SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File No. 33-55254-24
EGRET, INC.
(Exact name of Registrant as specified in its charter)
NEVADA 87-0438635
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1800 East Sahara Avenue, Suite 107
Las Vegas, Nevada 89104
(Address of principal executive offices) (Zip Code)
3098 SOUTH HIGHLAND DRIVE, SUITE 460
SALT LAKE CITY, UTAH 84106
(Former Address) (Zip Code)
Registrant's telephone number, including area code (702) 792-7449
----------------------------
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [ ] Yes [X] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [X]
As of July, 1997, there is no aggregate market value of the voting stock held by
non-affiliates of the registrant.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding as of July, 1997
$.001 PAR VALUE CLASS A COMMON STOCK 2,500,000 SHARES
DOCUMENTS INCORPORATED BY REFERENCE: None
<PAGE>
PART I
ITEM 1. Business.
The Company was incorporated under the laws of Utah on April 16, 1986 and
subsequently reorganized under the laws of Nevada on December 30, 1993. The
Company's reorganization plan was formulated for the purpose of changing the
state of domicile and provided that the Company form a new corporation in Nevada
which acquired all of the contractual obligations, shareholder rights and
identity of the Utah corporation, and then the Utah corporation was dissolved.
The Company is in the developmental stage, and its operations to date have been
limited to the sale of shares to Capital General Corporation, the gifts of
shares to the giftees and issuance of shares for services in November, 1996.
During November, 1996 Capital General gave up control of the Company. The
Company is in the process of investigating potential business ventures which, in
the opinion of management, will provide a source of eventual profit to the
Company. Such involvement may take many forms, including the acquisition of an
existing business or the acquisition of assets to establish subsidiary
businesses. The Company's management does not expect to remain involved as
management of an acquired business; presently unidentified individuals would be
retained for such purposes.
As an unfunded venture, the Company will be extremely limited in its attempts
to locate potential business situations for investigation. However, the
Company's officers, directors and major shareholder have undertaken to make
loans to the Company in amounts sufficient to enable it to satisfy its reporting
and other obligations as a public company, and to commence, on a limited basis,
the process of investigating possible merger and acquisition candidates, and
believe that the Company's status as a publicly-held corporation will enhance
its ability to locate such potential business ventures.
No assurance can be given as to when the Company may locate suitable business
opportunities and such opportunities may be difficult to locate; however, the
Company intends to actively search for potential business ventures for the next
five years. The Company intends not to allocate any incoming funds specifically,
should there be any in the future, to general use for the purpose of seeking,
investigating and acquiring or becoming engaged in a business opportunity.
Decisions concerning these matters may be made by management without the
participation or authorization of the shareholders.
Management anticipates that due to its lack of funds, and the limited amount
of its resources, the Company may be restricted to participation in only one
potential business venture. This lack of diversification should be considered a
substantial risk because it will not permit the Company to offset potential
losses from one venture against gains from another.
Business opportunities, if any arise, are expected to become available to the
Company principally from the personal contacts of its officers and directors.
While it is not expected that the Company will engage professional firms
specializing in business acquisitions or reorganizations, such firms may be
retained if funds become available in the future, and if deemed to be advisable.
Opportunities may thus become available from professional advisers, securities
broker-dealers, venture capitalists, members of the financial community, and
other sources of unsolicited proposals. In certain circumstances, the Company
may agree to pay a finder's fee or other form of compensation, including perhaps
one-time cash payments, payments based upon a percentage of revenues or sales
volume, and/or payments involving the issuance of securities, for services
provided by persons who submit a business opportunity in which the Company shall
decide to participate. The Company is unable to predict at this time the costs
of locating a suitable business opportunity.
The Company will not restrict its search to any particular business, industry
or geographical location, and reserves the right to evaluate and to enter into
any type of business opportunity, in any stage of their development (including
the "start up" stage), in any location. In seeking a business venture,
Management will not be influenced primarily by an attempt to take advantage of
the anticipated or perceived appeal of a specific industry, management group, or
product or industry, but rather will be motivated by the Company's business
objective of seeking long term capital appreciation in their real value. In
addition, the Exchange Act reporting requirements require the filing of the Form
8-K disclosing any businesses acquired and requires certified financial
statements of such companies. These reporting requirements may substantially
limit the businesses which may be available for possible acquisition candidates.
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The analysis of business opportunities will be undertaken by or under the
supervision of the Company's management, none of whom is a professional analyst
and none of whom have significant general business experience. Among the factors
which management will consider in analyzing potential business opportunities are
the available technical, financial and managerial resources; working capital and
financial requirements; the history of operation, if any; future prospects; the
nature of present and anticipated competition; potential for further research,
development or exploration; growth and expansion potential; profit potential;
the perceived public recognition or acceptance of products or services; name
identification, and other relevant factors.
It is not possible at present to predict the exact manner in which the Company
may participate in a business opportunity. Specific business opportunities will
be reviewed and, based upon such review, the appropriate legal structure or
method of participation will be decided upon by management. Such structures and
methods may include, without limitation, leases, purchase and sale agreements,
license, joint ventures; and may involve merger, consolidation or
reorganization. The Company may act directly or indirectly through an interest
in a partnership, corporation or other form of organization. However, it is most
likely that the Company will acquire a business venture by conducting a
reorganization involving the issuance of the Company's restricted securities.
