cash $148,619
PROPERTY AND EQUIPMENT, net 263,991
--------
TOTAL ASSETS $412,610
========
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 19,964
Other liabilities 148,453
Income taxes payable 119,000
--------
TOTAL LIABILITIES 287,417
--------
STOCKHOLDERS' EQUITY
CONVERTIBLE PREFERRED STOCK -
$1.00 Series A, $.001 par value; 1,000,000 shares -
authorized, none issued and outstanding
$2.50 Series B, $.001 par value; 1,000,000 shares
authorized, issued and outstanding 1,000
COMMON STOCK - $.001 par value; 100,000,000
shares authorized; 14,938,542 shares issued 14,939
ADDITIONAL PAID-IN CAPITAL 55,072
RETAINED EARNINGS 178,299
--------
249,310
--------
LESS: TREASURY STOCK
Common stock - 1,022,817 shares at par value 1,023
RECEIVABLE FROM STOCKHOLDER 123,094
--------
124,117
--------
TOTAL STOCKHOLDERS' EQUITY 125,193
--------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $412,610
========
</TABLE>
See accompanying notes to the financial statements.
- F2 -
<PAGE> 26
THE S.I.N.C.L.A.R.E. GROUP, INC.
STATEMENT OF OPERATIONS
JANUARY 18, 1995 (INCEPTION) THROUGH OCTOBER 31, 1995
<TABLE>
<S> <C>
NET REVENUES $ 611,699
----------
EXPENSES:
Cost of revenues 79,575
Research and development 3,465
Advertising and promotion 12,295
General and administrative 219,065
----------
TOTAL EXPENSES 314,400
----------
INCOME BEFORE INCOME TAXES 297,299
INCOME TAXES 119,000
----------
NET INCOME $ 178,299
==========
EARNINGS PER COMMON SHARE $ 0.01
==========
WEIGHTED AVERAGE SHARES OUTSTANDING 12,490,553
==========
</TABLE>
See accompanying notes to the financial statements.
- F3 -
<PAGE> 27
THE S.I.N.C.L.A.R.E. GROUP, INC.
STATEMENT OF CASH FLOWS
JANUARY 18, 1995 (INCEPTION) THROUGH OCTOBER 31, 1995
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 178,299
Adjustments to reconcile net income
Depreciation 49,189
Changes in liabilities
Increase in accounts payable and accrued expenses 19,964
Decrease in other liabilities (4,515)
Increase in income taxes payable 119,000
---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 361,937
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (313,180)
CASH FLOWS FROM FINANCING ACTIVITIES
Donated capital 99,862
---------
NET INCREASE IN CASH 148,619
CASH - BEGINNING OF PERIOD -
---------
CASH - END OF PERIOD $ 148,619
=========
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND
FINANCING ACTIVITIES
Receivable from stockholder for common stock $ 123,094
=========
Liabilities assumed in reverse acquisition $ 154,878
=========
License acquired for common stock $ 364,427
=========
Royalties satisfied and rights obtained for common stock $ 11,050
=========
Common stock returned to the treasury $ 390,745
=========
Treasury shares retired $ 578,037
=========
</TABLE>
See accompanying notes to the financial statements.