Such a reorganization may involve a merger (or combination pursuant to state
corporate statutes, where one of the entities dissolves or is absorbed by the
other), or it may occur as a consolidation, where a new entity is formed and the
Company and such other entity combine assets in the new entity. A reorganization
may also occur, directly or indirectly, through subsidiaries, and there is no
assurance that the Company would be the surviving entity. Any such
reorganization could result in additional dilution to the book value of the
shares and loss of control of a majority of the shares. The Company's present
directors may be required to resign in connection with a reorganization.
A reorganization may be structured in such a way as to take advantage of
certain beneficial tax consequences available in business reorganizations, in
accordance with provisions of the Internal Revenue Code of 1986 (as amended).
Pursuant to such a structure, the number of shares held prior to the
reorganization by all of the Company's shareholders might be less than 20% of
the total shares to be outstanding upon completion of the transaction.
Substantial dilution of percentage equity ownership may result to the giftees,
in the discretion of management.
Generally, the issuance of securities in a reorganization transaction would be
undertaken in reliance upon one or more exemptions from the registration
provisions of applicable federal securities laws, including the exemptions
provided for non-public or limited offerings, distributions to persons resident
in only one state and similar exemptions provided by state law. Shares issued in
a reorganization transaction based upon these exemptions would be considered
"restricted" securities under the 1933 Act, and would not be available for
resale for a period of one year, in accordance with Rule 144 promulgated under
the 1933 Act. However, the Company might undertake, in connection with such a
reorganization transaction, certain registration obligations in connection with
such securities.
The Company may choose to enter into a venture involving the acquisition of or
merger with a company which does not need substantial additional capital but
desires to establish a public trading market for their securities. Such a
company may desire to consolidate its operations with the Company through a
merger, reorganization, asset acquisition, or other combination, in order to
avoid possible adverse consequences of undertaking its own public offering.
(Such consequences might include expense, time delays or loss of voting
control.) In the event of such a merger, the Company may be required to issue
significant additional shares, and it may be anticipated that control over the
Company's affairs may be transferred to others. It should also be noted that
this type of business venture might have the effect of depriving the giftees of
the protection of federal and state securities laws, which normally affect the
process of a company's becoming publicly held.
It is likely that the investigation and selection of business opportunities
will be complex, time-consuming and extremely risky. However, management
believes that even though the Company will have limited capital, the fact that
their securities will be publicly-held will make it a reasonably attractive
business prospect for other firms.
As part of their investigation of acquisition possibilities, the Company's
management may meet with executive officers of the business and its personnel;
inspect its facilities; obtain independent analysis or verification of the
information provided, and conduct other reasonable measures, to the extent
permitted by the Company's limited resources and management's limited
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expertise. Generally, the Company intends to analyze and make a determination
based upon all available information without reliance upon any single factor as
controlling.
In all likelihood, the Company's management will be inexperienced in the areas
in which potential businesses will be investigated and in which the Company may
make an acquisition or investment. Thus, it may become necessary for the Company
to retain consultants or outside professional firms to assist management in
evaluating potential investments, and to hire managers to run or oversee the
operations of its acquisitions or investments. The Company can give no assurance
that it will be able to find suitable consultants or managers. The Company
intends not to employ any of its affiliates, officers, directors or principal
shareholders as consultants. The Company has no policy regarding the use of
consultants, however, if management, in its discretion, determines that it is in
the best interests of the Company, management may seek consultants to review
potential merger or acquisition candidates. There are currently no contracts or
agreements between the Company and any companies that are searching for "shell"
companies with which to merge. There have been no preliminary discussions or
understandings between the Company and any market maker regarding the
participation of any such market maker in the aftermarket for the Company's
securities inasmuch as no market for the securities is expected to arise due to
the lack of transferability on the Company's shares until an acquisition is made
and a Form 8-K is filed with the Commission.
It may be anticipated that the investigation of specific business
opportunities and the negotiation, drafting and execution of relevant
agreements, disclosure documents and other instruments will require substantial
management time and attention, and substantial costs for accountants, attorneys
and others. Should a decision thereafter be made not to participate in a
specific business opportunity, it is likely that costs already expended would
not be recoverable. It is also likely, in the event a transaction should
eventually fail to be consummated, for any reason, that the costs incurred by
the Company would not be recoverable. The Company's officers and directors are
entitled to reimbursement for all expenses incurred in their investigation of
possible business ventures on behalf of the Company, and no assurance can be
given that if the Company has available funds they will not be depleted by such
expenses.
In addition to the severe limitations placed upon the Company by virtue of its
unfunded status, the Company will also be limited, in its investigation of
possible acquisitions, by the reporting requirements of the Securities Exchange
Act of 1934, pursuant to which certain information must be furnished in
connection with any significant acquisitions. The Company would be required to
furnish, with respect to any significant acquisition, certified financial
statements for the acquired company, covering one, two or three years (depending
upon the relative size of the acquisition). Consequently, acquisition prospects
which do not have the requisite certified financial statements, or are unable to
obtain them, may be inappropriate for acquisition under the present reporting
requirements of the 1934 Act.
The Company does not intend to take any action which would render it an
investment company under The Investment Companies Act of 1940 (the "1940 Act").
The 1940 Act defines an investment company as one which (1) invests, reinvests
or trades in securities as its primary business, (2) issues face-amount
certificates of the installment type or (3) invests, reinvests, owns, holds or
trades securities or owns or acquires investment securities having a value
exceeding 40 percent of the value of its total assets (exclusive of Government
securities and cash items) on an unconsolidated basis. The above 40 percent
limitation may be exceeded so long as a company is primarily engaged, directly
or through wholly-owned subsidiaries, in a business or businesses other than
that of investing, reinvesting, owning, holding or trading in securities. A
wholly-owned subsidiary is defined as one which is at least 95% owned by the
company.
Neither the Company nor any of its officers or directors are registered as
investment advisers under the Investment Advisers Act of 1940 (the "Advisers
Act"), and so there is no authority to pursue any course of business or
activities which would render the Company or its management "investment
advisers" as defined in the Advisers Act. Management believes that registration
under the Advisers Act is not required and that certain exemptions are
available, including the exemptions for persons who may render advice to a
limited number of other persons and who may advise other persons located in one
state only.
The Company expects to encounter intense competition in its efforts to locate
suitable business opportunities in which to engage. The primary competition for
desirable investments may come from other small companies organized and funded
for
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similar purposes, from small business development corporations and from public
and private venture capital organizations. As the Company will be completely
unfunded, it can fairly be said that all of the competing entities will have
significantly greater experience, resources, facilities, contacts and managerial
expertise than the Company and will, consequently, be in a better position than
the Company to obtain access to, and to engage in, business opportunities. Due
to its lack of funds, the Company may not be in a position to compete with
larger and more experienced entities for business opportunities which are
low-risk. Business opportunities in which the Company may ultimately participate
are likely to be highly risky and extremely speculative.
ITEM 2. Properties.
The Company owns no properties and utilizes space on a rent-free basis in the
office of its principal shareholder, Bouclin & Associates. This arrangement is
expected to continue until such time as the Company becomes involved in a
business venture which necessitates its relocation, as to which no assurances
can be given. The Company has no agreements with respect to the maintenance or
future acquisition of office facilities, however, if a successful
merger/acquisition is negotiated, it is anticipated that the office of the
Company will be moved to that of the acquired company.
ITEM 3. Legal Proceedings.
On January 7, 1994, the Bureau of Securities of the State of New Jersey filed
a complaint in the matter of Capital General Corporation, David R. Yeaman and 74
other named defendants, Nevada and Utah corporations including the Company,
which complaint proposes that civil monetary penalties totaling $30,000 be
assessed against Capital General Corporation for alleged violations of the
Uniform Securities Law (1967), N.J.S.A. 49:3-47 et. seq. by (1) selling to 24
New Jersey residents between April 1986 and May 1991, securities in 25 of the 74
above referred to respondent corporations named in the proceeding, including the
Company, which were neither registered nor exempt from registration, and (2)
making untrue statements of material fact and omitting to state material facts
in connection with said New Jersey sales in 6 of the 74 above referred to
resident corporations named in the proceeding, not including the Company. Also
on January 7, 1994, the Bureau of Securities of the State of New Jersey, based
on substantially similar allegations as in the above referred complaint, issued
its Order Denying Exemptions and to Cease and Desist. This order summarily
denied the exemptions contained in N.J.S.A. 49:3-50(b), (1), (2), (3), (9), (11)
and (12) of the securities of Capital General Corporation and the other 74
respondent corporations, including the Company, except that excluded from the
summary denial of the exemption contained in N.J.S.A. 49-3-50(b)(12) is the
Offer of Rescission by Capital General Corporation to 24 New Jersey residents
pursuant to the offer of rescission which began about April 28, 1993. This order
also ordered Capital General Corporation and David Yeaman to Cease and Desist
from offering or selling any securities in blind pool corporations into, or from
the State of New Jersey.
Capital General and David Yeaman filed answers denying the material
allegations of said complaint and resisting the imposition of said civil
monetary penalties, and the said Order Denying Exemptions and to Cease and
Desist. Subsequently the issues raised in said complaint and order were settled
by agreement between the said Bureau of Securities and Mr. Yeaman and Capital
General Corporation in a consent order dated July 11, 1994 and approved by an
administrative law judge of the State of New Jersey Office of Administrative Law
September 2, 1994. Under the terms of said consent order, all claims in the
complaint against all named respondents were settled by the payment of a $3,000
civil penalty, and the order was modified so that it does not apply to 27 of the
respondent companies; however said order does still apply to the Company.
During 1986 and 1987, Capital General gifted very small percentages of stock
(usually 100 shares to each giftee) in the following companies, which includes
the Company, to approximately 1,000 persons or entities: Amenity, Inc.,
Dogmatic, Inc., Mystic Industries, Inc., Highland Mfg., Inc., Kowtow, Inc.,
Noble Industries, Inc., Oryan Capital Corporation, Pegasus Star Enterprise,
Inc., Showstoppers, Inc., Hightide, Inc., Grandeur, Inc., Fantastic Industries,
Inc., Jugglar, Inc., Xebec Galleon, Inc., Golden Home Health Care Equipment
Centers, Inc., Nighthawk Capital, Inc., Instrument Development Corporation,
Panther Industries, Inc., Owl Enterprises, Inc., Quail, Inc., GBS Technologies
Corporation, H & B Carriers, Inc., Florida Growth Industries, Inc., Macaw, Inc.,
Longhorn Enterprise, Inc., Koala Corporation, Yahwe Corporation, Star Dolphin,
Inc., Jackal, Inc., Hyena Capital, Inc., Gopher, Inc., Flamingo Capital, Inc.,
Cetacean Industries, Inc., Bonito, Inc.,
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Alpaca, Inc., Zeus Enterprise, Inc., Tamarind, Inc., Saber, Inc., Radar, Inc.,
Quiescent Corporation, Vanadium, Inc., Upsilon, Inc., Why Not?, Inc., Bestmark,
Inc., Missouri Illinois Mining Co., Inc.