- F4 -
<PAGE> 28
THE S.I.N.C.L.A.R.E. GROUP, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
PERIOD ENDED OCTOBER 31, 1995
<TABLE>
<CAPTION>
COMMON STOCK TREASURY STOCK
------------------- ------------------ RECEIVABLE RETAINED
NUMBER NUMBER UNEARNED FROM (DEFICIT)/
OF SHARES AMOUNT APIC DISCOUNT OF SHARES AMOUNT COMPENSATION STOCKHOLDER EARNINGS
---------- ------- ----------- ----------- --------- -------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCES,
OCTOBER 31, 1994
LEGAL ACQUIRER 11,908,000 $11,908 $ 8,677,411 $(5,682,283) 188,315 $188,315 $ 283,250 $ -- $(5,768,405)
COMMON SHARES
RETURNED TO
THE TREASURY
FOR PROPERTY -- -- -- -- 600,000 105,337 -- --
RETAINED DEFICIT
THROUGH
AUGUST 15, 1995 -- -- -- -- -- -- -- -- (359,395)
---------- ------- ----------- ----------- --------- -------- --------- -------- -----------
BALANCES,
AUGUST 15, 1995
LEGAL ACQUIRER 11,908,000 11,908 8,677,411 (5,682,283) 788,315 293,652 283,250 -- (6,127,800)
REVERSE ACQUISITION:
COMMON SHARES
RETURNED TO THE
TREASURY
Non-vested shares -- -- -- -- 216,500 283,250 (283,250) -- --
Other shares -- -- -- -- 1,134,643 1,135 -- -- --
By Worldtec -- -- -- -- 2,916,567 2,917 -- -- --
ISSUANCE OF
COMMON STOCK
FOL License 5,000,000 5,000 359,427 -- -- -- -- -- --
FOL rights
and assets 170,000 170 10,880 -- -- -- -- -- --
ISSUANCE OF
TREASURY STOCK -- -- 121,200 -- (1,893,750) (1,894) -- 123,094 --
RETIREMENT
OF TREASURY SHARES (2,139,458) (2,139) (575,898) -- (2,139,458) (578,037) -- -- --
DONATED CAPITAL -- -- 99,862 -- -- -- -- -- --
RECAPITALIZATION -- -- (8,637,810) 5,682,283 -- -- -- -- 6,127,800
---------- ------- ----------- ----------- --------- -------- --------- -------- -----------
BALANCES,
AUGUST 16, 1995
ACCOUNTING SURVIVOR 14,938,542 14,939 55,072 -- 1,022,817 1,023 -- 123,094 --
NET INCOME,
JANUARY 18, 1995
(INCEPTION) THROUGH
OCTOBER 31, 1995 -- -- -- -- -- -- -- -- 178,299
---------- ------- ----------- ----------- --------- -------- --------- -------- -----------
BALANCES,
OCTOBER 31, 1995 14,938,542 $14,939 $ 55,072 $ -- 1,022,817 $ 1,023 $ -- $123,094 $ 178,299
========== ======= =========== =========== ========= ======== ========= ======== ===========
</TABLE>
See accompanying notes to the financial statements.
- F5 -
<PAGE> 29
THE S.I.N.C.L.A.R.E. GROUP, INC.
STATEMENT OF STOCKHOLDERS' EQUITY (CONTINUED)
PERIOD ENDED OCTOBER 31, 1995
<TABLE>
<CAPTION>
CONVERTIBLE PREFERRED STOCK "SERIES A"
--------------------------------------
Treasury
-------------------------
Number of Number of
Shares Amount APIC Cost Shares
---------- ------ -------- ----------- -----------
<S> <C> <C> <C>
BALANCES, OCTOBER 31, 1994 1,000,000 $1,000 $999,000 $(550,000) (1,000,000)
RETIREMENT OF TREASURY SHARES (1,000,000) 1,000 999,000 550,000 1,000,000
---------- ------ -------- --------- ----------
BALANCES, OCTOBER 31, 1995 - $ - $ - $ - -
========== ====== ======== ========= ==========
</TABLE>
<TABLE>
<CAPTION>
CONVERTIBLE PREFERRED STOCK "SERIES B"
----------------------------------------
Number of
Shares Amount APIC
---------- ------ -----------
<S> <C> <C>
BALANCES, OCTOBER 31, 1994 1,000,000 $1,000 $ 2,499,000
RECAPITALIZATION DUE TO REVERSE
ACQUISITION - - (2,499,000)
--------- ------ -----------
BALANCES, OCTOBER 31, 1995 1,000,000 $1,000 $ -
========= ====== ===========
</TABLE>
See accompanying notes to the financial statements.
- F6 -
<PAGE> 30
THE S.I.N.C.L.A.R.E. GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995
NOTE 1 - HISTORY AND NATURE OF THE BUSINESS AND SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
History and Nature of the Business
- ----------------------------------
Third Lloyd Funding, Inc. was incorporated on August 20, 1990 for the purpose
of seeking businesses to acquire. In September, 1993, Third Lloyd Funding,
Inc. was reincorporated in Delaware and changed its name to The
S.I.N.C.L.A.R.E. Group, Inc. (the "company"). The company did not conduct
business operations until August 1993 when it exchanged 59% of its common stock
(2,252,000 shares) for all of the issued and outstanding common stock of Print
U.S.A., Inc. formerly BCO Holding Company, Inc. ("Print-USA") and PR Holding
Company, Inc. ("PR Holding"). Print USA is the owner of 100% of the issued and
outstanding common stock of Barrington Color Offset, Inc. ("Barrington").