Capital General did not register the gifts of shares in these companies
with the Securities Division of the State of Utah or with the Securities
Exchange Commission because it believed these gifts to be outside the scope of
the Utah Uniform Securities Act and the Securities Act of 1933 in as much as
such acts require registration for sales and do not require registration of
gifts. Nevertheless, in connection with the distribution of shares of its
subsidiaries, Capital General was found by the Utah Securities Advisory Board,
in two decisions affirmed by the Utah State Courts, to have violated the
registration provisions of the Utah Uniform Securities Act. See In re Amenity
Inc., No. SD-86-11 (Utah Sec. Adv. Bd. February 18, 1987) aff'd C87-2625 (3d
Dist. Ct. September 18, 1987) aff'd sub nom Capital General Corp. v. Utah Dep't
of Business Reg., 777 P.2d 494, 498 (Utah Ct. App.) cert. denied, 781 P.2d 873
(Utah S. Ct. 1989); In re H&B Carriers Inc., No. 87-09-28-01 (Utah Sec. Adv.
Bd., Apr. 15, 1988) aff'd No. 88-5900053 (3d Dist. Ct. Sept 10, 1990) aff'd sub
nom Capital General Corp. v. Utah Dep't of Business Reg., Case No 91-196 (Utah
Ct. App. February 10, 1992. All of the remaining companies listed above were
parties to the H&B Carriers order.
Both of these actions sought suspension of transactional exemptions respecting
the shares of these companies pursuant to Section 14 (3) of the Utah Uniform
Securities Act. Capital General defended both actions on the grounds that the
Utah Uniform Securities Act did not apply to gifts of securities, that the gifts
were good faith gifts specifically exempted by the Act, and that in any event
even if it had "sold" shares in violation of the Act, suspension of
transactional exemptions was not an authorized remedy under the statute. These
defenses were rejected at the administrative agency level, and upon judicial
review at the District Court level and by the Utah Court of Appeals.
See also Item 10 regarding legal proceedings against former officers and
directors.
The Company does not believe the legal problems of its former officers and
directors will materially affect the Company in the future.
ITEM 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to the Company's security holders for a vote during
the fiscal year ending December 31, 1996.
PART II
ITEM 5. Market for Registrant's Common Equity and Related Stockholders Matters.
There currently is not a trading market for the Company's $.001 par value
common stock nor has there been a trading market for the Company's stock since
its inception.
As of June 11, 1997, there were 753 record holders of the Company's common
stock. The Company has not previously declared or paid any dividends on its
common stock and does not anticipate declaring any dividends in the foreseeable
future.
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ITEM 6. Selected Financial Data.
EGRET, INC.
SUMMARY OF OPERATIONS
DECEMBER 1996
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total Assets............. 10,000 0 0 0 0
Revenues................ 0 0 0 0 0
Operating Expenses.... 5,000 0 0 0 0
Net Earnings (Loss).. (5,000) 0 0 0 0
Per Share Data
Earnings (Loss)....... 0 0 0 0 0
Average Common Shares
Outstanding..... 1,250,000 1,000,000 1,000,000 1,000,000 1,000,000
</TABLE>
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation.
The Company has had no operational history and has yet to engage in
business of any kind. All risks inherent in new and inexperienced enterprises
are inherent in the Company's business. The Company has not made a formal study
of the economic potential of any business. At the present, the Company has not
identified any assets or business opportunities for acquisition.
The Company's only financial activity for 1996 consisted of issuing
1,500,000 shares of restricted common stock into escrow for services valued at
$15,000. The services related to services performed in 1996 and services
expected to be performed in 1997 to assist the Company in locating a suitable
business opportunity.
As of August, 1997, the Company has no liquidity and no presently
available capital resources, such as credit lines, guarantees, etc. and should a
merger or acquisition prove unsuccessful, it is possible that the Company may be
dissolved by the State of Nevada for failing to file reports, at which point the
Company would no longer be a viable corporation under Nevada law and would be
unable to function as a legal entity. Should management decide not to further
pursue its acquisition activities, management may abandon its activities and the
shares of the Company would become worthless. However, the Company's officers,
directors and major shareholder, have made an oral undertaking to make loans to
the Company in amounts sufficient to enable it to satisfy its reporting
requirements and other obligations incumbent on it as a public company, and to
commence, on a limited basis, the process of investigating possible merger and
acquisition candidates. The Company's status as a publicly-held corporation may
enhance its ability to locate potential business ventures. The loans will be
interest free and are intended to be repaid at a future date, if or when the
Company shall have received sufficient funds through any business acquisition.