Barrington has been engaged in the plastic printing business since 1968 and
provides high quality plastic printing services as well as the design and
development of printed plastic products and marketing tools principally in the
northeastern section of the United States. Barrington operated under Chapter
11 of the United States Bankruptcy Code from March 1991 through August 26,
1993, when its Plan of Reorganization (the "Plan") was confirmed by the
Bankruptcy Court. PR Holding, in connection with the Plan acquired a 99%
partnership interest of a partnership controlled by the former principal
stockholder of Barrington. The partnership owns the manufacturing and
administrative office facility presently occupied and leased by Barrington (the
"Property"). Barrington and PR Holding were subsequently sold in October 1994.
The company formed a management company, Empire Management Group, Ltd.
("Empire") in September, 1993. Empire is a wholly-owned subsidiary of the
company and is in the business of providing broad-based management services
with a special emphasis on the identification for acquisition and
reorganization of distressed companies that are the subject of bankruptcy
proceedings. Empire will actively participate in the management of each
distressed company with the objective of effecting its turnaround.
In addition, in September 1993, the company formed two wholly-owned
subsidiaries as follows: Twenty-First Century Marketing Company ("21st
Century") to provide marketing services to its operating divisions and Royal
Crown Development Corporation ("RCD") to own, develop and operate real estate
utilized by subsidiaries of the company.
On July 31, 1995, the Company through Royal Crown Development Corp., a
wholly-owned subsidiary, accepted the return of the previously issued 600,000
shares of its common stock and a release from the note payable of $550,000 in
exchange for the two waterfront investment properties valued at approximately
$655,000.
On July 12, 1995, the Company sold 100% of the issued and outstanding shares of
its subsidiary, J.D.S. Enterprises, Inc., which owned its skin care products
line, to a corporation controlled by the creator of its skin care products line
in exchange for a promissory note in the amount of $2,000,000. The note is
payable only from 20% of annual after tax profits and since realization is
doubtful, the note receivable was not recorded.
Acquisition
- -----------
On August 16, 1995, the company, certain controlling stockholders of the
company and Worldtec Financial Resources Group, Inc. ("Worldtec") entered into
an agreement pursuant to which Worldtec obtained control of the company.
Under the terms of this agreement:
o Worldtec acquired 6,916,567 shares of common stock from controlling
stockholders and returned 2,916,567 shares of common stock to the
treasury.
o The company transferred all of the issued and outstanding shares of
Empire to the former president. Empire's liabilities exceeded its assets
by approximately $543,000.
- F7 -
<PAGE> 31
THE S.I.N.C.L.A.R.E. GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995
NOTE 1 - HISTORY AND NATURE OF THE BUSINESS AND SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Acquisition (Continued)
- -----------
o The company issued 5,000,000 shares of common stock to Worldtec in
exchange for an exclusive license with Federation On-Line Services
("FOL").
o The company issued 1,893,750 shares of common stock from the treasury
which resulted in a receivable from stockholder in the amount of
$123,094. The proceeds were received and deposited on December 19, 1995.
Under a subsequent agreement dated October 27, 1995, the company issued 170,000
shares of common stock for the rights and assets of FOL. FOL owns and operates
a proprietary system to access the Internet and manage data and related
software configurations to transmit financial information. Since Worldtec
controlled FOL and acquired control of the company on August 16, 1995, FOL
became the acquiring entity and accounting survivor. Accordingly, the
acquisition of FOL was accounted for as a reverse acquisition whereby the
historical financial statements contained herein are those of the accounting
acquirer, FOL and not the financial statements of the legal acquirer, the
registrant. The operations of the registrant reflect the operations of FOL
from January 18, 1995 (inception) through August 15, 1995 and the combined
operations from August 16, 1995 through October 31, 1995. At August 16, 1995,
the excess of liabilities over assets of the legal acquirer amounted to
approximately $155,000 and since there were no operations and there was a
change in control, the conformed entity was recapitalized to reflect the
capital structure of the surviving legal entity and the retained earnings of
FOL.