The loans are intended to provide for the payment of filing fees, professional
fees, printing and copying fees and other miscellaneous fees.
Based on current economic and regulatory conditions, Management
believes that it is possible, if not probable, for a company like the Company,
without assets or liabilities, to negotiate a merger or acquisition with a
viable private company. The opportunity arises principally because of the high
legal and accounting fees and the length of time associated with the
registration process of "going public". However, should any of these conditions
change, it is very possible that there would be little or no economic value for
anyone taking over control of the Company.
ITEM 8. Financial Statements and Supplementary Data.
See Item 14.
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ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not Applicable.
PART III
ITEM 10. Directors and Executive Officers of the Registrant.
The following table shows the positions held by the Company's officers
and directors. The directors were appointed in November, 1996 and will serve
until the next annual meeting of the Company's stockholders, and until their
successors have been elected and have qualified. The officers were appointed to
their positions, and continue in such positions, at the discretion of the
directors.
Name Age Position
Pierre-Paul Lalonde 37 President, Director
Helga Leuthe 37 Vice President of Finance, Secretary/Treasurer,
Director
Pierre-Paul Lalonde (age 37) is President and a Director. A resident of
Montreal, Canada, Mr. Lalonde will be responsible for overseeing the operations
of the Registrant, including the negotiation of agreements and approving new
projects. He is the President and sole shareholder of 140397 Canada, Inc., an
investment corporation. Since June 1995, Mr. Lalonde has worked as General
Manager for Softguard Enterprises, Inc., a Montreal-based software development
company. His role with Softguard has been to coordinate project research and
development and supervise management activities.
Helga Leuthe (age 37) is Vice President of Finance, Secretary/Treasurer
and a Director. A resident of St-Lambert, Canada, Mrs Leuthe will be responsible
for approving the financial viability of projects and in securing financing for
the Company. Mrs. Leuthe's business experience and financial contacts will play
a major role in assisting the Registrant in securing financing for its future
projects. Presently, Mrs. Leuthe is a shareholder and Secretary/Treasurer of
Softguard Enterprises, Inc., a high-tech company specializing in proprietary
software development. She is Director of Finance and is actively involved in the
management and financial activities of Softguard, ranging from daily financial
operations to acquiring governmental grants, etc. for the company. Mrs. Leuthe
has worked in the field of accounting and finance for numerous corporations.
The above officers and directors were appointed in November, 1996 after
Bouclin & Associates, acting in trust, acquired 740,800 shares of stock
previously owned by Capital General Corporation and other related entities. This
acquisition gave control of the Company to Bouclin & Associates, acting in
trust.
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On February 8, 1996, David R. Yeaman (former Secretary/Treasurer and
Director) was charged in the United States District Court for the Eastern
District of Pennsylvania with conspiracy, wire fraud and fraud in the offer,
purchase and sale of securities, in violation of 18 U.S.C. Sections 2, 371 and
1343; 15 U.S.C. Sections 77q(a), 77x, 78j(b), and 78ff; and Rule 10b-5
promulgated by the Securities and Exchange Commission, Title 17, Code of Federal
Regulations, Section 240.10b-5 (1986).
On February 22, 1996, Mr. Yeaman entered his not guilty plea to all
charges. The allegations against Mr. Yeaman are based on the government's claims
that he and five of the other defendants named in the proceeding violated the
aforesaid laws by inflating the apparent worth of certain reinsurance companies
by leasing them alleged worthless securities. Specifically, it is alleged that
Mr. Yeaman, with other defendants, engaged in practices which falsely increased
the quoted prices of the securities and misrepresented restricted securities as
free trading securities. Based on these allegations, the charges against Mr.
Yeaman include one count of conspiracy, seven counts of wire fraud, six counts
of securities fraud, and aiding and abetting with respect to each count.
The U.S. Securities and Exchange Commission, Securities Act of 1933
Release No. 7008 and Securities Exchange Act of 1934 Release No. 32669 announced
that on July 23, 1993, it ordered David R. Yeaman and Capital General
Corporation to permanently cease and desist from committing or causing further
violations of Section 5(a) and (c) and 17(a) of the Securities Act of 1933 and
Sections 10(b) and 13(g) of the Securities Exchange Act of 1934 and Rules 10b-5,
12b-20 and 13d-1(c) thereunder.
Krista Castleton Nielson (former President and Director) was ordered to
permanently cease and desist from committing or causing further violations of
Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and
Rules 10b-5 and 12b-20 thereunder. In addition, the Commission ordered the
revocation of the registration of the common stock of Altara International,
Inc., Arrow Management, Inc., Atlas Equity, Inc., Dynamic Associates, Inc.,
Energy Systems, Inc., Four Star Ranch, Inc., Panorama Industries, Inc., Partisan
Corporation, Quiescent Corporation, Saber, Inc., Upsilon, Inc., Vicuna, Inc.,
Why Not?, Inc., Xebec Galleon, Inc., Zebu, Inc., and Zeus Enterprises, Inc.
pursuant to Section 12(j) of the Exchange Act. The Commission found that each of
the issuers had filed a registration statement on Form 10 that contained
materially false and misleading statements in violation of Section 10(b) of the
Exchange Act and Rule 10b-5 thereunder.
Each of the respondents had submitted an Offer of Settlement consenting
to the entry of the Order without admitting or denying the allegations in the
Order. Prior to the submission of the Offers of Settlement, Capital General, on
behalf of the above mentioned companies, except for Panorama Industries, Inc.,
filed a registration statement on Form S-1 during December of 1992 to register
the common stock of those companies under the Securities Act of 1933.
Concurrently with the signing of the Offers of Settlement, the Registration
Statement was declared effective on June 30, 1993. A Post Effective Amendment
was filed and declared effective September 2, 1993. Although the registration of
the common stock under Section 12(g) of the 1934 Act was revoked on July 23,
1993, the companies are now registered and reporting under the Securities Act of
1933 by virtue of the filing of Form S-1 as indicated by Commission File No.
33-55254.
ITEM 11. Executive Compensation.
The Company has made no arrangements for the remuneration of its
officers and directors, except that they will be entitled to receive
reimbursement for actual, demonstrable out-of-pocket expenses, including travel
expenses if any, made on the Company's behalf in the investigation of business
opportunities. No remuneration has been paid to the Company's officers or
directors prior to the filing of this form. There are no agreements or
understandings with respect to the amount or remuneration that officers and
directors are expected to receive in the future. Management takes no salaries
from the Company and does not anticipate receiving any salaries in the
foreseeable future. No present prediction or representation can be made as to
the compensation or other remuneration which may ultimately be paid to the
Company's management, since upon the successful consummation of a business
opportunity, substantial changes may occur in the structure of the Company and
its management. At such time, contracts may be negotiated with new management
requiring the payment of annual salaries or other forms of compensation which
cannot presently be anticipated. Use of the term "new management" is not
intended to
8
<PAGE>
preclude the possibility that any of the present officers or directors of the
Company might be elected to serve in the same or similar capacities upon the
Company's decision to participate in one or more business opportunities.
The Company's management may benefit directly or indirectly by payments
of consulting fees, sales of insiders' stock positions in whole or in part to
the private company, the Company or management of the Company, or through the
payment of salaries, or any other methods of payments through which insiders or
current investors receive funds, stock, other assets or anything of value
whether tangible or intangible. There are no plans, proposals, arrangements or
understandings with respect to the sale of additional securities to affiliates,
current shareholders or others prior to the location of a business opportunity.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth, as of December 31, 1996, information
regarding the beneficial ownership of shares by each person known by the Company
to own five percent or more of the outstanding shares, by each of the directors
and by the officers and directors as a group.
<TABLE>
<CAPTION>
Name and address Amount of Percent
Title of class of beneficial owner beneficial of class
ownership
<S> <C> <C> <C>
Common Stock Bouclin & Associates, Acting in Trust 1,990,800 79.63%
790, Boul, Marcel-Laurin
Bureau 302
St. Laurent, Quebec, Canada H4M 2M6
Common Stock Bouclin & Associates 150,000 6.00%
5255, Boul Henri-Bourassa Quest
Bureau 305
St. Laurent, Quebec, Canada H4M 2M6
Common Stock Helga Leuthe 0 0%
6200 Taschereau Blvd. East, Suite 200
Brossard, Quebec, Canada J4W 3J8
Common Stock Pierre-Paul Lalonde 0 0%
6200 Taschereau Blvd. East, Suite 200
Brossard, Quebec, Canada J4W 3J8
Common Stock All Officers and 0 0%
Directors as a Group
</TABLE>
ITEM 13. Certain Relationships and Related Transactions.
No officer, director, nominee for election as a director, or associate
of such officer, director or nominee is or has been in debt to the Company
during the last fiscal year. However, the Company's officers, directors and
major shareholder, have made an oral undertaking to make loans to the Company in
amounts sufficient to enable it to satisfy its reporting requirements and other
obligations incumbent on it as a public company, and to commence, on a limited
basis, the process of investigating possible merger and acquisition candidates.
The Company's status as a publicly-held corporation may enhance its ability to
locate potential business ventures. The loans will be interest free and are
intended to be repaid at a future date, if or when the Company shall have
received sufficient funds through any business acquisition. The loans are
intended to provide for the payment of filing fees, professional fees, printing
and copying fees and other miscellaneous fees.
9
<PAGE>
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
Financial Statements and Financial Statement Schedules.
Financial Statements - December 31, 1996, 1995 and 1994
Reports on Form 8-K.
There were no reports on Form 8-K filed during the fiscal year ending
December 31, 1996.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
EGRET, INC.
Date: August 20, 1997 By: /s/ Pierre-Paul Lalonde
Pierre-Paul Lalonde, President and Director
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: August 20, 1997 By: /s/ Pierre-Paul Lalonde
Pierre-Paul Lalonde, President and Director
Date: August 20, 1997 By: /s/ Helga Leuthe
Helga Leuthe, Vice President, Secretary/Treasurer
and Director
11
<PAGE>
SMITH & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
MEMBERS OF: CRANDALL BUILDING SUITE 700
AMERICAN INSTITUTE OF 10 WEST 100 SOUTH
CERTIFIED PUBLIC ACCOUNTANTS SALT LAKE CITY, UTAH 84101
UTAH ASSOCIATION OF TELEPHONE: (801) 575-8297
CERTIFIED PUBLIC ACCOUNTANTS FACSIMILE: (801) 575-8306
- -------------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Egret, Inc. (A Development Stage Company)
We have audited the accompanying balance sheets of Egret, Inc. (a development
stage company) as of December 31, 1996 and 1995, and the related statements of
operations, changes in stockholders' equity, and cash flows for the years ended
December 31, 1996, 1995 and 1994 and for the period of April 16, 1986 (date of
inception) to December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Egret, Inc. (a development
stage company) as of December 31, 1996 and 1995 and the results of its
operations, changes in stockholders' equity and its cash flows for the years
ended December 31, 1996, 1995 and 1994 and for the period of April 16, 1986
(date of inception) to December 31, 1996 in conformity with generally accepted
accounting principles.