Cash Equivalents
- ----------------
The company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
Property and Equipment
- ----------------------
Property and equipment are stated at cost. The company provided for
depreciation generally using an accelerated method, based upon the estimated
useful lives of the respective assets.
Revenue Recognition
- -------------------
Sales of Website Software are recognized as products are shipped. Sales from
subscriptions are recognized prorata over the subscription period.
Income Taxes
- ------------
Deferred income taxes are determined in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". Under the
liability method specified by SFAS 109, deferred tax assets and liabilities are
determined based on the difference between the financial statement and tax
bases of assets and liabilities as measured by the enacted tax rates which will
be in effect when these differences are settled or realized. Deferred tax
expense is the result of changes in deferred tax assets and liabilities.
Net Income Per Common Share
- ---------------------------
Net Income per common share is computed by dividing net income applicable to
common stockholders by the weighted average number of common shares and common
stock equivalents outstanding during each year.
NOTE 2 - CONCENTRATION OF CREDIT RISK
The company maintains cash balances and a certificate of deposit at a financial
institution located in the Northeast. The account is insured by the Federal
Deposit Insurance Corporation up to $100,000. The company has not experienced
any losses in such accounts and believes it is not exposed to any significant
credit risk on cash balances.
- F8 -
<PAGE> 32
THE S.I.N.C.L.A.R.E. GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995
NOTE 3 - RELATED PARTY TRANSACTIONS
Office space located in Montreal, Canada and Barnegat, New Jersey was provided
to the company during the period ended October 31, 1995 at no cost by certain
related individuals. Executive officers have not received any compensation for
the period ended October 31, 1995.
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<S> <C>
Equipment $250,000
Furniture and fixtures 63,180
--------
313,180
Less: accumulated depreciation 49,189
--------
$263,991
========
</TABLE>
NOTE 5 - CONTINGENCIES
Legal Proceedings
- -----------------
On May 15, 1995, the former mortgagee of the two investment properties
commenced an action against the company and other defendants, asserting various
claims against the company originating from the issuance by the company of
250,000 shares of its common stock in exchange for cancellation of the mortgage
on the properties. The mortgagee has obtained a default against the company
for failure to file an answer to the complaint. In July 1996, the company
filed a motion to dismiss for insufficient service of process. The court has
not ruled on the company's motion. In addition, in July 1996 the company filed
a complaint against the former mortgagee and other defendants which complaint
seeks a declatory judgment that the 1,000,000 shares of the company's Series A
preferred stock has been retired. The defendants have asserted ownership of
the securities contrary to the position of the company. At the present time,
the parties have not initiated discovery proceedings.
The company is also a defendant in a number of legal proceedings which occurred
in the ordinary course of business.
In the opinion of management, the ultimate settlement of such legal proceedings
will not have a material adverse impact on the company's financial statements.
Stock Sales
- -----------
During the period ended October 31, 1993, the company sold to private investors
372,000 shares of its common stock for $372,000. Counsel to the company has
determined that it is possible the sale of these shares and certain subsequent
sales of common stock may not have constituted valid exempt transactions under
the Securities Act of 1933 (the "Act") and Regulation D promulgated thereunder.
Accordingly, these sales may not have been undertaken in compliance with the
registration requirements of the Act and the purchasers thereof may claim
damages against the company to the extent of the deficiency, if any, between
the market price of the stock, if later sold, and the purchase price.
Management has stated its intention to offer formal rescission rights to the
stockholders identified above. To the extent that the investors elect to
accept the recision offer, the company could be required to return the proceeds
it has received. The actual amount of funds the company will be required to
return is dependent upon the number of investors who accept the recision offer.
- F9 -
<PAGE> 33
THE S.I.N.C.L.A.R.E. GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995
NOTE 5 - CONTINGENCIES (Continued)
Lease
- -----
Effective May 1, 1996 the company entered into an operating lease with a
related party for corporate offices located in Montreal, Canada. The lease
agreement is for a term of two years with a minimum monthly lease payment of
$3,500. The company is liable for related taxes and operating expenses.