/S/ Smith & Company
CERTIFIED PUBLIC ACCOUNTANTS
Salt Lake City, Utah
June 10, 1997, except Note 7 which is dated August 15, 1997.
F-1
<PAGE>
EGRET, INC.
(A Development Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
12/31/96 12/31/95
----------------- -----------------
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash in bank $ 0 $ 0
Prepaid expense (Note 5) 10,000 0
----------------- -----------------
TOTAL CURRENT ASSETS 10,000 0
OTHER ASSETS
Organization costs (Note 1) 0 0
----------------- -----------------
0 0
----------------- -----------------
$ 10,000 $ 0
================= =================
LIABILITIES & EQUITY
CURRENT LIABILITIES
Accounts payable $ 0 $ 0
----------------- -----------------
TOTAL CURRENT LIABILITIES 0 0
STOCKHOLDERS' EQUITY
Common Stock $.001 par value:
Authorized - 100,000,000 shares
Issued and outstanding
2,500,000 shares (1,000,000 in 1995) 2,500 1,000
Additional paid-in capital 14,500 1,000
Deficit accumulated during
the development stage (7,000) (2,000)
----------------- -----------------
TOTAL STOCKHOLDERS' EQUITY 10,000 0
----------------- -----------------
$ 10,000 $ 0
================= =================
</TABLE>
See Notes to Financial Statements.
F-2
<PAGE>
EGRET, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
4/16/86
Year Year Year (Date of
ended ended ended inception) to
12/31/96 12/31/95 12/31/94 12/31/96
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net sales $ 0 $ 0 $ 0 $ 0
Cost of sales 0 0 0 0
------------- -------------- -------------- --------------
GROSS PROFIT 0 0 0 0
General & administrative
expenses 5,000 0 0 7,000
------------- -------------- -------------- --------------
NET LOSS $ (5,000) $ 0 $ 0 $ (7,000)
============= ============== ============== ==============
Net income (loss) per weighted
average share $ .00 $ .00 $ .00
============= ============== ==============
Weighted average number of
common shares used to compute
net income (loss) per weighted
average share 1,250,000 1,000,000 1,000,000
============= =============== ==============
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE>
EGRET, INC.
(A Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During
Par Value $0.001 Paid-in Development
Shares Amount Capital Stage
-------------- -------------- ----------------- --------------
<S> <C> <C> <C> <C>
Balances at 4/16/86
(Date of inception) 0 $ 0 $ 0 $ 0
Issuance of common stock
(restricted) at $.002 per share
at 4/17/86 1,000,000 1,000 1,000
Net loss for period (1,950)
-------------- -------------- ----------------- --------------
Balances at 12/31/86 1,000,000 1,000 1,000 (1,950)
Net loss for year (10)
-------------- -------------- ----------------- --------------
Balances at 12/31/87 1,000,000 1,000 1,000 (1,960)
Net loss for year (10)
-------------- -------------- ----------------- --------------
Balances at 12/31/88 1,000,000 1,000 1,000 (1,970)
Net loss for year (10)
-------------- -------------- ----------------- --------------
Balances at 12/31/89 1,000,000 1,000 1,000 (1,980)
Net loss for year (10)
-------------- -------------- ----------------- --------------
Balances at 12/31/90 1,000,000 1,000 1,000 (1,990)
Net loss for year (10)
-------------- -------------- ----------------- --------------
Balances at 12/31/91 1,000,000 1,000 1,000 (2,000)
Net income for year 0
-------------- -------------- ----------------- --------------
Balances at 12/31/92 1,000,000 1,000 1,000 (2,000)
Net income for year 0
-------------- -------------- ----------------- --------------
Balances at 12/31/93 1,000,000 1,000 1,000 (2,000)
Net income for year 0
-------------- -------------- ----------------- --------------
Balances at 12/31/94 1,000,000 1,000 1,000 (2,000)
Net income for year 0
-------------- -------------- ----------------- --------------
Balances at 12/31/95 1,000,000 1,000 1,000 (2,000)
Issuance of common stock
(restricted) at $.01 per
share into escrow for services
from related parties
at 11/4/96 (Note 3) 1,500,000 1,500 13,500
Net loss for year (5,000)
-------------- -------------- ----------------- --------------
Balances at 12/31/96 2,500,000 $ 2,500 $ 14,500 $ (7,000)
============== ============== ================= ==============
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE>
EGRET, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
4/16/86
Year Year Year (Date of
ended ended ended Inception) to
12/31/96 12/31/95 12/31/94 12/31/96
-------------- -------------- -------------- --------------
OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net income (loss) $ (5,000) $ 0 $ 0 $ (7,000)
Adjustments to reconcile net income
(loss) to cash used by operating
activities:
Stock issued for expenses 5,000 0 0 5,000
Amortization 0 0 0 50
-------------- -------------- -------------- --------------
NET CASH USED BY
OPERATING ACTIVITIES 0 0 0 (1,950)
INVESTING ACTIVITIES
Organization costs 0 0 0 (50)
-------------- -------------- -------------- --------------
NET CASH USED BY
INVESTING ACTIVITIES 0 0 0 (50)
FINANCING ACTIVITIES
Proceeds from sale of
common stock 0 0 0 2,000
-------------- -------------- -------------- --------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 0 0 0 2,000
-------------- -------------- -------------- --------------
INCREASE IN CASH
AND CASH EQUIVALENTS 0 0 0 0
Cash and cash equivalents
at beginning of year 0 0 0 0
-------------- -------------- -------------- --------------
CASH & CASH EQUIVALENTS
AT END OF YEAR $ 0 $ 0 $ 0 $ 0
============== ============== ============== ==============
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE>
EGRET, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Accounting Methods
The Company recognizes income and expenses based on the accrual method
of accounting.
Dividend Policy:
The Company has not yet adopted any policy regarding payment of
dividends.
Organization Costs:
The Company amortized its organization costs over a five year period.
Cash and Cash Equivalents
For financial statement purposes, the Company considers all highly
liquid investments with an original maturity of three months or less
when purchased to be cash equivalents.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets,
liabilities, revenues, and expenses during the reporting period.
Estimates also affect the disclosure of contingent assets and
liabilities at the date of the financial statements. Actual results
could differ from these estimates.
Income Taxes:
The Company records the income tax effect of transactions in the same
year that the transactions enter into the determination of income,
regardless of when the transactions are recognized for tax purposes.
Tax credits are recorded in the year realized. Since the Company has
not yet realized income as of the date of this report, no provision for
income taxes has been made.
In February, 1992, the Financial Accounting Standards Board adopted
Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes, which supersedes substantially all existing authoritative
literature for accounting for income taxes and requires deferred tax
balances to be adjusted to reflect the tax rates in effect when those
amounts are expected to become payable or refundable. The Statement was
applied in the Company's financial statements for the fiscal year
commencing January 1, 1993.
At December 31, 1996 a deferred tax asset has not been recorded due to
the Company's lack of operations to provide income to use the net
operating loss carryover of $7,000 which expires as follows:
Year Ended Expires Amount
December 31, 1986 December 31, 2001 $ 1,950
December 31, 1987 December 31, 2002 10
December 31, 1988 December 31, 2003 10
December 31, 1989 December 31, 2004 10
December 31, 1990 December 31, 2005 10
December 31, 1991 December 31, 2006 10
December 31, 1996 December 31, 2011 5,000
---------------
$ 7,000
===============
A change in control during 1996 will eliminate or reduce the amount of
net operating loss incurred prior to 1996 that can be used in the
future.
NOTE 2: DEVELOPMENT STAGE COMPANY
The Company was incorporated under the laws of the State of Utah on
April 16, 1986 and has been in the development stage since
incorporation. On December 30, 1993, the Company was dissolved as a
Utah corporation and reincorporated as a Nevada corporation.
F-6
<PAGE>
EGRET, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1996
NOTE 3: CAPITALIZATION
On the date of incorporation, the Company sold 1,000,000 shares of its
common stock to Capital General Corporation for $2,000 cash for an
average consideration of $.002 per share. During 1996, 1,500,000 shares
of restricted stock were issued into escrow for services from related
parties. The stock was valued at $15,000 based on the value of services
received or to be received in the future. The Company's authorized
stock includes 100,000,000 shares of common stock at $.001 par value.
NOTE 4: RELATED PARTY TRANSACTIONS
The Company neither owns or leases any real property. Office services
were previously provided, without charge, by Capital General
Corporation. Office services are currently provided, without charge, by
current management. Such costs are immaterial to the financial
statements, and, accordingly, have not been reflected therein. The
officers and directors of the Company are involved in other business
activities and may, in the future, become involved in other business
opportunities. If a specific business opportunity becomes available,
such persons may face a conflict in selecting between the Company and
their other business interests. The Company has not formulated a policy
for the resolution of such conflicts.
NOTE 5: PREPAID EXPENSE
This asset consists of 1,000,000 shares of restricted common stock
issued into escrow for services expected to be rendered in 1997.
NOTE 6: CHANGE IN CONTROL
During the year the Company experienced a change in ownership as well
as a change in all officers and directors.
NOTE 7: SUBSEQUENT EVENTS
Subsequent to December 31, 1996, the Company has received $1,000,000
which is being held in escrow. The money is to be used to acquire a
potential business venture. If a suitable business opportunity becomes
available within the next year, the Company will issue 400,000 shares
of its restricted common stock at $2.50 per share to convert the
$1,000,000 to equity. If the business opportunity does not become
available the $1,000,000 will be returned to the investors.
F-7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from Egret, Inc. December 31, 1996 financial statements and is
qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000894533
<NAME> Egret Inc.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 10,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 2,500
<OTHER-SE> 7,500
<TOTAL-LIABILITY-AND-EQUITY> 10,000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (5,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,000)
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