NOTE 6 - INCOME TAXES
The provision for current income taxes for the period ended October 31, 1995 is
comprised of the following:
<TABLE>
<S> <C>
Federal $ 92,000
State 27,000
--------
$119,000
========
</TABLE>
There were no deferred income tax assets and liabilities since temporary
differences between financial statement and tax bases of assets and liabilities
were not significant.
The effective income tax rate of approximately 40% differs from the federal
statutory rate due to state income taxes.
As a result of significant capital transactions described in Note 1, and the
fact that the business enterprise of the loss corporation has not continued
for a two year period commencing on the change date, as described in Section
382 of the Internal Revenue Code, the net operating loss carryforwards of
approximately $2,010,000 of the legal acquirer are no longer available.
NOTE 7 - PREFERRED STOCK
The company is authorized to issue 50,000,000 shares of preferred stock. The
Board of Directors designated 1,000,000 shares as $1.00 Series A, $.001 par
value, with a liquidation value of $1,000,000. Each share is convertible into
shares of common stock consisting of that number of common shares determined by
dividing the $1.00 of the preferred stock by the fair market value of each
share of common stock. Dividends on the preferred stock are cumulative and
payable in cash. No dividend may be declared on any other class of stock
unless all dividend payments to be made are current. The 1,000,000 shares held
in the Treasury at October 31, 1994 were formally retired by the Board of
Directors.
The Board of Directors designated 1,000,000 shares as $2.50 Series B, $.001 par
value, with a liquidation value limited to the net assets of J.D.S.
Enterprises, Inc. (subsequently sold July 12, 1995, see Note 1). Each share is
convertible into shares of common stock consisting of that number of common
shares determined by dividing the $2.50 of the preferred stock by the fair
market value of each share of common stock. Dividends are on a non-cumulative
basis at an annual rate of 6% to the extent such dividends are declared. At
October 31, 1995 there were 1,000,000 shares issued and outstanding.
NOTE 8 - STOCK OPTIONS
Under a management agreement dated September 15, 1995 the company granted stock
options to an officer to acquire 50,000 shares of common stock at an exercise
price of $.06 per share (fair market value at date of grant) expiring two years
from date of grant.
- F10 -
<PAGE> 34
THE S.I.N.C.L.A.R.E. GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995
NOTE 9 - SUBSEQUENT EVENTS
Acquisitions
- ------------
On May 3, 1996 the company formed Cyberlinx Corporation ("Cyberlinx") as a
wholly-owned subsidiary as a means of segregating non-financial Internet
services. In May 1996, Cyberlinx acquired Trackers Sports Network, Inc.
("Trackers") in exchange for providing $550,000 in development costs associated
with the underdeveloped software technology which provides computerized
handicapping information for thoroughbred horse races. On May 7, 1996,
Trackers entered into two Executive Employment Agreements with two unaffiliated
individuals to pay a base salary of $62,500 per year for a period of two years
and an incentive salary equal to half of 1% of the adjusted net profit of
Trackers for the two year period. On a related transaction, the two employees
of the May 7, 1996 Executive Employment Agreement received 250,000 shares each,
$0.001 par value common stock of Cyberlinx in exchange for the transfer of
proprietary software and related source codes for a program called the Daily
Racing Form Reader. On May 9, 1996, Cyberlinx sold 30%, or 9,000,000 shares,
of the 30,000,000 total shares issued and outstanding shares of Trackers to two
unaffiliated third parties for a total consideration of $500,000. The proceeds
will be used for software development.
On May 29, 1996, the company acquired certain rights to a software system and
database application known as Internet News Network ("INN") in exchange for
740,000 shares of the company's common stock, valued at $1,866,000. In
addition, royalty payments are required at the rate of 10% of gross income up
to $5 million, with decreasing rates from 8% to 2% of gross income between $5
million and $50 million and over. On May 31, 1996 the rights to the
non-financial reporting functions of INN were transformed to the company's
wholly-owned subsidiary, Cyberlinx Corporation ("Cyberlinx"). On June 6, 1996,
the Board of Directors authorized the spin-off of Cyberlinx to the company's
stockholders of record as of June 26, 1996 and payable July 29, 1996. The
issuance of common shares has been deferred until a later date.
On August 3, 1996, Cyberlinx acquired Internet Preview Channel, Inc. ("IPCI")
for 6,000,000 shares of Cyberlinx Corporation common stock, $0.001 par value,
which has been valued at $6,000. IPCI is a development stage corporation
formed to design and market an Internet television show which will feature
video previews on the Internet using world wide web resources.
On August 20, 1996 by corporate resolution, Cyberlinx amended its certificate
of incorporation changing its authorized shares to be issued to 3,000,000 from
30,000,000 shares and changed the par value to $0.01 from $0.001.
On August 22, 1996, Cyberlinx proposed to offer for sale 600,000 shares of
$0.01 par value common stock at $0.25 per share. The sale of securities will
be pursuant to Rule 504 Regulation D of the Securities Act of 1933, as amended.
The proceeds of the sale would be used exclusively by Cyberlinx.
Capital Stock
- -------------
On November 27, 1995 the company issued 1,300,000 of Series A $1.00 convertible
preferred stock and 1,100,000 shares of Series B $2.50 convertible preferred
stock, both with a par value of $0.001, in exchange for exclusive rights to
sell and service software known as Federation On-Line Membership Kit for
Windows which has been valued at $144,000.
On February 7, 1996 the company by authorization from the Board of Directors
approved a 20 for 1 reverse split of the two series of preferred stock, Series
A and Series B and to allow a conversion into common stock on a one to one
basis.
Agreements
- ----------
On November 27, 1995, the company entered into an agreement to obtain the
database and supporting software from The New Industrialist for the United
States public companies in exchange for 40% of the net profits generated from
the database. In addition, a license agreement related to the publication of
The New Industrialist - Strictly Canadian requires the company to pay the
licensor a royalty of 15% of the gross profits from the publication which was
first published in February 1996.
- F11 -
<PAGE> 35
THE S.I.N.C.L.A.R.E. GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995
NOTE 9 - SUBSEQUENT EVENTS (Continued)
Agreements (Continued)
- ----------
On December 29, 1995, the company was granted the right to use certain
commercial marks and acquired a database of all public companies trading in
Canada and software for a total amount of $326,095 of which $32,,610 was
payable upon execution of the agreement. The balance of $293,485 is payable
over three years in quarterly installments with interest at 8.5%.
On February 15, 1996, the company entered into a one year agreement for
consulting services for the development of computer systems in exchange for the
issuance of 100,000 shares of common stock payable at the discretion of the
consultant.
On May 14, 1996, the company entered into a licensing agreement to offer access
to its FlexQuote product for a monthly application fee. Through July 1996, no
fee revenue has been received from this license agreement.
On July 30, 1996, the company acquired certain operating systems and software
applications known as FlexQuote for the North American market of a stock
quoting system. Under the agreement the company may be required to pay
$500,000, payable at the rate of 5% of gross revenues with the first payment
deferred until $1 million in gross revenues are generated from FlexQuote
operating systems. In addition, royalty payments are required at the rate of
10% of gross revenues up to $5 million, with decreasing rates from 8% to 2% of
gross revenues between $5 million and $50 million and over, payable monthly.
- F12 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 10-KSB
AUDITED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 10-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> JAN-18-1995
<PERIOD-END> OCT-31-1995
<CASH> 148,619
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 148,619
<PP&E> 313,180
<DEPRECIATION> 49,189
<TOTAL-ASSETS> 412,610
<CURRENT-LIABILITIES> 287,417
<BONDS> 0
0
1,000
<COMMON> 14,939
<OTHER-SE> 109,254
<TOTAL-LIABILITY-AND-EQUITY> 412,610
<SALES> 611,699
<TOTAL-REVENUES> 611,699
<CGS> 79,575
<TOTAL-COSTS> 79,575
<OTHER-EXPENSES> 234,825
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 297,299
<INCOME-TAX> 119,000
<INCOME-CONTINUING> 178,299
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 178,299
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
